Page 55 - Insurance Times March 2024

Insurance Caselaws

Supreme Court Ruling: Fire Insurance short circuit or by any other circumstance. The basic idea
that an insurance company's duty to the insured is far more
Valid Even if Insured Not at Fault for Fire important was highlighted by this case. Furthermore, it is
Outbreak discovered that the insured warehouse was the site of the
fire, and the appellant's denial is not credible.
New India Assurance Co Ltd v.
M/S Mudit Roadways The NCDRC ordered the Insurance Company to pay over 6
crores for a fire insurance claim with 9% interest from the
Citation: 2023 Live Law (SC)
claim denial date within 8 weeks, or face 12% interest
beyond the specified 8 weeks, in an appeal heard by the
Summary Supreme Court bench made up of Justices Hrishikesh Roy and
The Supreme Court has ruled that the cause of a fire in a Sanjay Karol. The case concerned a fire that occurred at a
fire insurance claim is irrelevant as long as the insured party warehouse that was insured on March 14, 2018, and the
is not held responsible for starting it. This principle is based claimant had paid Rs. 44,02,562/-for coverage against fire
on the Canara Bank v. United India Insurance Company and the protection of custom bonded goods. Seven of the
(2020) 3 SCC 455 decision. The court emphasized that an findings from the numerous investigations point to short-
insurance company's duty to the insured is more important circuiting as the fire's origin. But the forensic investigation
than the cause of the fire. The NCDRC ordered the insured report found that sparks from rooftop welding work might
company to pay over 6 crores for a fire insurance claim with have started the fire instead of a short circuit.
9% interest within 8 weeks or face 12% interest beyond the
specified 8 weeks. The claimant argued that the Customs This conclusion was supported by the surveyor's report from
Act, 1962, only applies to "importers" of insured products, M/s. Bhansali & Co. as well. The insured filed a claim for Rs.
and the court agreed with their argument. The claim's 6,57,55,155 on October 3, 2018. However, on July 15, 2019,
customs duty component was instructed to be paid directly the Insurance Company denied the claim, citing the Customs
to the Customs Department. Act, 1962, which states that the importer alone is
responsible for paying customs duty. He maintained that
About the case there is no customs tax liability because no bills of entry were
The Supreme Court recently ruled that, in a fire insurance submitted and no assessed commodities were destroyed in
claim, it doesn't matter what caused the fire as long as the the fire. The claimant contended that the Customs Act's
insured party isn't held accountable for starting it. This Sections 22 and 23, which offer abetment and remission
principle upholds the insurer's obligation to uphold the privileges, are only applicable to "importers" of insured
provisions of the insurance policy and complete its duties to products, and the court agreed with them. As a custodian,
the insured. It is based on the Canara Bank v. United India the claimant serves only as a trustee on behalf of their
Insurance Company (2020) 3 SCC 455 decision. customers, never taking on the position as an importer or
owner of the goods.
The Court noted Therefore, it was categorically stated that
as long as the claimant did not start the fire, it does not The claimant's ability to include customs duty in the
matter what caused the fire-whether it was caused by a insurance claim depended heavily on this distinction.

The Insurance Times March 2024 49