NEW INDIA ASSURANCE CO. LTD. & ORS versus M/S. MUDIT ROADWAYS

Citation: [2023] 13 S.C.R. 1027 · Decided: 24-11-2023 · Supreme Court of India · Bench: HRISHIKESH ROY · Disposal: Dismissed

cites 2 · see the full citation network in Lexace

Judgment (excerpt)

[2023] 13 S.C.R. 1027 : 2023 INSC 1022
1027
CASE DETAILS
NEW INDIA ASSURANCE CO. LTD. & ORS. 
v.
M/S. MUDIT ROADWAYS 
(Civil Appeal No. 339 of 2023)
NOVEMBER 24, 2023
[HRISHIKESH ROY AND SANJAY KAROL, JJ.]
HEADNOTES
Issue for consideration: Whether the National Commission was 
justifi ed in allowing the fi re insurance claim of the insured against the 
insurance company.
Consumer Protection Act, 1986 – Fire insurance claim – Repudiation 
of – Fire broke out at a insured warehouse – Insured having paid for 
coverage against fi re and safeguarding the custom bonded goods – Survey 
and investigations reports – Majority suggesting electric short circuit as 
the cause and two reports suggesting sparks from rooftop welding work – 
Repudiation of claim by the Insurance Company – Consumer complaint 
by the insured – Allowed by the National Commission holding that the 
insurance policy covered the complainant’s warehouse and the roofi ng work 
did not signifi cantly increase the risk and directed payment of specifi ed 
amount with interest – Correctness:
Held: Insurance company’s obligation to the insured is of much 
greater import – Precise cause of a fi re, whether attributed to a short-circuit 
or any alternative factor, remains immaterial, provided the claimant is not 
the instigator of the fi re – Claim of the insured against the insurer is upheld 
– Insurer cannot introduce additional reasoning beyond those detailed in 
their letter, to justify the repudiation – Area where the fi re occurred was 
covered by the said insurance policy – Looking at the various documents, 
it is reasonable to conclude that the insured premises was the one that was 
identifi ed and insured by the insurance company – Repair work undertaken 
on the rooftop to prevent water leakage to the warehouse would not fall in 
the category of an alteration which would increase the risk insured for the 
1028 
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
warehouse premises – Signifi cant time gap that exists between the welding 
work and the fi re has no logical explanation – Basis of the repudiation 
accordingly appears to be unreasonable and is not acceptable – Surveyor’s 
report, although comprehensive otherwise, is inconclusive on the aspect 
identifying the actual cause of fi re – Given that the surveyor’s report only 
relies on the Forensic Examiner fi ndings, it would be unsafe to rely on 
the said report – Furthermore, the claimant neither assumes the role of 
importer nor owner; instead, they function solely as a custodian entrusted 
with the goods on behalf of their clients – Customs duty component of the 
claim should, in the given event, be discharged directly to the Customs 
Department – Thus, it is a case of wrongful repudiation by the insurer – No 
legal infi rmity in the impugned decision allowing the insured’s insurance 
claim. [Paras 33, 35, 37, 41, 47, 50, 55, 56, 58]
Insurance – Insurance contracts – Doctrine of uberrimae fi dei: 
Held: Trust serves as the cornerstone, forming the essence of the 
insurer-insured relationship – Fundamental principle is that insurance is 
governed by the doctrine of uberrimae fi dei-there must be complete good 
faith on the part of the insured – Heart and soul of an insurance contract 
lies in the protection it accords to those who wish to be insured by it – This 
understanding encapsulates the foundational belief that insurance accords 
protection and indemnifi cation, preserving the sanctity of trust within its 
clauses – Eff ectively, the insurer assumes a fi duciary duty to act in good faith 
and honour their commitment – This responsibility becomes particularly 
pronounced when the insured, in their actions, have not been negligent – In 
light of the vital role that trust plays in insurance contracts, it is important 
to ensure that the insurer adequately fulfi ls the duty that has been cast on 
it, by virtue of such a covenant. [Para 57] 
Insurance Act, 1938 – s. 64 (UM) (4) – Value of a surveyor’s report:
Held: An approved surveyor’s assessment is necessary for a 
claim – s. 64(UM)(4) mandates that claims above Rs. 20,000 must be 
initially assessed by an approved surveyor – Insurer has the discretion 
to settle the claim for a diff erent amount, than what is assessed by the 
surveyor – Surveyor’s report cannot be considered a sacred document 
and contrary evidence, including an investigation report, is subject to 
rebuttal. [Para 42, 43, 45]
1029
LIST OF CITATIONS AND OTHER REFERENCES
New India Assurance Co. Ltd. vs. Pradee

Excerpt shown. Read the full judgment & AI analysis in Lexace.