On July 27, 2017, a flood occurred due to a breach in the Shilabati River embankment. Water entered the hospital's ground floor. The councillor, Ghatal Municipality, certified this.
The flood water damaged the hospital equipment. The insured promptly intimated this to the insurer, which appointed a surveyor to inspect and assess the loss. The insured also provided all the documents sought by the surveyor. However, the claim remained pending. Hence, the insured filed a complaint before the National Consumer Disputes Redressal Commission (National Commission), claiming reimbursement for loss amounting to ₹46,69,687, along with interest and compensation.
The insurer contested the case on technicalities as well as merits. It contended that the requisite documents had not been supplied and that the surveyor had assessed the loss at ₹2,06,791, with the observation that the claim should be treated as “no claim” since there were no bills for the purchase of the equipment. The insurer also stated that when the equipment was purchased, the hospital did not have a valid licence to function. Hence, it repudiated the claim on July 25, 2018.
The insured pointed out that at the time of taking the policy, the hospital held a valid licence issued under the West Bengal Clinical Establishment Act, 1950, and was entitled to run the hospital. Also, the equipment had been purchased on an “as is where is” basis at an auction of mortgaged properties sold by State Bank of India. The hospital pointed out that the insurer issued the policy after ascertaining the value of the insured items, so if there was any doubt about the licence to run the hospital or the value of the equipment, the insurer should have cleared these before issuing the policy. It alleged that the insurer was raising objections after the loss and destruction of documents in the flood, with the mala fide intention of avoiding settlement of the claim.
In its judgment, delivered on April 7, 2026, by Justice Anoop Kumar Mendiratta, on behalf of the Bench headed by J Rajendra, the National Commission overruled the objection and held that even though the hospital was a commercial entity, the complaint would be maintainable as the policy was not obtained for a commercial purpose but for indemnification of a contingent loss.
On merits, the Commission observed that the insurer issued the policy after ascertaining the documents, which included the licence to run the hospital and proof of purchase of the insured equipment. The certificate issued by the Municipal Council also established the flooding incident. So, the Commission held the claim to be maintainable.
As regards the quantum of the claim, the Commission noted that there was no justification for the surveyor to apply 50 per cent depreciation from the purchase date of the equipment, as the equipment had been revalued at the time of obtaining the policy. The Commission concluded that after issuing the policy with “open eyes”, the insurer could not dispute the valuation of the equipment.
The Commission ordered the insurer to settle the claim by paying ₹46,24,687 after deducting ₹45,000 for salvage. In addition, it granted 6 per cent interest and compensation of ₹25,000.
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The writer is a consumer activist
 "CCPA, Central Consumer Protection Authority, ORDER, JUSTICE, COURT ORDER")