A consumer disputes commission in Mumbai directed National Insurance Company to pay a city-based liquor wholesaler more than ₹1.2 crore after his stock was 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, news agency PTI reported.
Kurla-based firm vs insurance company
A Kurla-based firm, engaged in the wholesale liquor business, had claimed that his stock of liquor bottles and cans, kept in the warehouse, were damaged in the torrential rainfall that lashed Mumbai on August 29, 2017.
"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 further claimed that despite the insurer's own surveyor assessing the loss and recommending a settlement of ₹1.2 crore, the insurance company formally denied the claim on January 14, 2020.
What insurer said
Arguing against the claims, the insurer alleged that the firm failed to produce forensic laboratory reports and evidence proving the liquor that got damaged was unfit for human consumption.
{{/usCountry}}Arguing against the claims, the insurer alleged that the firm failed to produce forensic laboratory reports and evidence proving the liquor that got damaged was unfit for human consumption.
{{/usCountry}}It added that the firm also failed to provide videographic evidence of the damaged stock's destruction.
What commission said
Citing the state excise department findings, the commission after hearing both the sides, noted that liquor was submerged in polluted Mithi River floodwater and was unfit for consumption.
Further pointing out that the state excise authorities had clarified that no laboratory would certify such contaminated stock, 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.
The panel also asserted that while the insurer rejected its own surveyor’s findings, it also did not obtain 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 ₹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 ₹1 lakh as compensation for mental stress, inconvenience, and hardship and ₹25,000 for litigation costs.
(With inputs from PTI)