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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.312 OF 2006

The New India Assurance Co. Ltd.  .. Appellant

Vs.

M/s. Protection Manufacturers Pvt. Ltd. ..Respondent

J U D G M E N T

ALTAMAS KABIR, J.   

1. This is a statutory appeal filed under Section  

23  of  the  Consumer  Protection  Act,  1986,  

hereinafter referred to as ‘the 1986 Act’, from an  

order  dated  24th October,  2005,  passed  by  the

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National  Consumer  Disputes  Redressal  Commission,  

New Delhi, hereinafter referred to as the “National  

Commission”,  in O.P. No.60 of 2003.  By the said  

order, the National Commission accepted the claim  

of  the  Respondent  herein,  M/s.  Protection  

Manufacturers Pvt. Ltd., in respect of insurance  

claim on account of a fire which had broken out in  

its factory at about 8.45 a.m. on 29th March, 2000,  

and directed the Appellant Insurance Company to pay  

Rs.2,26,36,179/- to the Respondent with interest at  

the rate of 12 per cent per annum from three months  

after the date of the fire.  In other words, the  

interest was to be reckoned from 1st July, 2000,  

till date.  

2. Although, the scope of the appeal is to some  

extent  limited,  a  few  facts  may  be  stated  for  

proper appreciation of the case made out by the  

Respondent/complainant.

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3. On 29th March, 2000, at about 8.45 a.m., there  

was  a  devastating  fire  in  the  factory  of  the  

Respondent/complainant.  The same was noticed by  

the factory workers who had assembled in front of  

the  factory  premises  and  were  waiting  for  the  

factory  to  open.   On  being  informed,  the  fire  

brigade reached the site at about 9.10 a.m. and  

began their operations immediately.  However, the  

fire was so severe that it continued to flicker for  

the  next  three  to  four  days  and  was  completely  

extinguished  only  on  4th April,  2000.    As  the  

factory premises of the Respondent was covered by  

Fire  Insurance  Policy  for  the  period  from  19th  

February, 2000, to 18th February, 2001, against the  

risk of fire, the Respondent made its claim to the  

Insurance Company amounting to Rs.2,85,50,000/- on  

account  of  damage  and  loss  suffered  to  the  

building, plant and machinery, stocks and stock-in-

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process  and  the  transformer  for  which  the  

Respondent  Company  had  paid  Rs.1,16,636/-  as  

premium.  It appears that while the Policy was in  

force, the insurance coverage was enhanced.   

4. On the very same day when the fire broke out,  

the Insurance Company appointed Mr. A.S. Asthana,  

Surveyor,  to  conduct  a  preliminary  spot  survey.  

On  30th March,  2000,  Mr.  Asthana  and  the  

representatives of the Insurance Company took joint  

stock of burnt motors and air coolers which were  

being  manufactured  by  the  Respondent/complainant.  

Mr. Asthana submitted his preliminary report on 3rd  

April, 2000, but did not specify the cause of fire.  

Thereafter,  on  9th April,  2000,  one  Mr.  Bhaskar  

Joshi was appointed as Joint Surveyor to conduct a  

final survey along with Mr. Asthana.  On 13th April,  

2000, a status report was submitted by Mr. Bhaskar  

Joshi.  The  Joint  Surveyors  prepared  a  draft

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assessment report and estimated the loss suffered  

by  the  Respondent/complainant  to  be  

Rs.2,37,09,372.12  paise.   The  joint  assessment  

report  which  was  submitted  on  28th August, 2000,  

clearly stated that the exact cause of fire was not  

known, though it could be due to a short circuit.  

5. Thereafter, on 30th October, 2000, the Regional  

Manager of the Insurance Company appointed M/s. J.  

Basheer & Associates as investigator to conduct an  

investigation into the cause of fire and to assess  

the loss. As many as six independent investigation  

reports were filed by M/s. J. Basheer & Associates  

on 28th May, 2001, 3rd July, 2001, 27th August, 2002,  

4th October,  2002,  7th November,  2002  and  10th  

December, 2002.  According to M/s. J. Basheer &  

Associates, the net amount of loss suffered by the  

Respondent Company on account of the fire would be  

Rs.1,10,57,034/-, which tallies almost exactly with

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the  assessment  made  by  the  Insurance  Company  

amounting  to  Rs.1,10,67,230/-.   Interestingly,  

although in the report submitted by M/s. J. Basheer  

& Associates it has been mentioned in clause 6 that  

their appointment was for investigation into (i)  

cause of fire and (ii) assessment of loss, there is  

nothing definite in the 67 page report as to the  

cause of fire, except for a reference to the reply  

sent by the Fire Officer, Cuttack, to the Khurda  

Branch Manager of the Insurance Company on 5th May,  

2001, stating that the estimate of fire amount was  

about Rs.15 lakhs and the cause of fire was “short  

circuit” in the raw material section.    

6. On  25th June,  2001,  the  Appellant  Insurance  

Company  requested  Mr.  Bhaskar  Joshi  to  make  his  

observations  on  the  report  submitted  by  M/s.  J.  

Basheer & Associates on 28th May, 2001.  In his  

comments submitted on 10th August, 2001, Mr. Bhaskar

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Joshi severely criticized the report filed by M/s.  

J. Basheer & Associates and even went to the extent  

of observing that they had failed to measure upto  

the faith and responsibility reposed on them by the  

insurers.  The report seemed to suggest that the  

same had been tailor-made in order to fit the loss  

assessed  by  the  Insurance  Company  at  

Rs.1,10,67,230/-, which uncannily tallied with the  

estimate of M/s. J. Basheer & Associates, namely,  

Rs.1,10,57,034/-.

7. After receipt of the views expressed by the  

Joint  Surveyors,  the  Appellant  Insurance  Company  

decided  to  obtain  the  views  of  Justice  Y.V.  

Chandrachud, former Chief Justice of India, on the  

question as to the cause of fire.  In his report,  

Chief Justice Chandrachud arrived at the conclusion  

that the report of M/s. J. Basheer & Associates was  

unfounded and speculative while that of the Joint

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Surveyors  contained  a  careful  analysis  of  the  

events. Chief Justice Chandrachud was of the view  

that he had no doubt that the fire was accidental  

and could not by any reasonable norm or standard be  

characterized as an act of arson.   

8. Mr. Bhaskar Joshi also commented on the report  

submitted by M/s. J. Basheer & Associates on 3rd  

July, 2001, and 29th November, 2001, and castigated  

the same in no uncertain terms.  Mr. Joshi observed  

that M/s. J. Basheer & Associates had not gone into  

the  roots  of  documentation  and  had  not  even  

bothered to verify the original documents.  On the  

other hand, they had gone around creating confusion  

and  controversies  and  to  create  an  air  of  

suspicion, which was a classic example of table-top  

investigation.

9. Thereafter,  as  the  claim  of  the  Respondent  

Company  was  not  being  settled  by  the  Appellant

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Insurance  Company,  a  complaint  was  filed  by  the  

Respondent Company with the National Commission on  

13th February,  2003,  for  a  direction  to  the  

Insurance  Company  to  pay  compensation  of  

Rs.2,48,94,000/-  for  the  loss  suffered  by  it,  

together with interest @18% p.a. and to also grant  

compensation  of  Rs.10  lakhs  for  the  delay  in  

settlement of the claim, which had caused mental  

agony and harassment to the Respondent/Complainant.  

10. The  claim  of  the  Respondent-Company  was  

repudiated by the Appellant Insurance Company on  

20th February, 2003, when the National Commission  

admitted  the  complaint  filed  by  the  Respondent-

Company  and  directed  notice  to  issue  to  the  

Insurance  Company  limited  to  the  question  of  

deficiency of service.  After considering the reply  

filed by the Insurance Company and after examining  

one  Mr.  Amit  Biswas,  the  representative  of  the

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Insurance Company, and Mr. J. Basheer of M/s. J.  

Basheer & Associates, who admitted that he had not  

visited the Excise Office, the Vendors and had also  

not provided any supporting evidence to bolster his  

findings,  the  National  Commission,  by  its  order  

dated  24th October,  2005,  directed  the  Appellant  

Insurance Company to pay to the Respondent Company  

a  sum  of  Rs.2,26,36,179  with  interest  @12%  p.a.  

with effect from 1st July, 2000 and to also pay a  

sum  of  Rs.1  lakh  by  way  of  compensation.   The  

Insurance Company was given liberty to recover the  

said  amount  from  its  defaulting  officers.  

Incidentally, it may be indicated that in the final  

assessment report of the Joint Surveyors the loss  

suffered by the Respondent Company was assessed at  

Rs.2,26,36,180.23 paise.   

11. Aggrieved by the said Award of the National  

Commission,  the  Appellant  Insurance  Company  has

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filed this appeal and questioned the said Award on  

several grounds.  

12. Appearing  for  the  Insurance  Company,  Mr.  

Jaideep Gupta, learned Senior Advocate, submitted  

that  the  National  Commission  had  erroneously  

approached the problem by concentrating only on the  

reports submitted by the Joint Assessors and the  

opinion  given  by  former  Chief  Justice  of  India,  

Y.V.  Chandrachud,  while  rejecting  the  several  

reports submitted by M/s. J. Basheer & Associates.  

It was submitted that the specific issues and the  

allegations  made  in  respect  thereof  were  not  

seriously considered by the National Commission.

13. Mr.  Gupta  submitted  that  the  National  

Commission had not considered the evidence in its  

totality.  Out of the six reports submitted by M/s.  

J. Basheer & Associates only two were taken into  

consideration, while the other four, including the

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Final Report submitted on 10th December, 2002, were  

ignored and were wrongly rejected.  The National  

Commission  relied  only  on  the  Joint  Report  

submitted by the M/s. Asthana and Joshi and the  

views expressed by Chief Justice Chandrachud, which  

was only an opinion and hence not admissible in  

evidence.   Mr.  Gupta  urged  that  the  only  

certificate available as to the cause of the fire  

was  the  Fire  Certificate  issued  by  the  Fire  

Officer,  Orissa,  Cuttack,  on  17th May,  2000,  

indicating  that  the  fire  was  the  result  of  an  

electrical  short  circuit,  but  except  for  a  bald  

statement, no evidence was produced to corroborate  

such opinion.

14. Mr. Gupta also referred to paragraph 6 of the  

Final Assessment Report on the basis of the joint  

survey  conducted  by  M/s.  A.  Asthana  &  Co.  and  

Bhaskar Joshi, which deals with the cause of the

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fire.   It  was  pointed  out  that  the  very  first  

sentence of paragraph 6 indicates that the exact  

cause of the fire was not known, but the police had  

attributed it to short circuit.  Sub-paragraph 2  

records the fact that nothing specific as to the  

cause of the fire could be found even on further  

probe and hence it had to be presumed that short  

circuit could be one of the probable causes out of  

other probables.  It was also indicated that in the  

light  of  the  reports  issued  by  the  local  

authorities,  such  as  the  police  and  the  fire  

brigade,  the  cause  of  the  fire  could  only  be  

attributed to a short-circuit, since no evidence  

could  be  found  that  would  point  towards  a  

deliberate  act  of  arson.   The  final  opinion  

expressed in Sub-paragraph (a) of paragraph 6 was  

that the fire appeared to be accidental and the  

loss would be indemnifiable under the Fire Policy  

issued to and held by the insured.

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15. Mr. Gupta also referred to the opinion of Chief  

Justice,  Y.V.  Chandrachud,  wherein  His  Lordship  

indicated that on a perusal of the Survey Report  

and  the  Investigation  Report  it  was  quite  clear  

that  the  Report  of  J.  Basheer  &  Associates  was  

unfounded and speculative, whereas the Report of  

the Joint Surveyors contained a careful analysis  

and assessment of the cause of fire and the facts  

incidental to and attendant upon the event of fire.

16. Mr.  Gupta  reiterated  his  earlier  submission  

that except the Fire Certificate issued by the Fire  

Officer,  Orissa,  Cuttack,  there  were  no  other  

reports as to the cause of the fire and the views  

expressed  by  the  Joint  Surveyors  and  also  Chief  

Justice  Chandrachud  were  without  foundation  and  

were  themselves  speculative  and  conjectural  and  

could not, there, be relied on.  If, however, all  

the reports submitted by J. Basheer & Associates

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were taken together, it would point towards an act  

of arson as to the cause of the fire.   

17. Mr. Gupta then referred to the decision of the  

National Commission on the question of cause of the  

fire.  It  was  pointed  out  that  the  National  

Commission in considering the report of J. Basheer  

& Associates and the opinion of Chief Justice Y.V.  

Chandrachud  and  the  views  expressed  by  Bhaskar  

Joshi  which  had  been  accepted  by  the  Insurance  

Company, observed as follows :

“Undisputedly, this report is accepted  by the Insurance Company and the learned  counsel  for  the  Insurance  Company  had  stated that the Insurance Company accepted  that the fire was accidental and could not  be characterized as an act of arson.”

18. Mr. Gupta submitted that the said observation  

was made on the basis of a concession which had  

been made by Counsel for the Insurance Company and  

not  on  the  pleadings,  wherein  it  had  been

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consistently stated that the cause of the fire had  

not been finally determined by any of the Assessors  

or Investigators and that the opinion of M/s. J.  

Basheer & Associates, that an act of arson was the  

cause of fire, could not be ruled out.  Mr. Gupta  

reiterated that even in the Joint Survey Report of  

M/s. Asthana and Joshi it had been mentioned that  

the exact cause of fire is not known but that the  

police had attributed it to a short circuit.  But  

it had also been indicated that the same was only a  

probable hypothesis. Mr. Gupta submitted that it is  

on such improved probability that an opinion was  

given that the fire appeared to be accidental and  

the  loss  would  be  indemnifiable  under  the  fire  

policy issued to and held by the insured.  Mr.  

Gupta submitted that in the circumstances when the  

cause of fire had not been established with any  

certainty, the direction given by the Commission to  

make payment of insurance on the Fire Policy, was

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not justifiable.

19. Mr. Gupta urged that this was a fit case for  

remand  to  enable  the  National  Commission  to  

ascertain the cause of the fire before making any  

Award for payment of insurance under the aforesaid  

policy.  In support of his submissions, Mr. Gupta  

firstly referred to the decision of this Court in  

National Insurance Co. Ltd. vs. Harjeet Rice Mills  

[(2005) 6 SCC 45], wherein it was held that since  

the  High  Court  had  failed  to  consider  the  

allegations  of  the  Insurance  Company,  that  the  

claim  of  the  complainant  was  fraudulent,  though  

there was adequate prima facie material available  

to  warrant  a  proper  inquiry,  the  matter  was  

required to be remanded for a decision afresh for  

adjudication on such submissions made on the behalf  

of  the  Insurance  Company.   Learned  Counsel  also  

referred to the decision of this Court in  United

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India Insurance Co. Ltd. & Ors. vs. Roshan Lal Oil  

Mills Ltd. & Ors. [(2000) 10 SCC 19], where in a  

somewhat  similar  situation  as  existing  in  the  

instant  case,  the  matter  was  remanded  to  the  

Commission for a fresh hearing.

20. Mr.  Gupta  submitted  that  the  National  

Commission  had  wrongly  relied  on  the  opinion  of  

Justice Y.V. Chandrachud, former Chief Justice of  

India,  in  contravention  of  the  provisions  of  

Section  45  of  the  Indian  Evidence  Act,  1872.  

Learned counsel urged that if the Commission wanted  

to  rely  on  the  opinion  given  by  Justice  Y.V.  

Chandrachud, as if it were an expert opinion, it  

could  only  have  done  so  after  examining  His  

Lordship  in  order  to  satisfy  the  provisions  of  

Section 45 of the aforesaid Act.  In support of his  

said submissions Mr. Gupta relied on the decision  

of this Court in Ramesh Chandra Agrawal vs. Regency

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Hospital Ltd. & Ors. [2009) 9 SCC 709, wherein,  

while considering the evidence of experts in the  

light of Section 45 of the Evidence Act, it was  

held  that  such  evidence  is  only  advisory  in  

character since such expert is not a witness of  

fact.

21. Mr.  Gupta  urged  that  in  view  of  the  

inconclusive nature of the reports as submitted,  

the matter was required to be sent back on remand  

to  the  National  Commission  for  a  fresh  

determination in accordance with law.   

22. Mr.  Piyush  Gupta,  who  appeared  in-person  on  

behalf  of  the  Respondent-Company,  submitted  that  

the allegations made about inclusion of the damage  

in  respect  of  the  products  manufactured  at  the  

manufacturing  unit  at  SCR-14,  Suryanagar,  

Bhubaneswar,  was  misleading,  since  after  the  

establishment  of  the  new  factory  premises  at

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Bhatkuri, the Suryanagar Factory ceased to exist.  

A  request  was  made  to  the  Central  Excise  

Authorities to cancel the licence for production of  

air coolers at Suryanagar with effect from 1st July,  

1999 and all manufacturing operations were being  

carried on by the insured at its new location at  

Bhatkuri which was affected by the fire.    

23. Mr.  Piyush  Gupta  submitted  that  the  Company  

maintained  computerized  financial  accounts  which  

combined financial accounting as well as inventory  

management  in  one  software.  Learned  counsel  

submitted  that  in  making  their  report  the  Joint  

Surveyors, M/s. Asthana and Joshi, had relied on  

the same after carrying out a detailed check of the  

system to ascertain its integrity.  A substantial  

quantity of raw materials which had been damaged  

during the super cyclone in October, 1999, had been  

found  to  be  subtracted  from  the  other  material

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which  had  been  damaged  on  account  of  the  fire.  

Learned counsel pointed out that in their report,  

M/s. Asthana and Joshi had in paragraph 8.03.1.14  

indicated that they had verified the integrity of  

the system by making dummy entries and the results  

were found to be reliable.  In order to further  

cross-check  the  account,  ledger  entries  of  the  

Company’s accounts in the vendor’s books were also  

called for and the same when reconciled with the  

Company’s  system  produced  corroborative  results.  

Mr.  Piyush  Gupta  submitted  that  based  on  their  

examination of the stock and the entries in the  

computer which were reconciled with the accounts of  

the  suppliers  (vendors),  they  submitted  a  draft  

assessment report assessing the loss incurred by  

the Company on account of the fire amounting to  

Rs.2,37,09,372.12/-.   However,  upon  visiting  the  

Regional Office of the Appellant-Insurance Company  

for discussions, they were given the version of the

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assessment made by the Insurance Company amounting  

to  Rs.1,10,67,230/-.  As  against  this,  the  loss  

assessed by M/s. J. Basheer & Associates was almost  

identical,  namely,  Rs.1,10,67,034/-.  Mr.  Gupta  

urged that it was obvious that the assessment made  

by  the  investigators  was  based  on  the  Insurance  

Company’s assessment of the loss suffered by the  

Company on account of the fire.

24. Mr. Piyush Gupta then submitted that Section  

64UM of the Insurance Act, 1938, which provides for  

licensing of Surveyors and Loss Assessors, would be  

attracted to the facts of this case and instead of  

appointing  another  surveyor,  as  was  done  in  the  

instant case by the appointment of M/s. J. Basheer  

& Associates, the Insurance Company ought to have  

gone  to  the  Regulatory  Authority  under  the  

Insurance Regulatory and Development Authority Act,  

1999, and under Sub-Section (3) it was for the said

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Authority to call for an independent report from  

any  other  Approved  Surveyor  or  Loss  Assessor  

specified by it. Mr. Gupta urged that by appointing  

another  surveyor/assessor/investigator  after  M/s.  

Asthana and Joshi had submitted their report, the  

Insurance  Company  had  presented  two  different  

reports  as  to  the  loss  caused  and  had  also  

introduced a third opinion as to the cause of the  

fire from a former Chief Justice of India, Justice  

Y.V. Chandrachud, although, an attempt was made to  

play down the same since it went completely against  

the case of the Insurance Company.  It was pointed  

out  that  Chief  Justice  Chandrachud  had  observed  

that  the  report  submitted  by  M/s.  J.  Basheer  &  

Associates  was  unfounded  and  was  in  any  way  of  

speaking, speculative, while the Joint Surveyors’  

report contained a careful analysis of the event.  

It  was  further  pointed  out  that  Chief  Justice  

Chandrachud came to the conclusion that he had no

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doubt that the fire was accidental and could not by  

any reasonable norm or standard be characterized as  

an act of arson.

25. On the merits of the report submitted by M/s.  

J. Basheer & Associates, Mr. Piyush Gupta submitted  

that one Mr. J. Basheer had been deputed by M/s. J.  

Basheer & Associates to visit the factory premises  

of the Respondent-Company, which had been damaged  

by the fire, only on 14th November, 2000, i.e., 8  

months after the fire had occurred and by that time  

rehabilitation  work  had  already  been  commenced  

after obtaining due permission from the Appellant-

Insurance Company.  Even then, Mr. Basheer was in  

the factory for barely half an hour and did not  

visit the factory ever again.

26. On the point of non-consideration of the last 3  

reports  filed  by  M/s.  J.  Basheer  &  Associates,  

learned counsel submitted that the same was nothing

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but a repetition of what had been mentioned in the  

earlier reports and did not reflect anything new  

which deserved separate consideration.

27. On the quantum of damages, Mr. Piyush Gupta  

referred to the assessment made by the Commission  

on a comparison of the reports submitted by M/s.  

Asthana and Joshi and M/s. J. Basheer & Associates.  

It was submitted that the conclusion arrived at by  

the Commission holding that the report submitted by  

M/s. J. Basheer & Associates was totally unreliable  

and tailor-made with regard to the loss suffered by  

the  Respondent-Company  on  the  basis  of  the  

suggestions made by its Regional Office at Orissa  

and its agreement with the observations made by the  

Joint  Surveyors  to  the  effect  that  the  whole  

exercise of M/s. J. Basheer & Associates was beyond  

their competence, cannot be called into question  

and  the  ultimate  Award  directing  the  Appellant-

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Assurance  Company  to  pay  Rs.2,26,36,179/-  with  

interest @12% per annum from 3 months after the  

date of occurrence of the fire, i.e., from 1st July,  

2000  till  payment,  was  fully  justified  and  the  

further direction to the Insurance Company to pay a  

further sum of Rs.1 lakh to the Respondent-Company  

by way of compensation for unjustly repudiating the  

claim of the Respondent-company did not also call  

for any interference.

28. A  further  submission  was  made  by  Mr.  Gupta  

claiming  payment of interest from the date of the  

fire and not from the date of the final decision of  

the Commission as the delay was on account of the  

Insurance Company, whose repudiation of the claim  

of the Respondent-Company was found to be unjust.  

In this regard reference was made to the decision  

of this Court in Sovintorg (India) Ltd. vs. State  

Bank  of  India,  New  Delhi [(1999)  6  SCC  406],

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wherein Section 14 of the Consumer Protection Act,  

1986, fell for consideration and it was observed  

that where no contract existed between the parties  

regarding payment of interest on delayed deposit or  

service,  interest  could  not  be  claimed  under  

Section 34 C.P.C. as the provisions of the C.P.C.  

have not been made applicable to proceedings under  

the 1986 Act.  However, the general provisions of  

Section  34  of  the  Code  being  based  on  justice,  

equity  and  good  conscience,  would  authorize  the  

consumer courts to grant interest according to the  

circumstances of each case.  It was submitted that  

in the said case the direction to pay interest @12%  

given by the State Commission was enhanced by the  

National Commission to 15% per annum.  Reference  

was also made to the decision of this Court in  

Ghaziabad  Development  Authority vs.  Balbir  Singh  

[(2004)  5  SCC  65],  where  somewhat  similar  views  

were expressed in the context of Section 73 of the

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Contract Act, 1872, and it was observed that the  

award  of  compensation  had  to  be  made  under  

different  and  separate  set  of  circumstances  and  

must vary from case to case depending on the facts  

of each case and no hard and fast rule, could,  

therefore, be laid down.   

29. Mr. Gupta submitted that no interference was  

called for with the impugned Award of the National  

Commission  and  the  appeal  was  liable  to  be  

dismissed.

30. The  nature  of  the  controversy  between  the  

parties has made us dwell on the facts of the case  

at some length.  Despite the extensive submissions  

made on behalf of the parties, the issues to be  

resolved  in  this  Appeal  are  confined  to  two  

questions, namely,

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(i) What was the cause of fire which broke out  

in the factory premises of the assured at  

Bhatkuri at about 8.45 a.m. on 29th March,  

2000?

(ii) What  was  the  extent  of  loss  and  damage  

suffered by the assured on account of such  

fire?

31. As far as the answer to the first question is  

concerned, the report of the Joint Surveyors, M/s.  

Asthana & Joshi, dated 28th August, 2000, indicates  

that the exact cause of the fire was not known,  

though  it  could  be  due  to  a  short  circuit.  

Interestingly, while referring in its report dated  

28th May,  2001,  to  the  reply  given  by  the  Fire  

Officer, Cuttack, to the Khurda Branch Manager of  

the Insurance Company on 5th May, 2001, stating that  

the cause of fire was a “short circuit” in the raw  

material section of the factory premises, M/s. J.

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Basheer & Associates ultimately observed that the  

fire could reasonably be attributed to an act of  “Arson”  by  vested  interests,  for  some  pecuniary  benefit, without any factual basis for the same.  Apart from the aforesaid observation made at the  

end of the report, no foundation has been laid down  

in  the  report  for  such  an  observation  which  

literally appears out of the blues.   

32. Even  if  the  views  expressed  by  the  Joint  

Surveyors, M/s. Asthana and Joshi, on the reports  

submitted  by  M/s.  J.  Basheer  &  Associates  are  

discounted,  although  they  were  appointed  by  the  

Insurance  Company  itself,  one  cannot  ignore  the  

views obtained by the Insurance Company from former  

Chief  Justice,  Y.V.  Chandrachud,  although,  an  

attempt has been made on behalf of the Insurance  

Company  to  exclude  the  said  views  from  

consideration or at least to water down the same by

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taking refuge in Section 45 of the Evidence Act.  

Such a stand has no legs to stand upon, since the  

opinion given by Justice Chandrachud was based on  

an analysis of the materials placed before him by  

the  Insurance  Company,  including  the  reports  

submitted by the Joint Surveyors, M/s. Asthana and  

Joshi and M/s. J. Basheer & Associates. Section 45  

of the Evidence Act empowers the Court, in order to  

form an opinion upon a point of foreign law or of  

science or of art, or as to identity of handwriting  

or finger impressions, to rely upon the opinions of  

persons  specially  skilled  in  such  matters.   The  

case  in  hand  is  quite  different,  as  the  views  

expressed by Justice Chandrachud were not meant to  

be an opinion within the meaning of Section 45 of  

the Evidence Act, but an analysis of the reports  

and the materials provided to His Lordship by the  

Insurance Company.  In fact, the attempt made on  

behalf  of  the  Appellant  Insurance  Company  to

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exclude the views expressed by Justice Chandrachud  

with regard to the cause of fire from the area of  

consideration does not commend itself to us as the  

same  is  a  completely  independent  and  unbiased  

assessment of the events relating to the cause of  

fire on the basis of the materials made available  

to His Lordship.

33. Without any material to support the theory of  

arson projected by M/s. J. Basheer & Associates and  

sufficient material to hold otherwise, it would be  

entirely unjust and inequitable to accept such a  

theory without any evidence whatsoever in support  

thereof. Reference can be made in this context to  

the  submission  made  by  the  counsel  for  the  

Insurance  Company  before  the  National  Commission  

and  quoted  in  para  17  above.   Accordingly,  we  

endorse  the  views  expressed  by  the  National  

Commission that the cause of fire was accidental

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and that the attempt made by M/s. J. Basheer &  

Associates to show that the fire had been caused by  

an  act  of  arson,  was  motivated  and  intended  to  

benefit  the  Appellant  Insurance  Company.  The  

decisions  cited  by  the  parties  were  rendered  in  

their own particular fact situations in accordance  

with law which is not disputed. The fact situations  

are, however, distinguishable.   

34. This brings us to the second question regarding  

the  quantum  of  loss  suffered  by  the  Respondent  

Company  on  account  of  the  fire.   As  has  been  

commented  upon  by  the  Joint  Surveyors  and  Chief  

Justice  Chandrachud  and  subsequently  by  the  

National Commission, the almost identical amounts,  

barring a few rupees, arrived at by the Insurance  

Company  and  M/s.  J.  Basheer  &  Associates  speak  

volumes of the exercise carried out by the latter  

on a wholly cursory investigation which has quite

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aptly been described as “tailor-made”.  The amount  

of  loss  suffered  by  the  Respondent  Company  on  

account  of  the  fire  has  been  calculated  by  the  

Joint  Surveyors  on  the  basis  of  the  amounts  

mentioned  by  the  Respondent  Company  and  the  

computer data available in support thereof and also  

upon cross-checking with the accounts of suppliers  

and  vendors  of  raw  materials  to  the  Respondent  

Company.  We see no reason to differ with the views  

expressed  by  the  National  Commission  in  this  

regard.  We also accept the discretion exercised by  

the  National  Commission  regarding  the  rate  of  

interest awarded from three months after the date  

of the Award. The submissions made on behalf of the  

Respondent Company for enhancement of the same is  

rejected as we are of the view that such exercise  

of discretion was just and equitable in the absence  

of  any  agreement  between  the  parties  regarding  

payment of interest or the quantum thereof.  

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35. The submissions of Mr. Piyush Gupta in regard  

to Section 64 UM of the Insurance Act, 1938, are  

also  of  substance,  as  the  Appellant  Insurance  

Company  should  have  applied  to  the  Regulatory  

Authority  under  the  Act  for  a  second  opinion  

instead of appointing M/s. J. Basheer & Associates  

for the said purpose unilaterally.   The reports  

submitted  by  M/s.  J.  Basheer  &  Associates  are  

liable to be discarded on such ground as well.   

36. The  Appeal  filed  by  the  Insurance  Company,  

therefore, fails on all counts and is dismissed.  

There will be no order as to costs.   

37. Having regard to the judgment delivered today,  

no further orders are required to be passed on the  

application for directions filed on 30.4.2010 on  

behalf of the Respondent Company and supported by

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an affidavit dated 27.4.2010 affirmed by Mr. Piyush  

Gupta and the same is disposed of accordingly.  

________________J. (ALTAMAS KABIR)

________________J. (CYRIAC JOSEPH)

New Delhi Dated: 8th July, 2010.    

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ITEM No.1-A      Court No.2          SECTION  XVII (for judgment)                  

S U P R E M E   C O U R T   O F   I N D I A                           RECORD OF PROCEEDINGS

     CIVIL APPEAL NO.312 OF 2006   

THE NEW INDIA ASSURANCE CO. LTD.        Appellant (s)

                             VERSUS

M/S PROTECTION MANUFACTURERS PVT. LTD.      Respondent (s)

Date : 08/07/2010  This  Petition was called on for    judgment today.

        For Appellant (s)   Mr. Dinesh Mathur,Adv.

Mr. Nishant Menon,Adv. Mr. Rameshwar Prasad Goyal,Adv.

 For Respondent(s) In person

                        Hon'ble Mr. Justice Altamas Kabir  

pronounced  the   Judgment   of  the  Bench  

comprising His Lordship, and Hon'ble Mr.  

Justice Cyriac Joseph.

  The appeal  is  dismissed in terms  

of  the  signed  judgment   placed  on  the  

file. There will be no order as to costs.

            (Ganga Thakur)            (Juginder Kaur)             P.S. to Registrar              Court Master     (Signed Reportable judgment is placed on the file.)

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