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National Consumer Disputes Redressal Commission (NCDRC): C. Viswanath (Presiding Member) while addressing the appeal, expressed that:

If the valuation of the lost gold is determined as on the date when reimbursement is made by insurer, it would open Pandora’s box where the beneficiaries of such Policies may seek undue benefit by deliberately delaying reimbursements.

Instant appeal was filed under Section 19 of the Consumer Protection Act against the decision of State Consumer Disputes Redressal Commission.

Background

Appellant/Complainant was engaged in the business of gold jewellery hallmarking and testing of jewellery, refinery and testing of gold. Appellant took jeweller’s block policy from the respondent/insurance company.

Complainant submitted that while his employee was returning to his shop after collecting jewellery, two unknown persons snatched and fled away with the bag containing jewellery. Thereafter a complaint was filed.

During the course of investigation, appellant filed an insurance claim and further, the appellant was informed that the claim had been repudiated. Aggrieved by the same, a consumer complaint was filed before the State Commission.

Not satisfied with the decision of the State Commission, the complainant filed the instant first appeal.

Analysis, Law and Decision

Commission noted that the Insurance Claim of the appellant was repudiated by the respondents on the ground that the “Cover ceased due to policy terms and conditions”.

The Respondents failed to adduce any evidence in support of their contention that the alleged loss was caused by any of the reasons noted under Exclusion Clause 8 of the Insurance Policy, that there was any fraud/mischief on part of the employee of the Appellant, among others leading to the alleged loss.

Therefore, Commission opined that State Commission rightly dismissed the contention of the Respondents that the Appellant’s claim fell under the Exclusion Clause 8 of the Policy.

Appellant submitted that the value of gold increases day by day and therefore, the State Commission erred in law by disregarding the prayer of the Appellant for a sum of Rs 42,86,293/-. Coram was unable to accept the contention of the Appellant in this regard, since the award of compensation must be restricted to the amount that had been claimed by the Appellant under the Insurance Policy. A perusal of the Insurance Claim form shows that the Appellant had only claimed Rs 25,78,680/- from the Insurance Company.

If valuation of the lost gold is determined as on date when reimbursement is made, it would open a Pandora’s box where the beneficiaries of such Policies may seek undue benefit by deliberately delaying reimbursements.

In view of the above background, appeal was partly allowed. [G.N. Hallmarking & Refinery (P) Ltd. v. National Insurance Company Ltd., 2021 SCC OnLine NCDRC 299, decided on 23-08-2021]


Advocates before the Commission:

 For the appellant: Pawan Kumar Ray, Advocate

 For the Respondent: Animesh Sinha, Advocate

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National Consumer Disputes Redressal Commission (NCDRC): The Division Bench of Justice R.K. Agrawal (President) and Dr S.M. Kantikar (Member) while partly allowing the complaint expressed that the surveyors of the insurance company adopted a conservative approach and kept demanding for information without any further clarification.

Complainant filed the instant complaint against the Opposite Party under Section 21(a)(i) of the Consumer Protection Act, 1986.

Complainant Co. was engaged in the business of arbitrage between NSE and BSE. As per the requirements of NSE and BSE, the complainant company took the insurance cover from the OP for cover amount of Rs 1 crore. The said policy was being renewed every year regularly, which covered “fidelity” under Section 1A of the terms and conditions of the policy. Nilesh Patel was incharge and looking after the arbitrage operations and other back-office work related to the updating of trade datas, MIS reports and deciding about volume of arbitrage. He was drawing salary and entitled to annual bonus like other employees. Alongwith that, he was not allowed to trade on his own or otherwise, any time.

It was noted that Mr Nilesh Patel committed huge fraud by transferring the losses into the accounts of companies clients. Complainant submitted that the said acts were fraudulent, unauthorized, without consent or permission of authority of the Complainant Co. and/ or his constituents.

Complainant company filed an insurance claim with the OP Insurance Co. OP rejected the claim of the complainant co. on the ground of speculative trading entered into by its employee which was outside the scope of the policy.

BSE observed that the loss incurred to the complainant was due to the fraud and infidelity of its employee and it was not speculative trading. OP still refused to settle the insurance claim.

On being aggrieved with the above position, the consumer complaint was filed.

Analysis and Decision

Bench observed that the two surveyors appointed by the insurance company failed to act as per IRDA guidelines and unnecessarily delayed the settlement of the claim. Complainant company though had submitted the entire details as sought, yet the surveyors made repeated demands for additional information.

In view of the above, the Commission found that the surveyors did not follow the IRDA guidelines which was a deficiency of service of the part of the OP.

The Complainant suffered loss due to dishonest actions of its employee Nilesh Patel who confessed his misdeeds and due to guilt, he committed suicide.

Commission opined that the complainant’s claim would be squarely covered under Section 1A i.e. ‘Fidelity’.

“1. FIDELITY

Loss resulting solely and directly from dishonest or fraudulent acts by Employees of the Insured committed with the manifest intent to cause the insured to sustain such loss or to obtain a financial gain for themselves wherever committed and whether committed alone or in collusion with others, including loss of property through any such acts by Employees.”

Evidence on record clearly establishes that the Complainant Co. suffered a loss due to fraudulent acts of Mr Nilesh Patel, the employee of the Company.

Bench on perusal of the record expressed that it was the apprehension of the Surveyors who surveyed arbitrage transactions only theoretically and failed to grasp the sophisticated techniques adopted by the complainant co. for arbitrage transactions.

Commission found that it was the baseless presumption of the Surveyors that Mr Nilesh Patel possibly attempted to make profits on speculative transactions, since his remuneration could be performance-based.

Based on the entirety the deficiency in service on the part of Insurance Co. was evident. OP was directed to pay an insurance claim of Rs 1 crore to the complainant co. alongwith interest @9% p.a. [R.R. Chokhani Stock Brokers (P) Ltd. v. New India Assurance Co. Ltd., 2021 SCC OnLine NCDRC 20, decided on 04-02-2021]


Advocates for the parties:

For the Complainant: Harish Malhotra, Senior Advocate with Ramakant Chokhani, AR

For OPs: P.K. Seth, Advocate

Case BriefsSupreme Court

Supreme Court: When the bench of Dr. DY Chandrachud and Hemant Gupta, JJ was tasked with determining whether a death due to malaria occasioned by a mosquito bite in Mozambique, constituted a death due to accident, it held that the illness of encephalitis malaria through a mosquito bite cannot be considered as an accident.

When can insurance be claimed:

As the law of insurance has developed, there has been a nuanced understanding of the distinction between an accident and a disease which is contracted in the natural course of human events in determining whether a policy of accident insurance would cover a disease. In a policy of insurance which covers death due to accident, the peril insured against is an accident: an untoward happening or occurrence which is unforeseen and unexpected in the normal course of human events. This understanding of what is an accident indicates that something which arises in the natural course of things is not an accident. This is the basis for holding that a disease may not fall for classification as an accident, when it is caused by a bodily infirmity or a condition.

“To be bitten by a mosquito and be imbued with a malarial parasite does involve an element of chance. But the disease which is caused as a result of the insect bite in the natural course of events cannot be regarded as an accident. Particularly, when the disease is caused in an area which is malaria prone.”

Ruling:

It was argued that there is an element of uncertainty about whether or when a person would be the victim of a mosquito bite which is a carrier of a vectorborne disease. The submission is that being bitten by a mosquito is an unforeseen eventuality and should be regarded as an accident. The Court, however, did not agree with the said submission as the insured was based in Mozambique. According to the World Health Organization’s World Malaria Report 2018, Mozambique, with a population of 29.6 million people, accounts for 5% of cases of malaria globally.

Noticing that it is on record that one out of three people in Mozambique is afflicted with malaria, the Court said that since the death of the insured in the present case was caused by encephalitis malaria,

“It was neither unexpected nor unforeseen. It was not a peril insured against in the policy of accident insurance.”

[National Insurance Co. v. Mousumi Bhattacharjee, 2019 SCC OnLine SC 419, decided on 26.03.2019]

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National Consumer Disputes Redressal Commission (NCDRC): A Single Member Bench of Prem Narain, (Presiding Member), allowed a revision petition filed against the order of State Consumer Disputes Redressal Commission, Haryana.

The main issue that arose before the Commission was whether suppression of a fact pertaining to diabetes precludes the family members of the insured to claim the benefits of insurance policy.

The Commission, in this case, observed that on the date of filing the proposal form the insured was not suffering from the disease which caused his death. As far as the claim of the respondent company that the insured had suppressed the fact that he was suffering from diabetes was concerned, the Commission referred to the case of Hari Om Agarwal v. Oriental Insurance Co. Ltd., 2007 SCC OnLine Del 1278, and observed that insurance claim cannot be denied on the ground of lifestyle diseases that are so common. The Commission further observed that even though insurance claims cannot be denied on the ground of lifestyle diseases but that doesn’t give the insured a right to suppress information from the insurance company and if the person does so then he must suffer in the form of reduced claims. The Commission also referred to the case of Sulbha Prakash Motegaonkar v. LIC of India, Civil Appeal No. 8245 of 2015 and observed that suppression of information regarding any pre-existing disease, if it has not resulted in death or has no connection to cause of death, would not disentitle the claimant for the claim.

The Commission held that the primary reason of death in the instant case was not diabetes. The insured had died due to some other disease and he was not suffering from that disease at the time when he had bought the insurance policy. The Commission allowed the petition and set aside the order of the State Commission. [Neelam Chopra v. Life Insurance Corporation of India, Revision Petition No. 4461 of 2012, order dated 08-10-2018]

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National Consumer Disputes Redressal Commission (NCDRC): A Single Member Bench of V.K. Jain, J., rejected an appeal filed against the order of State Commission whereby it was directed to pay the insurance amount to the respondent.

The respondent, in this case, entered into a contract with an overseas buyer for sale of some goods. As per the terms of the purchase order, the seller (respondent) was supposed to get the goods insured before sending them to seller and hence the respondent purchased an insurance policy from the appellant. The appellant did not ask for invoice or purchase order. As per the insurance policy the goods were insured till the time they reached the destination. The goods were lost in transit and the respondent claimed the insurance amount which was denied by appellant on the ground that the respondent had obtained the policy by misrepresentation.

The main issue that arose before the Commission was whether the appellant company was liable to pay the insurance amount of lost goods to the respondent

The Commission observed that the insurance company did not ask for invoice or the purchase order. Further, as it was clearly written in the purchase order that the seller (respondent) was supposed to get the goods insured before sending them to the buyer so it cannot be denied that the contract was a Cost, Insurance, Freight (CIF) contract. It is also undeniable that the goods were lost in transit, they did not reach their destination and as per the insurance policy itself, the goods were insured till the time they reached their destination.

The Commission held that since the goods had not reached their destination hence the ownership of the goods rested with the respondent and as per the terms of the insurance policy, he was entitled to receive the insurance amount. The Commission upheld the order of the State Commission and rejected the claims put forth by the appellant. [Oriental Insurance Co. Ltd. v. Ganesh Granites Ltd., 2018 SCC OnLine NCDRC 398, order dated 03-10-2018]

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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]

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National Consumer Disputes Redressal Commission (NCDRC):  NCDRC has held that failure of the insured to give immediate information of theft in writing to the insurance company would entitle the insurance company to repudiate the claim. While observing this, NCDRC upheld the repudiation of insurance claim by Reliance General Insurance Co. in a case of theft of vehicle.

Earlier, the complainant purchased an insurance policy for his vehicle from Reliance General Insurance Co. for the sum insured Rs. 5, 41,000/-. The policy was valid with effect from 06.11.2009 to 05.11.2010. According to the complainant, the vehicle was stolen by some unknown person from Loco Road, Bholepur on 11.08.2010. The theft was reported to the police station Kotwali on the same day. Oral information of theft was given to the Insurance Company. As the vehicle could not be traced, the complainant filed an insurance claim before the Insurance Company Reliance. Said claim was repudiated on the ground that in violation of the terms and conditions of the insurance policy, the complainant had failed to give immediate intimation of theft in writing to the insurance company.

When the complainant approached the  District Forum, it allowed the complaint and directed the Insurance Company to pay the amount of insurance claim of the insured vehicle i.e. Rs. 5,41,000/- with interest to the complainant. An appeal against the order was filed by the Insurance Company before the State Commission, which was dismissed. Aggrieved by the order, Insurance Company filed a revision petition before NCDRC.

After perusing the documents and hearing the parties, NCDRC observed that, “it is the case of the complainant that he reported the theft of subject vehicle to the concerned Police Station on the same day and gave oral information of theft to the petitioner insurance company. It is not the case of the complainant that he gave immediate intimation of theft of vehicle in writing to the insurance company.” After perusal of material on record and hearing the parties, NCDRC relied upon the earlier judgments of the National Commission and decided in favour of the insurance company. “As the insured has failed to fulfil his obligation to intimate the theft of vehicle to the insurer in writing immediately after the theft, insurance company was justified in repudiating the insurance claim,” noted the Commission while allowing the revision petition. [Reliance General Insurance Co. Ltd. v. Arun Kumar Singh, 2017 SCC OnLine NCDRC 1, decided on January 3, 2017]

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National Consumer Disputes Redressal Commission: An insurance company can reject an insurance claim of a stolen vehicle on the ground that the vehicle was not duly registered, observed NCDRC while allowing a revision petition of Oriental Insurance Co. Ltd. vide which the Company challenged the order of Himachal Pradesh State Consumer Commission granting compensation to vehicle owner.

This order of the National Consumer Disputes Redressal Commission has its origin in the theft of a vehicle owned by the complainant, and the rejection of his claim by the insurance company on the ground that the vehicle was not registered at the time of theft. The vehicle, Mahindra Bolero SLX, purchased on June 14, 2008 for Rs 5,94,000  had been insured covering the period from 19.06.2008 to 18.07.2009. Six months later, on December 27, 2008, the vehicle unfortunately was stolen, giving rise to a claim. The insurance company however repudiated the claim on the ground that the vehicle had no valid registration at the time of theft. Since this amounted to violation of the provisions of the Motor Vehicles Act, it was considered a violation of the terms of the insurance policy and, therefore, the insured amount was not payable, the insurance company told the claimant. Before the consumer court too, the insurance company pointed out that Section 39 of the Motor Vehicles Act clearly prohibited the use of an unregistered vehicle. Further, Section 43 of the MV Act also specified that a temporary registration was valid only for one month, except under certain circumstances allowed in the provision. Since in this case, the temporary registration, valid for one month, had obviously expired (at the time of theft) there was clearly a violation of the MV Act. And this amounted to breach of the terms of the insurance policy, the insurer argued.

The District Forum dismissed the complaint, observing that there was no deficiency in service on behalf of the insurance company in not settling the complainant’s claim. Aggrieved by the said order, the complainant preferred an appeal before the State Commission, which set aside the order of the District Forum, holding that the condition in the policy was to the effect that the vehicle will not be used at any public place, without registration;  Law also does not mandate the registration of a vehicle, but it only prohibits use of the vehicle at  any  public  place, unless it is registered, as per Section 39 of the Motor Vehicles Act, 1988 and as the complainant’s vehicle  was  parked  in front of  his  residence and was not being used at any public place, it did not constitute breach of any condition. The State Commission also directed the insurance company to pay compensation to the complainant.

In its revision petition before the National Commission, the insurance company again argued that there was a clear violation of the Motor Vehicles Act in that the vehicle was not registered at the time of theft. After perusal of material on record, NCDRC observed that, “the vehicle was without any registration for the period 13.06.2008 to 26-27.12.2008, i.e., for more than a period of five months.  Though, there is a specific pleading by the complainant  that  the said vehicle  was  not used and was only parked at his residence as he was involved in some marital disputes, yet, the fact  remains that no attempts were made by the Complainant in getting the registration extended.   Irrespective of the fact, whether, the vehicle is parked or plying, it is mandatory that the vehicle be registered, as stipulated under Section 39 of the Motor Vehicle Act, 1988.” While observing that non-registration of vehicle is a fundamental breach and the insurance company has rightly dishonored the claim, NCDRC allowed the revision petition and set aside the order of State Commission for payment of compensation. [Oriental Insurance Co. Ltd. v. Vikram Kanda2016 SCC OnLine NCDRC 1108 , decided on September 1, 2016]

Tribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): NCDRC has upheld the repudiation of insurance claim for goods destroyed in a fire on the ground that complainant was under obligation to intimate insurance company about change of place of business and to get necessary endorsement on the policy but he failed to do so. The complainant, who was doing business at Kangra district in Himachal Pradesh, had taken cash credit limit of Rs. 3 lakh from State Bank of India, but when he shifted his business from Kangra to Mandi district, he failed to inform the Insurance Company. In May 30, 2008, complainant’s shop was damaged in a fire but his claim was repudiated. When the complainant filed a complaint before the forum alleging deficiency on the part of bank and the insurance firm, the firm submitted that neither complainant nor the bank informed it about shifting of business which amounted to violation of the terms and conditions of policy. The bank, in the meanwhile, submitted that the complainant had filed an affidavit for changing the place of business but there was no question of permission as it had already been shifted. The forum directed the bank to pay Rs. 1.63 lakh and also allowed Rs. 8,000 towards compensation and cost of litigation. An appeal challenging the order before the State Commission was also dismissed. After perusal of records, NCDRC observed that District Forum committed error in allowing complaint against the petitioner and State Commission further committed error in dismissing the appeal as the Complainant was under obligation to intimate insurance company about change of place of business and to get necessary endorsement on policy but he failed to do so, hence, SBI cannot be held guilty of any deficiency. (State Bank of India v. Anil Kumar, 2014 SCC OnLine NCDRC 345, decided on November 17, 2014)

Tribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): NCDRC has upheld the repudiation of insurance claim for goods destroyed in a fire on the ground that complainant was under obligation to intimate insurance company about change of place of business and to get necessary endorsement on the policy but he failed to do so. The complainant, who was doing business at Kangra district in Himachal Pradesh, had taken cash credit limit of Rs. 3 lakh from State Bank of India, but when he shifted his business from Kangra to Mandi district, he failed to inform the Insurance Company. In May 30, 2008, complainant’s shop was damaged in a fire but his claim was repudiated. When the complainant filed a complaint before the forum alleging deficiency on the part of bank and the insurance firm, the firm submitted that neither complainant nor the bank informed it about shifting of business which amounted to violation of the terms and conditions of policy. The bank, in the meanwhile, submitted that the complainant had filed an affidavit for changing the place of business but there was no question of permission as it had already been shifted. The forum directed the bank to pay Rs. 1.63 lakh and also allowed Rs. 8,000 towards compensation and cost of litigation. An appeal challenging the order before the State Commission was also dismissed. After perusal of records, NCDRC observed that District Forum committed error in allowing complaint against the petitioner and State Commission further committed error in dismissing the appeal as the Complainant was under obligation to intimate insurance company about change of place of business and to get necessary endorsement on policy but he failed to do so, hence, SBI cannot be held guilty of any deficiency. (State Bank of India v. Anil Kumar, 2014 SCC OnLine NCDRC 345, decided on November 17, 2014)