The Delhi State Consumer Disputes Redressal Commission has directed New India Assurance to pay more than Rs 51.12 lakh alongside 6 percent annual interest to a Rajouri Garden restaurateur, holding that the state-run insurer failed to justify massive deductions made while assessing a fire loss claim from 2011.
A bench comprising Commission President Justice Sangita Dhingra Sehgal and Member Bimla Kumari delivered the order on August 25 in a dispute brought by Varun Agarwal, the proprietor of Tamba Indian Cuisine. The commission determined that the insurance provider had not provided any credible calculation or rationale to demonstrate how its heavily reduced payout represented its true liability under the policy.
The tribunal computed the Rs 51.12 lakh balance by deducting previous interim disbursements from an assessed entitlement of Rs 68.80 lakh. In addition to the principal amount, New India Assurance must pay simple interest at 6 percent per annum calculated from the date of the fire on May 4, 2011, through August 25. The commission also awarded Agarwal Rs 1 lakh for mental agony and harassment, along with Rs 50,000 toward litigation expenses.
Unjustified Deductions And Flawed Assessment
The case stemmed from an inferno on May 4, 2011, that destroyed the Rajouri Garden restaurant, gutting furniture, fixtures, fittings, electrical installations, and stock. The establishment had been covered under a Standard Fire and Special Perils Policy carrying a sum insured of Rs 1 crore. Both the fire department and local police issued reports on the incident dated May 17, 2011.
Following the loss, Agarwal reported the destruction of his original accounting records in the blaze and submitted certified duplicate invoices obtained directly from his suppliers. However, when the claim was processed, surveyor Aditi Consultants Private Limited evaluated the loss on a market value basis rather than a reinstatement basis, applying an arbitrary 75 percent depreciation on several destroyed items on the grounds that the articles could not be cross-referenced with original bills.
The insurer subsequently disbursed Rs 16,88,995 in March 2012 and Rs 78,895 in July 2012, asserting that the surveyor had pegged the final payable loss at Rs 7,16,707 and treating the claim as closed. Agarwal contested the settlement, stating that the company forced him to execute blank discharge vouchers before releasing any funds and ignored Clause 9 of the policy, which governed reinstatement and replacement.
Tribunal Overrules Insurer Objections
In its ruling, the commission observed that the surveyor’s own inspection had identified the fire as the direct cause of the damage and found no breach of any policy condition or warranty on the proprietor’s part.
Examining the policy terms, the bench highlighted that no contractual provision permitted the company to enforce a 75 percent depreciation cut simply because original bills were replaced by certified supplier invoices.
The commission also dismissed the insurer’s procedural defence that Agarwal could not claim relief under the Consumer Protection Act, 1986, because the policy covered a commercial establishment. The bench held that the complainant fell within the legal definition of a consumer because he operated the restaurant, bar, and hotel establishment to earn his personal livelihood.
