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On January 7, 2010, around 1.30 PM, Mr. Sharma was riding his scooter to Narela, carrying his wife’s gold jewellery in a pouch, because he planned to go to a jewellery store in Dariba Kalan, Chandni Chowk. By about 3 PM, he realized the pouch was missing from his pocket. He immediately went to Bawana Police Station to report the loss, for which the police issued a NCR (non-cognizable report). The jewellery was valued at Rs 18.37 lakh and was insured.
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He also notified his insurance company about the incident as he had taken an insurance policy covering various household items including his wife’s jewellery. However, the insurance company rejected the claim. They pointed out that Mr. Sharma had taken out this policy on December 24, 2009 and this alleged theft occurred within a very short time frame. The insurance company also argued that Mr Sharma did not take adequate care of the Insured items to prevent the loss.
The insurance company noted that he claimed to be travelling alone with the jewellery, first to Narela to inspect a plot and thereafter to Dariba Kalan for a jewellery replacement, even though the locations are in opposite directions and approximately 30–35 kilometres apart.
Feeling aggrieved, Mr. Sharma lodged a consumer complaint against the insurance company. The district consumer commission found the insurance company guilty of deficiency in arbitrarily refusing the claim and denying its liability and ordered them to pay Rs 17.75 lakh with 9% interest from date of repudiation until payment, along with Rs 50,000 in compensation for the deficiency, including legal costs.
Dissatisfied, the insurance company appealed to the Delhi State Consumer Commission. On January 15, 2026, the Delhi State Consumer Commission dismissed the appeal and upheld the district commission’s order.
Summary of the judgement
The Delhi State Commission pointed out that the insurance policy included cover for “all risks” related to jewellery, including loss by accident or misfortune. Moreover, the state consumer commission held that the insurer, having issued the policy after accepting the valuation report and being aware that purchase bills were unavailable, could not later question ownership, valuation, or existence of the jewellery after the loss had occurred.
The State Consumer Commission further noted that the surveyor’s doubts were based on assumptions and subjective perceptions, without any solid evidence to refute the loss.
Citing established law, the Delhi State Consumer Commission reiterated that a surveyor’s report is not conclusive and repudiation of a claim cannot rest on conjectures. Thus the state consumer commission upheld the district commission’s order. If the insurance company doesn’t appeal to the NCDRC, then the claimant could receive Rs 17.75 lakh insurance payout with 9% interest and Rs 50,000 in compensation.
Delhi State Consumer Commission analysis and discussion
The Delhi State Consumer Commission pointed out that the only question they need to consider is whether the District Commission incorrectly found the appellant (the insurer) liable for deficiency in service.
Insurer failed to establish “logic or reasonability” of carrying the jewellery
From the record, it is clear that Mr Sharma lodged a police report about the missing jewellery on January 7, 2010. He mentioned that he was heading to Narela on his scooter around 1:30 p.m. with his wife’s jewellery in a pouch in his pocket, as planned to go to Dariba Kalan, Chandni Chowk, to visit Kapoor Jewellers.
By 3:00 p.m., he checked and realized that the pouch was missing from his pocket. The following day, i.e. January 8, 2010, he promptly informed the insurance company about the incident.
In response, the insurance company hired a surveyor. The surveyor submitted his report on March 18, 2010 and assessed the loss at Rs 17,75,520. However, the surveyor noted that the incident and the circumstances leading to the loss of the gold articles didn’t seem logical or reasonable and couldn’t be backed up by any external evidence other than the insured’s statement. Consequently, the insurance company rejected the claim in a letter dated April 15, 2010.
The state consumer commission said: “However, the observation of the surveyor that the respondent failed to establish the “logic or reasonability” of carrying the jewellery is merely an opinion based on presumption and assumption. The surveyor has not disputed the valuation, existence of the policy or the occurrence of loss.”
Denial of the claim cannot be based on conjectures or subjective perceptions
More so, as the it is pertinent to note that Sharma had intimated the insurer about the incident on January 8, 2010 whereas the insurer appointed the surveyor on January 16, 2010 i.e., after about one week from the date of the incident and the investigation was conducted on January 17, 2010.
The consumer commission said: “In such circumstances, some difficulty may arise in investigating the matter of loss of articles, particularly when the insured himself was commuting between Narela and Dariba Kalan, Chandni Chowk. However, denial of the claim cannot be based on conjectures or subjective perceptions.”
The consumer commission said that it is necessary to refer to the Section III of the insurance policy, which deals with “All Risks of Jewellery and Valuables” wherein the said policy specifically covers loss caused by accident or misfortune.
The insurance company repudiated the claim questioning the ownership of jewellery, absence of purchase bills, alleged improbability of travel and alleged lack of reasonable care.
The state consumer commission said: “However, the appellant (the insurer) failed to file any cogent document or evidence to substantiate the aforesaid grounds of reject of the claim.”
Raising doubts regarding the value or existence of the jewellery after the loss is clearly unjustified
At the time of issuance of the policy, he had complied with all the formalities required by the insurance company and they issued the policy only after accepting the valuation report submitted by a certified valuer for the gold articles.
The surveyor as well as the insurance company have not disputed the valuation report at any stage.
Also, it is clear from the Annexure C-I of the insurance policy that at the time of taking the policy, he had disclosed that the bills for jewellery were lost or misplaced.
“Therefore, the appellant (insurance company) ought to have raised any doubt at the time of issuance of the policy towards the ownership of jewellery and absence of purchase bills. As a result, raising doubts regarding the value or existence of the jewellery after the loss is clearly unjustified.”
Supreme Court precedent cited
Case law cited: National Insurance Company Ltd. Vs. Hareshwar Enterprises (P) Ltd. & Ors. reported in 2021(226) AIC 179, wherein the Apex court has held as under:
“11. In the said decision, it is no doubt held that though the assessment of loss by an approved surveyor is a prerequisite for payment or settlement of the claim, the surveyor report is not the last and final word. It is not that sacrosanct that it cannot be departed from and it is not conclusive. The approved surveyor’s report may be the basis or foundation for settlement of a claim by the insurer in respect of loss suffered by insured but such report is neither binding upon the insurer nor insured. On the said proposition, we are certain that there can be no quarrel. The surveyor’s report certainly can be taken note as a piece of evidence until more reliable evidence is brought on record to rebut the contents of the surveyor’s report.”
The state consumer commission said: “The above dicta reflect that the surveyor’s report is not final or conclusive and may be departed from where the circumstances so warrant as it is neither binding upon the insurer nor upon the insured.”
Consequently, the Delhi State Consumer Commission observed that the Appellant (insurance company) repudiated the claim of the respondent (Mr Sharma) based on assumptions and presumptions as once the policy has been issued after due verification, the insurer cannot subsequently question the valuation, ownership, or existence of the jewellery only after the loss has occurred.
Therefore, the district commission has rightly appreciated the evidence on record and rightly held the appellant (insurer) liable for deficiency in service.
Judgement:
- In light of the aforesaid discussion, we find no reason to interfere with the order dated September 12, 2014 passed by the District Consumer Disputes Redressal Commission– VI, New-Delhi District, M-Block First Floor, Vikas Bhawan, I.P. Estate, New Delhi- 110002.
- Consequently, the present Appeal stands dismissed with no order as to costs. Application(s) pending, if any, stand disposed of in terms of the aforesaid judgment.
Calculation
- Principal (Claim amount): ₹17,75,520
- Rate of interest: 9% per annum (simple interest)
- Period: 15 April 2010 to 15 January 2026
Time period calculation
- From 15 April 2010 to 15 April 2025 = 15 years
- From 15 April 2025 to 15 January 2026 = 9 months = 0.75 year
- Total time = 15.75 years
- = 17,75,520 × 9% × 15.75
- = 17,75,520 × 0.09 × 15.75
- = Rs 25,17,199 (approx.)
Total amount payable
- Interest: ₹25,17,199
- Principal: Rs 17,75,520
Total = Rs 42,92,719 (approx.)
This excludes the additional Rs 50,000 compensation and any higher interest (12%) applicable if payment was delayed beyond 30 days, as mentioned in the order.
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