Case BriefsHigh Courts

Rajasthan High Court: P.K. Lohra J., in an appeal under Section 173 of the Motor Vehicles Act, 1988 upheld the decision of the impugned judgment and directed the insurer to first pay the compensation amount to the claimants and then recover from the insured.

In the present case, the appellants being Megma HDI General Insurance Company Limited had appealed before the High Court challenging the judgment and award passed by the Motor Accident Claims Tribunal, Jodhpur. The Tribunal had absolved the appellants herein from the liability to pay compensation to the claimants and the onus was on the owner of the vehicle. However, it had directed the appellants to pay the compensation to the claimants first and thereafter claim the amount from the owner of the vehicle, the insured.

Challenging this above order, the counsel representing the appellants, Dhanpat Choudhary, placed reliance on the Supreme Court judgment National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297 and submitted that the tribunal erred in ordering the appellants to first pay the compensation to the claimants and thereafter recover it from the insured party.

The High Court, after perusal of the Tribunal’s order, referred to the Supreme Court judgments in Pappu v. Vinod Kumar Lamba, (2018) 3 SCC 208 and Amrit Paul Singh v. Tata AIG General Insurance Co. Ltd., (2018) 7 SCC 558 wherein it was held that in case of any loss to the third party, the insurer is first required to pay compensation to the claimants and then recover the same from insured. It stated that the Tribunal had absolved the appellants from the duty due to the insured party not complying with the insurance policy but in order to mitigate the hardship of the claimants, the Tribunal directed the appellants to recover the compensation amount from the insured after paying the same to the claimants. The appeal was dismissed.[Megma Hdi General Ins. Co. Ltd. v. Likhama Ram, 2019 SCC OnLine Raj 1292, decided on 05-07-2019]

Case BriefsHigh Courts

Madras High Court: Pushpa Sathyanaryana, J. while hearing a petition praying for mandamus against an insurance company, directed the said insurance company to honour the claim of petitioner in respect of her insurance policy.

Petitioner and her husband had applied for a home loan for which they were to be sanctioned a sum of Rs 35,00,000. The loan policy also covered critical illness diagnosis cost. Petitioner’s husband suffered a massive cardiac arrest and died. Petitioner filed a claim petition seeking claim amount but it was denied on grounds that her husband’s death was not covered under major medical illness. Aggrieved thereby, the instant petition was filed.

Learned counsel for the petitioner S.R. Raghunathan argued that the respondent’s argument which stated that massive cardiac arrest did not come under the purview of major medical diagnosis was absolutely false. They were just trying to save themselves from providing rightful insurance claims. He relied on the case of LIC of India v. Asha Goel, (2001) 2 SCC 160 to buttress his argument.

Learned counsels for the respondents S. Manohar and K.J. Parthasarathy contended that the respondent company was not “State” under Article 12 of Constitution of India and therefore the writ petition was not maintainable under law. Secondly, they alleged that the cause of death did not fall within the covered claims.

Issue: Whether a writ petition is maintainable to enforce a contractual right of an insurance claim?

The Court opined that Article 226 of the Constitution of India could be invoked not only for infringement of fundamental rights but also for any other purpose. Thus, the question that required determination was whether private bodies performing public duties can be brought within the purview of judicial review. It considered the judgment in LIC v. Escorts Ltd., (1986) 1 SCC 264 where the Supreme Court while considering activities of LIC, which comes under the purview of public law, observed that “a Court will examine actions of State if they pertain to the public law domain and refrain from examining them if they pertain to the private law field…. The question must be decided in each case with reference to the particular action”.

The Court remarked that notwithstanding the law on the subject, in reality, there is no parity and balance between the insurer and insured. In many cases, the individual has no legal knowledge about the ambiguous language used in the company’s policy with an intention to waive them from the liability to pay the injured on happening of an agreed event. Many times the companies willfully neglect reimbursing the insured, who instead of getting their amount from the company have to pay the Courts for getting their rights enforced. The case on hand is the classic example of the same.”

 It was opined that the “malpractice and arbitrary use of power by the insurance companies must be restrained by incorporating provisions to reduce the chances of ambiguity at a later date. Or else, the insurer would continue to take advantage of the insured by falsely repudiating the claims made by the insured”.

It was noted that as per Section 3 of the policy in question the medical event of ‘Myocardial Infarction’ was covered under the Policy. Though the cardiac arrest suffered by the husband of the petitioner fell under the abovesaid medical event, the respondents were denying the rightful claim to the insurance cover. The Court asked for a medical report to clear the doubt whether massive cardiac arrest comes under major medical diagnosis, and after a perusal of the said report, it was concluded that the cause of death of the insured was well within the defined medical events prescribed in the policy.

As a concluding remark, the Court urged that insurance companies must focus on educating their customers about the financial backing and this must be done by issuing magazines, booklets and visual contents.

The petition was allowed and the respondent company was directed to honour the claim made by the petitioner without insisting for any further documentation or particulars, in accordance with the law.[Jasmine Ebenezer Arthur v. HDFC ERGO General Insurance Company Ltd., 2019 SCC OnLine Mad 2246, decided on 06-06-2019]

Case Briefs

Jharkhand High Court: Anubha Rawat Choudhary, J. allowed an appeal made by an insurance company regarding their extent of liability towards a deceased as mentioned in the insurance policy.

An FIR was lodged by the owner of a vehicle wherein it was stated that a person (deceased) was authorized to drive his vehicle. In order to save a cow while driving, that person met with an accident and died. His legal representatives (the claimant) filed a claim application, but the insurance company denied its liability. Motor Accident Claims Tribunal (MACT) allowed the claimant’s application under Section 166 of Motor Vehicles Act, 1988 and held the insurance company liable to pay compensation of Rs. 11 lakhs with 6 per cent interest. Hence, this appeal.

Issue: Whether the deceased, who was authorized to drive the vehicle, by the owner of the vehicle, is covered under the insurance policy and if so, to what extent.

Learned counsel Ashutosh Anand, on behalf of the appellant submitted that the Tribunal did not consider the fact that the deceased was driving the vehicle with the permission of the owner so, he won’t be considered a 3rd party as he stepped into the shoes of the owner and thus claimant would be entitled to compensation only after proving that there was no rash driving or negligence on the part of the deceased.

Learned counsel  K. K. Singh, on behalf of the respondent submitted that the point raised by the appellant were raised for the first time and not mentioned in its written statement. It was further contended that the appellant did not make any plea about their extent of liability before the Tribunal and referred to a judgment of Supreme Court Ramchandra v. Regional Manager, United India Insurance Company Ltd., (2013) 12 SCC 84, in which it was rightly held that the appellant was estopped from raising the plea for the first time at the appellant stage.

The Court noted that there was no rash and negligent driving on the part of the deceased as per the police report. It was noted that the reason for the appellant’s denial of its liability to pay compensation, was that the deceased was neither a 3rd party nor a paid driver of the insured owner. It was opined that the liability of the appellant under the policy would be governed by the terms and conditions of the insurance policy. The insurance policy did not cover the list of any gratuitous passenger and no additional premium for such coverage was paid by the insured against the policy.

It relied on the judgment in United India Insurance Co. Ltd. v. Sidharat Raju, 2014 SCC OnLine P&H 3117 where it was held that the deceased steps into the shoes of the owner of the vehicle, and therefore the claimant cannot be said to a third party for the purposes of awarding compensation under the Act. Further reliance was placed on National Insurance Company Ltd. v. Ashalata Bhowmik, (2018) 9 SCC 801 where it was held that liability of an insurance company would be only to the extent of personal accident coverage under the contract of insurance.

In view of the aforesaid decisions, it was held that the extent of liability of the appellant could only be 2 lakhs with 6 percent interest from the date of filing the petition till the payment is made.[TATA AIG General Insurance Co. Ltd. v. Shakuntala Ganeriwal, 2019 SCC OnLine Jhar 642, decided on 25-04-2019]

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 BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): A Division Member Bench of Anup K Thakur, C. Viswanath, Members, dismissed a complaint filed against the opposite party for claiming compensation for alleged deficiency of services.

The main issue that arose before the Commission was whether the opposite party was liable for deficiency of services under the provisions of Consumer Protection Act, 1986.

The Commission observed that the complainant had intimated the opposite party about the breakdown of its machinery a month after it actually broke down. Further, the complainant was regularly communicating with the opposite party but even then it did not provide any information to the opposite party via email or telegram about the break down of machinery and this omission on the part of the complainant was a violation of one of the provisions of the insurance policy. The Commission also observed that soon after taking Machinery Breakdown and Machinery Loss of Profits Policies, the machinery of the complainant broke down. Complainant’s omission to disclose that the machinery was giving trouble prior to the complainant taking insurance policy, is an active concealment on its part. Further, the complainant had dismantled the machinery before it was examined by the surveyor and it also made an excuse about the logbooks gone missing.

The Commission held that the composite result of all the actions on the part of the complainant clearly suggests that the complainant had deliberately concealed some vital facts from the opposite party and hence it cannot be allowed to derive benefits of an insurance policy obtained by concealment of such important facts. Resultantly, the complaint was dismissed by the commission holding the opposite party not liable for deficiency of services under the provisions of the Consumer Protection Act, 1986. [Amrit Environmental Technologies (P) Ltd. v. Cholamandalam MS General Insurance Co. Ltd.,2018 SCC OnLine NCDRC 381, order dated 09-10-2018]

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): A Single Judge Bench comprising of V.K Jain, J., dismissed a consumer plaint for claim of insurance.

The respondent owned a vehicle which was insured with the petitioner company for which he claimed reimbursement in respect of the loss suffered by him on account of damage to the vehicle but as the driver of the vehicle was under the influence of intoxicating liquor at the time of accident, the company denied the claim by stating the respondent’s liability under Section 1(c) of the insurance policy,  which states that insurer is not liable in case of any accidental loss or damage suffered whilst the insured or any person driving the private car with the knowledge and consent of the insured was under the influence of intoxicating liquor.

After being dismissed by the District Forum, the claim was finally allowed by the State Commission by way of an appeal and as a resultant, the petitioners filed for a revision.

The prime point for consideration was as to when a person can be regarded under the influence of alcohol in order to hold him guilty for his respective act. The Court appraised Lyon’s Medical Jurisprudence and Toxicology report whereby the Blood alcohol of 0.10% was accepted as prima facie evidence of alcoholic intoxication with the prescribed limit for permissible blood alcohol in India being 30mg/100 ml of blood. This was read in consonance with the AIIMS report which expressed that if the quantity of alcohol in the blood was 100 or more mg. /dl (100 ml), it led to blurred vision, unsteady gait and ill coordination.

In this case, the alcohol content of the driver was 103.14 mg /100 ml of his blood, which clearly indicates the influence of liquor at the time he died or got injured taking into account the national limit for permissible blood alcohol.

The Court was of the view that the purpose of the insurer behind excluding such cases was to ensure that the consumption of the liquor did not contribute to the accident. Hence the impugned order was set aside. [Royal Sundaram General Insurance Co. Ltd. v. Davubhai Babubhai Ravaliya, 2018 SCC OnLine NCDRC 372, order dated 04-09-2018]

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): The Bench comprising of R.K. Agarwal, J., M. Shreesha, Member, dismissed the revision petition filed against the order of Haryana State Consumer Disputes Redressal Commission.

The respondent had purchased an insurance policy from Oriental Insurance Company which was valid till 28-12-2015, however, the respondent had requested for renewal of the said policy and subsequently, the petitioner-bank had deducted a sum of Rs. 4,726/- from respondent’s account for preparing a draft in favour of the insurance company. The draft was not submitted to the insurance company and hence the policy expired. Thereafter, petitioner’s wife met with an accident and the petitioner had to spend Rs. 3,50,000/- for his wife’s treatment.

The Commission, in this case, observed that the fact about the existence of the demand draft was not contested by the petitioner-bank, neither it was denied that they had deducted Rs. 4,726/- from respondent’s account. Had the draft been deposited in time, the policy would have been renewed and the expenses incurred by petitioner would have been covered by the policy.

The Commission held that since the petitioner-bank had deducted the amount and also prepared the draft but did not give it to the insurance company, this amounted to deficiency in services on the part of the petitioner bank. The Commission upheld the order of the state commission, directing petitioner to pay Rs. 3,10,000/- to the respondent as compensation on account of deficiency of services. [Oriental Bank of Commerce v. Rajesh Kumar,2018 SCC OnLine NCDRC 307, order dated 30-07-2018]