Legislation UpdatesNotifications

The Insurance Regulatory and Development Authority of India has published revised guidelines on Trade Credit insurance on 8th September 2021. The guidelines shall come into force from November 1, 2021.


Key highlights of the revised guidelines are:

  • The guidelines set out the regulatory framework to:
    1. promote sustainable and healthy development of trade credit insurance business
    2. facilitate general insurance companies to offer trade credit insurance covers to suppliers as well as licensed banks and other financial institutions to help businesses manage country risk, open up access to new markets
    3. to manage non-payment risk associated with trade financing portfolio.
  • These guidelines shall be applicable to all insurers transacting general insurance business, registered under the Insurance Act, 1938. The ECGC Ltd (formerly Export Credit Guarantee Corporation of India Ltd) is exempted from the application of these guidelines.
  • A trade credit insurance for Banks / Financial Institutions and Factoring Companies shall cover the loss on account of non-receipt of payment from a buyer, due to commercial or political risks, against the bills / invoices purchased or discounted and it shall be issued for covering trade related transactions other than loan default of seller.
  • A trade credit insurance policy shall not cover a) Reverse Factoring; b) Government Buyers except for political risks in overseas under export transaction. c) Financial Guarantee in any form d) Any other risk cover that may be specified by the Authority from time to time.
  • A trade credit insurance policy shall cover only receivables arising from transactions made under trade credit transaction.
  • Every Insurer shall have an Underwriting and Risk Management Policy approved by Board, in addition to the underwriting policy prescribed under Guidelines on Product Filing Procedures for General Insurance Products which shall be filed with the Authority.
  • The insurer shall have a “Claims Manual” which will illustrate how the claims shall be processed, documentation, delegation of authority, policy holders servicing, grievance redressal etc.
  • Contravention of the any of these Guidelines shall invite penal action under the provisions of the Insurance Act, 1938 which includes prohibiting insurer against entering into any new or particular trade credit insurance business transaction after giving the insurer an opportunity of being heard.

*Tanvi Singh, Editorial Assistant has reported this brief.

Case BriefsSupreme Court

Supreme Court: The bench of Sanjay Kishan Kaul and R. Subhash Reddy, JJ has issued directions with respect to motor vehicle accident claims and has said that the said “directions will apply across the country so that a uniform practice is followed.”

Here are the detailed directions:

  1. Accident Information Report- The jurisdictional police station shall report the accident under Section 158(6) of the Motor Vehicles Act, 1988(Section 159 post 2019 amendment) to the tribunal and insurer within first 48 hours either over email or a dedicated website.
  2. B. Detailed Accident Report- Police shall collect the documents relevant to the accident and for computation of compensation and shall verify the information and documents. These documents shall form part of the Report. It shall email the Report to the tribunal and the insurer within three months. Similarly the claimants may also be permitted to email the application for compensation with supporting documents, under Section 166 to the tribunal and the insurer within the same time.
  3. The tribunal shall issue summons along with the Report or the application for compensation, as the case may be, to the insurer by email.
  4. The insurer shall email their offer for settlement/response to the Report or the application for claim to the tribunal along with proof of service on the claimants.
  5. After passing the award, the tribunal shall email an authenticated copy of the award to the insurer.
  6. The insurer shall satisfy the award by depositing the awarded amount into a bank account maintained by the tribunal by RTGS or NEFT. For this purpose the tribunal shall maintain a bank account and record the relevant account details along with the directions for payment to the insurer in the award itself.
  7. Each tribunal shall create an email ID peculiar to its jurisdiction for receiving the emails from the police and the insurer as mentioned above. Similarly, all insurer throughout India shall also create an email ID peculiar to the jurisdiction of each claim tribunal. These email IDs would be prominently displayed at tribunal, the police stations and the office of the insurers for the benefit of the claimants. Similarly, these email IDS shall also be prominently displayed on the website maintained by the tribunal and the insurer.
  8. Insurers shall appoint nodal officers for each tribunal and provide their contact details, phone and mobile phone numbers, and email address to Director Generals of State Police and the tribunals.

The Court was also of the opinion that the Central Government shall develop an online platform accessible to the tribunals, police authorities and insurers throughout India, as each State having an independent online platform for submission of accident reports, claims and responses to claims, will hamper efficient adjudication of claims, especially where the victim of the accident is not a resident of State where accident has occurred. It, however, refrained from passing any directions on the same for the time being after the ASG submitted that some more time may be required to work out the time period within which they can be implemented and the necessary infrastructure for the same created for which some more discussions are required.

The Court is due to take up the matter again after the summer break.

[Bajaj Allianz General Insurance Company Private Ltd. v. Union of India, 2021 SCC OnLine SC 418, order dated 16.03.2021]

Amicus Curiae: Mr. Narasimhan Vijayaraghavan, AC, Mr. Vipin Nair, AOR

For Petitioner(s): Ms. Meenakshi Arora,Sr. Adv.

Mr. Siddharth, AOR

Mr. Amit Kumar Agrawal, Adv.

Ms. Mamta Meghwal, Adv.

For Respondent(s):  Mr. J.K. Sud, Ld. ASG

Ms. Garima Prashad, Adv.

Mr. Bhuvan Mishra, Adv.

Mr. Navanjay Mahapatra, Adv.

Ms. Sanya Sud, Adv.

Mr. Randeep Sachdeva, Adv.

Mr. Harish Nadda, Adv.

Mr. Raj Bahadur Yadav, Adv.

Mr. G.S. Makker, Adv.

Mr. B.V. Balram Das, Adv.

Case BriefsHigh Courts

Gauhati High Court: The Division Bench of Sudhanshu Dhulia, CJ. and Manash Ranjan Pathak, J., took up a PIL wherein the counsel of the petitioner, Mr A. Chamuah had filed an interlocutory application stating that in Assam persons who were suffering from COVID, although they had an insurance cover were still not being admitted in private hospitals inspite of directions issued in this regard for taking care a COVID patients (who have insurance cover), vide order of the Regulatory Authority dated 04-03-2020.

Mr D. Saikia, Advocate General, Assam placed on record before the Court that on enquiry being done at their end, nine private hospitals were contacted in Guwahati, Dibrugarh and Bongaigaon and the replies which they had received from these private hospitals is that inspite of the late payment in many cases, have not denied admission to a patient suffering from covid, except in some cases where the employees of the hospital were also suffering from COVID. Enquiries have also been made regarding the old lady, who was allegedly denied treatment from cancer as she was suffering from COVID.

The Court granted one week time to Assistant Solicitor General of India, Mr R.K.D. Choudhury to get instructions from the Insurance Regulatory Authority and to file a detailed reply regarding the same so that there is a better position to examine the matter. Court to hear the matter on 31-05-2021.

[Lawyers Association, Guwahati v. State of Assam, 2021 SCC OnLine Gau 1100, decided on 24-05-2021]

Suchita Shukla, Editorial Assistant has put this report together 

Case BriefsSupreme Court

Supreme Court: In an interesting case, the 3-judge bench of UU Lalit, Indira Banerjee and KM Joseph*, JJ has held that while in case where there is a blood test or breath test, which indicates that there is no consumption at all, undoubtedly, it would not be open to the insurer to set up the case of exclusion, however, the absence of test may not disable the insurer from establishing a case for exclusion from liability on ground of drunk driving.

How to decide if the driver was “under the influence of intoxicating liquor”?

If in a case, without there being any blood test, circumstances, associated with effects of consumption of alcohol, are proved, it may certainly go to show that the person who drove the vehicle, had come under the influence of alcohol. The manner, in which the vehicle was driven, may again, if it unerringly points to the person having been under the influence of alcohol, be reckoned.

“Evidence, if forthcoming, of an unsteady gait, smell of alcohol, the eyes being congested, apart from, of course, actual consumption of alcohol, either before the commencement of the driving or even during the process of driving, along with the manner in which the accident took place, may point to the driver being under the influence of alcohol. It would be a finding based on the effect of the pleadings and the evidence.”

What does Section 185 of the Motor Vehicles Act state?

Section 185 of the Motor Vehicles Act creates a criminal offence dealing with driving by a drunken person or by a person under the influence of drugs. The Section mandates the proving of the objective criteria of presence of alcohol exceeding 30 mg per 100 ml. of blood in a test by a breath analyser.

Being a criminal offence, it is indisputable that the ingredients of the offence must be established as contemplated by law which means that the case must be proved beyond reasonable doubt and evidence must clearly indicate the level of alcohol in excess of 30 mg in 100 ml blood and what is more such presence must be borne out by a test by a breath analyser. With effect from 01.09.2019, the following words have been added to Section 185, that is “or in any other test including laboratory test”.

“The law does not prohibit driving after consuming liquor and all that is prohibited is, that the percentage of liquor should not exceed 30 mg. per 100 ml. of blood. Therefore, the understanding appears to be that only in circumstances, where the act of driving, having consumed liquor, attracts the wrath of Section 185 and an offence is committed thereunder, that the opprobrium of the Exclusion Clause in the Contract of Insurance, for own damage, is attracted.”

Read the full text of the provision here

Why will lack of scientific material not disable the insurer from establishing a case for exclusion?

If prosecution has not filed a case under Section 185, that would not mean that a competent Forum in an action alleging deficiency of service, under the Consumer Protection Act, is disabled from finding that the vehicle was being driven by the person under the influence of the alcohol.

“The presence of alcohol in excess of 30 mg per 100 ml. of blood is not an indispensable requirement to enable an Insurer to successfully invoke the clause. What is required to be proved is driving by a person under the influence of the alcohol. Drunken driving, a criminal offence, under Section 185 along with its objective criteria of the alcohol-blood level, is not the only way to prove that the person was under the influence of alcohol. If the Breath Analyser or any other test is not performed for any reason, the Insurer cannot be barred from proving his case otherwise.”

Further, should the Insurer fail to establish a case in terms of Section 185 BAL (Blood Analyser Test), it would fail, may not be the proper approach to the issue.

“It is not difficult to contemplate that the accident may take place with the driver being under the influence of alcohol and neither the Breath Test nor the laboratory test is done. A driver after the accident, may run away. A test may never be performed. However, there may be evidence available which may indicate that the vehicle in question was being driven at the time of the accident by a person under the influence of alcohol.”

Hence, in such circumstances, it cannot then be said that merely because there is no test performed, the Insurer would be deprived of its right to establish a case which is well within its rights under the contract.

[IFFCO TOKIO GENERAL INSURANCE COMPANY LTD. v. Pearl Beverages, 2021 SCC OnLine SC 309, decided on 12.04.2021]

*Judgment by Justice KM Joseph

For appellant: Advocate Shivam Singh

For respondent: Senior Advocate Gopal Sankarnarayanan

Case BriefsSupreme Court

Supreme Court: Taking note of an important legal question raised by the High Court of Kerala while hearing a Motor Vehicle Accident claim case, the 3-judge bench of NV Ramana, Surya Kant and Aniruddha Bose, JJ has agreed to decide the following question:

“Whether in the matter of awarding costs, the procedure and rules framed under the Constitution, CPC and the Rules made thereunder, for `Courts’, could be resorted to by the Claims Tribunal which is apparently, not a `Court.”

The petitioner in the Special Leave petition, challenged the Kerala High Court’s judgment whereby the High Court upheld the compensation granted by the Motor Accident Claims Tribunal, Kottayam in favour of the injured respondent. It was argued that

“the Tribunal does not possess any authority to award any costs as incidental to its power over the parties or the subject matter of the litigation, and the Tribunal being constituted under a special enactment is to be governed solely by the provisions of the Motor Vehicles Act, 1988.”

The Court, hence, allowed the special leave petition to the limited extent of examining the legal issue raised by the petitioner.

Advocate N.Vijayaraghavan will be assisting the Court as  amicus curiae.

[ICICI Lombard General Insurance Company v. MD Davasia,  2021 SCC OnLine SC 79, order dated 11.02.2021]

Appearance before the Court by

For Petitioner:  Rana Mukherjee, Sr.Adv., Nagesh, Adv., Daisy Hannah, Adv. and Shekhar Kumar, AOR.

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): C. Viswanath (Presiding Member) expressed that:

Section 50 of the Insurance Act imposes a statutory obligation on the part of the Insurance Company to issue notice before the expiry of three months from the date on which premium is payable and has not been paid and to give notice to the Policyholder informing him about the options available to him, unless the said conditions are set forth in the Policy.

The instant revision petition was filed under Section 21(1) (b) of the Consumer Protection Act, 1986 against the Order of Punjab State Consumer Disputes Redressal Commission.

Factual Matrix

Complainant’s son obtained a Personal Life Insurance Policy from petitioner 2 for a sum of Rs 2.70 lakh. On the said policy a quarterly instalment of the premium was fixed which was being paid through an agent. The complainant was the nominee.

Complainant’s son died in a road accident. Later the insurance company appointed a surveyor who demanded a bribe to make a favourable report, which the complainant did not pay.

Petitioner 1informed the complainant that since the premium due was not paid, therefore the claim of the complainant could not be considered.

On being aggrieved with the deficiency in service on the part of the petitioners, respondent filed a complaint before the District Forum.

District Forum concluded that there was no deficiency in service on the part of the petitioners as the Insurance Policy of the deceased had lapsed and the complaint was dismissed.

Though the State Commission while accepting the appeal and setting aside the District Forum’s order observed that:

“Consequently, the Complaint filed by the Appellant/ Complainant is allowed and the Respondents are directed to pay the sum insured of Rs.2.70 lakh under the Policy to the Appellant and Rs.1.00 lakh on account of accidental death of the young and unmarried son of the Appellant. The Respondents are also directed to pay Rs.20,000/- as compensation and Rs.10,000/- as litigation expenses to the Appellant.

The Respondents shall comply the order within 45 days of the receipt of copy of the order.”

Complainant aggrieved with the State Commission’s order filed the present revision petition.


Commission observed that the entire case revolved around Section 50 of the Insurance Act, which states as follows:

“50. Notice of options available to the assured on the lapsing of a policy:

An insurer shall (before the expiry of three months from the date on which the premiums in respect of a policy of life insurance were payable, but not paid), give notice to the policy-holder informing him of the options available to him (unless these are set forth in the policy)”.

Bench observed that the petitioner’s main issue was that the premium was payable on 06-03-2007 and even during the grace period it was not paid. Policy stood lapsed at the end of 31st day from the date of premium fell due.

Further, since the complainant did not apply for reinstatement, no benefits under the policy could be given to them. Petitioners kept notifying the complainant about the policy being lapsed and were also informed about the reinstatement option.

Later on not receiving any information from the insured, the policy lapsed and the same was notified to the complainant.

Hence, the Commission found that the petitioners had acted in accordance with the terms and conditions of the Policy, therefore the complaint deserved to be dismissed.

District Forum’s Order was upheld.[Tata AIG Life Insurance Company Ltd. v. Kishan Lal Arora, Revision Petition No. 4415 of 2013, decided on 01-02-2021]

Hot Off The PressNews

The Competition Commission of India (CCI) approves the acquisition of stake by Axis Bank Limited, Axis Capital Limited and Axis Securities Limited in Max Life Insurance Company Limited.

Axis Bank Limited provides services in retail banking, which includes retail lending and retail deposits, wholesale banking, payment solutions, wealth management, forex and remittance products, distribution of mutual fund schemes and distribution of insurance policies.

Axis Capital Limited is engaged in the business of providing focused and customized solutions in the areas of investment banking and institutional equities.

Axis Securities Limited is engaged in the business of broking, distribution of financial products and advisory services.

Max Life Insurance Company Limited is Life Insurance company registered with Insurance Regulatory and Development Authority of India (IRDAI). It is engaged in the business of providing life insurance and annuity products and investment plans in India.

The proposed combination approved by CCI relates to increase of shareholding in Max Life Insurance Company Limited (Target) to approximately 9.9% by Axis Bank Limited and acquisition of 2% and 1% shareholding in the Target by Axis Capital Limited and Axis Securities Limited respectively.

Detailed order of the CCI will follow.

Ministry of Corporate Affairs

[Press Release dt. 21-01-2021]

[Source: PIB]

Case BriefsHigh Courts

Karnataka High Court: Ashok S. Kinagi J., allowed the appeal and applied the pay and recover principle fastening the liability on the owner to pay the compensation.

The facts of the case are such that the claimant was sitting in the backside of the auto-rickshaw, the driver was driving rashly and negligently without following traffic rules and regulations and dashed the same to a motorcycle which was going in front of auto-rickshaw because of which the auto turned turtle and the claimant sustained grievous injuries in the said accident. Thus, a claim petition was filed before the Tribunal for compensation which was thereby granted by holding that the respondents are jointly and severally liable to pay it. Being aggrieved by the same, the present appeal was filed.

Counsel for the appellants submitted that the tribunal has committed an error in fastening the liability on the insurer as the vehicle was plying outside the permitted limit and hence the insurance is not liable to pay compensation.

Counsel for the respondents supported the impugned judgment and award.

The Court relied on judgment Shamanna and Divisional Manager, Oriental Insurance Co. Ltd., 2018 ACJ 2163 and observed that when there is a breach of policy conditions and the policy is in force as on the date of the accident, it is for the insurance company to pay the compensation amount and recover the same from the owner.

The Court thus held that the permit disclosed that offending vehicle was permitted to ply within 16 km from Savdatti but in fact, the accident has occurred outside the limit of Savadatti i.e., outside of 16 km from the permit limit. It was further observed that on the date of the accident the insurance policy was in force but at the time of the accident, the vehicle did not have permit at the accident spot. Thus there is a clear violation of policy conditions.

In view of the above, the appeal was allowed in part directing the insurer to pay the compensation amount and recover the same from the owner.[Divisional Manager v. Riyaz Ahmed, M.F.A. No. 100275/2015 (MV), decided on 06-02-2020]

Arunima Bose, Editorial Assistant has put this story together

Case BriefsHigh Courts

Kerala High Court: Anil K, Narendran, J., allowed this Motor Accident Claim Appeal filed against the order of Motor Accidents Claims Tribunal.

In the instant appeal, a claim petition filed under Section 166 of the Motor Vehicles Act 1988 was challenged for being inadequate. The appellant sustained injuries in a motor accident, which occurred on 27-04-2014, while he was riding a motorcycle. At the place of accident, the motorcycle was hit by a car. The counsel for the motorcyclist K.A. Hassan alleged that the accident occurred due to the rash and negligent driving of the car by the respondent 1. A claim petition was filed before the Tribunal claiming a total compensation of 4,50,000 rupees.

The car driver, while admitting the occurrence of accident contended through his counsel, A.A. Ziyad Rahman that the accident happened due to the rash and negligent riding of the motorcycle by the motorcyclist. It was contended by the Insurance Company that the compensation claimed is highly excessive.

The Tribunal arrived at a conclusion that the accident occurred due to the rash and negligent driving of the car by its driver. The Tribunal awarded a total compensation of 99,500 rupees together with interest at the rate of 9% per annum from the date of petition till realisation.

The Court relied on National Insurance Company Ltd. v. Pranay Sethi, (2017) 16 SCC 680, wherein a Constitution Bench of the Supreme Court held that, Section 168 of the Motor Vehicles Act, 1988 deals with the concept of ‘just compensation’ and the same has to be determined on the foundation of fairness, reasonableness and equitability on an acceptable legal standard. The aim is to achieve an acceptable degree of proximity to arithmetical precision on the basis of materials brought on record in an individual case.

 In the view of the above considerations, the Court granted an additional compensation of 15,750 rupees with interest at the rate of 8% per annum from the date of petition till realisation. Since insurance coverage of the said vehicle was not in dispute, the insurer was held liable to indemnify additional compensation granted in this appeal, together with interest to the insured within a period of two months. [Asharaf K.A v. Easow T.T., 2020 SCC OnLine Ker 7968, decided on 20-01-2020]

Case BriefsHigh Courts

Karnataka High Court: Hemant Chandangoudar J., dismissed the appeal and upheld the impugned award and judgment regarding compensation.

The facts of the case are such that the claimants have sustained accidental injuries on 30-03-2010 due to rash and negligent driving of the Toofan Jeep, and thereby filed claim petitions under Section 166 of Motor Vehicle Act to award just and proper compensation. The Tribunal awarded compensation by judgment and award dated 27-04-2013. Aggrieved by the same the instant appeals have been filed by the Insurance Company challenging the impugned judgment and award.

Counsel for the Insurance Company submitted that the Tribunal has committed an error in fastening liability on the insurance company as the vehicle was insured for private purpose whereas during the accident it was plyed on hire and hence was in violation of the comprehensive policy and against the provisions of Section 149 (2) of MV Act.

The Court relied on judgment titled United India Assurance Co. Ltd. v. Kalawathi, ILR 2001 KAR 2328 and observed that

“That apart we do not find any rationale for the insurer as a ‘State’ to discriminate between the paid inmate and the gratuitous inmate when the vehicle is a private vehicle plyed on hire, the owner may be liable for the penal and fiscal consequences under the Motor Vehicle Act for payment of penalty and taxes applicable to the commercial vehicles. But from the standpoint of the insurer, it makes no difference whether the inmate is a paid passenger or gratuitous passenger. When the policy issued is a comprehensive policy covering risk of inmates of private vehicle, the insurer cannot avoid liability on the ground that the inmate is a paid passenger. In that view, we hold that the terms in the policy, which discriminates the liability of the insurer for the paid inmate and gratuitous inmate is discriminatory and illegal.”

The Court held that no discrimination would be made between the paid inmate and gratuitous inmate when the vehicle is covered with a comprehensive policy. If the vehicle is a private vehicle, plyed on hire, the owner may be liable for the penal and fiscal consequences under the provisions of MV Act for payment of penalty and taxes but the insurer cannot avoid liability. Hence, fastening of liability on the Insurance Company to pay compensation cannot be found fault with.

In view of the above, appeals were dismissed.[United India Insurance Co. Ltd. v. Basavaraj, 2020 SCC OnLine Kar 1652, decided on 02-11-2020]

Arunima Bose, Editorial Assistant has put this story together

Case BriefsHigh Courts

Bombay High Court: Vibha Kankanwadi, J. partly modified the award granted by Motor Accident Claims Tribunal on being challenged.

The trail of events in the case is as follows:

Original claimants filed the claim petition for getting compensation on account of the death of their son—Krushna Murlidhar Kabra. Deceased along with his friend were on a motorcycle and were dashed by Mahindra Bolero Vehicle which had come in a rash and negligent manner and dashed from the backside due to which both the riders on the motorcycle received severe injuries.

Further, Respondent 1 was the owner of the Bolero Vehicle which was insured with Respondent 2 on the date of the accident.

It was contended that the deceased was 22 years old and attaining a degree in M.Com. He was also doing some private job with a monthly salary of Rs 18,000 per month. He was also involved in share purchasing and selling out of which he used to earn Rs 3000 per month and in total his income for the month was estimated to be Rs 21,000 per month. On the basis of the said amount, compensation claimed was of Rs 55,00,000.

Taking into consideration the evidence placed, the Motor Accident Claims Tribunal had held that claimants had proved that Krushna died in the said accident due to rashness and negligence if the driver of the offending vehicle. Insurance Company had also failed to prove breach of terms of policy and therefore, both the respondents were held liable to pay compensation to the claimants.

Advocate, V.N. Upadhye represented the appellant. Advocate P.R. Katneshwarkar, holding for Advocate L.B. Pallod, appeared for Respondents 1 and 2.

The appellant submitted that he is challenging the Judgment & Award on the point of quantum. He submitted that, excessive compensation was awarded when, in fact, the law requires just compensation. Tribunal’s basis for granting award and calculating the same based on an imaginary figure ended in granting bonanza to the claimants.

High Court stated that, “What remains after discarding the oral evidence in respect of point of income adduced by the claimants is, the only guess work that has been done by the learned Tribunal.”

Courts are required to take a note of the fact of unemployment prevailing in the society. Highly qualified persons are unable to get job and if at all they are able to get, then they are required to be satisfied with a lesser salary.

Due to the above-stated circumstances, merely on the count that deceased was a brilliant student, his monthly salary cannot be assessed to Rs 20,000 per month, but it was reasonable to derive that he could have fetched a job with a salary of Rs 10,000 per month with the qualifications he seemed to have attained.

Tribunal included the future prospectus in the amount as stated above of Rs 20,000, but on placing reliance on the decision of National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16 SCC 680, the type of calculation as stated was not expected. High Court modified the same and did the calculations based on taking into consideration his income at Rs 10,000 per month.

The fact that the deceased was a bachelor and in view of the decision in Sarla Verma v. DTC, (2009) 6 SCC 121, 50% is required to be deducted towards personal expenditure.

Thus, the claimants were entitled to get compensation of Rs 15,82,000. Accordingly, the Court gave the following order:

  • Judgment and award passed by the Member of the Motor Accident Claims Tribunal is hereby set aside and modified.
  • Rest of the award is kept as it is. [Reliance General Insurance Co. Ltd. v. Murlidhar, 2019 SCC OnLine Bom 1548, decided on 13-08-2019]
Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): Justice V.K. Jain (Presiding Member) dismissed an appeal filed by a jeweller, assailing repudiation of his claim for insurance.

The complainant/appellant obtained a Jewellers Block Policy from the respondent company for Rs 48 lakhs. During the period of the policy, some burglars entered their jewellery shop and took away ornaments kept in a safe. Respondent was intimated and a surveyor was appointed to visit the site and assess the loss. Surveyor submitted a report recommending repudiation of the claim on the ground that there was no sign of breaking the safe or its locks. Aggrieved appellant approached the State Commission by way of a consumer complaint. State Commission dismissed the complaint on the ground that the insured had failed to take all reasonable steps for safety of the property.

NCDRC noted an exception clause in the policy which stated that if it is established that the safe had been opened by the intruders, using either the original or a duplicate key of the safe belonging to the complainant, the loss would not be covered unless it is shown that the key, or duplicate key, as the case may be, had been obtained by threat or by violence. In the present case, the alleged use of key belonging to the insured was based upon the fact that one key of the safe was found in a glass showcase underneath a weighing scale. It was opined that in the normal course of human conduct, burglars would either take away the key or just throw it somewhere in the shop, instead of making efforts of keeping it under a weighing scale inside the glass showcase.

The Commission further noted that it was a condition of the policy that the premises where the jewellery was kept were to be protected by employing a watchman. But the said condition had not been met by the appellant.  Lastly, the appellant was not maintaining proper books of accounts and had failed to prove the actual loss suffered by him.

For the aforesaid reasons, it was held that the order of State Commission, dismissing the complaint filed by the appellant, did not call for any interference by this Commission.[S.B. Jewellers v. United India Insurance Co. Ltd., First Appeal No. 154 of 2013, Order dated 04-04-2019]

Case BriefsHigh Courts

Kerala High Court: A Full bench comprising of V. Chitambaresh, P.B. Suresh Kumar and Sathish Ninan, JJ. while answering a reference ruled that the burden to prove non-receipt of insurer’s letter of cancellation of insurance lies on the insured.

The liability of an insurer to indemnify third parties subsists unless the insurance coverage is cancelled by him (for reason such as dishonour of cheque given by insured towards premium) and intimation of cancellation has reached the insured and the registering authority.

The sole question referred to the Full Bench for determination was as to on whom does the burden lie to prove that the insurer has intimated about cancellation of insurance. Is it sufficient if it is proved that the insurer has sent intimation about cancellation of insurance coverage to the insured and the registering authority; or is it necessary to prove that the addressees have received the same?

The Court remarked that the fundamental difference between speed post and registered post was that while the former was address specific and time bound, the latter was addressee specific. Thus, the surest way to prove that intimation about cancellation of insurance had been sent by the insurer was to dispatch it by registered post with or without postal acknowledgment. Since Section 27 of the General Clauses Act, 1897 raises a presumption in favour of the sender for a properly addressed and prepaid post, therefore production of the receipt evidencing dispatch by registered post raises a presumption in favour of the insurer that the intimation has been sent to the addressee for secured delivery.

In view of the above, the reference was answered holding that the burden to rebut the presumption in favour of insured by conclusive evidence lay on the addressee. It was for the addressee/ insured to prove that he did not receive insured’s letter of cancellation and that the same was not a case of deliberate avoidance.[Prasanna B. v. Kabeer P.K.,2018 SCC OnLine Ker 4929, Order dated 31-10-2018]

Case BriefsHigh Courts

Chhattisgarh High Court: The petition filed by the National Insurance Co. seeking to evade its liability to indemnify the petitioner, was dismissed by a Single Judge Bench comprising of Sanjay Agrawal, J.

Undisputed facts of the case were that the claimant’s motorcycle was dashed vehemently by the jeep of the respondents which was being driven in a rash and negligent manner. The claimant claimed compensation under Section 166 of the Motor Vehicles Act 1988 subsequent to which the Claims Tribunal fastened liability upon the petitioner Insurance Co. Being aggrieved, the Insurance Company filed the instant petition.

The High Court noted that the main contention raised by the Insurance Company was that at the concerned time, the premium was not paid to the Company and the Development Officer who collected the premium amount was not authorized for the same. However, such contention was rejected by the Court. It was held that on a bare perusal of the record, it was evident that at the relevant time, the premium had already been collected by the petitioner by issuing a ‘Deposit Challan’ in its printed form. Therefore the Insurance Company could not run away from its liability to pay the assured. In accordance, the petition was dismissed. [National Insurance Co. Ltd. v. Jitendra Kumar Jain, 2018 SCC OnLine Chh 487, dated 24-4-2018]

Business NewsNews

The government is considering a nationwide single GST registration process for the aviation, banking and insurance sectors. A single registration will potentially solve a majority of the compliance problems that services companies have been complaining about. They now have to register themselves and file GST returns in every state or union territory (UT) they operate in. But the change will require the approval of the GST Council, the top decision-making body under the new tax system, where states are expected to oppose it fearing revenue loss as they have done when the proposal had come up before.

While goods-producing industries were used to making multiple state-wise returns for value-added tax under the previous regime, this is a new requirement for services companies, which complain it as a cumbersome process involving lot of paperwork and manpower. For instance, since most airlines have pan-India operations and sales offices, they have to make about 30 registrations. In each territory, they have to file two returns every month: GSTR1 on outward supply or sale and GSTR 3B, which is a summary of all transactions and credits. With two more being added — GSTR 2 on inward supply or purchase and GSTR 3on reconciliation or credits to be claimed from the government — the number of returns that an airline has to file is set to increase to 120 a month, or 1,440 a year.

There are other fears as well. Inter-company transactions in some sectors could attract transfer pricing issues. In such cases, the company will have to pay tax. There could be problems also over tax assessment due to reassignment of work within the tax authorities. The government has assigned GST assessing officers from a combined pool of officials who previously dealt with sales tax, excise or VAT. Some of them, especially those working in state governments, may not be familiar with the way services industries operate. Earlier, state officials dealt primarily with manufacturing companies, collecting VAT. The central government collected excise tax as well as services tax from industries like aviation and financial services. Service providers, which were previously assessed only at the central level, are also assessed by state officials under GST. A common registration system, with a centralized filing of returns, will significantly cut compliance costs and complexities, a key issue that almost all of corporate India has raised about the tax structure that combines several indirect taxes into one.

[Source: The Economic Times]

Case BriefsHigh Courts

Hyderabad High Court: The Single Bench partly allowed an insurance claim petition reducing the quantum of compensation granted to the respondents.

The claims related to the insurance in the case of a motor accident between an auto and a lorry resulting in the death of two individuals. The claimant was related to both the deceased as husband and father respectively. As to the question of negligence, the Additional District judge had passed the order that the auto driver had primarily caused the accident after which the liability shifted on to the lorry driver. This decision remains unchanged by the High Court.

The primary question being considered by the High Court was the quantum of compensation amount. The Court followed the guidelines set previously by the Supreme Court in a similar matter. It was stated that if the deceased is a bachelor then 50% of the income is to be deducted as living expenses and the remaining 50% is to be considered as expenses towards family. The father of the deceased or his siblings are not considered as dependants as the father is assumed to be earning and the sibling are either earning or dependent on the father. Only the mother is considered to be a dependant for the bachelor. In cases where the family is large and totally dependent on the income of the deceased, the widowed mother shall be a dependant along with the siblings who are not earning, the personal expenses of the bachelor is to be limited to 1/3rd of the total income and 2/3rd towards family expenses.

In this case the Court accepted this rule and reduced the quantum of compensation from Rs. 2,60,500 to Rs. 1,92,000. [The New India Assurance Company Limited v. Datla Verma,  2017 SCC OnLine Hyd 244, decided on 14.07.2017]

Case BriefsHigh Courts

Punjab and Haryana High Court: An appeal was filed by the Oriental Insurance Company challenging the order of the lower court which had allowed a patient’s family to claim insurance for the death of the patient who had denied taking treatment against medical advice. The patient had met with an accident and he was in a serious condition, said doctors. But he got himself discharged against medical advice and succumbed to his injuries on the day of his discharge itself.

The appellant argued that the insured was already a TB patient with cirrhosis of liver and it could not be predicted that the death was only on account of head injury suffered in the accident and not his pre-existing condition. The doctor testifying for the Insurance Company stated in court that the chances of the recovery couldn’t be ruled out if the patient had stayed on for treatment. The doctor however, not able to assess the prospect of recovery.

The Court examined that between the date of accident and death, there were no other intervening incident that could have affected the medical conditions except that the patient himself denied the treatment which perhaps was available. The cause for death could also be easily discerned from the fact that when he was readmitted, the diagnosis was that there were internal bleeding within the skull and when there was a reference about the general poor condition. Seen in the context of such diagnosis with no reference to the condition of cirrhosis of liver or the tuberculosis which the deceased was said to have already contacted the precipitating factor for the poor condition was only the head injury with internal bleeding within the skull in the brain area. A decision to get discharged even against medical advice at the terminal stage of life shall not be likened to an invitation to assisted suicide. It is embracing dignity in death.

Thus, the High Court dismissing the appeal, approved the payment of the claim. [Oriental Insurance Company Limited v. R.K. Dogra, 2016 SCC OnLine P&H 3397, decided on 18-05-2016]

Case BriefsSupreme Court

Supreme Court: The questions that came before the bench of H.L. Dattu, CJ and Arun Mishra, J were whether in the wake of lease agreement entered into by registered owner with Karnataka State Road Transport Corporation (KSRTC), the registered owner and insurer along with KSRTC can be fastened with the liability to make payment to the claimants and that whether KSRTC can recover the amount from registered owner and its entitlement to seek indemnification from insurer.

Taking note of the definition of the term ‘owner’ as defined under Section 2(30) of the Motor Vehicle Act, 1988, the Court said that under the MV Act, the owner means a registered owner and where the agreement on hire-purchase or an agreement of hypothecation has been entered into or lease agreement, the person in possession of the vehicle is treated as an owner. It was held that the KSRTC being in actual control of the vehicle would also be liable to make the compensation, however, it can recover the amount from the registered owner or insurer, as the case may be. Regarding the liability of the insurer, it was held that the insurer cannot escape the liability, when ownership changes due to the hypothecation agreement It was further held that In the case of hire also, it cannot escape the liability, even if the ownership changes. Even though, KSRTC is treated as owner under Section 2(30) of the MV Act, the registered owner continues to remain liable as per terms and conditions of lease agreement lawfully entered into with KSRTC.

The Court, after referring to many decisions of this court, held that registered owner, insurer as well as KSRTC would be liable to make the payment of compensation jointly and severally to the claimants and the KSRTC in terms of the lease agreement entered into with the registered owner would be entitled to recover the amount paid to the claimants from the owner as stipulated in the agreement or from the insurer.[ Managing Director, K.S.R.T.C. v. New India Assurance Co.Ltd.,2015 SCC OnLine SC 1044, decided on 27.10.2015]

Legislation UpdatesStatutes/Bills/Ordinances

The Insurance Laws (Amendment) Bill, 2015 was passed by the Parliament on 12.03.2015. Earlier, the Bill was passed by Lok Sabha on 04.03.2015. The objective of the Bill is to remove archaic and redundant provisions in the legislations and incorporate certain provisions to provide Insurance Regulatory and Development Authority of India (IRDAI) with the flexibility to discharge its functions more effectively and efficiently. The Bill provides as follows:


  • enhancement of the foreign investment cap in an Indian Insurance Company from 26% to an explicitly composite limit of 49% with the safeguard of Indian ownership and control.
  • enable capital raising through new and innovative instruments under the regulatory supervision of IRDAI, which would  lead to greater distribution reach to under / un-served areas in order to meet diverse insurance needs of citizens, efficient service delivery through improved distribution technology and enhanced customer service standards.
  • enable the interests of consumers to be better served through provisions like penalties on intermediaries / insurance companies for misconduct, practice of mis-selling, misrepresentation by agents / insurance companies etc.
  • easier process for payment to the nominee of the policy holder, as the insurer would be discharged of its legal liabilities once the payment is made to the nominee.
  • obligation on insurance companies to underwrite third party motor vehicle insurance as per IRDAI regulations.
  • IRDAI to regulate the eligibility, qualifications and other aspects of the appointments of insurance agents to insurers.
  • IRDAI to regulate key aspects of Insurance Company operations in areas like solvency, investments, expenses and commissions and to formulate regulations for payment of commission and control of management expenses.
  • empowers the Authority to regulate the functions, code of conduct etc., of surveyors and loss assessors.
  • expands the scope of insurance intermediaries to include insurance brokers, re- insurance brokers, insurance consultants, corporate agents, third party administrators, surveyors and loss assessors etc.
  • properties in India can now be insured with a foreign insurer with prior permission of IRDAI; which was earlier to be done with the approval of the Central Government.
  • enables foreign reinsurers to set up branches in India and defines ‘re-insurance’ to mean “the insurance of part of one insurer’s risk by another insurer who accepts the risk for a mutually acceptable premium”, and thereby excludes the possibility of 100% ceding of risk to a re-insurer.any insurer or insurance intermediary aggrieved by any order made by IRDAI may prefer an appeal to the Securities Appellate Tribunal (SAT).

-Ministry of Finance

Tribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): NCDRC has dismissed an appeal filed by a woman who failed to submit reasonable explanation for delay of more than three years in filing the said appeal. The case relates to the insurance claim of deceased husband of the appellant who had taken policy of Rs. 25 Lakh from Bajaj Allianz General Insurance Co. Ltd. The husband of appellant died due to the injuries received after slipping from stairs but the insurance company repudiated the insurance claim on the ground that death of insured was not on account of accident as there was no post-mortem report and no intimation to Police. The appellant approached NCDRC claiming the insurance amount after an inordinate delay of 1163 days and sought condonation of delay on the ground that she was residing in remote areas and was also having financial constraints. While rejecting the contention of the appellant, NCDRC referred to various judgments of the Supreme Court and held that as there is no sufficient cause or explanation for condonation of inordinate delay of 1163 days, it cannot be condoned. NCDRC further added that as application for condonation of delay has been dismissed, appeal being barred by limitation is also liable to be dismissed. (Bonda Kasi Annapurna v. Bajaj Allianz General Insurance Co. Ltd., First Appeal No. 160 of 2013, decided on May 29, 2014)

To read the full judgment, refer to SCCOnLine