State Consumer Disputes Redressal Commission
Swapan Stores vs The Oriental Insurance Co. Ltd. on 18 May, 2026
STATE CONSUMER DISPUTES REDRESSAL COMMISSION
WEST BENGAL
CONSUMER COMPLAINT NO. SC/19/CC/419/2016
Swapan Stores
PRESENT ADDRESS - Through partners Swapan Kr. Saha & Smt. Kalyani Saha, Railgate,
Station Road, P.O. - Alipurduar, Dist. Alipurduar. ,WEST BENGAL.
.......Complainant(s)
Versus
The Oriental Insurance Co. Ltd.
PRESENT ADDRESS - Cooch Behar Br., Cooch Behar, P.S. Sharma Building, Roopnarayan
Road, W.B. - 736 101.,WEST BENGAL.
State Bank of India
PRESENT ADDRESS - Alipurduar Bazar Br., Marwari Patty, Alipurduar, W.B. - 736 121.,WEST
BENGAL.
.......Opposite Party(s)
BEFORE:
HON'BLE MR. RAJES GUHA RAY , JUDICIAL MEMBER
HON'BLE MR. SANTANU SAHA , MEMBER
FOR THE COMPLAINANT:
Swapan Stores, Mr. N.R. Mukherjee, Mr. Sourya Mukherjee. Shalini Mukherjee.
(Advocate)
FOR THE OPPOSITE PARTY:
The Oriental Insurance Co. Ltd. , Mr. Shyamal Sengupta. (Advocate)
State Bank of India, Ms. Deblina Lahiri. (Advocate)
DATED: 18/05/2026
ORDER
Hon'ble Mr. Santanu Saha, Member
1. Genesis The present complaint has been instituted under the Consumer Protection Act, 1986 alleging deficiency in service, arbitrary settlement of insurance claim, unfair trade practice, non-disclosure of survey reports and prolonged delay in processing of claim by Opposite Party No.1, namely Oriental Insurance Company Limited.
The case been filed by Swapan Stores through partners Sri Swapan Kumar Saha and Smt. Kalyani Saha, hereinafter referred to as complainants. The complainants contend that a devastating conflagration during the night hours of 21.11.2014 completely gutted their insured shop premises, adjoining go-down, stocks, fixtures and allied business assets situated at Station Road, Alipurduar, resulting in near total destruction. It is their case that although the aggregate insured value under two valid policies was Rs.36,00,000/-, the insurer, after prolonged delay, offered only Rs.10,28,489/- in purported full and final settlement. Said amount was subsequently released as interim payment pursuant to an order of this Commission.
The complainants, asserting that the said settlement was grossly inadequate and procedurally unfair, approached this Commission seeking enhanced relief.
2. Heard Ld. Counsels of the complainants, O.P. No.1 and O.P. No. 2. Perused all the records including the complaint filed by the complainants, Written Version filed by the O.P. Nos. 1 & 2, evidence on affidavit filed by the complainants and the O.P.s along with all enclosures.
3. Facts in Brief The complainants, husband and wife, were carrying on business jointly in stationery, cosmetics and allied merchandise from the subject premises.
For protection of their business assets, two insurance policies were obtained from Opposite Party No.1 for the period from 28.05.2014 to 27.05.2015. The first policy, namely Standard Fire and Special Perils Policy, covered stock in go-down with sum insured of Rs.1,00,000/-. The second policy, namely Shopkeepers Insurance Policy, covered i) Building (Rs.5,00,000/-), ii) Stock in Shop - Rs.29,00,000/- and iii) Furniture & Fixtures - Rs.1,00,000/-
On 21.11.2014 at about 2:00 a.m., a major fire broke out in the Station Road locality affecting several shops including that of the complainants. Fire brigade personnel, with assistance of local inhabitants, extinguished the blaze after substantial damage had occurred. The occurrence of fire is not disputed.
The complainants promptly informed the insurer and lodged General Diary entry with the police authorities. Thereafter claims were lodged under the heads of building, stock in shop, stock in go-down and furniture/fixtures. The insurer appointed one preliminary surveyor and thereafter a final surveyor, who inspected the premises and collected records.
The grievance of the complainants is that despite repeated approaches, no timely decision was communicated. Ultimately, on 02.08.2016, i.e. nearly twenty months after the incident, the insurer offered Rs.10,28,489/- in full and final settlement. The complainants declined to accept the same as final discharge, maintaining that the loss was total and the assessed figure was grossly inadequate.
Subsequently, during pendency of the complaint, this Commission directed release of the said amount as interim benefit, whereupon the amount stood paid.
4. Case of the Complainants The complainants submit that the insured premises were wholly ravaged by fire and that all saleable stock, records, furniture, fittings and goods stored in the adjoining kutcha go-down were rendered useless due to direct flames, smoke, heat and water used by fire brigade personnel for extinguishing the fire.
They rely upon certificates issued by Chairman, Alipurduar Municipality and local councillor, report of fire brigade authority and letter issued by local traders' association to contend that the destruction was extensive and near complete.
It is further contended that the insurer acted unfairly by keeping the claim pending for an inordinately long period and by withholding copies of survey reports until commencement of litigation. Such conduct, according to them, amounts to gross deficiency in service and indulging in unfair trade practices.
On the question of insurable interest, it is argued that although the railway licence in respect of the plot originally stood in the name of one Sri Gopal Das, the complainants were in settled commercial occupation with his knowledge and consent, paying licence charges in his name. They further state that subsequently, the railway authorities granted licence in their favour, thereby corroborating bona fide possession and business nexus with the premises.
The complainants also assail the assessment of loss by final surveyor and OP No. 1 on multiple grounds:
Firstly, the deduction towards salvage from furniture and fixtures is alleged to be fictitious, since nothing salvagable remained after the incidence and all debris were removed by the Municipal authority.
Secondly, the subsequent deduction of Rs.1,81,498/- allegedly made by the insurer on ad hoc salvage basis is challenged as wholly arbitrary. Thirdly, the deduction of 25% for non-production of books of account is criticized as irrational because such books themselves were burnt in the fire.
Fourthly, it is urged that in a case of complete destruction, speculative "trend analysis" based on past accounts for assessment of loss cannot override the insured values accepted by the insurer at inception of policy.
5. Defence of Opposite Party No.1 The insurer denies deficiency in service and contends that the complaint is an inflated attempt to secure windfall gain contrary to settled principles of indemnity. The insurer insists that no liability beyond the amount already paid exists.
It is submitted that the occurrence of fire was never disputed; rather, the claim was processed, surveyed and partially allowed. Hence, according to the insurer, bona fides of O.P. No. 1 stand demonstrated.
The insurer's principal objection relates to absence of insurable interest in respect of the building. It is urged that the land belonged to N.F. Railways and the operative licence stood in the name of Sri Gopal Das as on the date of loss. Since the complainants failed to establish transfer, tenancy, assignment or authorization in their favour, they could not validly claim structural loss as owners or lawful licensees.
As regards stock claim, the insurer submits that no stock register, purchase bills, sale bills or contemporaneous accounts were furnished. In such circumstances, the surveyor necessarily resorted to trend analysis based on income-tax returns, balance sheets, trading accounts and historic turnover patterns. According to the insurer, this is a recognized accounting methodology where direct evidence is unavailable.
It is further contended that the claim of total destruction is doubtful because certain portions of the structure remained standing and some repairs had allegedly been undertaken before final inspection. The surveyor noticed the premises to be in partly burnt and partly broken condition, thereby suggesting partial rather than total loss.
Reliance is placed on authorities emphasizing that insured value is not synonymous with automatic entitlement and that surveyor's report deserves substantial evidentiary weight unless shown to be perverse.
6. Points for Determination Upon hearing learned advocates and perusing the materials on record, the following issues arise:
1. Whether the complainants had insurable interest in the insured property?
2. Whether there was deficiency in service or unfair trade practice on the part of the insurer?
3. Whether full sum insured automatically became payable?
4. Whether the survey assessment suffers from arbitrariness or perversity?
5. To what relief, if any, is the complainants entitled?
7. Discussion and Reasons Point No.1- Insurable Interest Insurable interest is not confined to absolute ownership. It extends to every lawful or equitable relationship with the subject-matter of insurance whereby the insured benefits from its preservation or would suffer pecuniary prejudice from its destruction. Thus, a person having possessory, contractual, financial, or other legally recognisable interest in the property may possess insurable interest even without absolute title.
In New India Assurance Co. Ltd. v. T.T. Finance Ltd., the Delhi High Court recognised that insurable interest is founded upon the likelihood of pecuniary loss and is not restricted to ownership in the strict proprietary sense. It is a settled fact in insurance jurisprudence that possession, tenancy, licence, mortgagee's interest, beneficial occupation or contractual liability may constitute insurable interest even if title be imperfect.
In the present case, it is undisputed that i) the complainants were actually running business from the premises, ii) insurer knowingly issued shopkeeper policy covering that very premises, iii) premium was accepted without demur, iv) fire occurred in the said premises and v) insurer investigated claim on merits.
Therefore, insurer cannot just approbate and reprobate i.e. accept premium on representation that premises existed as insured shop but after loss, deny all insurable interest unless fraud or material concealment is proved. However, distinction must be drawn between business contents and title to structure.
The complainants undoubtedly had insurable interest in stock, furniture, fixtures and business use of premises because destruction thereof caused direct pecuniary loss. However, insofar as the structural building claim is concerned, documentary title or operative licence in favour of the complainants on the date of loss has not been satisfactorily proved and this defect cannot be remedied by subsequent licence.
Accordingly, Insurable interest in contents/business assets stands established but insurable interest in building claim of Rs.5 lakh as owner-like claimant is not satisfactorily proved.
Hence repudiation of claim regarding building component by the insurer cannot be termed as wholly arbitrary.
Point No.2 - Deficiency in Service The expression "deficiency" under the Consumer Protection Act means any fault, imperfection, shortcoming, inadequacy in the quality, nature or manner of performance required to be maintained by law or undertaken under a contract. An insurer, having accepted premium and undertaken to indemnify the insured upon occurrence of covered peril, is under a corresponding obligation to process the claim fairly, objectively, transparently and within a reasonable time. Insurance contracts are contracts of utmost good faith, and that duty operates not only at the stage of disclosure by the insured but equally at the stage of claim handling by the insurer.
Tested on the aforesaid principles, this Commission is of the considered view that Opposite Party No.1 was deficient in service in more than one material respect.
(i) Unreasonable Delay in Claim Settlement The fire incident occurred on 21.11.2014. The insurer was informed immediately.
Surveyors were deputed and inspections were carried out shortly thereafter. Yet, the final offer of settlement was communicated only on 02.08.2016, nearly twenty months after the loss.
No exceptional complexity of claim, no pending criminal investigation, no allegation of fraud requiring prolonged inquiry, and no supervening circumstance justifying such extraordinary delay has been established before this Commission. Even allowing reasonable latitude for survey, verification of accounts and internal processing, a delay of such magnitude in relation to a fire claim affecting the complainants' source of livelihood cannot be countenanced. Insurance proceeds are often the sole means by which a small trader resumes business after disaster. Undue postponement of settlement defeats the very commercial object of insurance and aggravates the insured's financial distress. The delay in the present case was therefore not a mere procedural lapse but a substantive deficiency in rendition of service.
(ii) Non-disclosure / Withholding of Survey Reports The complainants have consistently asserted that despite repeated requests, copies of the survey reports were not furnished during claim processing and became available only after filing of written version in the present proceedings.
A survey report forms the foundational basis of claim determination. If the insurer proposes to reduce or reject a claim on the strength of such report, elementary fairness requires that the insured be made aware of the reasons and material relied upon. Without disclosure of the report, the complainants were deprived of any meaningful opportunity to explain discrepancies, produce clarifications, or contest deductions before the settlement decision was crystallized.
Such opacity is inconsistent with fair claims administration and offends the requirement of transparency expected from a public sector insurer. The withholding of the survey report until commencement of litigation clearly constitutes deficiency in service.
(iii) Arbitrary and Non-speaking Deductions The material on record indicates that after the surveyor's assessment, further deductions were introduced by the insurer, including ad hoc reduction towards salvage. However, no intelligible basis, formula, inventory analysis, salvage quotation, or reasoned computation was contemporaneously supplied.
A claim decision affecting valuable rights of the insured cannot rest upon unexplained figures. Where an insurer departs from or modifies the surveyor's quantified loss, reasons must be recorded and communicated. Mere assertion that deduction was made on estimate or prudential basis is insufficient.
Similarly, blanket deductions on account of non-production of records, without due consideration of the complainants' case that such records were destroyed in the very fire under claim, reveal a mechanical approach rather than judicious evaluation.
An insurer is entitled to scrutinize claims rigorously; it is not entitled to assess them capriciously. The arbitrary nature of the deductions therefore amounts to deficiency.
(iv) Failure to Adopt a Balanced Approach in Appreciating Evidence The insurer was correct in seeking proof of stock position. However, once it was not in dispute that a serious fire had occurred affecting multiple establishments, the claim required balanced adjudication of available secondary evidence such as past returns, trade pattern, local circumstances, extent of damage, nature of goods and surrounding probabilities.
Instead, the record discloses an unduly one-sided emphasis on deficiencies in documentation while insufficient weight was accorded to the practical reality that books and stock records may themselves perish in accidental fire. Such rigid insistence on perfect proof in circumstances where direct proof may be impossible defeats the consumer-protective spirit of the statute.
This failure to evaluate the claim holistically further evidences deficiency in service.
(v) Resultant Harassment and Prejudice The cumulative consequence of delayed settlement, non-disclosure of material documents, unexplained deductions and prolonged uncertainty was to subject the complainants to avoidable harassment at a time when their business had already suffered severe disruption due to fire.
Finding For the reasons aforesaid, this Commission holds, conclusively and without reservation, that Opposite Party No.1 was guilty of deficiency in service in the manner of processing and settling the complainants' claim. The deficiency lies not in disputing quantum per se which an insurer is entitled to do on reasonable grounds--but in the delayed, opaque, arbitrary and procedurally unfair manner in which such dispute was handled.
This point is accordingly decided emphatically in favour of the complainants and against Opposite Party No.1.
Point No.3 - Whether Full Sum Insured Became Payable The complainants strongly rely upon the extent of physical destruction. From materials on record, it is evident that the fire incident was serious and caused substantial destruction. The surrounding circumstances, number of affected shops, fire brigade intervention and contemporaneous records indicate probability of heavy loss.
However, this issue requires careful distinction between physical devastation and legal proof of quantum of loss. In contracts of fire insurance, the sum insured ordinarily represents the maximum indemnity limit, not a guaranteed payout upon occurrence of peril. Insurance of indemnity reimburses actual loss proved, subject to policy limit.
Thus, even where premises are gutted, the insured must establish, on balance of probabilities, the value of goods existing immediately prior to loss. In the present case, no contemporaneous stock statements, supplier confirmations, purchase trail proximate to incident, tax inventory returns, or cogent valuation proving stock of nearly Rs.29 lakh have been furnished.
The insurer is therefore justified in contending that actual stock position could not be accepted merely because the sum insured was Rs.29 lakh. At the same time, it would be equally erroneous to presume low stock merely because books were unavailable after a fire.
The correct approach should be not to grant the entire policy limit, nor to mechanically uphold depressed survey deductions, but to determine a fair indemnity on available probabilities. In consideration of the factors like severity of fire, nature of business run by the complainants, infirmities in deductions and surveyor's estimation of loss, it can be inferred that the actual loss materially exceeded the amount offered by the insurer.
Accordingly, this Commission holds:
• The plea of physical near-total destruction is substantially credible. • The plea of automatic entitlement to full sum insured of Rs.36 lakh is not legally sustainable.
• The actual compensable loss exceeded the amount finally offered by the insurer.
Point No.4 - Assessment of Loss and Surveyor's Report The legal position is well settled that surveyor's report is an important piece of evidence but not conclusive.
In New India Assurance Co. Ltd. v. Pradeep Kumar, the Hon'ble Supreme Court held that a surveyor's report constitutes an important piece of evidence which cannot be discarded lightly, though consumer fora may depart therefrom for cogent and valid reasons. Likewise, in Sri Venkateswara Syndicate v. Oriental Insurance Co. Ltd., the Court deprecated arbitrary rejection of survey reports and held that an insurer cannot disregard or supersede such reports without assigning satisfactory and cogent reasons.
Therefore, this Commission finds it necessary to test the report on the anvil of logic and evidence.
(a) Trend Analysis Where contemporaneous stock records are unavailable and other methods of assessment of stock like volumetric analysis, chemical test of debris or physical evidence are ruled out, recourse to past accounts like annual turnover, profit and loss account, previous balance sheets, income-tax returns etc. forms the basis of a proper inferential method.
Where records are destroyed in the very peril insured against, inference about loss incurred by the insured must be drawn very carefully. This makes adoption of some sort of scientific methodology, rather than employing any ad-hoc formula, so very imperative for assessment of actual loss in the present case.
Hence resorting to trend analysis, albeit its being only an approximation rather than mathematical certainty, cannot be condemned.
(b) Deduction of 25% Blanket deduction of 25% of net loss assessed solely for non-production of books of accounts and other records, without considering the plausibility of such records being destroyed in the peril itself, as alleged by the insured, appears mechanical and excessive.
(c) Salvage Deduction The final surveyor engaged by the insurer itself made no salvage deduction on stock, but insurer later made ad hoc deduction of Rs.1,81,498/- for salvage. Once a licensed surveyor has assessed loss, unilateral post-survey deduction without transparent basis is arbitrary and untenable. Therefore, while the survey method itself cannot be wholly rejected, certain deductions and the insurer's final unilateral reductions are unsustainable.
For reasons discussed at point No. 1 of "Decision with Reasons" above, this Commission finds no fault with the insurer's repudiation of claim on the building. So two components are to be considered in assessing loss of the complainant i.e. stock and furniture & fixtures.
The final surveyor in the present case assessed gross loss on account of stock and furniture & fixtures to be Rs. 1635208/- and Rs. 128000/- respectively from which Rs. 20,344/- was deducted for underinsurance on furniture & fixtures. This Commission finds no sufficient reason to wholly discard the surveyor's principal methodology. The deductions towards underinsurance, being contractual in character, may stand. However, deduction made for salvage has been excluded because this Commission is of the opinion that in view of the devastating nature of the fire, making deduction for salvage would be unjustified.
Further deduction of 25% by the final surveyor on account of non-production of books of account cannot be mechanically sustained. The complainants' consistent case is that records were burnt in the fire itself. In such circumstances, insistence upon perfect documentary production would be unrealistic.
At the same time, some cautionary reduction is justified because exact stock position was not independently verifiable. Ends of justice would, in our opinion, be met by restricting such deduction to 10% instead of 25%. Accordingly, net loss for stock and furniture & fixtures stands at Rs. 1471687/- and Rs. 96890/-. After deducting policy excess of Rs. 10,000/-, net liability of the insurer comes to Rs. 15,58,577/-.
Point No.5 - Complainants' entitlement to Relief Net liability of the insurer has been worked out by this Commission (as at Point No. 4 above) to be Rs. 15,58,577/-. Out of this net liability, Rs. 10,28,489/- has already been paid by the insurer as interim benefit and hence, balance payable by the insurer to the complainants now is Rs.5,30,088/-.
Further, compensation for harassment and payment of cost of litigation are warranted.
8. ORDER The complaint is allowed in part on contest and stands disposed of with the following directions:
i) Opposite Party No.1, Oriental Insurance Company Limited, shall pay the complainants a further sum of Rs.5,30,088/- (Rupees Five Lakh Thirty Thousand Eighty Eight only), over and above the amount already paid towards settlement of the claim. The aforesaid sum of Rs.5,30,088/- shall carry simple interest at the rate of 7% per annum from 02.08.2016, being the date on which inadequate settlement was offered, till actual realization.
ii) Opposite Party No.1 shall further pay to the complainants a sum of Rs.2,00,000/-
(Rupees Two Lakh only) as compensation for harassment, delay and deficiency in service.
iii) Opposite Party No.1 shall also pay a sum of Rs.75,000/- (Rupees Seventy Five Thousand only) towards litigation costs.
iv) The amounts directed in point nos. i) to iii) above shall be paid within 45 (forty- five) days from the date of this order, failing which the complainants shall be at liberty to put the order into execution in accordance with law.
v) The complaint against Opposite Party No.2 stands dismissed, no specific deficiency in service having been proved against it.
Let copies of this judgment be supplied to the parties free of cost as per rules.
..................
RAJES GUHA RAY JUDICIAL MEMBER ..................
SANTANU SAHA MEMBER