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S.S. Cold Storage India Pvt. Ltd. vs National Insurance Company Limited

Civil Appeal · 2023 INSC 689Decided 8 Aug 2023
Civil Appeal No. 2042 of 2012
A.S. Bopanna · Dipankar Datta · Bela M. Trivedi as a bench member

Background

The appellant ran a cold storage facility whose ammonia refrigeration pipes leaked gas in October 1997, spoiling stored potatoes. It claimed over Rs. 1.03 crore under its Refrigeration Policy from National Insurance Company. The insurer's surveyor concluded the leak was due to "wear and tear" of the pipes, a cause excluded under the policy, and the claim was repudiated. The National Consumer Disputes Redressal Commission (NCDRC) dismissed the appellant's complaint, preferring the surveyor's report over the appellant's expert reports which said the pipes could not have failed from wear and tear given their age and material. The appellant appealed to the Supreme Court under Section 23 of the Consumer Protection Act, 1986.

Decision Breakdown

The Supreme Court found the NCDRC's approach seriously flawed. It had selectively relied on portions of the appellant's expert reports that suited its conclusion while disregarding the rest, even though the reports had to be accepted or rejected as a whole. The surveyor's report itself gave no scientific basis (no lab testing, no analysis of pipe material or lifespan) for its "wear and tear" conclusion, despite the facility having been inspected and insured only months before the incident. Applying the standard of preponderance of probabilities, and relying on precedent that a surveyor's report is evidence but not the final word and can be departed from, the Court held the more probable explanation was an unforeseen accident, not excluded wear and tear. It held the repudiation amounted to a deficiency in service and awarded the appellant a lump sum of Rs. 2.25 crore in full and final settlement, with 10% interest if not paid within two months.

Lesson Learnt

An insurer cannot escape liability by cherry-picking favourable fragments from expert reports while ignoring the rest, and a surveyor's report rejecting a claim must itself be backed by a reasoned scientific basis, not a bare assertion. Courts and consumer forums will look behind an insurer's stated reason when it lacks that foundation.

Official source (sci.gov.in)View Judgment (PDF)

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