Fire insurance — nature of contract — cause of fire. — A fire insurance policy is a contract of indemnity. Once it is established that loss has occurred by fire and there is no allegation or finding of fraud or that the insured instigated the fire, the precise technical cause of the fire is immaterial; the insurer cannot repudiate liability merely because the surveyor opines that the fire did not originate from a particular source unless an exclusion or culpability is proved. (Paras 32–43, 36.) Surveyor’s report — scope of challenge before consumer forum. — A surveyor’s reasoned on-site report is entitled to weight; however, where the final surveyor’s conclusions lack cogent reasoning or ignore contemporaneous primary business records produced by the insured, the report may be held to be perverse and arbitrary. Consumer fora need not subject a surveyor’s report to microscopic forensic dissection but may quash it where it is vitiated by omission or arbitrariness. (Paras 14, 57, 62.) Interpretation of policy abbreviations — ‘FFF’. — Ambiguous policy language must be construed commercially and in favour of the insured; the abbreviation “FFF” in the policy is to be read as “Furniture, Fixtures & Fittings” and cannot be excluded without clear contractual basis. (Paras 44–47.) Proof of quantum — contemporaneous business records. — Stock loss and its valuation can be proved by contemporaneous records maintained in the ordinary course of business (stock statements, cost sheets, production logs, purchase orders, cancelled orders, VAT returns and audited financials); such material, if coherent and corroborative, furnishes admissible and reliable proof of quantum and may rebut an unreasoned surveyor’s estimate. (Paras 49–56, 60.) Assessment methodology — arbitrary unit valuation, depreciation and salvage. — A surveyor’s assignment of a uniform per-unit value without regard to differing product types or to charred/unidentifiable goods is arbitrary. Depreciation and salvage require specification of machine age and accepted rates; salvage cannot be mechanically assumed for goods (e.g., leather) rendered worthless by fire/water. (Paras 58–61.) Relief and interest. — Where insurer’s repudiation is found contrary to record and law, insured is entitled to recovery under the policy; the Court may moderate interest where appropriate — here, interest fixed at 6% p.a. from three months after the date of the incident until payment. (Para 63.) Disposition. — Appeal by insurer dismissed; appeal by insured allowed in part — insured entitled to coverage including FFF and to quantum established by admissible evidence; interest awarded as above.

Fire insurance — nature of contract — cause of fire. — A fire insurance policy is a contract of indemnity. Once it is established that loss has occurred by fire and there is no allegation or finding of fraud or that the insured instigated the fire, the precise technical cause of the fire is immaterial; the insurer cannot repudiate liability merely because the surveyor opines that the fire did not originate from a particular source unless an exclusion or culpability is proved. (Paras 32–43, 36.)

Surveyor’s report — scope of challenge before consumer forum. — A surveyor’s reasoned on-site report is entitled to weight; however, where the final surveyor’s conclusions lack cogent reasoning or ignore contemporaneous primary business records produced by the insured, the report may be held to be perverse and arbitrary. Consumer fora need not subject a surveyor’s report to microscopic forensic dissection but may quash it where it is vitiated by omission or arbitrariness. (Paras 14, 57, 62.)

Interpretation of policy abbreviations — ‘FFF’. — Ambiguous policy language must be construed commercially and in favour of the insured; the abbreviation “FFF” in the policy is to be read as “Furniture, Fixtures & Fittings” and cannot be excluded without clear contractual basis. (Paras 44–47.)

Proof of quantum — contemporaneous business records. — Stock loss and its valuation can be proved by contemporaneous records maintained in the ordinary course of business (stock statements, cost sheets, production logs, purchase orders, cancelled orders, VAT returns and audited financials); such material, if coherent and corroborative, furnishes admissible and reliable proof of quantum and may rebut an unreasoned surveyor’s estimate. (Paras 49–56, 60.)

Assessment methodology — arbitrary unit valuation, depreciation and salvage. — A surveyor’s assignment of a uniform per-unit value without regard to differing product types or to charred/unidentifiable goods is arbitrary. Depreciation and salvage require specification of machine age and accepted rates; salvage cannot be mechanically assumed for goods (e.g., leather) rendered worthless by fire/water. (Paras 58–61.)

Relief and interest. — Where insurer’s repudiation is found contrary to record and law, insured is entitled to recovery under the policy; the Court may moderate interest where appropriate — here, interest fixed at 6% p.a. from three months after the date of the incident until payment. (Para 63.)

Disposition. — Appeal by insurer dismissed; appeal by insured allowed in part — insured entitled to coverage including FFF and to quantum established by admissible evidence; interest awarded as above.2025 INSC 1271

Civil Appeal Nos.3806/2020 & 3855/2020 Page 1 of 25

 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVILAPPELLATE JURISDICTION

CIVILAPPEAL NO. 3806 OF 2020

ORION CONMERX PVT. LTD. .…. APPELLANT

VERSUS

NATIONAL INSURANCE CO. LTD. ..…RESPONDENT

WITH

 CIVIL APPEAL NO. 3855 OF 2020

J U D G M E N T

MANMOHAN, J.

1. Cross Appeals have been filed challenging the order dated 10th August

2020 passed by National Consumer Disputes Redressal Commission (herein after

referred to as the ‘National Commission’), wherein the consumer complaint

No.248 of 2012 filed by M/s Orion Conmerx Pvt. Ltd. (hereinafter referred to as

‘Insured’) was partly allowed and it was held by the National Commission that

the Surveyor ‘had not proved that the fire was not accidental’ and that the

documents provided by the Insured, namely, reports of the Bank Auditor,

Architect and Chartered Accountant were adequate to assess the loss caused.

Further, the National Commission held that the assessment of the loss at

Rs.61,39,539/- by the Surveyor was rightly done taking into account the material

lost in the fire and the documentary evidence (after the exclusion of furniture,

fittings and fixtures, as they were not insured) and the said amount was directed 

Civil Appeal Nos.3806/2020 & 3855/2020 Page 2 of 25

to be paid with simple interest @ 9% per annum, with effect from the date of

repudiation of the claim till realization, by the National Insurance Co. Ltd.

(hereinafter referred to as ‘Insurance Company’) to the Insured within eight

weeks.

ARGUMENTS ON BEHALF OF THE INSURANCE COMPANY

2. At the outset, Ms. Shantha Devi Raman, learned counsel for the Insurance

Company submitted that the Insurance Company had given cogent reasons for

repudiation of the claim raised by the Insured, inasmuch as, the Insurance

Company had rightly stated vide letter dated 14th June, 2011 that the nature of

damage did not support the manifestation of an occurrence which could

reasonably and otherwise sustainably be concluded as an occurrence within the

terms and conditions of the Insurance Company’s policies.

3. She stated that the preliminary Surveyor, after visiting the premises, had

concluded that circumstantial evidence indicated electrical short circuiting as the

most probable cause of fire. She contended that the role of preliminary Surveyor

was only to inspect the spot immediately after the loss.

4. Ms. Shantha Devi Raman, learned counsel for the Insurance Company

further stated that the final Surveyor, after a more detailed investigation, had

concluded that ‘after removal of all the debris has resulted in a finding, which

precludes the possibility of an accidental ignition of electrical origin.’ She stated

that the final Surveyor had observed in paragraph 11 of the Report dated 30th

March, 2011 that the electrical short circuit as a probable cause stood readily 

Civil Appeal Nos.3806/2020 & 3855/2020 Page 3 of 25

denied in view of the fact that the walls and roof right above the electrical fitting

had been spared almost completely and that the debris after the occurrence at the

location immediately adjoining the fitting were also not supporting the possibility

of an electrical source of ignition having had its seat there and then spread out to

the other materials. She stated that the final Surveyor had pointed out that even

thin plastic sheets and accessories such as buttons were intact. Thus, according to

her, final Surveyor had clearly opined that an electrical short circuit could not

have been the source of the fire. Therefore, she stated that the final Surveyor had

concluded that based on the physical examination undertaken by him, no

accidental fire had occurred and that available evidence showed manifestation of

multiple sources of fire.

5. She contended that the Insured had not pleaded anything specific to

contradict this or to disprove the findings of the final Surveyor that fire was not

accidental. She stated that the Insured had only raised few interrogatories on

ventilation to the final Surveyor and CW-1 had deposed in his affidavit about the

same but had failed to show the correlation or implication of the same on his

finding about the fire incident. Moreover, she contended that the Insured had not

led evidence of any forensic expert or independent witness disproving the report

of final Surveyor.

6. Consequently, according to her, as the final Surveyor had not concluded

that the fire was accidental, the Insured was not entitled to any compensation

under the fire policies.

Civil Appeal Nos.3806/2020 & 3855/2020 Page 4 of 25

7. She also emphasised that the preliminary Surveyor and the final Surveyor

in their reports dated 07th October 2010 and 30th March 2011 had stated that there

is no coverage available for ‘FFF’ (i.e. furniture, fixtures and fittings) under any

of the fire policies.

8. She further stated that the Insured in its complaint had not specifically

pleaded as to what was the basis for claiming an amount of Rs.3,30,93,678/-

(amount as per prayer in complaint) or to substantiate the quantity/unit of stocks

lost or its unit value and therefore, there was no calculation available on record

to contradict the calculation made by the final Surveyor. She pointed out that the

Insured had sought the claim amount (while raising the claim with Insurance

Company) of Rs.3,51,52,412/- under the following six heads:-

CLAIM PARTICULARS CLAIM AMOUNTS

Stocks Rs.2,65,75,647/-

Furniture and Fittings Rs.3,53,893/-

Building Rs.19,98,853/-

Plant and Machinery Rs.21,12,069/-

Showroom Rs.25,00,000/-

Electrical Fittings Rs.16,11,950/-

TOTAL Rs.3,51,52,412/-

9. According to her, the five claims of the Insured (other than claim for stock)

rested on the Report of M/s AURA, Architects & Designers, which, vide Report

dated 11th October, 2010 had estimated loss on account of Civil works to be

Rs.19,98,853/-; on account of furniture and fittings to be Rs.3,53,893/-; on

account of Plant and Machinery to be Rs.21,12,069/-; on account of construction

and interior design of showroom to be Rs.25,00,000/- and Rs.16,11,950/- on 

Civil Appeal Nos.3806/2020 & 3855/2020 Page 5 of 25

account of Electrical works amounting to a total of Rs.85,76,765/- only.

However, according to her, after perusal of the evidence affidavit of Mr. Rakesh

Ahuja, Proprietor of M/s AURA, it was clear that they were all estimates and the

architect had not physically visited the premises but had issued his report on the

basis of discussion held with the Insured and that this estimate had not been

substantiated with any reasoning or document. Further, the architect had not

considered the depreciation and non-coverage of ‘FFF’ (i.e. furniture, fixtures and

fittings) under the policy.

10. She stated that the claim of the Insured with regard to stocks rested on the

report of Tarun Gandhi & Co., Chartered Accountants, which concluded that after

analysis of the average stock computed on the basis of stock statements, the stock

before the date of the fire and stock on the date of the fire, the stock lost on

account of fire, the sales tax return and the audited balance sheet, the total loss on

account of fire was Rs.2,45,16,913/-. However, after perusal of the evidence

affidavit of Mr. Tarun Gandhi, Partner, it was clear that the Chartered Accountant

had not physically visited the premises and that his estimate was based on

approximation and was on the basis of the trend and not substantiated with the

units or rates.

11. She stated that the Insured had also relied on the stock statement, as on 31st

July 2010, submitted to their bankers, Canara Bank and had led the evidence of

one Mr. Amit Singh from the bank. She contended that as per the stock valuation

report submitted to Canara Bank, which was part of evidence affidavit of Mr. 

Civil Appeal Nos.3806/2020 & 3855/2020 Page 6 of 25

Amit Singh, Manager, Canara Bank, samples lying with the Insured had been

excluded from the total stock value and the reason of the exclusion was that ‘these

are sample pieces and not for sale and hence cannot be included.’ She, however,

stated that while filing its claim, the Insured had included the cost of sample

pieces.

12. She contended that the Insured relied on the generalised findings of M/s

AURA pertaining to furniture, fittings, building, plant and machinery, showroom

and electrical fittings, without any evidence to substantiate their findings and M/s

Tarun Gandhi for stocks, without substantiating the basis or proof of their

analyses and hence, both were unreliable and could not be a piece of evidence to

contradict the detailed report of the final Surveyor. She stated that the Insured

had attached a table of cancellation of orders and divided the claim of

Rs.2,65,75,647/- into Rs.1,72,88,452/- as against cancelled orders,

Rs.50,02,698/- as against accessories and Rs.42,84,497/- as against samples. She

contended that this table had been created by the Insured with the assumption that

all its products were finished products, however, it cannot be accepted when it is

not supported with evidence. She emphasised that cancellation of orders does not

prove actual loss.

13. She submitted that the Insured claimed that they had provided documents

which constituted 5855 (five thousand eight hundred fifty five) pages, however,

except the final Surveyor, no one else had perused the documents in detail and

conducted a proper physical inspection of the premises. The Insured had not filed 

Civil Appeal Nos.3806/2020 & 3855/2020 Page 7 of 25

even a single document before the National Commission or before this Court to

show the exact number of units damaged/burnt, whether they were finished

products or WIP or raw material etc., and what were the corresponding rates of

each item. Hence, according to her, the Insured, being the complainant, had failed

to file base documents and discharge the onus of proof.

14. In support of her submissions and contentions, she relied upon the

following judgments:-

A. Khatema Fibres Limited Vs. New India Assurance Company Limited and

Another, (2023) 15 SCC 327, wherein it has been held as under:-

“32. It is true that even any inadequacy in the quality, nature and

manner of performance which is required to be maintained by or under

any law or which has been undertaken to be performed pursuant to a

contract, will fall within the definition of the expression “deficiency”.

But to come within the said parameter, the appellant should be able to

establish : (i) either that the Surveyor did not comply with the code of

conduct in respect of his duties, responsibilities and other professional

requirements as specified by the regulations made under the Act, in

terms of Section 64-UM(1-A) of the Insurance Act, 1938, as it stood

then; or (ii) that the insurer acted arbitrarily in rejecting the whole or

a part of the surveyor's report in exercise of the discretion available

under the proviso to Section 64-UM(2) of the Insurance Act, 1938.

xxx xxx xxx

38. A consumer forum which is primarily concerned with an allegation

of deficiency in service cannot subject the surveyor's report to forensic

examination of its anatomy, just as a civil court could do. Once it is

found that there was no inadequacy in the quality, nature and manner

of performance of the duties and responsibilities of the surveyor, in a

manner prescribed by the Regulations as to their code of conduct and

once it is found that the report is not based on adhocism or vitiated by

arbitrariness, then the jurisdiction of the Consumer Forum to go further

would stop.”

Civil Appeal Nos.3806/2020 & 3855/2020 Page 8 of 25

B. Industrial Promotion and Investment Corporation of Orissa Limited Vs.

New India Assurance Company Limited and Another, (2016) 15 SCC 315,

wherein it has been held as under:-

“12. This Court in General Assurance Society Ltd. v. Chandmull Jain,

(1966) 3 SCR 500 : AIR 1966 SC 1644] held that there is no difference

between a contract of insurance and any other contract except that in a

contract of insurance there is a requirement of uberrima fides i.e. good

faith on the part of the insured and the contract is likely to be

construed contra proferentes i.e. against the company in case of

ambiguity or doubt. It was further held in the said judgment that the

duty of the Court is to interpret the words in which the contract is

expressed by the parties and it is not for the Court to make a new

contract, however reasonable.”

C. United India Insurance Company Limited Vs. Hyundai Engineering and

Construction Company Limited and Others, (2024) 6 SCC 310, wherein it has

been held as under:-

“34. At the outset, the experts concerned were never examined

before NCDRC. Further, these reports were not based on siteinspection. They are all theoretical in nature….

35. A similar approach was adopted by the other experts. On the other

hand, the surveyor has examined himself and adduced documents.

Further, there is sufficient evidence to indicate that the surveyor has

made site visits and the proof of that was part of the pleadings filed

before us.”

15. She contended that the final Surveyor, while concluding his report dated

30th March 2011 despite calculating net assessed losses for all claims, had

erroneously directed payment of gross loss amounting to Rs.61,39,539/-. She

emphasised that the gross amount included profit element and did not consider

depreciation and salvage. Consequently, while not admitting any liability, she 

Civil Appeal Nos.3806/2020 & 3855/2020 Page 9 of 25

alternatively submitted that the National Commission ought to have awarded the

net amount of Rs.44,35,174/- instead of the gross amount of Rs.61,39,539/-.

ARGUMENTS ON BEHALF OF THE INSURED

16. Mr. Ramesh Singh, learned senior counsel for the Insured stated that the

fire which took place on 25th September, 2010 at 8:30 a.m. was a result of an

accident, namely, short circuit as is clear from Preliminary Surveyor Report at

para 5.5 and police investigation report based on the complaint dated 25th

September, 2010, inasmuch as, it records ‘on the basis of the letter/report the

matter has been found of accidental fire’.

17. According to him, regarding the cause/source of fire, the final Surveyor’s

report was inconclusive. He contended that the final Surveyor’s finding on the

origin/source of fire was flawed as it had failed to consider ventilation which was

a critical factor for determination of fire origin and its behavior.

18. He stated that during the financial year 2010-2011 (year of fire damage) up

to the date of fire i.e. 25th September 2010, the Insured had recorded a sales

turnover of Rs. 26,26,95,194/- with additional export incentive of

Rs.1,80,70,106/- amounting to a turnover of approximately Rs. 28 crores and the

total sales turnover during the said financial year amounted to Rs. 42 crores

(inclusive of export incentive of about Rs. 2.5 crores).

19. He pointed out that statutory stock audit had been conducted by Canara

Bank’s panel auditor M/s Gupta & Bagaria between 27th August 2010 and 30th

August 2010 who certified that the total stock of approximately Rs. 24.46 crores 

Civil Appeal Nos.3806/2020 & 3855/2020 Page 10 of 25

were held by the Insured out of which raw materials and consumables accounted

for Rs. 14.65 crores, work in progress for Rs. 6.35 crores and finished goods for

Rs. 6.35 crores approximately. He clarified that samples have no marketable

value for bank and hence were excluded by the bank from total stock in its

valuation report.

20. He emphasised that due to fire, considerable damage had taken place to the

building structure, plant and machinery, furniture and fixture, electrical fittings,

stock of raw material, semi-finished and finished goods and showroom.

21. He stated that except for the claim of stocks (i.e. insofar as other five heads

of claims were concerned), the difference in the amount claimed and agreed to by

the Surveyor was essentially on account of furniture, fittings and fixtures not

being considered on the basis that none of the fire policies covered the said

category. He pointed out that Rs.54,31,076/- was towards furniture, fixtures and

fittings. He contended that the Surveyor’s view on furniture and fittings was a

clear error, inasmuch as, the Policy No.360901/11/103400000092 under the head

“Description of Risk” clearly provided for “FFF” which means furniture, fittings

and fixtures.

22. He contended that the Insured is entitled to the claim of Rs.3,30,93,678/-

and accordingly, the amount of Rs.61,39,539/- determined by the Surveyor was

incorrect.

Civil Appeal Nos.3806/2020 & 3855/2020 Page 11 of 25

23. He stated that while assessing the claim for stocks, the following

documents were asked for by the final Surveyor which were duly submitted by

the Insured:-

a. Cost sheets show required raw material to produce the finished

goods and also show the prices of the raw materials for finalization of

price of final product.

b. Purchase orders and purchase bills showing the purchases of

raw materials to produce the finished goods.

c. Outward Inward registers showing date-wise entries of items,

quantity, value along with party name, including the raw material

movement.

d. Stock movement details which included month-wise closing

and opening balance for raw material, leather and accessories.

e. ‘Production Movement Records’ showing production logs of

Insured pursuant to the receipt of orders placed upon it. Same duly

reflected the production being done by Insured towards meeting the

orders.

f. Stock statement for the last six months showing stock

statements of raw material (accessories), raw material (leather), WIP

and finished goods.

g. VAT returns.

Civil Appeal Nos.3806/2020 & 3855/2020 Page 12 of 25

h. Balance sheets as well as profit and loss account for the last

three years at 31.03.2008, 31.03.2009 and 31.03.2010.

i. Total loss details as per which the item wise detail of goods

damaged along with its quantity, value and location were provided i.e.

goods at production floor, production store, WIP store, finished goods

production store, samples at showroom and finished goods garments at

ground floor.

j. Details of orders and emails regarding cancellation of orders

were also relied upon. The said document showed the details of orders

buyer-wise/ description-wise/ quantity-wise and value-wise.

24. He stated that the stock details not only showed that the value of the total

stock at the premises where the fire incident took place was approximately Rs.19

crores but also gave the breakup quantity-wise as well as value of the said items.

This, according to him, corroborates the figures in the cost sheet and stock

statement.

25. According to him, all the above documents shared with the final Surveyor

were contemporaneous documents maintained by the Insured in the usual course

of business.

26. He stated that apart from the aforesaid preliminary evidence, the affidavit

of Mr. Tarun Gandhi, Partner of M/s Tarun Gandhi & Co. enclosing a detailed

report dated 05th January 2012 was also relied upon. The said report, according

to him, was admissible in terms of Section 65(g) of the India Evidence Act, 1872. 

Civil Appeal Nos.3806/2020 & 3855/2020 Page 13 of 25

27. He further stated that the loss of Rs.2,45,16,913/- against loss of stock had

been duly proved/established by the Insured. He pointed out that the value of

stock had been independently proved by placing on record costs of various items

(finished WIP, raw material) which were lying on the first floor and the ground

floor that got damaged because of fire as well as use of water to douse the fire

and the quantity of such items in the said two places.

28. Mr. Ramesh Singh contended that the amount of Rs.29,93,850/- assessed

by the final Surveyor towards the net loss of stock was clearly wrong as it

considered only the value of identifiable/recognizable goods i.e. the goods which

were damaged because of water and completely left out the

unidentifiable/unrecognizable goods i.e. the goods which were damaged on

account of fire. He emphasised that photographs showing the damage caused due

to fire were shared with the final Surveyor.

29. Mr. Ramesh Singh clarified that the cost of each item of stock had been

determined on the basis of cost sheets of various items which were shared with

the Surveyor.

30. He emphasised that the Surveyor had arbitrarily awarded a uniform

compensation of Rs.450/- for each damaged item of identifiable/recognizable

stock irrespective of the fact whether it was a leather belt or leather jacket or

polyester lining. He further stated that when an explanation was sought from the

Surveyor regarding the said figure, the same was once again met with evasive

reply.

Civil Appeal Nos.3806/2020 & 3855/2020 Page 14 of 25

31. He lastly pointed out that the National Commission ordered for

compensation to the Insured in the form of simple interest @ 9 % p.a., with effect

from the date of repudiation of the claim till realization. He submitted that in the

absence of agreement between the parties regarding payment of interest or

quantum of interest, the Insured was entitled to enhanced interest and that too

from three months from the date of incident.

REASONING

PRINCIPLES GOVERNING ‘FIRE INSURANCE’

32. Having heard learned counsel for the parties, this Court is of the view 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. Keeping in view the importance of the

concept of fire insurance, it is important to outline the principles governing the

same.

33. It is settled law that the contract of fire insurance is a contract to indemnify

the Insured against loss by fire. The expression ‘fire’ signifies the cause of the

loss and in order to determine whether in a particular case the loss is caused by

fire, the following rules generally apply:-

a) There must be an actual fire; hence mere heating or

fermentation will not be sufficient to render the insurers liable

for loss occasioned thereby.

Civil Appeal Nos.3806/2020 & 3855/2020 Page 15 of 25

b) There must be something on fire which ought not to have been

on fire.

c) There must be something in the nature of an accident, but a fire

occasioned by the wilful act of a third person without the

consent of the Insured, is to be regarded as accidental for the

purpose of this rule.

If these requisites are satisfied, any loss attributable to the fire, whether by

actual burning or otherwise, is within the contract.

34. The object of the contract is to protect the Insured against loss occasioned

by fire. The fire must be accidental. The dictionary meaning of the expression

‘accidental’ is a ‘happening occurring unexpectedly or by chance’. Consequently,

damage from a deliberately set fire will not be covered. To carry out the

investigation, therefore, beyond the cause of the loss and to cast upon the Insured

the burden of establishing that the cause of the fire itself was covered by his

contract, would largely defeat this object.

35. The cause of fire, however, becomes material where the circumstances of

the case are open to suspicion, and seem to indicate that it would be contrary to

the principle of good faith (doctrine of uberrima fides) inherent in the contract to

permit the Insured to recover. Accordingly, the cause of fire becomes material in

cases where the fire is occasioned not by negligence but by the wilful act of

Insured himself or of someone acting with his privity or consent. In such a case,

his conduct, coupled with the making of a claim, is a fraud upon the insurers and 

Civil Appeal Nos.3806/2020 & 3855/2020 Page 16 of 25

he cannot enforce his claim against them. (See: The Law Relating to Fire

Insurance by A.W. Baker Welford and W.W. Otter-Barry Fourth Edition).

36. This Court in New India Assurance Company Limited and Others vs.

Mudit Roadways, (2024) 3 SCC 193 has held, ‘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 said

judgment categorically holds that the precise cause of fire is immaterial provided

the Insured is not the instigator of the fire. This judgment underscores the

importance of insurers’ duty to act in good faith and honour its commitment to

the Insured.

37. Consequently, this Court is of the opinion that once it is established that

the loss is due to fire and there is no allegation/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 and falls within the ambit and

scope of fire policy.

IN THE PRESENT CASE, THE INCIDENT IS AN ACCIDENTAL FIRE

38. The term and condition of one of the fire policies, in the present case, is

reproduced hereinbelow:-

“THE COMPANY AGREES, (Subject to the Conditions and Exclusions

contained herein or endorsed or otherwise expressed hereon) that if

after payment of the premium the Property insured described in the said

Schedule or any part of such Property be destroyed or damaged by any

of the perils specified hereunder during the period of insurance named

in the said schedule or of any subsequent period in respect of which the

Insured shall have paid and the Company shall have accepted the 

Civil Appeal Nos.3806/2020 & 3855/2020 Page 17 of 25

premium required for the renewal of the policy, the Company shall pay

to the Insured the value of the Property at the time of the happening of

its destruction or the amount of such damage or at its option reinstate

or replace such property or any part thereof:

I. Fire excluding destruction or damage caused to the property

insured by

a) i) its own fermentation, natural heating or spontaneous

combustion.

ii) its undergoing any heating or drying process.

b) burning of property ensured by order of any Public

Authority.

II. Lightning

III. Explosion/Implosion Excluding loss, destruction of a

damage….”

39. The aforesaid fire policy does not state that no liability will accrue upon

the insurer till the exact cause of fire is proved.

40. In the present case, actual fire damage is proved by police investigation

report based on complaint dated 25th September 2010, preliminary Surveyor’s

report, photographs of fire, fire claim form and reports of M/s AURA, Architects

& Designers and Tarun Gandhi & Co., Chartered Accountants.

41. The final Surveyor’s conclusion that the fire is not accidental is not correct,

as there is no reasoning in the final Surveyor’s report as to why the fire is not

accidental. This Court is of the view that the final Surveyor’s report has only

found that electric short circuit is not the sole source and that there were three

independent sources/seats/pools of fire. But the said finding cannot lead to the

conclusion that the fire in question is not accidental. This is more so, when the 

Civil Appeal Nos.3806/2020 & 3855/2020 Page 18 of 25

final Surveyor in its report has neither concluded that the incident of fire falls

within the exception/exclusion clause of the fire policies nor fraud, negligence or

intentional damage by the Insured. In fact, the final Surveyor’s report is not

conclusive with regard to the cause of fire and there is no finding leave alone any

conclusion in the final Surveyor’s report that the Insured caused the fire.

Accordingly, this Court is of the view that in the present case, the incident of fire

is an accidental fire and is an occurrence which reasonably and otherwise is an

occurrence within the terms and conditions of the Insurance policies.

42. Consequently, this Court is of the opinion that the basis for rejecting the

claim by the final Surveyor and Insurance Company is contrary to record,

untenable in law and suffers from arbitrariness and perversity.

43. Even otherwise, this Court is of the opinion that the National Commission’s

view on this issue is well considered and cogent and does not call for any

interference.

POLICIES PROVIDE FOR COVERAGE OF ‘FFF’ WHICH CAN ONLY MEAN

FURNITURE, FIXTURES AND FITTINGS

44. This Court agrees with the contention of Mr.Ramesh Singh, learned senior

counsel for the Insured that the difference in the amount claimed and granted by

the Surveyor qua five claims (i.e. other than stocks) is essentially on account of

furniture, fixtures and fittings not being considered on the ground that none of the

policies covered the said category. This view on furniture, fixtures and fittings is

a clear error, inasmuch as, the policy No.360901/11/10/3400000092 under the 

Civil Appeal Nos.3806/2020 & 3855/2020 Page 19 of 25

head “Description of Risk” clearly provides for ‘FFF’ which can only mean

furniture, fixtures and fittings.

45. On the meaning of ‘FFF’ in the fire policies, the Surveyor has given an

evasive reply in his answer to interrogatories. The said answers are reproduced

hereinbelow:-

“8(a) On what basis you say that the furniture and fittings are not

covered when the same are explicitly covered under the policy?

Ans. Based on the description or the absence of the same in the policy

contract.

8(b) What is the meaning of the words “FFF” used in the policy?

Ans. The question calls for an argumentative reply.

8(c) Do the words “FFF” used in the policy not mean Furniture,

Fittings and Fixtures?

Ans. The question calls for an argumentative reply.

8(d) If no, what do they stand for? (Please specify on the basis of past

precedents)?

Ans. The question calls for an argumentative reply...”

46. Further, the National Commission’s finding that ‘assessment for furniture,

fixtures and fittings has been rightly excluded….as no premium had been paid for

the same’ is contrary to record. Even the learned counsel for the Insurance

company did not defend the impugned order on the said ground.

47. It is also settled law that coverage provisions should be interpreted broadly

and in case of ambiguity, it is to be resolved in favour of the Insured. This Court

in Canara Bank vs. United India Insurance Company Limited and Others,

(2020) 3 SCC 455 has held as under:-

“22. The principles relating to interpretation of insurance policies are

well settled and not in dispute. At the same time, the provisions of the 

Civil Appeal Nos.3806/2020 & 3855/2020 Page 20 of 25

policy must be read and interpreted in such a manner so as to give

effect to the reasonable expectations of all the parties including the

insured and the beneficiaries. It is also well settled that coverage

provisions should be interpreted broadly and if there is any ambiguity,

the same should be resolved in favour of the insured. On the other

hand, the exclusion clauses must be read narrowly. The policy and its

components must be read as a whole and given a meaning which

furthers the expectations of the parties and also the business realities.

According to us, the entire policy should be understood and examined

in such a manner and when that is done, the interpretation becomes

a commercially sensible interpretation.”

(emphasis supplied)

48. Consequently, this Court is of the view that the policies provide for

coverage of ‘FFF’ which can only mean furniture, fixtures and fittings and the

Insured is entitled to the amounts claimed under the heads of Building, Plant and

Machinery, Showroom, Electric fittings, furniture and fixtures.

INSURED HAS SUBSTANTIATED ITS CLAIMS FOR LOSS OF STOCK WITH

REASONS AND CONTEMPORANEOUS DOCUMENTS MAINTAINED IN THE

REGULAR COURSE OF BUSINESS

49. This Court finds that the purchase orders and emails regarding cancellation

of orders contain the details of orders buyer-wise/description-wise/quantity-wise

and value-wise.

50. Insofar as the quantity of the products damaged/destroyed in the fire are

concerned, the closing balance figures of such items are reflected in stock

movement detail and stock statement as on 24th September, 2010 of the unit where

the fire incident took place for the two floors, namely, ground floor and first floor.

The same was relied upon and shared with the Surveyor.

Civil Appeal Nos.3806/2020 & 3855/2020 Page 21 of 25

51. From the documents on record, it is apparent that the companies who had

cancelled their orders included Levis Strauss (India) Pvt. Ltd., Benetton India Pvt.

Ltd., Gap inc, Tommy Hilfiger Europe BV, J. Crew, Mexx Europe BV, Tempe and

Wilson Leather amongst others. The total value of the damaged goods that were

in the process of being manufactured/produced as per the orders of the Companies

was Rs.1,72,88,452/- (at the exchange of 1 US = Rs.44) out of total loss of

Rs.2,65,75,647/-.

52. Further, the Insurance Company’s argument that cancellation of orders

does not prove the actual loss is erroneous as figures given in calculation sheet

indicating the cancelled orders are supported with the following

contemporaneous documents maintained in the regular course of business:-

a. Stock details till 24.09.2010 (25.09.2010 being the date of fire)

showing date-wise/period-wise opening and closing stock along with

description of goods i.e. finished/WIP, raw material (accessories) etc.

quantity, rate and value.

b. Cost sheets.

c. Stock statement showing period-wise, including period from

01.09.2010 to 24.09.2010 (25.09.2010 being date of fire) stock (WIP,

finished goods and finished goods samples) with opening and closing

quantity, in and out quantity along with unit, rate and value.

d. Date-wise production movement.

Civil Appeal Nos.3806/2020 & 3855/2020 Page 22 of 25

e. Copies of orders placed by various customers on Insured which

were cancelled due to fire.

53. This Court randomly tested the veracity of five figures given in the said list

of cancelled orders against the backup/primary evidence/documents. No

discrepancy was found, except in one instance, namely, Serial No. 32, wherein

the quantity ordered figure is shown to be less than quantity cancelled. This was

found on account of the fact that the production of said product was more than

what was ordered. This figure is corroborated by contemporaneous documents

like production movement records and stock details at three locations.

54. This Court agrees with the contention of the Insured that the purpose of

valuation done by the bank is different, inasmuch as, for the Insured the samples

are of value, but not to the bank. Destruction of samples on account of fire caused

loss to the Insured, who had to arrange for replacement of the samples.

55. The Insured has also produced production logs, which showcase daily

production of items, including finished goods and the goods at the advance stage

of production. The Insured has raised claim not on the basis of the order value but

rather on the basis of the stock actually lying at the unit against the said orders,

which substantiates genuineness of Insured’s claim.

56. Consequently, in the present case, actual loss has been proved by the

Insured by producing the ‘base documents’, which are clearly relevant and

admissible in terms of Section 34 of the Indian Evidence Act, 1872.

Civil Appeal Nos.3806/2020 & 3855/2020 Page 23 of 25

57. Moreover, the final Surveyor has not dealt with the 5,855 (five thousand

eight hundred fifty five) pages’ documents provided to him by the Insured and

has erroneously recorded in his report that “till date insured have not submitted

any reasonable or correlatable documentary evidence in support of the quantum

and thereby the value of the claim”. Consequently, the Insurance Company’s

contention that there was no basis for claiming an amount of Rs.3,30,93,678/- as

compensation is contrary to record inasmuch as the Insured has substantiated its

claims with reasons and contemporaneous documents.

58. Not only have the cost sheets been completely ignored by the final

Surveyor, but also an average uniform per unit price of Rs.450/- has been

arbitrarily assigned for ascertaining Insured’s insurance liability towards stock

irrespective of the nature of the stock (i.e. whether the damaged item was a leather

jacket or a leather belt or a polyester lining etc.).

59. This Court is further of the view that the Insurance Company’s insistence

that officers of M/s AURA and/or M/s Tarun Gandhi & Company should have

physically visited the premises is a red herring, inasmuch as, all that could have

been ascertained by the physical visit is the cause of fire and factum of goods

having been damaged by fire and water. Insofar as the quantity and value of the

goods lost by fire and water is concerned, the same could not have been accurately

ascertained by mere physical visit; instead, what was more reliable were various

documents and evidence maintained by the Insured in normal course of business. 

Civil Appeal Nos.3806/2020 & 3855/2020 Page 24 of 25

That is precisely the reason why all such documents were asked for by the

Surveyor and were supplied by the Insured.

60. This Court also finds that the Insured has, while assessing loss, reduced the

amount of assessed loss from Rs.2.65 crores to Rs.2.45 crores to exclude the

profit elements and overvalued stock. The relevant portion of the report of M/s

Tarun Gandhi & Co. Chartered Accountants is reproduced herein below:-

“(iii) We certify and Report that the Loss of 2.65 crore shown in the

profit & loss A/C of the Company includes the Profit element and some

overvalued stock and therefore the Assessed loss computed by us comes

to Rs.2.45 crore subject to a marginal variation of 1% to 2%.”

61. Further, the sine qua non for calculation of depreciation is the age of

machinery and the accepted rate of depreciation for the products. Without

specifying these two ingredients, the Surveyor could not have assessed

depreciation – as has been done in the present case. The salvage as assessed by

the Surveyor for stock is misconceived as the products in question are leather

products which are worthless in the event they are damaged by fire and/or water.

Consequently, this Court is of the view that in the present case, the Insured has

only claimed net loss and not gross loss.

62. Keeping in view the aforesaid, this Court is of the view that even according

to the tests stipulated in the judgments cited by the Insurance Company, the

irresistible conclusion is that the final Surveyor has not only misdirected itself in

law, but has adopted a perverse approach, inasmuch as, no reason has been given

for discarding the Cost Sheet for each item maintained in regular course of

business and that too when the Cost Sheet tallies with all other primary documents 

Civil Appeal Nos.3806/2020 & 3855/2020 Page 25 of 25

like purchase orders. Further, the final Surveyor’s recommendation to award an

average unit price of Rs.450/- for each item of identifiable stock/product is deeply

flawed as it neither takes into account the value of non-identifiable goods (i.e.

goods that had been charred in the fire) nor does it take into account the nature of

the stock (i.e. whether a leather jacket or a leather bag or a leather belt or a

polyester lining etc.) for determining its value.

CONCLUSION

63. Keeping in view the aforesaid as well as the fact that the objective of the

fire insurance policy is to restore the policyholder to the financial position before

the loss, the appeal filed by the Insurance Company is dismissed and the appeal

filed by the Insured is allowed, except that simple interest is allowed @ 6% per

annum from three months from the date of the incident till the date of payment.

……..……………….J.

[DIPANKAR DATTA]

……………….J.

[MANMOHAN]

New Delhi;

October 30, 2025

Tender — Rejection of bid — Validity — Scope of judicial review — Interpretation of “haisiyat praman patra” — Requirement of District Magistrate’s certificate — Whether mandatory where not expressly stated in tender — Held, no. Where the tender (NIT) required bidders to submit a “haisiyat praman patra” of ₹10 crores but did not specify that it must be issued by a District Magistrate, rejection of bidder’s technical bid on the ground that the certificate was issued by a private architect/valuer, and not by District Magistrate, was dehors the terms of the NIT and liable to be quashed. Tendering authority could not import an unstated condition from a subsequent Government Notification not incorporated in the NIT. Further, additional justifications introduced later in counter-affidavit (viz., non-disclosure of encumbrances) could not sustain rejection when the original rejection was on another ground. Authority ought to have sought clarification before disqualification. Principles reaffirmed: Terms of NIT must be clear and unambiguous. (Maha Mineral Mining & Benefication (P) Ltd. v. MP Power Generating Co. Ltd., (2025) SCC OnLine SC 1942, para 19) Judicial review confined to arbitrariness or deviation from NIT terms. (Tata Cellular v. Union of India, (1994) 6 SCC 651, para 94) Order must stand or fall on reasons contained therein; fresh reasons cannot later be supplied. (Mohinder Singh Gill v. Chief Election Commr., (1978) 1 SCC 405, para 8) Held, Mandi Parishad, being a statutory body under the U.P. Krishi Utpadan Mandi Adhiniyam, 1964, is not per se governed by the Government Notification dt. 29-10-2018 prescribing procedure for issue of solvency certificates by District Magistrate. Failure to specify in NIT that “haisiyat praman patra” must be issued by District Magistrate disentitled rejection on that basis. Valuation certificate issued by Income Tax Department-empanelled valuer showing asset worth far exceeding ₹10 crores satisfied Clause 18. Result — Impugned High Court judgment set aside. Matter remanded to respondent-Mandi Parishad to reconsider appellant’s technical bid and, if net worth condition is met, proceed with negotiation and determine award of remaining contract period between appellant and successful bidder. Per Joymalya Bagchi, J. (for Surya Kant, J. and himself): (1) Tender authority cannot add new conditions extraneous to NIT. (2) Government notification not automatically binding unless expressly incorporated. (3) Rejection order must stand on its recorded reason; later amplification impermissible. (4) Judicial review in tender cases is limited to arbitrariness or deviation from tender conditions.

Tender — Rejection of bid — Validity — Scope of judicial review — Interpretation of “haisiyat praman patra” — Requirement of District Magistrate’s certificate — Whether mandatory where not expressly stated in tender — Held, no.

Where the tender (NIT) required bidders to submit a “haisiyat praman patra” of ₹10 crores but did not specify that it must be issued by a District Magistrate, rejection of bidder’s technical bid on the ground that the certificate was issued by a private architect/valuer, and not by District Magistrate, was dehors the terms of the NIT and liable to be quashed. Tendering authority could not import an unstated condition from a subsequent Government Notification not incorporated in the NIT.

Further, additional justifications introduced later in counter-affidavit (viz., non-disclosure of encumbrances) could not sustain rejection when the original rejection was on another ground. Authority ought to have sought clarification before disqualification.

Principles reaffirmed:

Terms of NIT must be clear and unambiguous. (Maha Mineral Mining & Benefication (P) Ltd. v. MP Power Generating Co. Ltd., (2025) SCC OnLine SC 1942, para 19)

Judicial review confined to arbitrariness or deviation from NIT terms. (Tata Cellular v. Union of India, (1994) 6 SCC 651, para 94)

Order must stand or fall on reasons contained therein; fresh reasons cannot later be supplied. (Mohinder Singh Gill v. Chief Election Commr., (1978) 1 SCC 405, para 8)

Held, Mandi Parishad, being a statutory body under the U.P. Krishi Utpadan Mandi Adhiniyam, 1964, is not per se governed by the Government Notification dt. 29-10-2018 prescribing procedure for issue of solvency certificates by District Magistrate. Failure to specify in NIT that “haisiyat praman patra” must be issued by District Magistrate disentitled rejection on that basis.

Valuation certificate issued by Income Tax Department-empanelled valuer showing asset worth far exceeding ₹10 crores satisfied Clause 18.

Result — Impugned High Court judgment set aside. Matter remanded to respondent-Mandi Parishad to reconsider appellant’s technical bid and, if net worth condition is met, proceed with negotiation and determine award of remaining contract period between appellant and successful bidder.

Per Joymalya Bagchi, J. (for Surya Kant, J. and himself):

(1) Tender authority cannot add new conditions extraneous to NIT.

(2) Government notification not automatically binding unless expressly incorporated.

(3) Rejection order must stand on its recorded reason; later amplification impermissible.

(4) Judicial review in tender cases is limited to arbitrariness or deviation from tender conditions.2025 INSC 1276

Page 1 of 7

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.____________/2025

(@ SLP (C) No. 20557/2021)

KIMBERLEY CLUB PVT. LTD. APPELLANT(S)

VERSUS

KRISHI UTPADAN MANDI PARISHAD & ORS. RESPONDENT(S)

J U D G M E N T

 Joymalya Bagchi, J.

1. Leave granted.

2. Appellant is aggrieved by the judgment and order dated 07.09.2021

whereby the Division Bench of the Allahabad High Court, Lucknow

Bench refused to set aside the decision of 1st respondent-Krishi

Utpadan Mandi Parishad1 rejecting appellant’s technical bid on the

ground that the ‘haisiyat praman patra’ submitted by it had not been

issued by District Magistrate.

3. Dispute arose from a tender floated by 1st respondent-Mandi Parishad

to let out a banquet hall/terrace lawn for 10 years to the highest bidder.

The notice inviting tender2 prescribed a two-stage bidding process

1 Hereinafter referred to as “1st respondent-Mandi Parishad”

2 Hereinafter referred to as “NIT”

Page 2 of 7

comprising a technical bid and a financial bid. The technical bids were

to be evaluated first and only bidders meeting the eligibility criteria

would qualify for the second stage, where the financial bids were to be

evaluated and tender awarded to the highest bidder. One of the

conditions, namely Clause 18 in the NIT stated that bidder must submit

a ‘haisiyat praman patra’ of minimum ₹10 crores with the technical bid.

4. Appellant as well as 5th respondent (successful bidder) submitted their

respective bids. Appellant’s technical bid was disqualified for the reason

that the ‘haisiyat praman patra’ was issued by a private architect and

not a District Magistrate. Claiming itself to be the highest bidder and

that technical bid had been unlawfully rejected, appellant approached

High Court by way of a writ petition.

5. High Court dismissed the writ petition holding that valuation certificate

submitted by appellant having been issued by a private architect could

not be treated as a ‘haisiyat praman patra’, i.e., solvency certificate

which is always issued by the office of District Magistrate.

6. Appellant challenged the decision before this Court by way of Special

Leave Petition. This Court on 17.12.2021 while issuing notice, directed

as follows:-

“……………In case the successful tenderer has not started the

execution of the tender, no further work be done in pursuance

to the tender and in case it has so started, it would be subject

to the final orders to be passed by this Court ”

7. We have heard learned counsel for parties and perused the records.

8. The issue which falls for consideration is whether appellant, while

submitting a valuation certificate issued by a professional architect 

Page 3 of 7

cum private valuer attached to the Income Tax Department, had

complied with Clause 18 of NIT which required it to submit a ‘haisiyat

praman patra’ of minimum ₹10 crores.

9. Appellant has strenuously argued that nothing in the NIT necessitated

that ‘haisiyat praman patra’ be issued by a District Magistrate. It

contended ‘haisiyat praman patra’ submitted by the appellant was by

an experienced valuer who was empanelled with the Income Tax

Department and there was no justification to reject such certificate. It

was also argued that the valuation certificate assessed the value of the

asset at around ₹99 crores, of which appellant was 76.09 %

shareholder, whereas as per clause 18 the bidder was to furnish a

‘haisiyat praman patra’ of minimum ₹10 crores only.

10. In rebuttal, the 1st respondent-Mandi Parishad referred to Uttar

Pradesh government notification dated 29.10.20183 laying down the

procedure for issuance of ‘haisiyat praman patra’ by District Magistrate.

It was contended that Clause 18 required submission of such ‘haisiyat

praman patra’ and not valuation certificate issued by a private valuer.

All bidders apart from appellant had submitted ‘haisiyat praman patra’

issued by District Magistrate. It was also contended that valuation

certificate does not disclose appellant’s net worth as it fails to indicate

whether the asset so valued was free from encumbrances.

11. In tender matters, the court exercising judicial review does not sit in

appeal over the decision of a tendering authority regarding

3 Notification No. C.M.-648/One-9-2018-7(M)/18, hereinafter referred to as “government

notification”

Page 4 of 7

disqualification of bid. Only in cases where such decision is dehors the

terms of the NIT or is patently arbitrary would the Court exercise powers

of judicial review and set aside such a decision.4

12. Having scanned the NIT, we are of the considered view that neither

Clause 18 nor any other condition specifies that the ‘haisiyat praman

patra’ submitted by a prospective bidder must be issued only by a

District Magistrate in terms of the government notification.

13. It is trite that the terms of an NIT must be clear and unambiguous.5 If

1st respondent-Mandi Parishad intended that ‘haisiyat praman patra’

must be issued by District Magistrate alone, it ought to have specified

so in the NIT conditions.

14. We are also unimpressed by 1st respondent-Mandi Parishad’s

submission that such condition was implied and followed by other

bidders, as nothing is placed on record to show that the government

notification was applicable to all tenders floated by 1st respondentMandi Parishad. It may not be out of place to bear in mind that the 1st

respondent-Mandi Parishad is not a government department to which

the notification is per se applicable but is a body constituted under a

statute, namely Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964.

15. Given the situation, it was incumbent on 1st respondent-Mandi

Parishad to indicate in the tender conditions that the ‘haisiyat praman

patra’ was to be obtained from a District Magistrate as per the

procedure laid down in such government notification. Having failed to

4 Tata Cellular v. Union of India, (1994) 6 SCC 651 [Para 94]

5 Maha Mineral Mining & Benefication Pvt. Ltd. v. Madhya Pradesh Power Generating Co. Ltd.

& Anr., (2025) SCC Online SC 1942 [Para 19]

Page 5 of 7

do so, the 1st respondent-Mandi Parishad could not have rejected the

certificate submitted by appellant on the ground that it was not issued

by a District Magistrate. That apart, appellant’s certificate has been

issued by an experienced valuer registered with the Income Tax

Department who is otherwise competent to issue such certificate.

16. A new objection has been raised in paragraph 6 of the counter affidavit

filed by 1st respondent-Mandi Parishad to justify the rejection of the

certificate submitted by the appellant. It is averred since the certificate

does not disclose encumbrances, if any, on the asset, it cannot be

termed as a ‘haisiyat praman patra’ indicating net worth of the bidder.

This objection has been taken for the first time in the judicial

proceeding and was not a ground for rejection of the technical bid as

would be evident from paragraph 8 of the counter affidavit which

unequivocally states as follows:-

“The Petitioner’s tender had been rejected on the ground that

they had not submitted required certificate issued by a District

Magistrate”

17. As per Oxford Hindi – English dictionary, the English translation of the

word ‘haisiyat’ is “capacity, ability, means or resources”.

6 No doubt from

such perspective, the ‘haisiyat praman patra’ would be understood as

net worth of the bidder. However, the valuation certificate had not been

turned down by 1st respondent-Mandi Parishad on such score. It was

rejected on the ground that it had not been issued by a District

Magistrate as per the government notification whose applicability to the

6 Oxford Hindi – English Dictionary, 38th impression – June 2010, Oxford University Press

Page 6 of 7

subject tender had not been spelt out in the NIT. Given these

circumstances, we are loathe to permit the 1st respondent-Mandi

Parishad to justify the rejection of appellant’s technical bid on such

additional ground belatedly taken in the counter affidavit. There is no

cavil that an order of rejection must be sustained on grounds stated

therein and additional grounds cannot be subsequently pressed into

service to justify such rejection.7 On the other hand, the valuation

certificate shows the worth of the appellant’s share in the asset far

exceeds ₹10 crores as required under Clause 18 of the NIT. In such a

situation, if the 1st respondent-Mandi Parishad doubted that the asset

was encumbered it ought to have sought clarification from the appellant

on such score before rejecting the bid.

18. For the aforementioned reasons, we are of the opinion that rejection of

appellant’s technical bid on ground that appellant’s certificate was not

issued by District Magistrate is dehors the terms of the NIT and is liable

to be quashed.

19. Impugned order of the High Court is set aside. The matter is remanded

to 1st respondent-Mandi Parishad to reconsider the technical bid of the

appellant and if it is satisfied that the net worth of the asset (free of

encumbrances, if any) disclosed in the valuation certificate submitted

by appellant meets the requirement of Clause 18 of the NIT, it shall

accept the technical bid and after due negotiations between appellant

and the 5th respondent (successful bidder), decide whether remainder

7 Mohinder Singh Gill & Anr. v. The Chief Election Commissioner, New Delhi & Ors., (1978)

1 SCC 405 [Para 8]

Page 7 of 7

of contract be awarded to the appellant or in the event 5th respondent

matches the financial bid or enhanced offer of the appellant, permit the

5th respondent to continue the contract for the remaining period.

20. With these directions, the appeal is disposed of.

…………………………………………., J

(SURYA KANT)

…………………………………………, J

(JOYMALYA BAGCHI)

NEW DELHI,

OCTOBER 31, 2025.

Education Law – Teachers’ Eligibility Test (TET) – Requirement of qualification – Right of Children to Free and Compulsory Education Act, 2009, S. 23(1), (2) (as amended by Act 12 of 2017) – National Council for Teacher Education (NCTE) Notification dated 23-8-2010 – Minimum qualifications for appointment as teacher – Applicability to teachers appointed prior to passing of TET – Scope of 2017 amendment extending time for acquiring qualification. Held, appellants were appointed as Assistant Teachers in 2012, before clearing TET (first TET in U.P. held 13-11-2011). Appellant No.1 cleared TET on 25-11-2011 and Appellant No.2 on 24-5-2014. Their services were terminated on 12-7-2018 for want of TET qualification at the time of appointment. By virtue of the second proviso to S. 23(2) inserted by Amendment Act 12 of 2017 (effective 9-8-2017), all teachers appointed or in position as on 31-3-2015 were permitted to acquire the minimum qualification within four years i.e. up to 31-3-2019. Since the appellants had acquired the TET qualification by 2014, they were not unqualified on the date of termination. Termination, therefore, unsustainable. Orders of Single Judge (12-3-2024) and Division Bench (1-5-2024) of Allahabad High Court affirming termination, set aside. Appellants directed to be reinstated with continuity of service and consequential benefits (excluding back wages). — Right of Children to Free and Compulsory Education Act, 2009, Ss. 23(1), (2); NCTE Notification, 23-8-2010; Amending Act 12 of 2017, S. 23 (as amended). Held: The Supreme Court held that: Under Section 23 of the Right of Children to Free and Compulsory Education Act, 2009, the National Council for Teacher Education (NCTE) was empowered to prescribe the minimum qualifications for appointment as a teacher. The notification dated 23 August 2010 required passing the Teacher Eligibility Test (TET) as a minimum qualification. The appellants were appointed as Assistant Teachers on 17 March 2012, though they had not qualified TET at the time. Appellant No.1 cleared TET on 25 November 2011 and Appellant No.2 on 24 May 2014. By the 2017 amendment (effective 9 August 2017), the second proviso to Section 23(2) of the RTE Act allowed every teacher appointed or in position as on 31 March 2015, who did not possess the minimum qualifications, to acquire them within four years from commencement of the amendment (i.e., by 31 March 2019). Therefore, on the date of their termination (12 July 2018), both appellants had already acquired TET qualification within the statutory grace period. The basis of termination — non-possession of TET at appointment — was thus legally unsustainable. The Court found that the High Court erred in upholding the termination despite recording that the appellants had qualified TET by 2014. No other ground was cited for their removal. Result Appeal allowed. Orders of the Division Bench (1 May 2024) and Single Judge (12 March 2024) of Allahabad High Court quashed and set aside. Termination order dated 12 July 2018 quashed. Respondents directed to reinstate appellants forthwith to the post of Assistant Teachers in Jwala Prasad Tiwari Junior High School, Bhauti, Kanpur Nagar, Uttar Pradesh. No back wages but continuity of service and consequential benefits (including seniority) granted.

Education Law – Teachers’ Eligibility Test (TET) – Requirement of qualification – Right of Children to Free and Compulsory Education Act, 2009, S. 23(1), (2) (as amended by Act 12 of 2017) – National Council for Teacher Education (NCTE) Notification dated 23-8-2010 – Minimum qualifications for appointment as teacher – Applicability to teachers appointed prior to passing of TET – Scope of 2017 amendment extending time for acquiring qualification.

Held, appellants were appointed as Assistant Teachers in 2012, before clearing TET (first TET in U.P. held 13-11-2011). Appellant No.1 cleared TET on 25-11-2011 and Appellant No.2 on 24-5-2014. Their services were terminated on 12-7-2018 for want of TET qualification at the time of appointment. By virtue of the second proviso to S. 23(2) inserted by Amendment Act 12 of 2017 (effective 9-8-2017), all teachers appointed or in position as on 31-3-2015 were permitted to acquire the minimum qualification within four years i.e. up to 31-3-2019. Since the appellants had acquired the TET qualification by 2014, they were not unqualified on the date of termination. Termination, therefore, unsustainable.

Orders of Single Judge (12-3-2024) and Division Bench (1-5-2024) of Allahabad High Court affirming termination, set aside. Appellants directed to be reinstated with continuity of service and consequential benefits (excluding back wages).

— Right of Children to Free and Compulsory Education Act, 2009, Ss. 23(1), (2); NCTE Notification, 23-8-2010; Amending Act 12 of 2017, S. 23 (as amended).

Held:

The Supreme Court held that:

Under Section 23 of the Right of Children to Free and Compulsory Education Act, 2009, the National Council for Teacher Education (NCTE) was empowered to prescribe the minimum qualifications for appointment as a teacher. The notification dated 23 August 2010 required passing the Teacher Eligibility Test (TET) as a minimum qualification.

The appellants were appointed as Assistant Teachers on 17 March 2012, though they had not qualified TET at the time. Appellant No.1 cleared TET on 25 November 2011 and Appellant No.2 on 24 May 2014.

By the 2017 amendment (effective 9 August 2017), the second proviso to Section 23(2) of the RTE Act allowed every teacher appointed or in position as on 31 March 2015, who did not possess the minimum qualifications, to acquire them within four years from commencement of the amendment (i.e., by 31 March 2019).

Therefore, on the date of their termination (12 July 2018), both appellants had already acquired TET qualification within the statutory grace period. The basis of termination — non-possession of TET at appointment — was thus legally unsustainable.

The Court found that the High Court erred in upholding the termination despite recording that the appellants had qualified TET by 2014. No other ground was cited for their removal.

Result

Appeal allowed.

Orders of the Division Bench (1 May 2024) and Single Judge (12 March 2024) of Allahabad High Court quashed and set aside.

Termination order dated 12 July 2018 quashed.

Respondents directed to reinstate appellants forthwith to the post of Assistant Teachers in Jwala Prasad Tiwari Junior High School, Bhauti, Kanpur Nagar, Uttar Pradesh.

No back wages but continuity of service and consequential benefits (including seniority) granted.2025 INSC 1273

1

NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. OF 2025

(Arising out of SLP(C) No. 22164 of 2024)

UMA KANT AND ANOTHER …APPELLANTS

VERSUS

STATE OF U.P. AND OTHERS …RESPONDENTS

J U D G M E N T

B.R. GAVAI, CJI

1. Leave granted.

2. The present appeal challenges the judgment and final

order dated 1st May 2024 passed by a Division Bench of the

High Court of Judicature at Allahabad1, whereby the intracourt2 appeal filed by the appellants herein was dismissed and

the judgment and order dated 12th March 2024 passed by a

learned Single Judge of the High Court, dismissing the Writ

Petition3 filed by the appellants, was affirmed.

1 Hereinafter, “High Court”.

2 Special Appeal No. 441 of 224.

3 Writ – A No. – 17951 of 2018. 

2

3. The facts, in brief, giving rise to the present appeal are as

under.

3.1. By a notification dated 23rd August 2010, the National

Council for Teacher Education,4 in exercise of the powers

conferred by sub-section (1) of Section 23 of the Right of

Children to Free and Compulsory Education Act, 2009,

5 laid

down minimum qualifications for a person to be eligible for

appointment as a teacher in Class I to VIII in a “school”

referred to in clause (n) of Section 2 of the RTE Act, with effect

from the date of the notification. It can be seen that the

requirement to pass the Teacher Eligibility Test,6 to be

conducted by the appropriate Government in accordance with

the guidelines framed by the NCTE for the purpose, was added

as a minimum qualification.

3.2. On 25th June 2011, the management of one Jwala Prasad

Tiwari Junior High School, Bhauti, Kanpur Nagar, Uttar

Pradesh,7 which is a recognized and aided junior high school,

initiated proceedings to fill four posts of Assistant Teachers in

4 Hereinafter, “NCTE”.

5 Hereinafter, “RTE Act”.

6 Hereinafter, “TET”.

7 Hereinafter, “JPT Junior High School”. 

3

JPT Junior High School with the permission of the Basic

Shiksha Adhikari, Kanpur Nagar District8.

3.3. An advertisement for the aforesaid four posts of Assistant

Teachers was issued on 3rd July 2011 and the last date for

submission of applications was 16th July 2011. The appellants

herein applied for the same.

3.4. On 13th November 2011, TET examination was held for

the first time in the State of Uttar Pradesh and on 25th

November 2011, appellant No. 2 cleared the TET.

3.5. On 13th March 2012, the BSA approved the selection of

the appellants by way of an appointment letter. As a result,

the appellants joined the post of Assistant Teacher on 17th

March 2012.

3.6. On 24th May 2014, appellant No. 1 also cleared the TET.

3.7. By way of an amendment dated 9th August 2017 to

Section 23 of the RTE Act, it was provided that every teacher,

appointed or in position as on 31st March 2015, who does not

possess minimum qualifications as laid down under sub8 Hereinafter, “BSA”.

4

section (1) shall acquire such minimum qualifications within

a period of four years from the date of the said amendment.

3.8. On 12th July 2018, the services of the appellants were

terminated by the BSA on the ground that they did not have

TET qualification at the time of their appointment.

3.9. Aggrieved thereby, the appellants along with two others

filed a Writ Petition before the High Court inter-alia seeking

quashing of the aforesaid order/communication passed by the

BSA.

3.10. Vide judgment and final order dated 12th March

2024, a learned Single Judge of the High Court dismissed the

Writ Petition.

3.11. Aggrieved thereby, the writ petitioners before the

High Court filed an intra-court appeal and the same was also

dismissed by the Division Bench of the High Court vide

impugned judgement and final order dated 1st May 2024.

3.12. Being aggrieved by the impugned judgment and

final order, two of the writ petitioners before the High Court

have filed the present appeal by way of special leave. 

5

4. We have heard Shri Amit Anand Tiwari, learned Senior

Counsel for the appellants and Shri Ankit Goel, learned

counsel for the respondent-State.

5. It is submitted by the learned Senior Counsel on behalf

of the appellants that the first TET was conducted by the

respondent-State on 13th November 2011 and the appellants

passed the same in 2011 and 2014. It is further submitted

that since the appellants qualified TET within the extended

time prescribed by the RTE Act, they should not be terminated

for non-possession of TET certificate at the time of their

appointment and that they should be reinstated.

6. Per contra, it is submitted by the learned counsel for the

respondent-State that as per the mandate of the RTE Act, the

appellants ought to have obtained TET certificate at the time

of their appointment. It is, however, fairly stated by the learned

counsel for the respondent-State that subsequent to their

appointment, they obtained TET certificate by 2014.

7. Section 23 of the RTE Act provides qualifications for

appointment and terms and conditions of service of teachers.

In exercise of the powers thereof, the NCTE, being the

concerned academic authority authorised by the Central 

6

Government, by way of a notification dated 23rd August 2010

prescribed passing the TET as one of the minimum

qualifications for a person to be eligible for appointment as a

teacher in Class I to VIII in a “school” referred to in clause (n)

of Section 2 of the RTE Act.

8. By an amendment dated 9th August 2017, the second

proviso to sub-section (2) of Section 23 of the RTE Act was

added and it provides that every teacher appointed or in

position as on 31st March 2015, who does not possess

minimum qualifications as laid down under sub-section (1)

shall acquire such minimum qualifications within a period of

four years from the date of commencement of the amendment.

9. In the present case, the appellants applied for the post of

Assistant Teacher in the JPT Junior High School pursuant to

the advertisement dated 3rd July 2011, with the last date for

submission of applications being 16th July 2011. The BSA

approved the selection of the appellants on 13th March 2012,

with them joining the post on 17th March 2012. Further, the

TET was held for the first time in the State of Uttar Pradesh on

13th November 2011 and appellant No. 1 cleared TET on 25th

7

November 2011, while appellant No. 2 cleared TET on 24th May

2014.

10. It can thus be seen that the appellants had acquired the

minimum qualifications, including TET, by 24th March 2014,

while the second proviso to sub-section (2) of Section 23 of the

RTE Act provides that the unqualified teachers appointed/inposition as on 31st March 2015 shall acquire minimum

qualifications before 31st March 2019. We, therefore, fail to see

as to how the appellants can be said to be unqualified on the

date of their termination i.e., 12th July 2018, when

undisputedly they had already qualified the TET by 24th March

2014.

11. Pertinently, both the learned Single Judge and the

Division Bench of the High Court recorded that the appellants

had qualified TET by 2014. However, they proceeded on the

premise that since the appellants did not possess TET passcertificate at the time of their appointment, so their

termination, after working for 6 years, need not be interfered

with.

12. A perusal of the order/communication dated 12th July

2018 passed by the BSA would, however, show that apart from 

8

finding the appellants to have not qualified the TET, there is

no other basis on which the appointment of the appellants was

terminated. The learned counsel for respondent-State has also

not stated any other ground on the basis of which the

candidature of the appellants was found to be unsuitable for

the post of Assistant Teacher.

13. In that view of the matter, we find that the noninterference by the learned Single Judge of the High Court and

the same being affirmed by the Division Bench of the High

Court is erroneous as the requirement to qualify TET was to

be complied with by 31st March 2019, by when the appellants

had undisputedly passed the TET.

14. We, therefore, allow the present appeal by passing the

following order:

(i) The judgment and final order passed by the Division

Bench of the High Court in Special Appeal No. – 441

of 2024 is quashed and set aside;

(ii) The judgment and final order passed by the Single

Judge of High Court in Writ – A No. – 17951 of 2018

dated 12th March 2024 is quashed and set aside; 

9

(iii) The order/communication recalling the selection of

the appellants on the posts of Assistant Teachers

dated 12th July 2018 is quashed and set aside;

(iv) The Writ Petition filed by the appellants before the

High Court is disposed of with a direction to the

respondents to forthwith reinstate the appellants to

the post of Assistant Teacher in the Jwala Prasad

Tiwari Junior High School, Bhauti, Kanpur Nagar,

Uttar Pradesh. We clarify that though the appellants

would not be entitled to back-wages, they shall be

reinstated with continuity of service and all other

consequential benefits, including seniority, etc.

15. Pending applications, if any, shall stand disposed of.

…………..............................CJI

(B.R. GAVAI)

.............................................J

(K. VINOD CHANDRAN)

NEW DELHI;

OCTOBER 31, 2025.

Delhi Development — Misuse of residential premises — Sealing and de-sealing of properties — Jurisdiction of Monitoring Committee and Judicial Committee — De-sealing of shop-cum-residence — New Rajinder Nagar Market (LSC), New Delhi — Whether upper floors of Shop/Plot No. 106 intended for commercial use — Held, No. Monitoring Committee (appointed vide orders dated 07.05.2004 and 24.03.2006 in M.C. Mehta case) was empowered only to prevent misuse of residential premises by conversion to commercial use. Later, a Judicial Committee (constituted vide order dated 13.09.2022) was empowered to hear matters relating to sealing/de-sealing, regularization, demolition, and encroachment. Applicant sought de-sealing of Shop No.106, New Rajinder Nagar Market, claiming the entire building was intended for commercial use. Judicial Committee had passed a common order dated 18.12.2023 treating markets “en bloc”. MCD contended that only the ground floor was commercial, upper floors were residential, and there were unauthorized constructions. Held: Judicial Committee’s order dealt only with markets in general, not with individual cases. Factual adjudication was necessary to determine the use of individual premises. Documents produced by applicant (lease deed of 06.08.1987, conveyance deed of 28.02.1989, sanctioned plan of 2005) showed only ground floor was commercial and upper floors were sanctioned as residential. No material showed that the first floor had been constructed or used commercially in 1961 as claimed. Under Master Plan for Delhi (MPD) 2021, Local Shopping Centres (LSC) are divided into (i) planned LSCs (exclusively commercial) and (ii) designated LSCs (shop-cum-residences permitting commercial use of upper floors after payment of conversion charges). New Rajinder Nagar Market falls in a shop-cum-residence designated LSC. Hence, conversion of residential upper floors to commercial use is permissible only after payment of prescribed conversion charges and regularisation of excess Floor Area Ratio (FAR) and removal of non-compoundable deviations. Applicant’s premises exceeded sanctioned FAR (162.32 existing as against 260.40 permissible), with further unauthorized structures. Consequently, request for de-sealing and commercial use of upper floors was rejected. However, MCD directed to issue fresh notice for inspection, specify non-compoundable portions, and indicate conversion and penalty charges payable for regularization and conversion. Applicant permitted to comply by (i) removing non-compoundable constructions and (ii) paying conversion and penalty charges, after which commercial use of upper floors may be regularized. Held: “On a broad overview of the documents produced by the applicant with respect to Shop No.106 in New Rajinder Nagar Market, we find that the lease and the subsequent freehold rights granted permit only the ground floor to be used as commercial area. The upper floors though eligible for conversion, it can happen only with payment of the conversion charges. The additional FAR as built and existing in excess of that sanctioned will also have to be regularised by paying penalty charges and any non-compoundable constructions will have to be removed.” (per K. Vinod Chandran, J. for the Bench) Direction: I.A. for de-sealing rejected. MCD to issue inspection notice; joint inspection to be held. Specific written order to be issued identifying: (a) Non-compoundable constructions; (b) Conversion charges for upper floors; and (c) Penalty for excess FAR. Applicant entitled to comply by removing non-compoundable portions and paying charges for regularization and conversion. Result: I.A. Nos. 203615/2024, 218080/2024 and 210981/2025 — Rejected with directions as above.

Delhi Development — Misuse of residential premises — Sealing and de-sealing of properties — Jurisdiction of Monitoring Committee and Judicial Committee — De-sealing of shop-cum-residence — New Rajinder Nagar Market (LSC), New Delhi — Whether upper floors of Shop/Plot No. 106 intended for commercial use — Held, No.

Monitoring Committee (appointed vide orders dated 07.05.2004 and 24.03.2006 in M.C. Mehta case) was empowered only to prevent misuse of residential premises by conversion to commercial use. Later, a Judicial Committee (constituted vide order dated 13.09.2022) was empowered to hear matters relating to sealing/de-sealing, regularization, demolition, and encroachment.

Applicant sought de-sealing of Shop No.106, New Rajinder Nagar Market, claiming the entire building was intended for commercial use. Judicial Committee had passed a common order dated 18.12.2023 treating markets “en bloc”. MCD contended that only the ground floor was commercial, upper floors were residential, and there were unauthorized constructions.

Held: Judicial Committee’s order dealt only with markets in general, not with individual cases. Factual adjudication was necessary to determine the use of individual premises. Documents produced by applicant (lease deed of 06.08.1987, conveyance deed of 28.02.1989, sanctioned plan of 2005) showed only ground floor was commercial and upper floors were sanctioned as residential. No material showed that the first floor had been constructed or used commercially in 1961 as claimed.

Under Master Plan for Delhi (MPD) 2021, Local Shopping Centres (LSC) are divided into (i) planned LSCs (exclusively commercial) and (ii) designated LSCs (shop-cum-residences permitting commercial use of upper floors after payment of conversion charges). New Rajinder Nagar Market falls in a shop-cum-residence designated LSC. Hence, conversion of residential upper floors to commercial use is permissible only after payment of prescribed conversion charges and regularisation of excess Floor Area Ratio (FAR) and removal of non-compoundable deviations.

Applicant’s premises exceeded sanctioned FAR (162.32 existing as against 260.40 permissible), with further unauthorized structures. Consequently, request for de-sealing and commercial use of upper floors was rejected.

However, MCD directed to issue fresh notice for inspection, specify non-compoundable portions, and indicate conversion and penalty charges payable for regularization and conversion. Applicant permitted to comply by (i) removing non-compoundable constructions and (ii) paying conversion and penalty charges, after which commercial use of upper floors may be regularized.

Held:

“On a broad overview of the documents produced by the applicant with respect to Shop No.106 in New Rajinder Nagar Market, we find that the lease and the subsequent freehold rights granted permit only the ground floor to be used as commercial area. The upper floors though eligible for conversion, it can happen only with payment of the conversion charges. The additional FAR as built and existing in excess of that sanctioned will also have to be regularised by paying penalty charges and any non-compoundable constructions will have to be removed.”

(per K. Vinod Chandran, J. for the Bench)

Direction:

I.A. for de-sealing rejected.

MCD to issue inspection notice; joint inspection to be held.

Specific written order to be issued identifying:

(a) Non-compoundable constructions;

(b) Conversion charges for upper floors; and

(c) Penalty for excess FAR.

Applicant entitled to comply by removing non-compoundable portions and paying charges for regularization and conversion.

Result:

I.A. Nos. 203615/2024, 218080/2024 and 210981/2025 — Rejected with directions as above.2025 INSC 1274

Page 1 of 23

I.A. No. 203615 of 2024 in W. P.(C) No.4677 of 1985

Reportable

IN THE SUPREME COURT OF INDIA

CIVIL ORIGINAL JURISDICTION

I.A. Nos.203615 & 218080 of 2024

and

I.A. No.210981 of 2025

in

Writ Petition (C) No.4677 of 1985

M.C. Mehta

…Petitioner

Versus

Union of India & Ors.

...Respondents

O R D E R

1. The applicant is concerned with plot bearing No.106

and the building thereon situated in New Rajinder Nagar

Market (LSC), New Delhi, admeasuring approximately 89 sq.

yards. The petitioner by this I.A. prays for de-sealing the

‘commercial premises’ at plot No.106 relying on the common

order dated 18.12.2023 passed by a Judicial Committee

appointed by this Court in W.P.(C) No.4677 of 1985. The very

same order has been challenged by the Municipal

Corporation of Delhi (MCD) in I.A. No.32418 of 2024. We are

in the present I.A. concerned only with the claim filed by the

individual for de-sealing of his premises.

Page 2 of 23

I.A. No. 203615 of 2024 in W. P.(C) No.4677 of 1985

2. Before we go into the nitty gritty of the claim raised in

the I.A., we have to briefly notice the history of the litigation.

As has been submitted by the MCD, over a period of time

number of markets/neighbourhood shopping areas were

developed by the Land and Development Office (L&DO), the

Delhi Development Authority (DDA) & the MCD with

participation of private developers. Based on the Master Plan

for Delhi, 1962 (MPD’1962), the shopping facilities and the

shop-cum-residences were shown in the zonal development

plans wherein layout plans were approved for different

residential colonies by the MCD. Based on the Building ByeLaws, 1959 as amended in 1964, the occupiers of the shopcum-residences put the residential area also to commercial

use upon which show cause notices were issued against the

unauthorised conversions. W.P.(C) No.4677 of 1985, a Public

Interest Litigation (PIL) was filed before this Court

complaining of the stifling environment within Delhi, seeking

multiple prayers to better effectuate the decongestion, like

shifting of heavy and noxious industries, stopping mining

activities in Aravali Hills in and around Delhi, demolition of

Page 3 of 23

I.A. No. 203615 of 2024 in W. P.(C) No.4677 of 1985

colonies built on forest land as also misuse of premises and

unauthorized constructions.

3. In the said Writ Petition, this Court on 07.05.2004,

appointed a Monitoring Committee comprising of Chief

Secretary of Delhi, the Commissioner of Police, Delhi,

Commissioner of MCD and Vice-Chairman, DDA for

stoppage of illegal industrial activities. Later by order dated

24.03.2006, a three Member Monitoring Committee

comprising of the Former Advisor to the Election

Commission, Chairman of EPCA and a Major General (Retd.)

was appointed to oversee the implementation of law;

especially to proceed against offensive premises, built or

converted unauthorisedly. The Monitoring Committee

appointed in 2006 was divested of its powers in 2012 and

later it was restored in 2017. In the meanwhile, at one point

in 2012, the matters were also transferred to the High Court

which order was also recalled in the year 2017, for the slow

progress made in the High Court, on which date the

Monitoring Committee’s powers were also restored. The

Monitoring Committee proceeded under the authority 

Page 4 of 23

I.A. No. 203615 of 2024 in W. P.(C) No.4677 of 1985

granted by this Court and sealed residential premises on

leased/free hold land when the same was challenged before

this Court.

4. This Court by order dated 14.08.2020 categorically

found that the Monitoring Committee was appointed only to

prevent misuse of residential premises by conversion to

commercial use and not with respect to residential premise

used as such. The order specifically noticed the constitution

of a Special Task Force (STF) by order dated 25.04.2018

passed by this Court and found that the Monitoring

Committee at best could only make suggestions to the STF

with respect to encroachment on the public land, roads and

public places and not proceed peremptorily to seal the

premises, which would in effect deprive the land

owner/lessee from availing statutory remedies. Various

reports of the Monitoring Committee were referred to and

some extracted. The procedure of sealing, it was expressed,

carries with it civil consequences and there was a procedure

in place as per the Delhi Municipal Corporation Act, 19571

1

For brevity ‘the DMC Act’

Page 5 of 23

I.A. No. 203615 of 2024 in W. P.(C) No.4677 of 1985

providing for an appeal to the Tribunal constituted. It was

found that the Monitoring Committee would not have the

statutory powers conferred on the authorities under the

enactment. The sealing of premises by the Monitoring

Committee was set aside and the notices issued for

demolition, on the reports of the Monitoring Committee,

were also quashed.

5. This Court again by order dated 13.09.2022 appointed

a Judicial Committee to consider the following aspects.

“i) Sealing and de-sealing of properties;

ii) Regularization and/or levy of penalties or

conversion charges;

iii) Demolition of unauthorized construction; and

iv) Directing the removal of encroachment.”

6. The Judicial Committee was conferred with the

jurisdiction to hear the challenge to the orders/decisions on

any of the above aspects passed by or on recommendations

of the Monitoring Committees constituted by this Court by

orders dated 07.05.2004 and 24.03.2006. The orders of the

Judicial Committee with respect to de-sealing and rejection

of the application as opined by this Court could be 

Page 6 of 23

I.A. No. 203615 of 2024 in W. P.(C) No.4677 of 1985

challenged before this Court wherein it was also observed

that this Court would adopt the SLP approach. The objection

raised by the learned Amicus Curiae regarding certain

applications filed by associations/federations was also

noticed and it was observed that the remedy for individual

cases cannot lie through the associations/federations, since

the factual scenario would vary. All applications pending

before this Court was hence referred to the Judicial

Committee for consideration and passing orders and the

associations/federations as also those seeking individual

relief were directed to approach the Judicial Committee

thereafter; except a challenge to the master plan, ordinances

issued from time to time, the application concerning the

marble markets and challenge to the constitution of the

Monitoring Committee and the STF. We have to immediately

notice that the order of the Judicial Committee challenged in

the above I.A. refers to the markets/shopping centres ‘en

bloc’ and does not deal with the individual case of the

applicant.

Page 7 of 23

I.A. No. 203615 of 2024 in W. P.(C) No.4677 of 1985

7. We are hence of the opinion that the case of the

applicant to enable de-sealing by virtue of the order passed

by the Judicial Committee will have to be considered on the

merits of the facts arising on the subject premises.

8. We have heard Mr. Kailash Vasdev, learned Senior

Counsel, appearing for the applicant, learned Senior

Counsel Mr. S. Guru Krishna Kumar, the Amicus Curiae and

Mr. Sanjib Sen, learned Senior Counsel appearing for the

MCD.

9. On behalf of the applicant, it was submitted based on

the documents referred to from the I.A., compiled separately

for our convenience, to assert that the subject premises was

intended to be used commercially. Much reliance was also

placed on the order of the Judicial Committee which holds

that the properties in New Rajinder Nagar Market was

intended to be used on a commercial basis. The learned

Amicus Curiae and the learned Senior Counsel appearing for

the MCD, however asserted that only the ground floor could

be used as commercial space and even the applicant had

applied for construction of residential accommodation on the 

Page 8 of 23

I.A. No. 203615 of 2024 in W. P.(C) No.4677 of 1985

upper floors. Even after completion of the construction for

residential use, the building has been combined with the

adjacent plot, which is against the regulations, the master

plan and the various circulars and notifications issued in this

behalf. A number of such conversions from residential to

commercial have been permitted, based on payment of

conversion charges to ensure that the infrastructure

requirements could be met from such amounts. There was no

intention to enable the allottees of lands to have windfall

benefits, since that would run against the concept of

sustainable development. When residential spaces are

converted as commercial, there would be more footfalls and

there would be need to augment infrastructure; providing

parking spaces and other facilities for common use of the

public visiting the commercial spaces. It is also pointed out

that there are unauthorised constructions made by the

applicant which also has to be dealt with.

10. With respect to the order of the Judicial Committee

which has considered the relevant provisions of the law

juxtaposed with various office orders and dealt with the rival 

Page 9 of 23

I.A. No. 203615 of 2024 in W. P.(C) No.4677 of 1985

contentions, it is more on a general manner and not on an

individual basis. Insofar as New Rajinder Nagar Market is

concerned, the association’s application was before the

Committee and the specific premises referred to are plot

Nos.106 and 79, the first of which belongs to the applicant.

Reliance was placed on a letter issued by the L & DO dated

19.11.1957 to one Dr. K.L Tuli, wherein it was specified that

there was no objection to the sanction of the plan if the first

floor is being used for commercial purpose and not for

residential use. Reference was also made to lease deeds

dated 16.05.1974 and 19.07.1975 pertaining to the Old and

New Rajinder Nagar markets which speaks of erection of

single storied building containing one business flat or double

storied building with one or two business flats. The word

‘business’ was substituted for residential which clearly

indicates that the use intended was commercial and not

residential.

11. We are not persuaded to place any reliance on the

letter issued to a third-party or to the supplementary lease

deeds which are not specified as the one in the name of the

two plots referred therein. We would, hence, go by the 

Page 10 of 23

I.A. No. 203615 of 2024 in W. P.(C) No.4677 of 1985

arguments addressed before us with reference to the various

documents, which though may not be a strictly SLP approach,

will have to be resorted, to enable factual consideration. This

is more so since the consideration by the Judicial Committee

has virtually made ineffective the statutory remedies where

a factual adjudication would have been possible.

12. This Court has also by Order dated 22.08.2024 looked

at the order of the Judicial Committee dated 18.12.2023 and

found prima facie that the Committee has not looked into

individual cases of buildings/units. It has also been observed

that it is necessary for the Committee to call upon the

applicant to produce copies of the sanctioned plans in

respect of individual buildings/units and copies of

documents of allotments/ purchases. These are the

documents which the Judicial Committee has not looked into,

which was to be done on a case-to-case basis.

13. As has been noticed in the order of the Judicial

Committee the influx of refugee migration to Delhi in the

1950s necessitated the formulation of a master plan for

focused development, helmed by the local authority but with

private participation. The subject plot was allotted to the 

Page 11 of 23

I.A. No. 203615 of 2024 in W. P.(C) No.4677 of 1985

predecessor-in-interest of the applicant through a certificate

of possession produced as Annexure A-29, the layout plan of

which is produced as Annexure A-30. The letter of the L&DO

dated 09.11.1957 with reference to one Dr. K.L. Tuli relied on

by the Judicial Committee is produced as Annexure A-31.

The contention of the applicant is that the subject plot was

given in possession to the predecessors in interest as per

Annexure A-29, specifically designating the property as a

shop which squarely indicates the commercial purpose for

which it is intended. Further, as specified in Annexure A-31

which is a similarly situated plot in the very same market, the

first floor was permitted use as a commercial space. It is the

further contention that the predecessor-in-interest of the

applicant, in the year 1961, constructed the first floor of the

premises as commercial, after obtaining necessary

permission. Subsequently on 06.08.1987, a lease deed was

issued in the name of the predecessor-in-interest of the

applicant as per Annexure A-37 which also showed the

nature of the property as commercial, after which the

conveyance deed was issued in the name of the predecessor-

Page 12 of 23

I.A. No. 203615 of 2024 in W. P.(C) No.4677 of 1985

in-interest of the applicant, indicating, again, the plot to be

commercial.

14. Contemplating sale of the lease hold rights, the

predecessor-in-interest approached the L&DO for an

inspection and the proforma drawn up for the said purpose

Annexure A-40 also indicated it as commercial. The

applicant himself was called upon to pay additional ground

rent at commercial rates for the additional floors (first floor)

which was paid on 27.12.1988 as evidenced at Annexure A41 after which the permission for sale was obtained in 1989.

The applicant came into possession of the premises vide sale

deed dated 28.02.1989 and it was thereafter that an

application was made to convert the property from leasehold

to freehold. The input checklist for conversion, as prepared

by the L&DO Annexure A-45 also indicated the property to

be a shop and the charges paid by the applicant for

conversion was also at commercial rates. There was no

undertaking made by the applicant at any point of time nor

by his predecessor-in-interest that the property would be 

Page 13 of 23

I.A. No. 203615 of 2024 in W. P.(C) No.4677 of 1985

used only for residential purpose or no commercial purpose

would be carried on in the upper floors.

15. Before we look at the documents, as referred to by the

applicant, we have to specifically notice that the admitted

position is that the ground floor of the property in question

was given in possession on lease, and subsequently

conveyed, to be used as a shop for commercial purpose. The

question is only whether the upper floors can be constructed

and used for commercial purpose. Annexure A-29, the

certificate of possession, specifically speaks of house No. 32

in Block No.25 out of which Shop No.106 in Rajinder Nagar

was given possession to the predecessor in interest. We

cannot place any reliance on Annexure A-31 since there is

nothing in the said document of 1957, indicating that the New

Rajinder Nagar Market was intended as a fully commercial

one. Nor is anything placed before us to indicate that the

documents of such property was similar to the demise of

possession in favour of the applicant's predecessor-ininterest. Further admittedly on the said date there was no

additional construction sought for by the predecessor-in-

Page 14 of 23

I.A. No. 203615 of 2024 in W. P.(C) No.4677 of 1985

interest and what existed was the ground floor shop.

Annexure A-34 is an office order issued by the L&DO in the

year 1979 specifically dealing with shop-cum-residences

and the user clause having been specified as shop-cumresidence which has no bearing on the issue.

16. Annexure A-37 is a lease deed dated 06.08.1987 in

favour of Shri Hira Lal, the predecessor-in-interest of Shop

No.106 of New Rajinder Nagar which does not speak of any

first floor having been constructed as contended by the

applicant, in the year 1961. On the very same day, Annexure

A-38 deed of conveyance was also executed, which, in its

Schedule I, specifically speaks of a single storied building

which again puts to peril the contention of the applicant that

there was a first floor constructed in the year 1961 and the

same was also intended for commercial use.

17. Annexure A-39 is a notice of inspection issued to the

predecessor-in-interest in the year 1988 when as contented

by the applicant the leasehold rights in the premises was

sought to be sold. Therein it has been specifically indicated

that the existing building as per the previous plan sanctioned 

Page 15 of 23

I.A. No. 203615 of 2024 in W. P.(C) No.4677 of 1985

under lease/construct by CPWD is only 570 sq. feet on the

ground floor. True, under paragraph 10, the plans under

L&DO were referred to which speaks of first floor coverage

of 529 sq. feet, which as per the proforma prepared on

inspection had not materialised at that point. There is nothing

in Annexure A-41 grant of sale permission to indicate that the

payments were made on commercial rates. The sale deed

itself is relied on by the applicant, produced as Annexure A43 which is dated 28.02.1989 by which the leasehold rights

was transferred to the applicant. The specific recital in the

said deed indicates a government-built Shop No.106,

measuring 89 sq. yards situated in the abadi of New Rajinder

Nagar, Shankar Road, New Delhi with the specified

boundaries, the leasehold rights in which were intended to

be conveyed. Hence, as on the date on which the sale was

made to the applicant, Shop No.106 had only the ground

floor, in the plot of 89 sq. yards area.

18. It is also pertinent that this Court by order dated

20.05.2025 directed the officers of the MCD to visit the

premises and report on the compliances. It was also 

Page 16 of 23

I.A. No. 203615 of 2024 in W. P.(C) No.4677 of 1985

specified that those who want relief of de-sealing must apply

to this Court. This Court also observed that if such

applications are made before Court, the same would be

considered on its merits without being influenced by orders

passed by the Judicial Committee. In this context, we cannot

but notice the finding of the Judicial Committee with respect

to a circular issued by the DDA dated 22.06.2025, which

referred to a case filed by one Asha Pal Gulati in which the

High Court of Delhi after examining the issue and keeping in

view the circular issued by the L&DO in 1983 directed that

with respect to the use of the top floors there would be no

proceedings for misuse. We have not been informed, how

the said circular would apply to the applicant herein,

especially in the context of the communication issued by the

DDA itself on 27.11.2018 produced as Annexure P/1 in I.A.

No.32418 of 2024. In the said letter it has been specified that

shop-cum-residence/shop-plot complex declared as LSC

and CSC (Local Shopping Centre and Convenience

Shopping Centre), wherein standard plan was used, the

upper floor was intended to be residential. Whereas in shopplot complex which were not made as per the standard plan,

Page 17 of 23

I.A. No. 203615 of 2024 in W. P.(C) No.4677 of 1985

the total plan was for commercial use. The conversion was

allowed after payment of conversion charges in which

circumstances the earlier clarification issued by the DDA was

annulled especially noticing that there was no intention for

the owners of the shop-cum-residential complexes to obtain

windfall gains.

19. The above communication has to be juxtaposed with

Annexure A49, Deed of Conveyance issued in the name of

the applicant herein. It is true that in Annexure A47 and A48

referring to the execution of ‘Conveyance Deed and

Conversion from lease hold to free hold’, it was specified that

there was no undertaking given by the applicant that the

premises will be used only for residential purposes.

However, the absence of the undertaking cannot lead to the

corollary that the permission was for commercial purposes

especially when the plan appended to the Conveyance Deed

as seen from I.A. No.203615 of 2024 speaks of “proposed

shop-cum-residential building plan of plot No.106 situated at

New Rajinder Nagar, New Delhi for Sh. Vinod Kumar Arora

(the applicant)”. The said plan indicates sanction of 

Page 18 of 23

I.A. No. 203615 of 2024 in W. P.(C) No.4677 of 1985

residential apartments over the shop building and a

basement for storage purposes. The sanction is for

residential buildings with kitchen, bathroom, bedroom etc.

Hence the plan approved for construction of the upper floors

was clearly intended for residential purposes, as applied for

by the applicant, putting again to peril, the contention that

the predecessor-in-interest had constructed the first floor

and put it to commercial use.

20. The learned Senior Counsel for the MCD further

enlightened us on the different categories of markets across

Delhi with reference to the Master Plans notified for Delhi.

The first Master Plan for Delhi was MPD-1962, replaced by

the 2nd Master Plan, MPD-2001 published on 01.08.1990 and

then the 3rd Master Plan, MPD-2021 which came into effect on

07.02.2007. We have from the documents produced by the

applicant himself, found that the applicant has obtained a

sanctioned plan for construction only in the year 2005. The

Master Plan for 2021 conceived the Community Centres (CC)

as shopping and business centres while the Local Shopping

Centre (LSC) and the Convenience Shopping Centre (CSC) 

Page 19 of 23

I.A. No. 203615 of 2024 in W. P.(C) No.4677 of 1985

would cater to the day-to-day needs of the local population.

Certain areas developed prior to 1962 like Lajpat Nagar,

Rajouri Garden, Tilak Nagar, Kamla Nagar and others which

existed prior to MPD-1962 had consolidation of commercial

activities.

21. The LSCs were categorised into two categories, one

meant exclusively for commercial use and the other for

mixed use where commercial activity was allowed to be

carried out on the ground floor and residential activity

permitted on the upper floors. MPD-2021 designated some of

the shop-cum-residential complexes which were earlier

termed as ‘shop-cum-residence’ plots/shops as Local

Shopping Centres and permitted commercial use of floors

above the ground floor, subject to payment of conversion

charges. The former category of LSCs wherein exclusively

commercial activities were carried out, were thus called

planned LSCs while those in which conversion of the

‘residential’ to ‘commercial’ was permitted were called

designated LSCs. New Rajinder Nagar in which the

applicant’s plot is situated has been notified as a pre-1962

built up residential and rehabilitation colony. The 

Page 20 of 23

I.A. No. 203615 of 2024 in W. P.(C) No.4677 of 1985

understanding of the applicant was also not otherwise since

the sanctioned plan produced along with the IA, as applied

for the applicant, clearly indicates the sanction of residential

areas on the upper floors.

22. One of the distinguishing factors is that the planned

LSCs, where commercial use was permitted, uniformly had a

Floor Area Ratio (FAR) of 100 in all the Master Plans for Delhi.

Insofar as the designated LSC’s are concerned, FAR was

always one that was permissible for residential plots which

could go up to a maximum of 350 FAR. The Counter Affidavit

filed on behalf of the MCD tabulates the FAR as per the

sanction granted to the applicant which is 162.32 while the

existing area is 217.08; bringing forth an additional of 69.22

sq. mtrs, in excess of that sanctioned for the area of the plot,

which is 89 sq. yards. The permissible FAR upto 350 is

computed as 3.50 x 74.40 sq. mtrs. which equals 260.40 sq.

mtrs for the subject plot. This clearly indicates, according to

the MCD, that the applicant’s plot is situated in the shop-cumresidential LSC which by MPD-2021 is a designated LSC

permitting conversion of the residential area to a commercial 

Page 21 of 23

I.A. No. 203615 of 2024 in W. P.(C) No.4677 of 1985

area after payment of the conversion charges. The Counter

Affidavit also speaks of FAR in excess of that sanctioned,

inviting penalty charges for the purpose of regularisation.

The Counter Affidavit also notices non-compoundable

deviations on the 1st floor and 2nd floor on the back side.

23. On a broad overview of the documents produced by

the applicant with respect to Shop no. 106 in New Rajinder

Nagar Market, we find that the lease and the subsequent

freehold rights granted permits only the ground floor to be

used as commercial area. The applicant though contends that

the 1st floor was built by his predecessor-in-interest and used

as a commercial area, there is nothing produced to establish

the same. On the contrary, the conveyance deed obtained by

the applicant as produced by him in the IA, referred to by us,

has been annexed with an approval for construction of upper

floors in the year 2005, which approval is also for residential

spaces on the upper floors. We find the New Rajinder Nagar

Market to be a shop-cum-residence LSC as designated in the

MPD-2021. The FAR of the building already constructed, with

the upper floors further fortify the contention of the MCD that 

Page 22 of 23

I.A. No. 203615 of 2024 in W. P.(C) No.4677 of 1985

over the shop residential spaces were constructed, since the

FAR sanctioned exceeds that for commercial spaces. The

upper floors though eligible for conversion, it can happen

only with payment of the conversion charges. The additional

FAR as built and existing in excess of that sanction will also

have to be regularised by paying penalty charges and any

non-compoundable constructions will have to be removed.

In the above circumstances, we reject the I.A. filed by the

applicant to de-seal the premises at Shop/Plot no. 106, New

Rajinder Nagar Market and also reject the prayer for

permitting the use of upper floors as commercial.

24. We have to notice from the Counter Affidavit, the

violations which were found on inspection with notice to the

applicant. However, we direct the MCD to issue a further

notice for inspection which shall be jointly done and the

violations intimated by a written order specifically pointing

out the non-compoundable constructions. The order shall

also indicate the conversion charges payable for the upper

floors and the penalty charges for regularisation of excess

FAR from that sanctioned. The applicant would be entitled to

comply with the order passed removing the non-

Page 23 of 23

I.A. No. 203615 of 2024 in W. P.(C) No.4677 of 1985

compoundable constructions/ projections and depositing

the conversion charges as also the penalty charges for

regularisation of the excess FAR so as to carry out

commercial activities in the upper floors.

25. With the above directions, the I.As stand rejected.

 ……….……………………. CJI.

 (B. R. GAVAI)

………….……………………. J.

 (K. VINOD CHANDRAN)

New Delhi;

October 31, 2025.