The Delhi High Court has set aside the repudiation of an insurance claim by New India Assurance Co. Ltd., holding that the insurer’s reliance on an unqualified forensic report could not override the findings of a licensed surveyor. The Court consequently decreed ₹4,69,99,729 in favour of the insured, M/s Worldfa Exports Pvt. Ltd.
The dispute arose after a fire broke out at the plaintiff’s premises in April 2017, causing extensive damage to stock, machinery and infrastructure. While the insurer-appointed surveyor assessed the loss at approximately ₹4.69 crore, the insurance company repudiated the claim based on a forensic report by M/s Truth Labs, which alleged that the fire was not accidental but caused by “extraneously induced ignitable fire accelerants.”
Justice Subramonium Prasad found that the forensic report did not inspire confidence and could not be relied upon. The Court noted that the investigator was not a licensed surveyor under Section 64UM of the Insurance Act, 1938, and therefore, lacked the statutory authority to assess or determine the cause of loss.
Significantly, the Court highlighted serious deficiencies in the forensic analysis, including the fact that only 2 out of 27 collected samples were tested, the absence of any determination of the origin of fire, and failure to examine critical factors such as the condition of the premises or the financial position of the insured. The investigator also admitted during cross-examination that the possibility of a short circuit caused by a storm could not be ruled out.
The Court further observed that the surveyor’s report being prepared by a duly authorised professional had independently assessed the loss and did not conclude that the fire was non-accidental. In such circumstances, the insurer was required to provide cogent reasons for disregarding the surveyor’s findings, which it failed to do.
Holding the repudiation to be unsustainable, the Court directed the insurer to pay ₹4.69 crore to the plaintiff within eight weeks, along with interest at 6% per annum from the date of the surveyor’s report until realisation.
Appearances:
For the Plaintiff: Mr. Shashank Garg, Sr. Adv. with Mr. Dinesh Sharma, Ms. Ritika Jhurani, Mr. Abhishek Kandwal, Mr. Prithvi, Ms. Nistha Jain, Ms. Aaradhya Chaturvedi, Ms. Gauri Bansal, Advs.
For the Defendant(s): Mr. Prem Kishore Seth, Ms. Alana Mohammed, Advocates.
