The consumer commission had believed the insured and disbelieved the surveyors, awarding Rs 2.4 crore on a fire-insurance claim after brushing the survey reports aside. The Supreme Court reversed that approach. A surveyor’s report has statutory standing and evidentiary value, and a consumer forum cannot simply discard it unless the insured points to a specific, statutorily-recognised deficiency in it; here the insured had done no such thing. On the facts the surveyors had found, a claim inflated far beyond the actual loss, false assertions about the fire and the stock, the repudiation was sustainable, and the award could not stand.
New Delhi: The Supreme Court has set aside an order of the National Consumer Disputes Redressal Commission (NCDRC) that had directed New India Assurance Company Ltd. to pay Rs 2.4 crore, with interest, to a paper-board manufacturer on a fire-insurance claim, holding that the insured had advanced a false and inflated claim in breach of the policy conditions, and that the Commission was not justified in brushing aside the reports of the surveyors [New India Assurance Company Ltd. v. Hemkund Duplex and Board Pvt. Ltd.].
A Bench of Justice Sanjay Kumar and Justice Sanjeev Sachdeva, in a judgment authored by Justice Sanjay Kumar, allowed the insurer’s appeal and dismissed the insured’s cross-appeal, which had sought enhancement of the compensation.
The claim
The insured, which manufactured paper boards from waste paper and similar raw material at its factory in Najibabad, held two fire policies with the insurer, one for stock and one for buildings, plant and machinery. On May 7, 2009, a fire broke out in the waste-paper yard, damaging raw material and a tin shed. The insured lodged a claim and, before the NCDRC, sought compensation of over Rs 7.31 crore with interest. The Commission, by its order of November 2024, awarded Rs 2.4 crore with interest, along with Rs 3 lakh for deficiency in service on account of delay and Rs 1 lakh in costs; both sides appealed.
The insurer had appointed a preliminary surveyor, an investigative agency and a final surveyor. The preliminary surveyor flagged the need for meticulous investigation to rule out a deliberate fire and hypothetical loss; the investigative agency found the cause of the fire unclear and various aspects of the account improbable; and the final surveyor recorded a series of abnormalities pointing to an inflated and unsubstantiated claim. The insurer repudiated the claim on the ground that the policy conditions had been violated.
The evidentiary value of a surveyor’s report
The Court reiterated the settled position on the standing of a surveyor’s report. A surveyor is appointed under Section 64-UM of the Insurance Act, 1938, is governed by a code of conduct, and his report carries evidentiary value; while the insurer is not bound to accept it and may, for satisfactory reasons, appoint a further surveyor, the report cannot be discarded arbitrarily, whether by the insurer or by a consumer forum.
The corollary, the Court held, governs a consumer forum’s treatment of such a report. Where a claim is repudiated on the basis of survey reports that negate the claim on facts, the insured must, in its complaint, plead and establish a specific deficiency in the reports in terms of the statutory requirements; a bald assertion that the surveyors erred will not do. In the present case, the Court found, the insured had not pointed out any specific deficiency on the part of the surveyors as the statute requires, and yet the NCDRC had simply brushed aside both surveyors’ reports, in which the genuineness of the claim had been negated on facts.
A false and inflated claim
On the facts, the Court found the material pointed strongly to a false claim. The final surveyor had recorded that the burnt debris and the state of the tin shed were inconsistent with the presence of the usable stock claimed to have been destroyed, that the raw-material consumption and yield figures were unsupported and improbable, that there was no proper system of weighing or recording the waste paper, and that the reported yield was imaginary; the workers’ statements did not support the account of a genuine attempt to fight the fire. Taken together, these were false assertions made to press an inflated claim.
Against that background, the Court held that the repudiation of the claim on the ground that the policy conditions, which disentitle a fraudulent or false claim and require the insured to substantiate its loss, had been violated was clearly sustainable:
“If an insured makes false averments to bolster its claim, contrary to the policy conditions, the insurer would be lawfully entitled to reject such claim on that ground without further ado.”
The NCDRC, the Court held, had no basis to give the insured a clean chit, to hold that there was no delay in informing the fire station, or to undertake its own assessment of the loss and quantify it far in excess of the surveyors’ figures. Allowing the insurer’s appeal, the Court set aside the NCDRC’s order and, in consequence, dismissed the insured’s cross-appeal for enhancement, directing that the amounts the insurer had deposited be returned to it with accrued interest.
Why it matters
The judgment restates the disciplined role a consumer forum must play when a fire or property claim is repudiated on the strength of survey reports. A surveyor’s report is not a mere opinion the forum may accept or reject at will; it is a statutorily-contemplated document with evidentiary value, and a claimant who would have it displaced must identify, with particulars, where it falls short of the statutory standard. A forum that discards such reports on general dissatisfaction, and substitutes its own loss assessment, exceeds the bounds of its adjudicatory function, which is the vice the Court found in the NCDRC’s order.
The other limb of the decision is the consequence of a false claim. Fire and property policies routinely contain conditions voiding a claim that is fraudulent or supported by false statements, and requiring the insured to substantiate its loss; the courts give those conditions effect. Where the surveyors found the claimed stock could not have been present, the consumption and yield figures were unsupported, and the account of the fire did not hold together, the insured’s claim answered the description of a false and inflated one, and the insurer was entitled to repudiate it outright.
The outcome should not be read as a licence for insurers to reject claims on thin grounds; the same body of law protects a genuine claimant, and consumer forums have repeatedly struck down repudiations based on trivial or wrongful reliance on technicalities. What this case decides is the narrower proposition that a claim shown, on the surveyors’ unrebutted findings, to be false and inflated cannot be salvaged by a consumer forum’s willingness to overlook those findings; the protection the consumer law affords runs to honest claims, not fabricated ones.
Case Title: New India Assurance Company Ltd. v. Hemkund Duplex and Board Pvt. Ltd. [Civil Appeal No. 7221 of 2025, with Civil Appeal No. 11416 of 2025]
Bench: Justice Sanjay Kumar and Justice Sanjeev Sachdeva, Supreme Court of India
Date of Judgment: September 21, 2026 | Neutral Citation: 2026 INSC 1023
Status: Insurer’s appeal allowed; NCDRC’s Rs 2.4 crore award set aside. Insured’s cross-appeal for enhancement dismissed; deposited amounts to be returned to the insurer with interest.