Delhi District Court
Gaurav Ink Private Limited vs United India Insurance Company Limited on 27 January, 2026
In the Court of Shri Ashutosh Kumar, District Judge (Commercial
Court)-01, Tis Hazari Courts, West District, Delhi
CS (Comm.) No. 556/2021
CNR No.DLWT01-0086612021
Gaurav Ink Private Limited
Having its registered office at:
307, Swaran Park, Udyog Nagar,
Mundka, Delhi- 110 041
....Plaintiff
Versus
United India Insurance Company Limited
Savitri Chamber - II, D-13, Local Shopping Complex
Prashant Vihar, Outer Ring Road, Rohini,
New Delhi -110 085
.......Defendants
Date of Institution : 17-11-2021
Date of hearing of arguments : 21-01-2026
Date of decision : 27-01-2026
Counsel for the plaintiff : Sh Prakash Gautam
Counsel for defendant: Sh Subodh Kumar Jha and
Sh Tribindh Kumar
JUDGMENT
1. The case of the plaintiff is that it is a company duly incorporated under the Companies Act, 1977 and engaged in the business of manufacturing, selling and marketing of colour printing inks, CS (COMM.) No. 556/2021 Gaurav Ink Pvt Ltd. Vs United India Insurance Co. Ltd. Page No.1 of 26 having its registered office & manufacturing unit at 307, Swaran Park, Udyog Nagar, Mundka, Delhi - 110041 and has filed the present suit through Gaurav Garg, who has been duly authorised vide board resolution to institute the instant civil recovery suit and to do the acts incidental as he is well conversant with the facts and circumstances of this suit being a witness to the entire transactions.
2. It is further the case of the plaintiff that it had taken the Standard Fire and Special Perils Policy bearing no.
2219001118P105487918 for the period from 20.07.2018 to 19.07.2019 for its factory bearing no. 307, Swaran Park, Udyog Nagar, Mundka, Delhi - 110041, from the defendant, who is engaged in the business of providing insurance coverage to its policy holders and further that the plaintiff had been taking the said policy from the defendant previously also.
3. It is further averred by the plaintiff that on 27.03.2018 due to short circuit a fire had taken place in plaintiff's aforesaid factory due to which plaintiff had sustained damages, qua which plaintiff had lodged a claim with the defendant, which was allowed by the defendant and an amount of Rs. 51,55,108/- in respect of the insurance policy was paid by the defendant on 20.11.2019 to the plaintiff.
4. Plaintiff has further claimed that unfortunately again on 18.03.2019 due to the aforesaid reason, a fire had again taken CS (COMM.) No. 556/2021 Gaurav Ink Pvt Ltd. Vs United India Insurance Co. Ltd. Page No.2 of 26 place in plaintiff's factory due to which plaintiff sustained damages, which was duly intimated to the defendant and a claim was lodged with the defendant through e-mail on 18.03.2019. Further various officials of the defendant had intimated and corresponded with the plaintiff through e-mails about the fire/incident taken place in the plaintiff's factory and in furtherance thereof Ms Alka Gupta, Surveyor & Loss Assessor deputed by the defendant, had demanded information from the plaintiff through e-mail dated 19.03.2019 and 04.09.2019. It is also claimed by the plaintiff after providing all the information/documents demanded by aforesaid M/s Alka Gupta & Associates, Surveyor & Loss Assessor, plaintiff had written an e- mail dated 10.09.2019 inquiring about any further documents required by it. It is also the case of the plaintiff that on 14-05- 2020, the defendant had written an e-mail dated 14.05.2020 to M/s Alka Gupta & Associates, Surveyor & Loss Assessor asking them for a reply alongwith addendum report with revised assessment, which was replied on 30.06.2020 whereafter defendant had written another e-mail dated 10.07.2020. It is further the case of the plaintiff that vide its letter dated 16.09.2020, the defendant had repudiated plaintiff's claim, which letter was dispatched by the defendant on 12.10.2020. Defendant had also supplied the copy of survey report alongwith covering letter dated 18.11.2020 in pursuance to plaintiff's request qua the CS (COMM.) No. 556/2021 Gaurav Ink Pvt Ltd. Vs United India Insurance Co. Ltd. Page No.3 of 26 same vide letter dated 27.10.2020.
5. Plaintiff has claimed that the defendant had repudiated the plaintiff's claim by stating that "....it was observed that there was huge accumulation of hazardous material just to gain profit from sale of said material. The material stored falls in the hazardous category for rating purpose and declined item for insurance purpose. Storing of such huge quantity of hazardous material resulted in change of insurance category and violated of policy condition."
6. It is claimed by the plaintiff that since it was into the business of manufacturing of the printing inks and therefore for its business requirements, it had purchased raw materials including Chlorinated Polypropylene, for manufacturing purpose only. It is further claimed by the plaintiff that it had approached Sigma, Test & Research Centre for giving their report on the Melting Point and Flash Point of Chlorinated Polypropylene and deposited its sample alongwith requisite fees on 04-12-2020, qua which Sigma, Test & Research Centre had issued the test certificate on 08.12.2020, on the basis of which, the plaintiff had written a letter dated 22.12.2020 to the defendant for reviewing the rejection of fire claim. Plaintiff had further sent an application for reviewing the rejection of its claim loss on 25.01.2021 to the defendant and upon defendant's failure to give any reply to the same, the plaintiff had again sent a reminder dated 05.04.2021, to which CS (COMM.) No. 556/2021 Gaurav Ink Pvt Ltd. Vs United India Insurance Co. Ltd. Page No.4 of 26 once again no reply whatsoever was communicated by the defendant to the plaintiff.
7. It is further the case of the plaintiff that the plaintiff had suffered a loss of Rs. 1,09,75,385/- on account of said fire but the surveyor appointed by the defendant had assessed the gross loss of Rs. 77,88,862/- and had further restricted the loss to Rs. 64,91,252/- after adjustments and the basis of the calculation vide which the surveyor had restricted the loss to Rs. 64,91,252/- was highly objectionable. However, thereafter, the defendant had totally repudiated the claim on the pretext of the reason which was entirely arbitrary and illegal.
8. Plaintiff has prayed for passing a decree in its favour and against the defendant for recovery of a sum of Rs. 77,88,862/- alongwith pendent lite and future interest @ 24% per annum from the date of fire/incident i.e. 18.03.2019 till actual realization alongwith costs of the suit.
9. In pursuance to the summons, the defendant had put in appearance and also filed written statement to the suit filed by the plaintiff wherein, in preliminary objections of its written statement has raised the foremost plea that the suit of the plaintiff is liable to be rejected as this court lacks the territorial jurisdiction to entertain the present suit. It is claimed that upon getting the intimation of the loss by the Plaintiff Company, one Alka Gupta & Associates, a duly qualified and licensed Surveyor & Loss Assessor, was CS (COMM.) No. 556/2021 Gaurav Ink Pvt Ltd. Vs United India Insurance Co. Ltd. Page No.5 of 26 deputed by it to assess and survey the loss, who submitted its final report vide reference No. UIIC/320/11.03.2020 and after submission of the said Final Report, defendant's claim handling officials had analyzed its contents and after its perusal and terms and conditions of the policy in question, the claim of the plaintiff was validly repudiated by the competent authority of the defendant insurance company vide its letter dated 16.09.2020 on the ground that, "there was huge accumulation of hazardous material just to gain profit from sale of said material. The material falls in the hazardous category for rating purpose and declined item for insurance purpose. Storing of such huge quantity of hazardous material resulted in change of insurance category and violation of policy condition No. 3(a)." It is claimed by the defendant that that above-said condition no. 3 (a) stipulates that, "Under any of the following circumstances the insurance ceases to attach as regards the property affected unless the insured, before the occurrence of any loss or damage , obtains the sanction of the Company signed by endorsement upon the policy by or on behalf of the Company: (a) If the trade or manufacture carried on be altered, or of the nature of the occupation of or other circumstances affecting the building insured or containing the insured property be changed in such a way as to increase the risk of loss or damage by Insured Perils."
10. On merits, defendant has admitted the policy and appointment of CS (COMM.) No. 556/2021 Gaurav Ink Pvt Ltd. Vs United India Insurance Co. Ltd. Page No.6 of 26 surveyor (Alka Gupta & Associates) by it to assess the loss. While admitting the contents of para 13 of the plaint to the extent that plaintiff is into the business of manufacturing the printing inks and therefore for its business requirements plaintiff had purchased the raw materials including Chlorinated Polypropylene, for manufacturing purpose only, the defendant has claimed that plaintiff's manufacturing unit was having huge accumulation of the hazardous material just to gain the profit from sale of said hazardous material.
11. It is further claimed by the defendant that the test certificate dated 08-12-2020 obtained by the plaintiff from Sigma Test & Research Centre can't be relied upon, same being not from a recognized institution as neither the IRDA nor any other Govt. Authority recognizes the aforesaid institution. While giving general denial to the remaining averments made by the plaintiff, the defendant has claimed that plaintiff has wrongly stated that he had suffered a loss to the tune of Rs. 1,09,75,385/- on account of said fire and accordingly, the claim of the plaintiff being not maintainable be dismissed.
12. From the pleadings of the parties, the following issues were framed vide order dated 24-02-2023:
1. Whether the plaintiff is entitled to recover Rs. 77,88,862/- from defendant? OPP
2. Whether the plaintiff is entitled to interest @ 24% from defendant? OPP CS (COMM.) No. 556/2021 Gaurav Ink Pvt Ltd. Vs United India Insurance Co. Ltd. Page No.7 of 26
3. Whether the repudiation of the claim of the plaintiff is proper and legal? OPD
4. Relief.
13. The plaintiff has examined two witnesses on its behalf viz.
Gaurav Garg, Authorized Representative of plaintiff company, as PW-1 and Santram Rajpur, Technical Manager, Sigma Test and Research Centre as PW-2. On the other hand, defendant United India Insurance Company Ltd. has examined one witness, namely, Deepak, its Sr. Divisional Manager, as DW-1.
14. PW-1 Gaurav Garg, Authorized Representative of plaintiff company, tendered his affidavit of evidence Ex. PW-1/A on 17-01-2023 and relied upon following documents:-
1. Certificate of Incorporation of the plaintiff - Mark A
2. Board Resolution - Mark B
3. Standard Fire and Special Perils Policy bearing no. 2219001118P105487918 - Ex. P-1
4. E-mails 14.05.2020, 30.06.2020 and 10.07.2020 - Ex. P-2 (Colly.)
5. Letter dated 16.09.2020 - Ex. P-3.
6. Letter dated 27.10.2020 alongwith survey report Ex. P-4
7. Letter written to Sigma, Test & Research Centre by the plaintiff for giving its report on the Melting Point and Flash Point Chlorinated Polypropylene - Ex. PW-1/3.
8. Tax Invoice dated 08.12.2020 - Ex. PW-1/4
9. Test Certificate dated 08.12.2020 - Ex. PW-1/5
10. Review letter dated 25.01.2021 - Ex. P-5
11. Reminder letter dated 05-04-2021 - Ex. P-6
12. Non-starter report dated 27.09.2021 - Ex. P-7
15. PW-2 Santram Rajput, Technical Manager, Sigma Test and CS (COMM.) No. 556/2021 Gaurav Ink Pvt Ltd. Vs United India Insurance Co. Ltd. Page No.8 of 26 Research Centre, 99, Badli Industrial Area, Phase 2, New Delhi - 42, was a summoned witness, who testified that document Ex. PW-1/4, relied upon by PW-1 during his testimony, was issued by its Research Centre to the plaintiff company and further Ex. PW-1/5 was issued by him.
16. DW-1, Deepak, Sr. Divisional Manager, of United India Insurance Co. Ltd., tendered his affidavit of evidence Ex. DW-1/A and relied upon the following documents:
i. Copy of authorization letter - Mark A ii. Copy of the Tariff Rate Chart - Ex. DW-1/1 iii. Copy of bill dated 15-11-2018 - Ex. DW-1/2 iv. Copy of bill dated 15-12-2018 - Ex.DW-1/3 v. Copy of bill dated 28-07-2018 - Ex.DW-1/4 vi. Copy of bill dated 12-10-2018 - Ex.DW-1/5 vii. Copy of bill dated 20-11-2018 - Ex.DW-1/6 viii. Copy of bill dated 28-10-2018 - Ex.DW-1/7 ix. Copy of bill dated 22-11-2018 - Ex.DW-1/8
17. I have heard the final arguments addressed by ld. Counsels for the parties, perused the written submissions filed on behalf of the parties and have also perused the judicial file.
18. During the course of final arguments, Ld counsel for the plaintiff had also relied upon the following civil appeals decided by the Hon'ble Supreme Court:
(1) Civil Appeal No. 339/2023 titled New India Assurance Co.
Ltd. & Ors. versus M/s. Mudit Roadways pronounced on 24.11.2023 CS (COMM.) No. 556/2021 Gaurav Ink Pvt Ltd. Vs United India Insurance Co. Ltd. Page No.9 of 26 (2) Civil Appeal No. 9050/2018 titled as Khatema Fibres Ltd. versus New India Assurance Co. Ltd. & Ors. pronounced on 28.09.2021 & (3) Civil Appeal No. 4979/2019 titled National Insurance Company Ltd. versus Vedic Resorts and Hotels Pvt. Ltd. pronounced on 17.05.2023 (4) Civil Appeal No. 3893/2013 titled Karnavati Veneers Pvt. Ltd. Vs New India Assurance Company Limited And Others pronounced on 09-02-2023 (5) Civil Appeal No. 8249/2022 titled Texco Marketing Pvt Ltd. Vs Tata AIG General Insurance Co. Ltd. & Ors. pronounced on 09-11-2022
19. On the other hand, Ld Counsel for the defendant has relied upon the following judgments / civil appeals (1) Civil Appeal No. 4769/2022 titled as National Insurance Company Ltd Vs The Chief Electoral Officer & Ors. pronounced on 08-02-2023 by the Hon'ble Supreme Court (2) M/s Durga Intermediates vs. United India Insurance Company Ltd., CC No.287/2014 decided on 06.09.2022, by Hon'ble NCDRC (3) United India Insurance Co. Ltd. vs. Sushil Kumar Godara, Civil Appeal No. 5887 of 2021, decided on 30-09-2021 (4) United India Insurance Co. Ltd. v. Harchand Rai Chandan Lal (2004) 8 SCC 644 of Hon'ble Supreme Court of India (5) Polymat India (P) Ltd. v. National Insurance Co. Ltd (2005) 9 SCC 174 of Hon'ble Supreme Court of India (6) Civil Appeal No. 1557/2004 titled as Export Credit Guarantee Corpon. Vs M/s. Garg Sons International pronounced on 17-01- 2013 by the Hon'ble Supreme Court
20. My issue-wise findings are as under:
ISSUE NO. 1"1. Whether the plaintiff is entitled to recover Rs. 77,88,862/-
CS (COMM.) No. 556/2021 Gaurav Ink Pvt Ltd. Vs United India Insurance Co. Ltd. Page No.10 of 26 from defendant? OPP
3. Whether the repudiation of the claim of the plaintiff is proper and legal? OPD"
The onus to prove issue no. 1 was on the plaintiff. The onus to prove issue no. 3 was on the defendant.
Since issue nos. 1 & 3 are interconnected, therefore they are being decided together.
21.The admitted facts in this case include that the plaintiff is a company incorporated under the Companies Act, 1956, engaged in the business of manufacturing, selling, and marketing colour printing inks with its registered office and manufacturing unit at 307, Swaran Park, Udyog Nagar, Mundka, Delhi-110041, that Gaurav Garg is the authorized representative of the plaintiff vide board resolution to institute this suit, that the defendant is an insurance company providing coverage to policyholders, that the plaintiff had taken a Standard Fire and Special Perils Policy No. 2219001118P105487918 from the defendant for the period 20.07.2018 to 19.07.2019 covering the factory with a sum insured of Rs. 1,00,00,000/- described as "Ink Manufacturing (excluding Printing Ink)", that the plaintiff had previously taken similar policy from the defendant, that a fire occurred on 27.03.2018 due to short circuit in the factory for which the defendant paid Rs. 51,55,108/- on 20.11.2019 after lodging and processing the claim, that another fire occurred on 18.03.2019 due to short circuit, CS (COMM.) No. 556/2021 Gaurav Ink Pvt Ltd. Vs United India Insurance Co. Ltd. Page No.11 of 26 intimated to the defendant via email on the same day, that the defendant appointed M/s Alka Gupta & Associates as surveyor who demanded and received documents from the plaintiff via emails dated 19.03.2019, 04.09.2019, and 10.09.2019, that internal emails were exchanged by the defendant with the surveyor on 14.05.2020, 30.06.2020, and 10.07.2020, that the surveyor assessed the gross loss at Rs. 77,88,862/- and net loss at Rs. 64,91,252/- after deductions in its report dated 11.03.2020, that the defendant repudiated the claim vide letter dated 16.09.2020 dispatched on 12.10.2020 citing huge accumulation of hazardous material leading to violation of policy condition 3(a), that the plaintiff requested the survey report vide letter 27.10.2020 which was provided on 18.11.2020, that the plaintiff obtained a test certificate from Sigma Test & Research Centre dated 08.12.2020 stating Chlorinated Polypropylene (CPP) Resin is non-flammable, that the plaintiff sent review requests on 22.12.2020, 25.01.2021, and reminder on 05.04.2021 to which no reply was given, that the plaintiff suffered loss under five articles (Additives, Chemicals, Pigments, Resins, Printing Ink) calculated on quantity, value, and GST.
22.The disputed facts in this case revolve around whether the repudiation was proper and legal, whether the plaintiff is entitled to Rs. 77,88,862/-, whether CPP Resin is hazardous and inflammable leading to policy violation, whether the policy covers CS (COMM.) No. 556/2021 Gaurav Ink Pvt Ltd. Vs United India Insurance Co. Ltd. Page No.12 of 26 printing ink manufacturing or excludes it deliberately for lower premium, whether premium was paid in compliance with Section 64VB of the Insurance Act, 1938, whether estoppel applies due to prior claim payment and policy renewal, whether the principle of uberrimae fidei was breached by misrepresentation of business, whether the plaintiff accumulated hazardous material for profit, whether non-adherence to statutory and fire safety norms forfeits the claim, whether the claim amount is substantiated by evidence, whether the surveyor's assessment includes excluded items and is subject to policy terms, whether the plaintiff failed to prove bills as primary evidence under the Evidence Act, whether the policy must be strictly interpreted without equity, and whether interest at 24% is warranted.
23.Addressing Issue No. 3 first as to whether the repudiation of the claim is proper and legal with the onus on the defendant, the defendant in its repudiation letter dated 16.09.2020, Ex.P-3, solely cited accumulation of hazardous material (implied as CPP Resin) for profit, classifying it as hazardous for rating and declined for insurance, the relevant portion of repudiation letter dated 16.09.2020, Ex.P-3 is reproduced as under:-
"Dear Sir, With reference to captioned claim, which was intimated to us on 18.03.2019 and claim was surveyed by M/s alka Gupta & Associates, surveyor and loss assessors.
Based on their report and documents on record, it was observed CS (COMM.) No. 556/2021 Gaurav Ink Pvt Ltd. Vs United India Insurance Co. Ltd. Page No.13 of 26 that there was huge accumulation of hazardous material just to gain profit from sale of said material. The material stored falls in the hazardous category for rating purpose and declined item for insurance purpose Storing of such huge quantity of hazardous material resulted in change of insurance category and violation of policy condition No. 3 (a) which reads as under:
Under any of the following circumstances the insurance ceases to attach as regards the property affected unless the insured, before the occurrence of any loss or damage, obtains the sanction of the Company signified by endorsement upon the policy by or on behalf of the Company :-
a) If the trade or manufacture carried on be altered, or if the nature of the occupation of or other circumstances affecting the building insured or containing the insured property be changed in such a way as to increase the risk of loss or damage by Insured Perils."
24. The aforesaid letter of repudiation Ex P-3, was based on purported huge accumulation of hazardous material (mentioned as CPP resin in the report of the surveyor) and storage of such material falls under violation of condition 3(a) of the insurance policy, Ex.P-1 which requires no alteration in trade or circumstances increasing risk without sanction, but the surveyor report dated 11.03.2020 (Part of Ex. P-4) appointed by the defendant itself assessed the loss without recommending repudiation on these grounds and verified the business as printing ink manufacturing with raw materials including resins and the plaintiff's test certificate from accredited Sigma Test & Research Centre, Ex.PW-1/5 proves CPP is non-flammable, unchallenged by counter-evidence from defendant.
CS (COMM.) No. 556/2021 Gaurav Ink Pvt Ltd. Vs United India Insurance Co. Ltd. Page No.14 of 26
25.However,during course of arguments Ld. Counsel for the defendant drew my attention to cross-examination of PW-2, dated 06-02-2023 , wherein PW-2 had stated that , "..... I can not tell for what purpose the chemical Chlorinated Polypropylene is used. It is wrong to suggest that report dated 8.12.2020 (EX.PW1/5) was not prepared by me. I do not know if in the year 2019, Gaurav Ink had sent any sample for research report to the lab, It is wrong to suggest that I am deposing falsely....."
26. The aforesaid cross-examination does not discredit the test certificate Ex.PW-1/5, as PW-2 has categorically affirmed that he prepared the report dated 08.12.2020 and denied any false deposition. The onus to prove that Chlorinated Polypropylene (CPP) Resin is hazardous, inflammable, or a declined item under the tariff advisory committee guidelines, was squarely upon the defendant as it formed the core ground for repudiation under condition 3(a). The defendant has failed to discharge this onus by not producing any counter-evidence, independent expert opinion, or material from a recognized authority to rebut the scientific findings on melting point and flash point certified by an ISO accredited laboratory. PW-2's inability to state the industrial application of CPP does not invalidate the objective test results, nor does the lack of recollection about the exact year of sample submission vitiate the certificate issued after the plaintiff deposited the sample on 04.12.2020 and paid the requisite fee.
CS (COMM.) No. 556/2021 Gaurav Ink Pvt Ltd. Vs United India Insurance Co. Ltd. Page No.15 of 26 Thus, the defendant has not done the required things to substantiate its repudiation grounds, rendering the same unsustainable.
27. Furthermore, new ground for repudiation of claim i.e, the policy did not cover manufacturing/storing of printing ink raised in affidavit of evidence for the first time (as no such plea was taken in the written statement) cannot be looked into being beyond pleadings of the defendant and arguments of the defendant like estoppel inapplicability, uberrimae fidei breach, safety norm violations, and strict contract interpretation are prohibited as per the judgment relied upon by the plaintiff of Hon'ble Supreme Court in New India Assurance Co. Ltd. v. M/s. Mudit Roadways (Civil Appeal No. 339/2023, 24.11.2023), which bars supplementary arguments beyond repudiation letter, the relevant portion of the judgment is reproduced as under :-
"32. The insurance company in their letter mentioned two specific grounds to repudiate the claim: (i) that the location of fire was part of the premises not covered under the in- surance policy, and (ii) that there was negligence on the part of the insured in carrying out repairs at the roof of the warehouse which caused the fire.
33. Notably, in earlier cases like Galada Power and Tele- communication Ltd. v. United India Insurance Co. Ltd.5 and Saurashtra Chemicals Ltd. v. National In- surance Co. Ltd. , it was declared that new grounds for re-6
pudiation cannot be introduced during the hearing if they CS (COMM.) No. 556/2021 Gaurav Ink Pvt Ltd. Vs United India Insurance Co. Ltd. Page No.16 of 26 were not included in the repudiation letter. This legal prin- ciple was reiterated in JSK Industries Pvt. Ltd. v. Oriental Insurance Co. Ltd.7:
"10. Mr. Gopal Shankarnarayan, learned senior coun- sel for the appellants has argued both on substant- ive and procedural points to assail the aforesaid or- ders. His first submission is that the insurance com- pany cannot resist a claim petition on grounds bey-
ond those cited by them while repudiating a claim. In support of this argument, a decision of this Court in the case Saurashtra Chemicals Ltd. v. Na- tional Insurance Co. Ltd. [(2019) 19 SCC 70] has been cited. In this judgment, it has been held: -- "23. Hence, we are of the considered opinion that the law, as laid down in Galada [Galada Power & Tele- communication Ltd. v. United India Insurance Co. Ltd., (2016) 14 SCC 161: (2017) 2 SCC (Civ) 765] on Issue (2), still holds the field. It is a settled posi- tion that an insurance company cannot travel beyond the grounds mentioned in the letter of repudiation. If the insurer has not taken delay in intimation as a spe- cific ground in letter of repudiation, they cannot do so at the stage of hearing of the consumer complaint before NCDRC."
34. Canvassing supplementary arguments during the hear- ing, (beyond those in the insurer's repudiation letter), is ex- plicitly prohibited. Consequently, it is held that the insurer cannot introduce additional reasoning beyond those detailed in their letter, to justify the repudiation."
28.Further, in National Insurance Company Ltd. v. Vedic Resorts and Hotels Pvt. Ltd. (Civil Appeal No. 4979/2019, decided 17.05.2023) relied upon by the plaintiff of Hon'ble Supreme Court, emphasized insurer's burden for exclusions with ambiguity CS (COMM.) No. 556/2021 Gaurav Ink Pvt Ltd. Vs United India Insurance Co. Ltd. Page No.17 of 26 favoring insured, thus the repudiation is arbitrary and improper. Relevant portion of which is reproduced as under:-
"14. It is trite to say that wherever such an exclusionary clause is contained in a policy, it would be for the insurer to show that the case falls within the purview of such clause. In case of ambiguity, the contract of insurance has to be construed in favour of the insured.
15. Beneficial reference of the decision in National Insurance Company Limited vs. Ishar Das Madan Lal be made in this regard, in which it has been held that: -
"8. However, there may be an express clause excluding the applicability of insurance cover. Wherever such exclusionary clause is contained in a policy, it would be for the insurer to show that the case falls within the purview thereof. In a case of ambiguity, it is trite, the contract of insurance shall be construed in favour of the insured. "
16. The Constitution Bench in case of General Assurance Society Ltd. Vs. Chandumull Jain and Another had also observed as back as in 1966 that: -
"11.......there is no difference between a contract of insurance and any other contract except that in a contract of insurance there is a requirement of uberrima fides i.e. good faith on the part of the assured and the contract is likely to be construed contra proferentem that is against the company in case of ambiguity or doubt".
17. In the instant case, the appellant-Insurance Company had failed to discharge its burden of bringing the case within the exclusionary clause V(d) of the policies in question. The surveyor in the Final Survey Report dated 16.06.2011 had also opined that the loss had occurred due to the insured peril and the claim was CS (COMM.) No. 556/2021 Gaurav Ink Pvt Ltd. Vs United India Insurance Co. Ltd. Page No.18 of 26 admissible. Though it is true that the Surveyor's Report is not the last and final one nor is so sacrosanct as to the incapable of being departed from, however, there has to be some cogent and satisfactory reasons or grounds made out by the insurer for not accepting the Report. We are afraid in the instant case, the appellant Insurance Company has failed to make out any such cogent reason for not accepting the surveyor's Report."
29. During the course of arguments Ld. Counsel for the defendant raised following arguments which are being dealt with one by one:-
A. Non-Compliance of Insurance Act, 1938 -The defendant's claim that Section 64VB was violated as premium was paid for ink excluding printing ink at Rs. 2.50 per mile instead of Rs. 3.50 for printing ink, is negated because this ground was not in the repudiation letter and is barred as held in the aforesaid judgment cited and the policy was renewed post-2018 fire and claim payment without demanding higher premium despite knowing the business from surveyor inspections, estoppel applies as defendant accepted premium and covered similar risks previously, and the plaintiff consistently disclosed its printing ink manufacturing business without misrepresentation, making the premium adequate for the disclosed risk.
B. Non-Applicability of Rule of Estoppel- The defendant's assertion that each policy is separate and plaintiff failed to prove identical terms or prior manufacturing of same ink is negated as CS (COMM.) No. 556/2021 Gaurav Ink Pvt Ltd. Vs United India Insurance Co. Ltd. Page No.19 of 26 the payment of the prior claim of Rs. 51,55,108/- on 20.11.2019 for the fire incident dated 27.03.2018 under a policy with identical description is an admitted fact by the defendant in its written statement (para 5) and that the 2018 claim was settled under the same policy, and that the defendant renewed the policy for 2018- 2019 (Ex. P-1) on 25.07.2018 after the first fire without any objection or demand for higher premium. The defendant itself accepted the premium and renewed the policy post the 2018 fire and claim processing, thereby acknowledging the nature of the plaintiff's business and the coverage. In such circumstances, No adverse inference can be drawn against the plaintiff; rather, the defendant's failure to produce the prior policy strengthens the plaintiff's case of continuity and estoppel. The Hon'ble Supreme Court in Karnavati Veneers Pvt. Ltd. Vs New India Assurance Company Limited (Civil Appeal No. 3893/2013, decided on 09.03.2023) and Texco Marketing Pvt Ltd. Vs Tata AIG General Insurance Co. Ltd. (Civil Appeal No. 8249/2022, decided on 09.11.2022) has held that an insurer's conduct in accepting premium, renewing the policy, and settling a prior claim under similar circumstances estops it from later denying coverage on the ground of alleged mismatch in risk or policy description. Thus, the defendant's plea of non-leading of evidence on the prior claim is misconceived and is negated.
CS (COMM.) No. 556/2021 Gaurav Ink Pvt Ltd. Vs United India Insurance Co. Ltd. Page No.20 of 26 C. Principle of Uberrimae Fidei- The defendant's claim of breach by obtaining policy for ink at lower premium while manufacturing printing ink, is negated as the business was disclosed over 20 years, defendant inspected and paid prior claim, no evidence of concealment, and utmost good faith was maintained by plaintiff with full disclosure in claims and documents.
D. Repudiation of Claim of Plaintiff- The defendant's reliance on surveyor report leading to repudiation under condition 3(a) for altered circumstances, is negated as the plaintiff's own surveyor did not find violation or recommend repudiation, no alteration in trade occurred as business remained printing ink manufacturing, and condition 3(a) is inapplicable without proven risk increase, with defendant failing to sanction or endorse any change despite knowledge.
E. Huge Accumulation of Hazardous Material -The defendant's claim that CPP Resin is highly inflammable and accumulated for profit triggering loss is negated by the test certificate proving it non-flammable, surveyor not flagging it as cause, no evidence of profit intent or tariff classification as declined item. F. Non-Adherence to Statutory and Fire Safety Norms- The defendant has contended that the plaintiff was running its factory without any license, fire safety certificate, and No Objection Certificate from the Delhi Pollution Control Committee (DPCC), and that PW-1 admitted these facts in cross-examination. It is CS (COMM.) No. 556/2021 Gaurav Ink Pvt Ltd. Vs United India Insurance Co. Ltd. Page No.21 of 26 further argued that due to history of previous fire and failure to take remedial measures, the insurance claim is liable to be forfeited relying upon United India Insurance Co. Ltd. vs. Sushil Kumar Godara (SUPRA), and M/s Durga Intermediates vs. United India Insurance Company Ltd. (NCDRC, CC No.287/2014, decided on 06.09.2022).
24.While the admission of PW-1 that the factory did not possess a fire safety certificate and DPCC NOC is noted, these regulatory lapses, do not ipso facto lead to forfeiture of insurance benefits in the present case. The cause of loss was a short-circuit fire, and the defendant has failed to establish any direct causal nexus or proximate connection between the absence of these certificates and the occurrence or aggravation of the fire. Furthermore, the surveyor's report (Ex. P-4) does not attribute the fire or loss to any violation of fire safety norms or pollution control regulations and hence the aforesaid judgments cited by the defendant are clearly distinguishable on facts:
- In United India Insurance Co. Ltd. vs. Sushil Kumar Godara (Supra), the hon'ble Supreme Court upheld forfeiture where the insured was found to be fundamentally breaching the contract in flagrant violation of law, and the risk itself was created by such illegality directly connected to the insured peril. In the present case, the plaintiff was running a lawful manufacturing unit; the violations are collateral regulatory compliances and have no CS (COMM.) No. 556/2021 Gaurav Ink Pvt Ltd. Vs United India Insurance Co. Ltd. Page No.22 of 26 demonstrated link to the short-circuit incident.
- Similarly, in M/s Durga Intermediates vs. United India Insurance Company Ltd. (NCDRC, 06.09.2022), relied upon by Ld Counsel for the defendant, the National Commission dealt with a case where the insured had violated specific safety norms in storage and handling of hazardous chemicals, which directly contributed to the fire. Here, the defendant has neither pleaded nor proved that the absence of fire safety certificate or DPCC NOC was the cause or a contributing factor to the short-circuit fire. Moreover, the defendant had itself accepted premium, renewed the policy, and settled the previous claim of Rs. 51,55,108/- in 2019 for fire in the same factory, thereby waiving any objection on these grounds.
- In the absence of a specific exclusion clause in the policy linking coverage to possession of fire safety certificate or DPCC NOC, and without proof of connection to the loss, these lapses cannot be used as a ground to repudiate a valid claim.
G. Nothing on Record to Substantiate the Claim Amount- The defendant's plea that the plaintiff failed to substantiate the claim quantum through strict primary evidence under the Evidence Act holds partial merit, as PW-1 relied mainly on photocopy bills without originals or third-party witnesses to prove their contents. However, the defendant's own appointed surveyor, after detailed inspection and verification of documents, assessed the gross loss at Rs. 77,88,862/- in the report dated 11.03.2020 (Ex. P-4), which CS (COMM.) No. 556/2021 Gaurav Ink Pvt Ltd. Vs United India Insurance Co. Ltd. Page No.23 of 26 carries significant evidentiary weight. In the absence of any plea or proof of fraud, fabrication, or material unreliability in the surveyor's quantification, the court cannot wholly disregard it. Balancing the evidentiary shortcomings on the plaintiff's side with the professional, contemporaneous assessment by the defendant's expert, the plaintiff is held entitled to recover the net loss amount of Rs. 64,91,252/- as finally determined by the surveyor after applying deductions.
H. Insurance Policy is a Contract Between the Parties - The defendant's reliance on strict interpretation per United India Insurance Co. Ltd. v. Harchand Rai Chandan Lal (Supra), Polymat India (P) Ltd. v. National Insurance Co. Ltd. (Supra) and Export Credit Guarantee Corp. of India Ltd. v. Garg Son (Supra), is distinguishable on the facts of the present case as these do not override estoppel or prohibition on new grounds, and where conduct shows waiver as held by this court.
25.Accordingly, Issue No. 3 is decided against the defendant and in favour of the plaintiff, and Issue No. 1 is decided in favor of the plaintiff and against the defendant entitling plaintiff recovery of Rs. 64,91,252/- (Net loss assessed by the surveyor) from the date of repudiation of the claim i.e 16-09-2020 till actual recovery.
ISSUE NO. 2"2. Whether the plaintiff is entitled to interest @ 24% from CS (COMM.) No. 556/2021 Gaurav Ink Pvt Ltd. Vs United India Insurance Co. Ltd. Page No.24 of 26 defendant? OPP"
30.The onus to prove this issue was upon the plaintiff.
31. The plaintiff has also claimed interest @ 24% per annum on the principal suit amount. However, the said rate of interest seems excessive and also in the case of Cimmco Limited Versus Pramod Krishna Agrawal (2019 SCC OnLine Del 7289), the Hon'ble High Court of Delhi held as follows;
"3..........Hon'ble Supreme Court has now mandated that lower rates of interest be granted and therefore the pre-suit and also the pendente lite and future interest is liable to be reduced by this Court. Reliance is placed upon the judgments in the cases of Rajendra Construction Co. v. Maharashtra Housing & Area Development Authority, (2005) 6 SCC 678, McDermott International Inc.v Burn Standard Co. Ltd.,(2006) 11 SCC 181,Rajasthan State Road Transport Corporation v. Indag Rubber Ltd.,(2006) 7 SCC 700, Krishna Bhagya Jala Nigam Ltd v. G. Harischandra, (2007) 2 SCC 720 & State of Rajasthan v. Ferro Concrete Construction Pvt. Ltd. (2009) 3 Arb. LR 140 (SC)..."
32. Accordingly, in the given facts and circumstances, and keeping in view the aforesaid judgment and the prevalent rate of interest, the plaintiff is entitled to simple interest @ 9% per annum on the aforesaid outstanding amount from 16-09-2020 till actual recovery.
RELIEF
33. In view of the above, the present suit is decreed in favour of plaintiff and against defendant for sum of Rs. 64,91,252/- alongwith interest @ 9% per annum on the aforesaid outstanding CS (COMM.) No. 556/2021 Gaurav Ink Pvt Ltd. Vs United India Insurance Co. Ltd. Page No.25 of 26 amount from 16-09-2020 till actual recovery alongwith costs of the suit.
Digitally
signed by
Decree sheet be drawn accordingly. ASHUTOSH
ASHUTOSH KUMAR
File be consigned to record room. KUMAR Date:
2026.01.25
20:39:29
+0530
(Announced in the open (Ashutosh Kumar)
Court) District Judge (Commercial Court)-1
West, Tis Hazari Courts, Delhi
27-01-2026
CS (COMM.) No. 556/2021 Gaurav Ink Pvt Ltd. Vs United India Insurance Co. Ltd. Page No.26 of 26