Once Loss Is Caused By Fire, Cause Of Fire Becomes Immaterial: Supreme Court Allows Insurance Claim

Introduction

The Supreme Court of India recently delivered a landmark judgment that significantly clarifies the legal principles governing fire insurance claims in the country. In the case of Orion Conmerx Private Ltd. v. National Insurance Co. Ltd. (2025 INSC 1271), a two-judge bench comprising Justice Dipankar Datta and Justice Manmohan established that once it is proven that a loss occurred due to fire and there is no allegation or finding of fraud or that the insured instigated the fire, the exact cause of the fire becomes immaterial for the purpose of claiming insurance compensation [1]. This ruling reinforces the fundamental objective of fire insurance policies, which is to restore policyholders to their financial position before the loss occurred, rather than burdening them with the impossible task of proving the precise technical cause of an accidental fire.

The Legal Framework: Fire Insurance Under Indian Law

The Insurance Act, 1938

Fire insurance in India operates within a legal framework primarily established by the Insurance Act, 1938. While there is no standalone legislation specifically titled “Fire Insurance Act,” the Insurance Act, 1938 contains provisions that govern fire insurance business in the country. Section 2(6A) of the Insurance Act, 1938 defines “fire insurance business” as “the business of effecting, otherwise than incidentally to some other class of insurance business, contracts of insurance against loss by or incidental to fire or other occurrence customarily included among the risks insured against in fire insurance policies” [2]. This statutory definition establishes the foundational scope of fire insurance contracts and clarifies that such policies cover not only losses directly caused by fire but also those incidental to fire-related occurrences.

The Insurance Act, 1938 was originally enacted during British India to regulate the insurance sector and provide a legal framework for insurance operations. Following India’s independence, the Act has been amended multiple times to adapt to changing market conditions and regulatory requirements. The establishment of the Insurance Regulatory and Development Authority of India (IRDAI) in 1999 brought further regulatory oversight to the insurance industry, ensuring consumer protection and standardization of practices across the sector.

Consumer Protection Act, 2019

Insurance disputes frequently fall within the jurisdiction of consumer protection forums established under the Consumer Protection Act, 2019. The National Consumer Disputes Redressal Commission (NCDRC) possesses jurisdiction to entertain complaints where the value of goods or services paid as consideration exceeds two crore rupees [3]. This pecuniary jurisdiction threshold represents a significant change from the earlier Consumer Protection Act, 1986, which determined jurisdiction based on the value of goods or services and the compensation claimed, rather than merely the consideration paid.

The NCDRC serves as the apex body in India’s three-tier consumer protection framework, with authority to hear appeals from State Consumer Disputes Redressal Commissions and original complaints involving high-value transactions. For insurance-related disputes, particularly those involving substantial claim amounts, the NCDRC provides an accessible and relatively expeditious forum for consumers seeking redressal against insurance companies accused of unfair claim repudiation.

Background of the Orion Conmerx Case

The Fire Incident and Initial Claim

On September 25, 2010, a devastating fire broke out at the factory premises of Orion Conmerx Private Ltd., causing extensive damage to stocks, raw materials, machinery, building structure, furniture, fixtures, and other assets. The company held valid fire insurance policies issued by National Insurance Company Ltd., and following the incident, filed a claim seeking compensation of approximately three crore thirty lakh rupees. The insured premises were covered under multiple insurance policies that provided protection against fire and related perils.

Repudiation of Claim by the Insurance Company

After conducting surveys through its appointed surveyors, National Insurance Company repudiated the claim on several grounds. The primary basis for repudiation was the final surveyor’s report, which concluded that the fire was “not accidental” and raised doubts about whether the fire was caused by an electrical short circuit. The insurance company’s position rested heavily on this surveyor’s opinion, despite the absence of any direct evidence suggesting fraud, deliberate fire-setting, or misconduct by the insured party.

The insurance company’s refusal to honor the claim forced Orion Conmerx to seek relief through the consumer protection machinery. The company approached the National Consumer Disputes Redressal Commission, arguing that the repudiation was arbitrary, unjustified, and contrary to the fundamental principles of insurance law.

Proceedings Before NCDRC

The NCDRC, in its order dated August 10, 2020, partly allowed the complaint and directed the insurance company to pay sixty-one lakh thirty-nine thousand rupees with nine percent annual interest from the date of repudiation. However, both parties were dissatisfied with this outcome. The insurance company challenged the liability itself, while Orion Conmerx sought full compensation for the losses suffered. This resulted in cross-appeals being filed before the Supreme Court of India.

Supreme Court’s Landmark Judgment

Core Principles Established

The Supreme Court’s judgment in Orion Conmerx Private Ltd. v. National Insurance Co. Ltd. established several crucial principles that now govern fire insurance claims in India. The Court held unequivocally that “once it is established that the loss is due to fire and there is no allegation or 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” [1].

This principle significantly shifts the evidentiary burden in fire insurance claims. Rather than requiring the insured to prove the exact technical cause of the fire, the law now presumes that any fire is accidental unless the insurer can demonstrate fraud or deliberate fire-setting by the insured. This approach recognizes the practical reality that determining the precise cause of a fire often requires extensive forensic investigation and may sometimes be impossible even with expert analysis.

Reliance on Precedent: New India Assurance v. Mudit Roadways

The Supreme Court drew heavily upon its earlier judgment in New India Assurance Company Limited v. Mudit Roadways (2024) 3 SCC 193, which had established similar principles [4]. In that case, a bench comprising Justice Hrishikesh Roy and Justice Sanjay Karol had observed that “the precise cause of a fire, whether attributed to a short circuit or any alternative factor, remains immaterial, provided the claimant is not the instigator of the fire.” The judgment emphasized that casting upon the insured the burden of proving the exact cause of fire would largely defeat the fundamental purpose of fire insurance.

In the Mudit Roadways case, the insured warehouse suffered a fire on March 14, 2018, with multiple investigation reports suggesting different potential causes. Seven out of nine reports indicated that an electrical short circuit was the probable cause, while the insurance company’s forensic report suggested welding sparks as a possible trigger. Despite these conflicting findings, the Supreme Court held that the insurer could not escape liability merely because the exact technical cause remained uncertain. The Court noted that the insurance company cannot be permitted to rely selectively on reports that favor its position while ignoring those that support the insured’s claim.

Rejection of the Surveyor’s Report

One of the most significant aspects of the Orion Conmerx judgment was the Court’s treatment of the surveyor’s report. The Supreme Court found that the final surveyor’s report was “inconclusive” as it only expressed doubt about an electrical short circuit but never alleged fraud or that the insured instigated the fire. The Court stated emphatically that “there is no reasoning in the final surveyor’s report as to why the fire is not accidental” [1].

The judgment clarified that surveyor reports, while important pieces of evidence, are neither conclusive nor binding upon courts or the parties involved. In New India Assurance Co. Ltd. v. Pradeep Kumar (2009) 7 SCC 787, the Supreme Court had earlier observed that “the approved surveyor’s report may be the basis or foundation for the settlement of a claim by the insurer in respect of loss suffered by the insured but such report is neither binding upon the insurer nor insured” [5]. Courts possess the authority to examine all available evidence and reach independent conclusions based on the preponderance of probabilities.

Application of the Doctrine of Uberrima Fides

Insurance contracts operate on the principle of uberrima fides, meaning utmost good faith. Both parties to an insurance contract are expected to act with complete honesty and disclose all material facts. The Supreme Court in Orion Conmerx recognized that the cause of fire becomes relevant only when there is evidence suggesting fraud or breach of this doctrine. If the fire was willfully caused by the insured or occurred with their consent, the claim would amount to fraud and would be unenforceable. However, in the absence of any such evidence, the insurer cannot deny liability based merely on technical uncertainties about the fire’s origin.

Judicial Precedents and Legal Doctrine

Canara Bank v. United India Insurance Company

The legal principle that the cause of fire is immaterial when the insured is not the instigator finds strong support in Canara Bank v. United India Insurance Company (2020) 3 SCC 455 [6]. In this case, a cold storage facility insured by United India Insurance Company was destroyed by fire, along with the entire stock of agricultural produce stored within. The insurance company sought to avoid liability by questioning various aspects of the claim.

The Supreme Court, in its ruling on fire insurance claims, held that the insurance company could not escape its liability if there was nothing to prove that the fire was caused by the insured itself, irrespective of the actual cause of the fire. This judgment emphasized that coverage provisions in fire insurance policies should be interpreted broadly, and any ambiguity should be resolved in favor of the insured. The Court noted that if a column in the proposal form is left blank, the insurance company should ask the insured to fill it before accepting the premium and cannot later claim misrepresentation.

Principles of Interpretation of Insurance Policies

Courts have consistently held that insurance policies must be interpreted in a manner that gives effect to the reasonable expectations of all parties, including the insured and beneficiaries. The Supreme Court has established that while the terms of an insurance policy must be strictly construed to determine the extent of the insurer’s liability, this strict construction should not result in defeating the very purpose of insurance protection. When faced with ambiguous policy language, courts are directed to adopt an interpretation favorable to the insured, recognizing the disparity in bargaining power between insurance companies and individual policyholders.

Limitation on Grounds for Repudiation

An important principle established through case law is that insurance companies cannot introduce new grounds for repudiation during litigation if those grounds were not mentioned in the original repudiation letter. In Galada Power and Telecommunication Ltd. v. United India Insurance Co. Ltd. (2016) 14 SCC 161, the Court held that new grounds for claim repudiation cannot be raised during hearing if they were not explicitly specified in the repudiation letter [7]. This principle was reaffirmed in Saurashtra Chemicals Ltd. v. National Insurance Co. Ltd. (2019) 19 SCC 70, where the Court reiterated that insurers must adhere strictly to the grounds stated in the repudiation letter and cannot introduce additional reasons during litigation.

This doctrine protects insured parties from shifting justifications and ensures that insurance companies conduct thorough investigations before repudiating claims. It prevents insurers from adopting a strategy of finding post-hoc justifications for denials after initial repudiation based on inadequate grounds.

Requirements for Fire Insurance Claims

Conditions That Must Be Established

Based on the Orion Conmerx judgment and related precedents, the Supreme Court outlined specific conditions that must be satisfied for a fire insurance claim to succeed. First, there must be actual fire, meaning combustion accompanied by flame or glow. Second, there must be something on fire which ought not to have been on fire, establishing that the fire was unwanted and destructive rather than controlled or intentional. Third, there must be something in the nature of an accident, though a fire occasioned by the willful act of a third person without the consent of the insured is to be regarded as accidental for insurance purposes.

If these requisites are satisfied, any loss attributable to the fire, whether by actual burning or otherwise, falls within the insurance contract. The insured need not prove the technical mechanism or exact starting point of the fire, so long as the fire itself and the resulting loss are established through credible evidence.

Burden of Proof

The allocation of the burden of proof in fire insurance claims heavily favors the insured once the basic fact of fire and loss is established. The insured must prove that a fire occurred, that it caused loss to insured property, and that the loss falls within the policy’s coverage. However, the insured is not required to prove the negative proposition that they did not cause the fire. Instead, if the insurer wishes to deny the claim on grounds of fraud, arson, or deliberate fire-setting, the burden lies squarely on the insurer to prove these allegations with credible evidence.

This allocation of burden recognizes the practical difficulty an insured would face in proving what they did not do, and acknowledges that insurance companies typically have greater resources and expertise to conduct investigations into suspicious fires. The law does not permit insurers to hide behind inconclusive surveyor reports or mere speculation about the fire’s origin.

The Strategic Importance of Fire Insurance

Risk Management and Economic Resilience

The Supreme Court in Orion Conmerx emphasized the broader economic significance of fire insurance. The Court observed that “fire insurance is a strategic tool for risk management, asset protection and economic resilience. Fire insurance policy does not prevent fire – but it cushions the financial impact when it occurs” [8]. This recognition highlights that fire insurance serves not merely as a contractual arrangement between two parties, but as a critical component of economic stability for businesses and individuals.

For businesses, particularly manufacturing and storage facilities, fire poses one of the most catastrophic risks imaginable. A single fire incident can destroy years of accumulated capital, inventory, equipment, and infrastructure. Without adequate insurance protection that can be relied upon with confidence, businesses would face existential threats from fire hazards, potentially discouraging investment and economic activity. The Supreme Court’s judgment reinforces that fire insurance must function as a genuine safety net rather than becoming an illusory promise undermined by technical objections.

The Objective of Indemnification

The fundamental purpose of fire insurance is indemnification, meaning restoration of the insured to their pre-loss financial position. The Supreme Court emphasized that this objective would be defeated if insureds were required to prove the exact technical cause of every fire. Most policyholders lack the expertise, resources, or access necessary to conduct detailed forensic fire investigations. Moreover, in many cases, the complete destruction of evidence makes definitive determination of cause impossible even for experts.

By establishing that the cause of fire is immaterial absent fraud or deliberate fire-setting, the Supreme Court ensures that fire insurance operates according to its intended purpose. Policyholders who suffer genuine accidental losses can recover compensation without becoming mired in endless technical disputes about whether the fire started from an electrical short circuit, spontaneous combustion, lightning, or some other accidental cause.

Specific Issues Addressed in Orion Conmerx

Furniture, Fixtures and Fittings (FFF)

One particular dispute in the Orion Conmerx case concerned the interpretation of the abbreviation “FFF” in the insurance policy. The insurance company argued for a restrictive interpretation, while the insured contended that FFF clearly denoted furniture, fixtures, and fittings, all of which had been damaged in the fire. The Supreme Court held that the abbreviation FFF clearly means furniture, fixtures, and fittings, and rejected the insurance company’s attempt to deny coverage through narrow interpretation of policy terms. This ruling reinforces the principle that ambiguous policy language should be construed in favor of coverage rather than exclusion.

Quantum of Loss

The Supreme Court found that Orion Conmerx had substantiated its claim for losses of three crore thirty lakh rupees through contemporaneous records, cost sheets, and documentation of cancelled orders resulting from the fire. The Court noted that the surveyor had ignored over five thousand eight hundred pages of supporting documents submitted by the insured. This finding highlights that while surveyors’ reports are relevant, courts will not permit mechanical rejection of well-documented claims based on surveyor opinions that fail to properly consider all available evidence.

The Court ultimately allowed Orion Conmerx’s cross-appeal and directed that the company be compensated with interest for the full extent of proven losses, rather than the reduced amount awarded by the NCDRC. This outcome demonstrates judicial willingness to scrutinize whether insurance companies have genuinely investigated claims or have simply sought pretexts for denial.

Implications for Insurance Practice

Guidance for Policyholders

The Orion Conmerx judgment provides important guidance for policyholders pursuing fire insurance claims. First, policyholders should ensure prompt notification of fire incidents to insurers and maintain detailed documentation of losses. While the exact cause of fire need not be proven, establishing the occurrence of fire and the extent of damage requires credible evidence. Photographs, police reports, fire department reports, and contemporaneous business records all serve as valuable evidence.

Second, policyholders should not be deterred by inconclusive or adverse surveyor reports. The Supreme Court has made clear that such reports are not binding and can be challenged with contrary evidence. Independent expert opinions, government investigation reports, and logical analysis of circumstances can all be presented to counter an unfavorable surveyor assessment.

Third, policyholders should understand that insurance companies cannot shift grounds for repudiation during litigation. If an insurer initially repudiates a claim based on certain specified grounds, those grounds define the scope of the dispute. Additional grounds cannot be introduced later to justify the denial.

Obligations of Insurance Companies

For insurance companies, the judgment imposes clear obligations regarding claim handling. Companies must conduct thorough investigations before repudiating claims, and cannot rely on vague or conclusory surveyor reports that merely express doubt without substantive evidence of fraud or misconduct. The principle of utmost good faith applies to insurers as well as insured parties, requiring honest and fair dealing in claim assessment.

Insurance companies must recognize that fire insurance policies are designed to provide protection against accidental fires, and the law presumes that fires are accidental unless proven otherwise. Companies that adopt a routine practice of denying claims based on inconclusive evidence or technical objections risk adverse judicial intervention and damage to their reputation.

Regulatory Framework and IRDAI’s Role

Insurance Regulatory and Development Authority of India

The Insurance Regulatory and Development Authority of India (IRDAI), established under the Insurance Regulatory and Development Authority Act, 1999, serves as the principal regulator of the insurance sector in India. IRDAI issues regulations governing policy terms, claim settlement procedures, and consumer protection standards that insurance companies must follow. The authority has issued guidelines requiring insurers to settle claims promptly and fairly, with specific timelines for claim processing and investigation.

IRDAI regulations require insurance companies to maintain transparency in policy terms and to avoid unfair practices in claim settlement. The authority can impose penalties on insurers found to be systematically denying valid claims or failing to adhere to fair claim settlement practices. The Supreme Court’s judgment in Orion Conmerx reinforces these regulatory expectations by establishing clear legal standards that prevent arbitrary claim repudiation.

Conclusion

The Supreme Court’s judgment in Orion Conmerx Private Ltd. v. National Insurance Co. Ltd. represents a significant advancement in Indian insurance jurisprudence. By establishing that the cause of fire is immaterial once loss is proven and fraud is absent, the Court has strengthened protection for policyholders pursuing fire insurance claims, while preserving legitimate defenses for insurers against fraudulent claims. The judgment recognizes fire insurance as a critical tool for economic stability and risk management, deserving of interpretation that furthers rather than frustrates its protective purpose.

This ruling builds upon earlier precedents including New India Assurance v. Mudit Roadways and Canara Bank v. United India Insurance Company, creating a coherent body of law that clarifies the rights and obligations of parties to fire insurance contracts. Policyholders can now pursue fire insurance claims with greater confidence, knowing that they need not prove the technically impossible task of establishing the exact cause of an accidental fire. Insurance companies, meanwhile, retain the ability to contest claims where evidence of fraud or deliberate misconduct exists, but cannot hide behind inconclusive surveyor reports or speculative doubts.

The judgment serves the interests of justice by ensuring that fire insurance operates as a genuine safety net for those who suffer losses from accidental fires, while maintaining appropriate safeguards against fraudulent claims. As India’s economy continues to grow and businesses expand, the availability of reliable fire insurance backed by fair legal principles becomes increasingly important for sustainable development and investor confidence.

References

[1] Verdictum. “Once Accidental Fire And Loss Are Established And No Fraud Is Alleged, Cause Of Fire Is Immaterial For Insurance Claim: Supreme Court.” Verdictum, 31 Oct. 2025, https://www.verdictum.in/court-updates/supreme-court/orion-conmerx-private-ltd-v-national-insurance-co-ltd-2025-insc-1271-1596357

[2] Indian Kanoon. “Section 2(6A) in The Insurance Act, 1938.” Indian Kanoon, https://indiankanoon.org/doc/1458592/

[3] LiveLaw. “Pecuniary Jurisdiction Of Consumer Fora To Be Determined By Value Of Goods/ Services ‘Paid’ As Consideration: NCDRC.” LiveLaw, 5 Sept. 2020, https://www.livelaw.in/news-updates/pecuniary-jurisdiction-of-consumer-fora-to-be-determined-by-value-of-goods-services-paid-as-consideration-ncdrc-162440

[4] Indian Kanoon. “New India Assurance Co. Ltd. vs M/S. Mudit Roadways on 24 November, 2023.” Indian Kanoon, https://indiankanoon.org/doc/16332987/

[5] LiveLaw. “Fire Insurance | Exact Cause Of Fire Immaterial If Insured Was Not Responsible For Initiating Fire: Supreme Court.” LiveLaw, 1 Dec. 2023, https://www.livelaw.in/supreme-court/supreme-court-ruling-exact-cause-of-fire-irrelevant-if-insured-not-responsible-insurer-responsibility-canara-bank-v-united-india-insurance-company-243213

[6] Indian Kanoon. “Canara Bank vs M/S United India Insurance Co. Ltd on 6 February, 2020.” Indian Kanoon, https://indiankanoon.org/doc/146264212/

[7] CaseMine. “New India Assurance Co. Ltd. v. M/S. Mudit Roadways: Establishing Limits on Claim Repudiation in Fire Insurance.” CaseMine, 25 Nov. 2023, https://www.casemine.com/commentary/in/new-india-assurance-co.-ltd.-v.-m-s.-mudit-roadways:-establishing-limits-on-claim-repudiation-in-fire-insurance/view

[8] ETV Bharat. “Cause Of Fire Immaterial For Claims, Fire Insurance Is A Strategic Tool For Risk Management: SC.” ETV Bharat, 30 Oct. 2025, https://www.etvbharat.com/en/bharat/cause-of-fire-immaterial-for-claims-fire-insurance-is-a-strategic-tool-for-risk-management-says-sc-enn25103006197

[9] LiveLaw. “Cause Of Fire Is Immaterial If Insured Didn’t Instigate It: Supreme Court Explains Principles On Fire Insurance.” LiveLaw, 30 Oct. 2025, https://www.livelaw.in/supreme-court/cause-of-fire-is-immaterial-if-insured-didnt-instigate-it-supreme-court-explains-principles-on-fire-insurance-308347