The National Consumer Disputes Redressal Commission set aside the insurer’s repudiation of a fire-insurance claim, holding that disclosure of third-party stocks created a valid insurable interest and that the insurer could not rely on the absence of a ‘Goods Held in Trust’ endorsement.
Background & Facts
The Dispute
The complainant (Complainant No.1) obtained a Standard Fire and Special Perils Policy No.090400/11/13/11/000000213 on 05.02.2014 for a sum assured of Rs.10,00,00,000, covering cotton bales stored in its godown. The policy was renewed on 04.02.2015 as Policy No.454892/11/2015/30 for the period 04.02.2015 to 03.02.2016 with the same sum assured. The insured stocks belonged to sister concerns, Sri Parameshwari Spinning Mills Pvt. Ltd. (Complainant No.2) and Jayavelu Spinning Mills Pvt. Ltd. (Complainant No.3).
On 08.05.2015 at about 7:45 PM, heavy rain, thunder and lightning struck the premises, causing a fire that destroyed the cotton bales of Complainants Nos.2 and 3. The incident was reported on 09.05.2015 to the Fire Brigade, Police, ICICI Bank and the insurer. A claim of Rs.1,12,32,970 was lodged on 19.06.2015.
Key Facts
- Policy period 1: 05.02.2014 - 04.02.2015 (Policy No.090400/11/13/11/000000213)
- Policy period 2 (renewal): 04.02.2015 - 03.02.2016 (Policy No.454892/11/2015/30)
- Incident date: 08.05.2015 (fire caused by lightning)
- Claim filed: 19.06.2015 for Rs.1,12,32,970
- Preliminary survey report: 10.05.2015
- Final survey report: 14.07.2015 (loss quantified at Rs.1,02,47,896)
- Repudiation letter: 06.01.2017 (insurer denied liability)
- Subsequent communications: emails and representations between 13.05.2016 and 14.09.2017 attempting to revive the claim
- Relief sought: Rs.1,86,66,886 compensation plus 18% per annum interest from filing date
Procedural History
- 29.07.2026: Complaint reserved
- 24.08.2026: Judgment pronounced
- Consumer Complaint No.543 of 2018 filed before NCDRC
- IA No.4714 of 2019 filed for condonation of delay in filing reply
- 08.02.2022: Commission order deleting Complainants Nos.2 and 3 from the parties
- 24.08.2026: Present order partially allowing the complaint
The Parties' Positions
- Complainant(s): Asserted that the insurer was aware, at underwriting, that the cotton bales belonged to the sister concerns and that this disclosure created a sufficient insurable interest. They relied on the preliminary and final surveyor reports, FIR, police report, Village Administrative Officer’s certificate, meteorological data and the “Agreed Bank Clause” favouring ICICI Bank.
- Opposite Party (Oriental Insurance Co. Ltd.): Contended that the policy was issued solely in favour of Complainant No.1, covered only its own stock, and that the “Goods Held in Trust” clause was absent. Hence, no insurable interest existed for the third-party stocks and the claim was rightfully repudiated. The insurer also argued that lightning was not proven by an Electricity Department certificate.
Relief Sought
The complainant sought a sum of Rs.1,86,66,886 as compensation, interest at 18% per annum from the date of filing the complaint till actual realization, and any further relief deemed appropriate by the Commission.
