Cause Of Action In Fire Insurance Arises On Date Of Fire: Delhi State Consumer Commission Dismisses Complaint As Time-Barred
The Delhi State Consumer Disputes Redressal Commission, comprising Justice Sangita Dhingra Sehgal (President) and Ms. Bimla Kumari (Member), has dismissed the appeal filed by M/s Bhiwadi Polymers Ltd. against New India Assurance Company Ltd., affirming that the consumer complaint was barred by limitation under Section 24A of the Consumer Protection Act, 1986. The Commission reiterated that...
The Delhi State Consumer Disputes Redressal Commission, comprising Justice Sangita Dhingra Sehgal (President) and Ms. Bimla Kumari (Member), has dismissed the appeal filed by M/s Bhiwadi Polymers Ltd. against New India Assurance Company Ltd., affirming that the consumer complaint was barred by limitation under Section 24A of the Consumer Protection Act, 1986.
The Commission reiterated that in fire insurance cases, 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.
Brief Facts
The complainant, M/s Bhiwadi Polymers Limited, had obtained a Standard Fire and Special Perils Policy from New India Assurance Company Ltd., the opposite party, for the period from 15.01.2010 to 14.01.2011, covering its factory premises at Bhiwadi, Rajasthan, for a total insured sum of ₹1.65 crore.
On the intervening night of 13–14 October 2010, a fire broke out near a solvent tanker inside the factory premises, causing extensive damage to stock and property. The complainant lodged a claim for ₹1,05,82,697. The insurer appointed a surveyor, who assessed the loss at approximately ₹67 lakh, subject to admissibility under the policy terms.
The opposite party released an amount of ₹59,22,135, stating that the remaining sum of ₹7,94,000 was not payable due to the complainant's failure to submit supporting documents, including Goods Receipts (GRs). Alleging wrongful deduction, the complainant sought payment of the balance amount along with interest.
Findings of the District Commission
The District Consumer Commission held that the complainant qualified as a consumer and that the existence of the insurance policy and the occurrence of the fire were undisputed. However, it found that the complainant had failed to furnish the GR documents demanded by the insurer.
Relying on precedents restricting consumer fora from entering into disputes relating to quantification of loss, the District Commission declined to reassess the loss assessed by the surveyor. It further held that the payment made by the opposite party was not established to be in full and final settlement of the claim.
Nevertheless, the District Commission dismissed the complaint on the ground of limitation, holding that the cause of action arose on the date of the fire, i.e., 14.10.2010, and that the complaint filed on 23.05.2013 was beyond the statutory two-year period prescribed under Section 24A of the Consumer Protection Act, 1986.
Aggrieved, the complainant filed an appeal before the State Consumer Commission.
Submissions Before the State Commission
The complainant contended that the District Commission erred in dismissing the complaint as time-barred, arguing that the claim had not been fully settled and that repeated representations had been made seeking release of the deducted amount. It was submitted that acceptance of part-payment does not bar pursuit of the balance claim.
The opposite party opposed the appeal, contending that the complaint was clearly barred by limitation and that the claim had been settled strictly in accordance with the policy terms. It was further submitted that the deducted amount was rightly disallowed due to non-submission of mandatory supporting documents by the complainant.
Observations and Decision
The State Commission observed that Section 24A of the Consumer Protection Act mandates that a consumer complaint must be filed within two years from the date on which the cause of action arises. Relying on the Supreme Court's decision in Kandimalla Raghavaiah & Others v. National Insurance Co. Ltd., the Commission reiterated that subsequent correspondence, negotiations, or replies from the insurer do not extend the period of limitation.
Applying this principle, the Commission held that in fire insurance matters, the cause of action arises on the date of the fire itself. Since the fire occurred on 14.10.2010, the limitation period expired on 14.10.2012. As the complaint was filed only on 23.05.2013, it was clearly barred by limitation.
Finding no infirmity in the reasoning adopted by the District Commission, the State Commission upheld the impugned order and dismissed the appeal, with no order as to costs.
Case Title: M/s Bhiwadi Polymers Ltd. v. The New India Assurance Co. Ltd.
Case No.: FA/283/2015