Cause Of Fire Is Immaterial If Insured Didn't Instigate It : Supreme Court Explains Principles On Fire Insurance

Reiterating that the exact cause of a fire is immaterial so long as the insured is not its instigator, the Supreme Court on Thursday (October 30) dismissed the appeal filed by the National Insurance Company and upheld the insured's claim for loss arising from a fire that originated from multiple sources.

“Once it is established that the loss is due to fire and there is no allegation/finding of fraud or that the Insured is the instigator of the fire, the cause of fire is immaterial and it will have to be assumed and presumed that the fire is accidental and falls within the ambit and scope of fire policy.”, the court observed.

A bench of Justices Dipankar Datta and Manmohan heard the dispute, which originated from a fire at the premises of Orion Conmerx in September 2010. While the National Insurance Company repudiated the claim based on its final surveyor's report, which opined that the fire was "not accidental," the Court found this reasoning deeply flawed.

The Court held that the surveyor's report was "inconclusive" as it only doubted an electrical short-circuit but never alleged fraud or that the insured instigated the fire. Relying on its 2024 precedent in New India Assurance Company Limited and Others vs. Mudit Roadways, (2024) 3 SCC 193, the judgment authored by Justice Manmohan reaffirmed that "the precise cause of a fire... remains immaterial, provided the claimant is not the instigator of the fire."

The judgment emphasized that the object of fire insurance is to indemnify against loss, and casting upon the insured the burden of proving the exact cause of fire would largely defeat this purpose. The insurer's repudiation was deemed "contrary to record, untenable in law and suffers from arbitrariness and perversity."

“It is settled law that the contract of fire insurance is a contract to indemnify the Insured against loss by fire.”, the court said, while specifying the following rules to determine whether in a particular case, the loss is caused by fire:

“a) There must be an actual fire; hence mere heating or fermentation will not be sufficient to render the insurers liable for loss occasioned thereby.

b) There must be something on fire which ought not to have been on fire.

c) There must be something in the nature of an accident, but a fire occasioned by the wilful act of a third person without the consent of the Insured, is to be regarded as accidental for the purpose of this rule.

If these requisites are satisfied, any loss attributable to the fire, whether by actual burning or otherwise, is within the contract.”

Accordingly, the appeal was dismissed.

Cause Title: NATIONAL INSURANCE COMPANY LTD. VS. ORION CONMERX PVT. LTD.

Citation : 2025 LiveLaw (SC) 1047

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Appearance:

For Appellant(s) : Mr. Ramesh Singh, Sr. Adv. Ms. Bharti Badesra, Adv. Ms. Shivleen Pasricha, Adv. Mr. Karan Khaitan, Adv. Mrs. Bina Gupta, AOR Mrs. Shantha Devi Raman, Adv. Mr. Garvesh Kabra, AOR Mrs. Pooja Kabra, Adv. Ms. Tanisha Goyal, Adv.

For Respondent(s) :Mrs. Shantha Devi Raman, Adv. Mr. Garvesh Kabra, AOR Mrs. Pooja Kabra, Adv. Ms. Tanisha Goyal, Adv. Mr. Ramesh Singh, Sr. Adv. Ms. Bharti Badesra, Adv. Ms. Shivleen Pasricha, Adv. Mr. Karan Khaitan, Adv. Mrs. Bina Gupta, AOR