A Mumbai consumer disputes commission has ordered National Insurance Company Ltd to pay a liquor wholesaler over ₹1.2 crore for stock ruined during the 2017 Mumbai floods, citing the insurer's 'arbitrary and unreasonable' rejection of the claim.
Key Points
- A Mumbai consumer commission ordered National Insurance Company to pay a liquor wholesaler over Rs 1.2 crore for stock damaged in the 2017 floods.
- The commission ruled that the insurer's rejection of the claim was 'arbitrary and unreasonable', noting that floodwaters rendered the liquor unfit for sale.
- The state excise department had confirmed the liquor was submerged in polluted Mithi River floodwater and unfit for consumption, and its destruction was officially supervised.
- The insurance company was also directed to pay 9% interest from the date of repudiation and an additional Rs 1.25 lakh for compensation and litigation costs.
A consumer disputes commission in Mumbai lifted a city-based liquor wholesaler's spirits by directing National Insurance Company Ltd to pay him more than Rs 1.2 crore for stock ruined during the 2017 flooding in the city.
The South Mumbai District Consumer Disputes Redressal Commission, in an order passed last month, held the claim rejection "arbitrary and unreasonable", noting that floodwaters had rendered the liquor unfit for sale, making the insurer liable to pay the assessed loss with nine per cent interest.
Details of the Claim and Damage
A Kurla, Mumbai-based firm engaged in the wholesale liquor business claimed that torrential rainfall in the city on August 29, 2017, had inundated its warehouse.
"Muddy floodwater damaged large quantities of liquor bottles and cans by rusting the caps, damaging labels and contaminating the stock, rendering the goods unfit for sale as per industry standards and under the supervision of the state excise department," the complainant said.
The firm claimed that despite the insurer's own surveyor assessing the loss and recommending a settlement of Rs 1.2 crore, the insurance company formally repudiated the claim on January 14, 2020.
Insurer's Arguments and Commission's Findings
The insurer argued that the trading firm failed to produce forensic laboratory reports proving the liquor was unfit for human consumption, and additionally failed to provide videographic evidence of the damaged stock's destruction.
After hearing both the sides, the commission noted that the state excise department had officially confirmed the liquor was submerged in polluted Mithi river floodwater and was unfit for consumption.
It further pointed out that the state excise authorities had clarified that no laboratory would certify such contaminated stock, and the goods were destroyed under strict official supervision. The commission held that the insurer had unlawfully ignored its own independent surveyor's report.
"The requirement of a forensic report is neither found in the policy conditions nor supported by the state excise authorities, who are the competent statutory authority governing liquor stocks," the commission remarked.
Arbitrary Rejection and Final Order
The panel asserted that the insurance company rejected its surveyor's findings, but never obtained any contrary expert opinion.
"It is well settled that though the insurer is not invariably bound by the surveyor's report, it cannot discard such a report arbitrarily or on mere suspicion," it added.
The commission, therefore, held that the "repudiation of the claim was not based upon any valid or sustainable ground", but was "arbitrary, unreasonable and amounts to clear deficiency in service".
The panel directed the insurance company to pay the assessed loss amount of Rs 1,20,12,403 to the complainant, with 9 per cent per annum interest, calculated from January 14, 2020, the date the claim was initially repudiated, until realisation.
It also awarded the complainant an additional Rs 1 lakh as compensation for mental stress, inconvenience, and hardship and Rs 25,000 for litigation costs.
