Kiran Raj

The Supreme Court of India Division Bench of Justice J.K Maheshwari and Justice Vijay Bishnoi on December 16, 2025 allowed a fire insurance claim, set aside the insurer’s repudiation and the consumer forum’s dismissal, and remitted the matter for assessment of loss, to be decided within six months. The dispute stemmed from damage at an insured industrial unit after miscreants attempting burglary allegedly used a blow torch or portable gas cutter, igniting a transformer and causing a fire. Rejecting the insurer’s position that burglary/theft was the proximate cause and excluded, the Court held that once the loss is caused by fire, the cause igniting it is immaterial, and indemnity cannot be denied where the “Fire” peril contains no such exclusion.

The appeal arose from the repudiation of a fire insurance claim by ICICI Lombard General Insurance Company Limited in respect of loss suffered by Cement Corporation of India at its Mandhar Cement Factory.

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The appellant, a Government company, had obtained a Standard Fire and Special Perils Policy (Material Damage) pursuant to a centralized insurance contract. On the intervening night of 1 November 2006, miscreants entered the factory premises and attempted to steal copper windings from a transformer using blow torches and gas cutters. During this attempt, the transformer caught fire, resulting in damage to insured property. An FIR was registered and the insurer was notified. The appellant lodged a claim quantified at Rs. 2,20,14,190, supported by surveyor reports and related documents. The final survey report attributed the fire to attempted theft and opined that the loss fell within exclusions under the Riot, Strike, Malicious and Damage clause. Relying on this, the insurer repudiated the claim, treating it as a “nil liability” case.

The appellant approached the National Consumer Disputes Redressal Commission seeking indemnification, but the complaint was dismissed on the ground that burglary was the proximate cause of loss and was not a covered peril. This led to the present appeal before the Supreme Court.

The Court observed that the opening clause of the insurance policy clearly stipulated indemnification for loss caused by specified perils and recorded that “from the bare reading of the opening paragraph of the policy, it is clear that the Respondent had assured to indemnify the loss to the insured by any of the perils specified in the policy.” It noted that fire was expressly included as a covered peril and that the exclusions applicable to the peril of fire were limited and specifically enumerated.

The Bench recorded that burglary or theft did not appear among the exclusions under the specified peril of fire and stated that “Once it is not disputed that the loss is caused by fire, then the cause igniting the fire becomes immaterial. The insurer cannot refuse to indemnify the damage caused by fire, which is a specified peril, on the ground that the proximate cause of fire was burglary/theft (which is excluded under the RSMD clause), particularly when no such exclusion is provided in the specified peril “Fire”

Referring to settled principles of fire insurance, the Court observed that “the law need not go into the cause of the causes in case of fire as it may result in an infinite process.” It recorded that the object of a fire insurance policy is indemnification against loss by fire and that “to carry the investigation beyond the cause of the loss would largely defeat this object.”

The Court stated that the cause of fire becomes relevant only in limited circumstances and recorded that “the cause of fire becomes material where the fire is occasioned by the wilful act of the insured himself or someone acting with his privity or consent.” It noted that in the present case “at no stage any defence was taken that the insured caused the fire.”

It further stated that “In the case at hand, in terms of the policy, the burglary/theft is not an exclusion under the specified peril “Fire”. Even, the general exclusions to the policy do not cover theft which precedes the insured peril as an exclusion and the said exclusion is only provided under the RSMD clause. It is a trite law that the exclusions in the contract for insurance must be read strictly and, therefore, the exclusion provided under the RSMD clause would not oust the liability of the insurer when the loss or damage is attributable to the peril of fire which has its independent exclusions.”

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The Court concluded that “the incident of theft/burglary merely preceded the incident of fire” and that the National Consumer Disputes Redressal Commission “erred in rejecting the claim of the Appellant.”

The Court directed that “the appeal is allowed. The letter dated 04.01.2008, sent by the Respondent repudiating the claim of the Appellant and the impugned judgment, are set aside. The matter is remitted back to the National Consumer Disputes Redressal Commission to assess the loss pursuant to the claim filed by the Appellant. The NCDRC must decide the issue as expeditiously as possible, and in any case, not later than six months from the date of receiving the certified copy of this judgment. All pending application(s), if any, shall stand disposed of.”

Case Title: Cement Corporation of India v. ICICI Lombard General Insurance Company Limited
Neutral Citation: 2025 INSC 1444
Case Number: Civil Appeal No. 2052 of 2016
Bench: Justice J.K. Maheshwari, Justice Vijay Bishnoi