In a recent judgment, the Supreme Court directed the National Consumer Disputes Redressal Commission (NCDRC) to reassess the compensation amount payable under an insurance policy to a company that suffered losses due to a factory shed collapse in 2005. The case, which has been under dispute for several years, reached the apex court following an appeal by the insurance company against the NCDRC’s August 2022 order.
The bench, comprising Justices Sanjay Kumar and Augustine George Masih, highlighted discrepancies in the assessment of the damages claimed by the Agra-based company, which had insured its property against fire and special perils for the period from June 30, 2005, to June 29, 2006. The insurance firm had originally assessed the loss at Rs 8.89 lakh, significantly lower than the Rs 46.97 lakh determined by an independent surveyor hired by the company.
The controversy centers around the cause of the damage, with the insurance firm contesting the claim on the grounds that the loss was not due to “inundation,” a peril covered under the policy. This led to the firm initially repudiating the claim. However, the NCDRC sided with the company, directing the insurer to compensate the stated amount of Rs 46.97 lakh.
Expressing concern over the NCDRC’s handling of the matter, especially regarding the quantum of compensation, the Supreme Court noted that the commission did not adequately address the significant difference in the damage assessments reported by the opposing surveyors. The court criticized the NCDRC for not independently verifying the claim amount and relying too heavily on the company’s surveyor report without sufficient scrutiny of the insurance firm’s objections.
As a result, the Supreme Court has remitted the case back to the NCDRC for a thorough reevaluation of the compensation amount, emphasizing the need for a detailed and objective consideration of all evidence presented.
