Damage by fire less than a second enough to claim insurance: SC

The Supreme Court has ruled that insurance has to be paid for the damage caused by a fire that lasted just for a fraction of second and not long.     

"As long as there is a fire which caused the damage, the claim is maintainable, even if the fire is for a fraction of a second," the Supreme Court has said.  

A bench headed by Justice Markandey Katju upheld a National Consumer Disputes Redressal Commission's decision in the case of agri-inputs firm Zuari Industries and said it was the incident of fire and not the duration that was required for claiming compensation from the insurance companies.     

According to the court, there was no direct decision of the apex court on the issue of the proximate cause of the damage due to fire.     

It said that various decisions of the foreign courts and a predominant view appeared to be the proximate cause was not the cause which was nearest in time or place "but the active and efficient cause that sets in motion a train or chain of events which brings about the ultimate result without the intervention of any other force working from an independent source."  

In Zuari's case, Justice Katju dismissed the insurance companies plea and said the fire was the efficient and active cause of the damage. "Had the fire not occured, the damage also would not have occured and there was no intervening agency which was an independent source of damage," the judgement said.     

Zuari had taken insurance policies, including fire policy, from New India Assurance Company Ltd in respect of its factory situated in Goa in April 1998.Due to short circuiting in the main switch board installed in the factory, the entire electric supply to the plant had stopped leading to severe damage to its boiler.      

After the insurance company had rejected Zuari's claim of more than Rs 20.46 crore, the latter had moved the Commission.     

New India Assurance had stated that the loss to the boiler and other equipment was not caused by the fire but by the stoppage of electric suplly due to short circuiting in the switch board.     

The cause of loss to the boiler and other equipment was the thermal shock caused due to stoppage of electriciy and not to any fire, the insurance company had said, adding the proximate cause had to be seen for settling an insurance claim."