Decide compensation afresh under insurance policy: SC to NCDRC

New Delhi, The Supreme Court on Monday directed the National Consumer Disputes Redressal Commission to consider afresh the quantum of compensation payable under an insurance policy to a company for its losses in 2005.

A bench of Justices Sanjay Kumar and Augustine George Masih was hearing an appeal of the insurance firm against the NCDRC's August 2022 order.

The NCDRC held the insurance firm was liable to compensate an Agra-based company, which suffered losses due to the collapse of a factory shed, under its policy.

The apex court said the company had taken a comprehensive insurance policy from the insurance firm against fire and special perils, and the policy was operative from June 30, 2005 to June 29, 2006.

It came on record that heavy rainfall on August 1, 2005, led to the collapse of the factory shed and caused the damage to the plant, machinery, stocks and buildings.

The bench said the company raised an insurance claim for ₹91 lakh following which the insurance firm appointed a surveyor who assessed the losses at ₹8.89 lakh.

The insurance firm repudiated the claim, arguing the loss suffered was not due to the insured peril of "inundation" and would, therefore, fall outside the policy's purview.

Aggrieved by the repudiation, the company approached the NCDRC, saying it engaged an independent surveyor who confirmed the damage was caused by inundation and assessed the loss at ₹46.97 lakh.

The company argued in the NCDRC that its premises were renovated in 2003, and the insured shed/factory buildings were in a sound condition, obviating the possibility of a collapse due to weakening of walls or seepage.

The NCDRC directed the insurance firm to pay ₹46.97 lakh to the company.

In the top court, the insurance firm said it was not contesting its liability to pay compensation under the policy but the NCDRC did not properly deal with the issue of the quantum of compensation.

"Having noted that the surveyor appointed by the appellant had assessed the damage at a much lesser figure, i.e., ₹8,89,176, the NCDRC could not have assumed that the appellant had mutely accepted the enhanced estimation of ₹46,97,085, as per the unilateral assessment made by the surveyor appointed by the respondent ," the bench said.

The apex court said the NCDRC did not independently apply its mind on deciding the quantum of the claim and "blindly acted" upon the alleged failure of the insurance firm to deny the assessment in surveyor's report produced by the company.

"This impression, as pointed out earlier, was unfounded and erroneous," the bench said.

The top court remitted the matter to the NCDRC for a fresh consideration on the quantum of the compensation under the insurance policy for the losses suffered by the respondent.

It asked the NCDRC to give priority to the matter and decide it expeditiously.

This article was generated from an automated news agency feed without modifications to text.