Fire insurance repudiation fails where the insured premises are covered, negligence is unproven, and new grounds cannot be added later.

The insured warehouse at Survey No. 9/3 was treated as covered under the fire policy because the policy records, licence arrangements and related communications consistently identified that premises. Repudiation for alleged insured negligence failed because public and independent reports supported an electrical short circuit, the insurer's forensic material was inconclusive, and the rooftop repair work was not shown to increase risk materially. The insurer was also held bound by the grounds in its repudiation letter and could not add new objections later. The customs duty component on destroyed bonded goods was accepted for direct payment to customs authorities, and the claim denial was found wrongful.

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Issues: (i) Whether the insured warehouse at Survey No. 9/3 was covered under the policy; (ii) whether the fire was shown to have been caused by the insured's negligence so as to justify repudiation under the policy conditions; (iii) whether the customs duty component was recoverable under the claim and whether the insurer could raise additional grounds beyond the repudiation letter.

Issue (i): Whether the insured warehouse at Survey No. 9/3 was covered under the policy.

Analysis: The policy documents, leave and licence arrangement, customs-related permissions, and surrounding communications consistently identified the insured premises at Survey No. 9/3. The materials on record did not support the insurer's stand that the fire occurred outside the insured location.

Conclusion: The warehouse where the fire occurred was covered under the policy, against the insurer's contention.

Issue (ii): Whether the fire was shown to have been caused by the insured's negligence so as to justify repudiation under the policy conditions.

Analysis: Multiple reports from public authorities, police, and independent surveyors pointed to electrical short circuit, while the insurer's forensic material was treated as inconclusive. The rooftop repair work was not found to be an alteration increasing the insured risk, and the insurer was held bound by the grounds stated in the repudiation letter and could not add new grounds at the hearing. The surveyor's report was treated as important but not final or binding.

Conclusion: The insurer failed to establish negligence or a valid policy breach, and the repudiation on that basis was unjustified.

Issue (iii): Whether the customs duty component was recoverable under the claim and whether the insurer could raise additional grounds beyond the repudiation letter.

Analysis: The claim included customs duty payable in respect of destroyed bonded goods, and the insured had undertaken that the amount could be paid directly to the customs authorities. The Court accepted that unjust enrichment did not arise and that the duty component could be handled through direct payment. It also reaffirmed that the insurer could not travel beyond the stated repudiation grounds.

Conclusion: The customs duty component was not disallowed, and the insurer's additional objections were rejected.

Final Conclusion: The denial of the insurance claim was held to be wrongful, the insured's claim was sustained, and the appeal failed with the duty component to be remitted directly to the customs authorities.

Ratio Decidendi: An insurer cannot justify repudiation on grounds not stated in the repudiation letter, a surveyor's report is not conclusive, and liability under a fire policy cannot be avoided merely because the precise cause of fire is disputed if the insured is not shown to have caused the fire or breached the policy in a material way.

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