Cause Of Action In Fire Insurance Arises On Date Of Fire: Delhi State Consumer Commission Dismisses Complaint As Time-Barred
Pranav B Prem
The Delhi State Consumer Disputes Redressal Commission has dismissed an appeal filed by M/s Bhiwadi Polymers Limited against New India Assurance Company Limited, holding that the consumer complaint was barred by limitation under Section 24A of the Consumer Protection Act, 1986. The Commission reiterated that in fire insurance matters, the cause of action arises on the date of the fire itself and that subsequent correspondence or representations do not extend the statutory period of limitation. The order was passed by a coram comprising Justice Sangita Dhingra Sehgal (President) and Ms. Bimla Kumari (Member) while deciding First Appeal No. 283/2015 arising from an order of the District Consumer Disputes Redressal Commission (North), Delhi.
The complainant had obtained a Standard Fire and Special Perils Policy from New India Assurance Company Ltd. for the period from January 15, 2010 to January 14, 2011, covering its factory premises at Bhiwadi, Rajasthan, for a total insured sum of ₹1.65 crore. On the intervening night of October 13–14, 2010, a fire broke out inside the factory premises near a solvent tanker, causing extensive damage to stock and property. The complainant lodged a claim for ₹1,05,82,697 under the policy.
Upon receipt of the claim, the insurer appointed a surveyor, who assessed the loss at approximately ₹67 lakh, subject to admissibility under the policy terms. The insurer subsequently released an amount of ₹59,22,135, stating that the remaining sum of ₹7,94,000 was not payable as the complainant had failed to submit supporting documents, including Goods Receipts (GRs). Alleging wrongful deduction, the complainant sought payment of the balance amount along with interest.
The District Consumer Commission held that the complainant qualified as a consumer and that the existence of the insurance policy and occurrence of the fire were undisputed. However, it found that the complainant had failed to furnish the GR documents sought by the insurer. Relying on precedents limiting the jurisdiction of consumer fora in disputes involving quantification of loss, the District Commission declined to reassess the surveyor’s assessment. It also held that the payment made by the insurer was not shown to be in full and final settlement of the claim.
Despite these findings, the District Commission dismissed the complaint on the ground of limitation, holding that the cause of action arose on October 14, 2010, the date of the fire, and that the complaint filed on May 23, 2013 was beyond the statutory two-year period prescribed under Section 24A of the Consumer Protection Act.
Aggrieved by this decision, the complainant filed an appeal before the State Consumer Commission, contending that the complaint was not time-barred since the claim had not been fully settled and repeated representations had been made seeking release of the deducted amount. It was argued that acceptance of part payment did not preclude the complainant from pursuing the balance claim.
The insurer opposed the appeal, submitting that the complaint was clearly barred by limitation and that subsequent correspondence could not extend the limitation period. It was further argued that the amount had been settled strictly in accordance with the policy terms and the deduction was justified due to non-submission of mandatory documents.
After examining the record, the State Commission referred to Section 24A of the Consumer Protection Act and relied upon the Supreme Court’s decision in Kandimalla Raghavaiah & Others v. National Insurance Co. Ltd. The Commission reiterated that replies, negotiations or correspondence exchanged after the cause of action arises do not extend the limitation period. It observed that in insurance cases involving fire, the cause of action arises on the date when the fire occurs.
Applying this principle, the Commission held that since the fire took place on October 14, 2010, the limitation period expired on October 14, 2012. As the consumer complaint had been filed only on May 23, 2013, it was clearly barred by limitation. Finding no infirmity in the reasoning adopted by the District Commission, the Delhi State Consumer Commission upheld the impugned order and dismissed the appeal, with no order as to costs, thereby affirming that the complaint was time-barred under Section 24A of the Consumer Protection Act, 1986.
Cause Title: M/s Bhiwadi Polymers Ltd. v. The New India Assurance Co. Ltd.
Case No: FA/283/2015
Coram: Justice Sangita Dhingra Sehgal (President), Ms. Bimla Kumari (Member)
