Fire Insurance Claim Built on False Stock Declarations Can Be Repudiated: Supreme Court Sets Aside NCDRC’s ₹2.4 Crore Award
Case Name: M/s. New India Assurance Company Ltd. v. M/s. Hemkund Duplex and Board Pvt. Ltd.
Date of Judgment: 21 September 2026
Citation: 2026 INSC 1023
Bench: Justice Sanjay Kumar and Justice Sanjeev Sachdeva.
Held: An insurer may repudiate a fire insurance claim when the insured makes false factual declarations to support it in breach of the policy conditions. A licensed surveyor’s report is not conclusive, but a consumer forum cannot disregard material findings in survey reports without a sound basis. Here, the insured’s managers claimed that usable raw material had been stored in the fire-damaged tin shed, while statements from workers and accountants, together with the surveyor’s findings, showed that it held long-stored unusable waste. The Supreme Court held that the insurer’s repudiation under Policy Conditions 6 and 8 was justified. It did not need to conclusively determine whether the fire had been deliberately set.
Summary: A fire broke out at Hemkund Duplex and Board’s factory in May 2009. The company claimed compensation under its fire insurance policies, but New India Assurance rejected the claim after surveyors and an investigator raised concerns about the reported stock, accounting records and circumstances of the fire. The National Consumer Disputes Redressal Commission (NCDRC) directed the insurer to pay ₹2.4 crore, with interest, compensation for deficiency in service and litigation costs. On appeal, the Supreme Court found that the NCDRC had brushed aside significant survey evidence without justification. In particular, the company’s claim that the damaged shed contained usable raw material was contradicted by its own workers and accountants.
Decision: The Supreme Court allowed New India Assurance’s appeal and set aside the NCDRC’s order. It dismissed Hemkund’s appeal seeking a higher award and directed the return of the amounts deposited by the insurer in the Supreme Court, with accrued interest