In a detailed ruling that could reshape how insurance disputes over accidental fires are interpreted, the Supreme Court of India has held that the 2010 fire at Orion Conmerx Pvt. Ltd. was an “accidental fire” and directed National Insurance Company Ltd. to release the full compensation owed under the company’s fire policies. The Court dismissed the insurer’s appeal and allowed Orion’s plea, concluding that the repudiation of the claim was “contrary to record, arbitrary, and perverse.”
Background
The case stemmed from a fire that broke out on September 25, 2010, at Orion Conmerx’s industrial unit, destroying large quantities of finished and semi-finished leather goods, raw materials, and showroom items. The company filed a claim of over ₹3.3 crore under its fire insurance policies.
However, the insurer rejected the claim, arguing that the fire was not “accidental.” Its surveyor alleged “multiple sources of ignition,” implying possible human interference. The National Consumer Disputes Redressal Commission (NCDRC) partly allowed Orion’s complaint in 2020 and directed the insurer to pay ₹61.39 lakh with 9% interest. Both parties appealed to the Supreme Court-Orion seeking full payment, and the insurer seeking dismissal.
Court’s Observations
A bench of Justice Dipankar Datta and Justice Manmohan heard extensive arguments from both sides. The Court first reaffirmed key principles of fire insurance, stating that the insurer must indemnify losses caused by fire, “unless the insured himself has caused it.”
“The precise cause of a fire-whether short circuit or something else-is immaterial, provided the claimant is not the instigator,” the Court noted, citing New India Assurance Co. Ltd. vs. Mudit Roadways (2024).
The bench criticized the final surveyor’s conclusion that the fire was “not accidental,” saying it lacked reasoning. “The report does not show any finding that the insured caused the fire or that the incident fell within the exclusion clauses,” Justice Manmohan observed. “Hence, the occurrence must be presumed accidental.”
The Court also pointed out that the insurance policy specifically covered ‘FFF’-meaning furniture, fixtures, and fittings and therefore rejecting those claims was “a clear error.”
“The surveyor’s evasive replies to simple questions about the meaning of FFF are telling,” the bench said.
On the stock loss, the Court held that Orion had submitted extensive, contemporaneous business records—cost sheets, stock statements, production logs, and order cancellations—that clearly substantiated its losses. It noted that the surveyor failed to review over 5,800 pages of documents provided.
Assigning a uniform value of ₹450 per item “whether leather belt or jacket” was, the Court said, “deeply flawed and perverse.”
Decision
Concluding that Orion’s claim was justified, the Court held that the fire was accidental and that the insurer must honour the policy in full.
It dismissed National Insurance’s appeal and allowed Orion’s appeal, modifying only the interest rate to 6% per annum, payable from three months after the incident until full payment.
“The objective of a fire insurance policy,” the Court concluded, “is to restore the policyholder to the financial position before the loss, not to multiply his hardship through unjustified denial.”
Case Title: Orion Conmerx Pvt. Ltd. vs. National Insurance Co. Ltd.
Case Type: Civil Appeal Nos. 3806 & 3855 of 2020
Court: Supreme Court of India
Bench: Justice Dipankar Datta and Justice Manmohan
Citation: 2025 INSC 1271
Date of Judgment: October 30, 2025
