Supreme Court Awards Compensation in Fire Insurance Claim, Sets Aside NCDRC Order

In a recent judgment, the Supreme Court of India ruled on a fire insurance claim case, providing compensation to the appellant and setting aside the order of the National Consumer Disputes Redressal Commission (NCDRC). The case involved M/s Super Label Mfg. Co. as the appellant and New India Assurance Company Limited as the respondent.

M/s Super Label Mfg. Co., a registered partnership firm engaged in the printing of high technology labels, had imported sophisticated machinery and obtained a 'Standard Fire and Special Perils' insurance policy from New India Assurance Company Limited. A fire occurred in their factory, causing significant damage to the machinery and other property. The appellant filed a claim for compensation, but the respondent limited the reimbursement amount, leading to a dispute.

 The Supreme Court examined the surveyor's report, which assessed the loss suffered by the appellant, but emphasized that the surveyor's report is not binding or conclusive.

- The Court considered other reports and evidence to determine the extent of damage and compensation.

- It emphasized the concept of proximate cause, noting that the fire was the active and efficient cause of the damage to the machinery.

- The Court found that the NCDRC's narrow construction of the case, focusing on the duration of corrosion, was unjustified.

- Taking into account the chain of events and expert opinions, the Court awarded compensation to the appellant, limiting the claim to the actual loss suffered.

- The respondent was directed to pay the balance amount with interest at 6% per annum from the date of the complaint filed before the NCDRC.

The Supreme Court's judgment in the fire insurance claim case provides clarity on the assessment of loss, the relevance of surveyor's reports, and the determination of compensation based on the chain of events. The Court's decision sets aside the NCDRC order and ensures appropriate compensation for the appellant.

Date of Decision : May 16, 2023

M/s Super Label Mfg. Co.   vs New India Assurance Company Limited