The Supreme Court of India, in a judgment delivered on 21 September 2026, held that an insurer was justified in repudiating a fire insurance claim where the insured's own management made false declarations about the stock destroyed, and set aside a National Consumer Disputes Redressal Commission (NCDRC) order that had awarded compensation of Rs 2.40 crore with interest. A Bench of Justice Sanjay Kumar and Justice Sanjeev Sachdeva, in M/s. New India Assurance Company Ltd. v. M/s. Hemkund Duplex and Board Pvt. Ltd., allowed the insurer's appeal and dismissed the insured's cross-appeal on quantum.
Background
A fire broke out on 7 May 2009 in the waste paper yard of Hemkund Duplex and Board Pvt. Ltd.'s paper mill at Najibabad, insured against fire loss under two policies with New India Assurance. The insurer commissioned a preliminary survey by R.C. Bajpai, a further investigation by Royal Associates, and a final survey by Aditi Consultants Pvt. Ltd. All three reports flagged serious discrepancies: a possible arson, an unusual fire-damage pattern concentrated on stock the surveyors found was not genuine raw material, an insincere firefighting effort, a delayed intimation to the fire brigade, and manipulation of the company's books of accounts. The insurer repudiated the claim by letter dated 28 June 2010, citing breach of Policy Conditions 6 and 8. The NCDRC, in Consumer Complaint No. 66 of 2011, set aside the repudiation, found no deliberate delay in informing the fire brigade, and awarded compensation with interest, deficiency-in-service damages and litigation costs, by order dated 19 November 2024. Both the insurer (on repudiation) and the insured (on quantum) appealed to the Supreme Court.
Key holdings
1. Surveyors' reports are not binding, but cannot be brushed aside without reasons. The Court reaffirmed, citing New India Assurance Company Limited v. Pradeep Kumar and Khatema Fibres Limited v. New India Assurance Company Limited, that a licensed surveyor's report required under Section 64UM of the Insurance Act, 1938 is "neither binding upon the insurer nor the insured" and can be departed from, but held the NCDRC erred by "simply brush[ing] aside both the surveyors' reports" without pointing to any specific statutory deficiency in them, despite the insured having acknowledged receiving the reports and never identifying such a deficiency in its complaint.
2. Cause-of-fire precedents favouring insureds apply only absent fraud or arson allegations. The Court distinguished Canara Bank v. United India Insurance Company Limited, (2020) 3 SCC 455, and Orion Conmerx Private Limited v. National Insurance Company Limited, (2026) 5 SCC 445 — both holding that an unascertained fire cause is immaterial so long as the insured did not instigate the fire — on the basis that those cases involved no allegation or finding of fraud or arson, whereas the surveyors and investigators here had flagged a "strong possibility that this was not an accidental fire."
3. Multiple, converging factual findings pointed to arson or, at minimum, insincere firefighting. The Court catalogued the specific evidence: the fire brigade, though 6-7 km away and reachable within 11 minutes, was informed only 50 minutes after the fire was detected; firefighting efforts "merely sprinkled water either on the roof or on the ground but not on the fire itself"; the tin shed's structure and sheets showed damage inconsistent with a genuine, uncontrolled fire; the fire was concentrated around an area storing Hessian bags the respondent could not justify as raw material; and a witness statement, corroborated by workers and nearby shopkeepers, indicated a JCB machine had been called to break down the tin shed before the fire, contrary to the respondent's account that the JCB was used only to lift already-fallen sheets afterward.
4. Policy Conditions 6 and 8 were breached by false declarations from company management. The Court found the statements of the respondent's Vice President and General Manager — that usable raw material had been stocked in the burnt tin shed — were directly contradicted by the store supervisor and accountants, who confirmed only unusable, long-stored waste paper was kept there. It held Policy Condition No. 6 (requiring honest, full disclosure in a claim) and Policy Condition No. 8 (forfeiting benefits for any false declaration made to obtain them) were "clearly breached," entitling the insurer "to reject such claim on that ground without further ado."
5. Abnormal accounting patterns reinforced the finding. The Court noted the surveyor's finding that the respondent's raw-material-to-sales ratio fell from 32.30% in 2007-08 to 19.29% in 2008-09, that no stock register or stock movement register was maintained, and that recorded consumption appeared "arbitrary so as to maintain book stocks and profitability" — findings the NCDRC had not engaged with in giving the insured "a clean chit."
6. Disposition. The Court allowed the insurer's appeal (Civil Appeal No. 7221 of 2025), set aside the NCDRC's order of 19 November 2024, and dismissed the insured's appeal on quantum (Civil Appeal No. 11416 of 2025), directing the Registry to return the amounts the insurer had deposited toward the stayed NCDRC award, with accrued interest, and leaving parties to bear their own costs.
Implications for practitioners
For insurers, the judgment reinforces that a repudiation grounded in converging, unrebutted surveyor and investigator findings — rather than a single disputed report — is defensible even before a consumer forum inclined to favour the insured, provided the insurer can show the insured's own witnesses (here, employees and accountants) contradict its management's claim narrative.
For policyholders and their counsel, the ruling is a reminder that Policy Conditions requiring honest disclosure and barring false declarations are independently fatal to a claim once breached — proving the fire itself was accidental does not rescue a claim where the insured separately misstated what was destroyed, since the Court treated the false-declaration finding as sufficient on its own, distinct from the arson suspicion.
Consumer forums adjudicating insurance disputes should treat this judgment as confirming that surveyor and investigator reports, while not conclusive, cannot be set aside wholesale without the forum identifying a specific, reasoned deficiency in them — a bare preference for the insured's narrative is not a substitute for engaging with the technical findings on record.