Case BriefsSupreme Court

Supreme Court: In a case where an Insurance Company had refused to settle an insurance claim on non-submission of the duplicate certified copy of certificate of registration of the stolen vehicle, the bench of MR Shah* and BV Nagarathna, JJ has held that while settling the claims, the insurance company should not be too technical and ask for the documents, which the insured is not in a position to produce due to circumstances beyond his control.

In the case at hand, a Truck was stolen and an FIR was registered on the very day of theft. The Insured also informed the Insurance Company about the theft on the same day and had also produced the photocopy of the certificate of registration and the registration particulars as provided by the RTO. However, the appellant could not produce either the original certificate of registration or the duplicate certified copy of certificate of registration of the Truck. When the appellant applied for the duplicate certified copy of the certificate of registration, the RTO denied to issue the duplicate certified copy on the ground that in view of information/report regarding theft of the vehicle, which has been registered with the RTO, the details regarding registration certificate on the computer has been locked. The Insurance Company, however, refused to settle the claim.

In such circumstances, the Supreme Court observed that when the appellant had produced the photocopy of certificate of registration and the registration particulars as provided by the RTO, solely on the ground that the original certificate of registration (which has been stolen) is not produced, non-settlement of claim can be said to be deficiency in service. Therefore, the appellant has been wrongly denied the insurance claim.

The Court was of the opinion that in many cases, it is found that the insurance companies are refusing the claim on flimsy grounds and/or technical grounds. It observed,

“The insurance company has become too technical while settling the claim and has acted arbitrarily. The appellant has been asked to furnish the documents which were beyond the control of the appellant to procure and furnish. Once, there was a valid insurance on payment of huge sum by way of premium and the Truck was stolen, the insurance company ought not to have become too technical and ought not to have refused to settle the claim on non-submission of the duplicate certified copy of certificate of registration, which the appellant could not produce due to the circumstances beyond his control.”

The Court, hence, directed the Insurance Company to pay Rs.12 lakhs insurance along with interest @7 per cent from the date of submitting the claim. The insurance company was also saddled with the liability to pay the litigation cost of Rs. 25,000/­ to the appellant.

[Gurmel Singh v. National Insurance Co. Ltd., CIVIL APPEAL NO.  4071 OF 2022, decided on 20.05.2022]


*Judgment by: Justice MR Shah


Counsels

For Appellant: Advocate Anand Shankar Jha

For Insurance Company: Advocate Hetu Arora Sethi

Case BriefsSupreme Court

Supreme Court: The bench of Sanjiv Khanna and Bela M. Trivedi, JJ has held that an Insurance Company cannot repudiate a claim merely on the ground that there was a delay in intimating it about the occurrence of the theft of vehicle.

The Court was deciding a case relating to theft of a Truck that was insured with Oriental Insurance Company Limited. During the pendency of the complaint before the District Forum, the Insurance Company repudiated the claim of the complainant vide its letter dated 19.10.2010, stating that there was a breach of a condition of the policy which mandated immediate notice to the insurer of the accidental loss/damage, and that the complainant had intimated about the loss on 11.04.2008 i.e. after the lapse of more than five months and, therefore, the Insurance Company had disowned their liability on the claim of the complainant. While the District forum allowed the Complaint, the NCDRC reversed the said finding.

When the matter reached before the Supreme Court, it applied the ruling in Gurshinder Singh v. Shriram General Insurance Company Ltd., 2020 (11) SCC 612, wherein it was observed that

“On occurrence of an accidental loss, the insured is required to immediately give a notice in writing to the company. This appears to be so that the company can assign a surveyor so as to assess the damages suffered by the insured/vehicle.

….

In case of theft or criminal act which may be the subject of a claim under the policy, the insured shall give immediate notice to the police and cooperate with the company in securing the conviction of the offender. The object behind giving immediate notice to the police appears to be that if the police is immediately informed about the theft or any criminal act, the police machinery can be set in motion and steps for recovery of the vehicle could be expedited. In a case of theft, the insurance company or a surveyor would have a limited role. It is the police, who acting on the FIR of the insured, will be required to take immediate steps for tracing and recovering the vehicle. Per contra, the surveyor of the insurance company, at the most, could ascertain the factum regarding the theft of the vehicle.

When an insured has lodged the FIR immediately after the theft of a vehicle occurred and when the police after investigation have lodged a final report after the vehicle was not traced and when the surveyors/investigators appointed by the insurance company have found the claim of the theft to be genuine, then mere delay in intimating the insurance company about the occurrence of the theft cannot be a ground to deny the claim of the insured.”

In the case at hand, the FIR was lodged immediately on the next day of the occurrence of theft of the vehicle by the complainant. The accused were also arrested and chargesheeted, however, the vehicle could not be traced out.

“Of course, it is true that there was a delay of about five months on the part of the complainant in informing and lodging its claim before the Insurance Company, nonetheless, it is pertinent to note that the Insurance Company has not repudiated the claim on the ground that it was not genuine. It has repudiated only on the ground of delay.”

The Court, hence, concluded that when the complainant had lodged the FIR immediately after the theft of the vehicle, and when the police after the investigation had arrested the accused and also filed challan before the concerned Court, and when the claim of the insured was not found to be not genuine, the Insurance Company could not have repudiated the claim merely on the ground that there was a delay in intimating the Insurance Company about the occurrence of the theft.

The Court, hence, set aside the order of NCDRC.

[Jaina Construction Committee v. Oriental Insurance Company Ltd., 2022 SCC OnLine SC 175, decided on 11.02.2022]


*Judgment by: Justice Bela M. Trivedi


Counsels

For appellant: Advocate Avinash Lakhanpal

Case BriefsSupreme Court

Supreme Court: The Division Bench of Dhananjaya Y Chandrachud and B.V. Nagarathna*, JJ., held that if on the consideration of the medical report, the insurance company gets satisfied about the medical condition of the proposer and that there was no risk of pre-existing illness, and on such satisfaction it issues the policy, it cannot thereafter, contend that there was a possible pre-existing illness or sickness which has led to the claim made by the insured and for that reason repudiate the claim.

The facts in a nutshell were that the appellant had sought an overseas mediclaim policy B as he intended to travel to USA. On reaching at San Francisco airport he got a heart attack and was admitted in the hospital where angioplasty was performed on the appellant and three stents were inserted to remove the blockage from the heart vessels. Later on, the appellant claimed treatment expenses from the respondent-insurer which was repudiated by the insurer stating that as the appellant had a history of hyperlipidaemia and diabetes, which fact was not disclosed while obtaining insurance, the policy did not cover pre-existing conditions and complications arising from that.

Findings of NCDRC

The National Consumer Dispute Redressal Commission concluded that since the complainant had been under statin medication which was not disclosed while obtaining mediclaim, the complainant failed to comply with his duty to make complete discloser of his health conditions in a manner contrary to the principle of ‘uberima fides’ between the insurer and the insured. Hence, the Commission held that the insured was not entitled to claim benefit under the policy and the repudiation of the insurance claim was valid.

Uberrimae Fidei

Insurance contracts are special contracts based on the general principles of full disclosure inasmuch as a person seeking insurance is bound to disclose all material facts relating to the risk involved. The contractual duty so imposed is that any suppression or falsity in the statements in the proposal form would result in a breach of duty of good faith and would render the policy voidable and consequently repudiate it at the instance of the insurer. Opining that in relation to the duty of disclosure on the insured, any fact which would influence the judgment of a prudent insurer and not a particular insurer is a material fact, the Bench stated that the fact must be one affecting the risk. If it has no bearing on the risk it need not be disclosed and if it would do no more than cause insurers to make inquiries delaying issue of the insurance, it is not material if the result of the inquiries would have no effect on a prudent insurer. The Bench added,

“The duty to make full disclosure continues to apply throughout negotiations for the contract but it comes to an end when the contract is concluded; therefore, material facts which come to the proposer’s knowledge subsequently need not be disclosed.”

However, clarifying the position, the Bench stated that the assured is not under a duty to disclose facts which he did not know and which he could not reasonably be expected to know at the material time. Further, in order to seek specific information from the insured, the proposal form must have specific questions so as obtain clarity as to the underlying risks in the policy, which are greater than the normal risks.

Contra Proferentem

“A prudent insurer has to gauge the possible risk that the policy would have to cover and accordingly decide to either accept the proposal form and issue a policy or decline to do so.”

As per the doctrine, when words are to be construed, resulting in two alternative interpretations then, the interpretation which is against the person using or drafting the words or expressions which have given rise to the difficulty in construction applies. The Bench opined that if, on the consideration of the medical report, the insurance company was satisfied about the medical condition of the proposer and that there was no risk of pre-existing illness, and on such satisfaction it had issued the policy, it could not thereafter, contend that there was a possible pre-existing illness or sickness which had led to the claim being made by the insured and for that reason repudiate the claim.

Factual Analysis

The respondent-insurer claimed that there was suppression of the fact that the appellant was suffering from a heart disease for which he was prescribed statins owing to a cholesterol problem and the said fact which was a riskfactor for cardiac disease was material fact was not disclosed in the proposal form. Rejecting the claim of the insurer, the Bench observed that statins was prescribed in order to reduce the risk of a cardiac ailment in future. The Bench expressed,

“Diabetes mellitusII is a risk factor for a cardiac ailment in a person, it is not a hard and fast rule that every person having diabetes mellitusII would necessarily suffer from a cardiac disease.”

Noticeably, statins is also prescribed for controlling hyperlipidaemia but the appellant did not suffer from any heart ailment or hyperlipidaemia. Therefore, the Bench was of the view that prescription of statins to the appellant could not be deduced to say that the appellant had a cardiac ailment or hyperlipidaemia.

Noticeably, the appellant was issued overseas mediclaim policy after undergoing the requisite medical tests namely: 1) Blood sugar test, 2) Urine examination 3) Electrocardiogram test and after being examined by the doctor who stated that the appellant had diabetes mellitusII (DM2) which was controlled on drugs. The doctor further noted that there was no current illness or disease which would possibly require medical treatment during the proposer’s (appellant’s) forthcoming trip.

Therefore, the Bench held that the insurer being appraised about the said medical condition, i.e. diabetes mellitusII of the appellant, issued policy to the appellant; which lead to the inference that the insurer did not consider the said medical condition as a risk factor for any possible cardiac ailment during the term of the policy so as to decline acceptance of the proposal form and issuance of the mediclaim policy.

Conclusion and Decision

“Treatment availed by the appellant for acute myocardial infraction in USA could not have been termed as a direct offshoot of hyperlipidaemia and diabetes mellitus so as to be labelled as a pre-existing disease or illness which the appellant suffered from and had not disclosed the same.”

In the light of the above, the Bench concluded that there was no suppression of any material fact by the appellant to the insurer. The Bench opined the act of insurer of issuing mediclaim policy to the appellant despite the aforesaid facts regarding his medical record had to be read against the insurer by applying the contra proferentem rule against it; otherwise, the very contract of insurance would become meaningless in the instant case.

Consequently, the Bench held that the insurance company was not right in repudiating the policy in question. The appellant was held entitled to be indemnified under the policy. The decision of the Commission was set aside with the following orders:

  1. The insurer was directed to indemnify the appellant regarding the expenses incurred by him towards his medical treatment with interest at the rate of 6% per annum from the date of filing the claim petition before the Commission till realisation.
  2. Since the expenses incurred by the appellant was in terms of US Dollars and the claim would be paid in terms of Indian 57 Rupees, the exchange rate as it existed on the date the claim petition was filed by the appellant herein before the Commission or at Rs.45 INR, whichever is lesser, shall be reckoned for the purpose of determining the conversion rate of US Dollars into Indian Rupees.
  3. The appellant was also entitled to Rs. 1,00,000 towards the cost of litigation.

[Manmohan Nanda v. United India Assurance Co. Ltd., 2021 SCC OnLine SC 1181, decided on 06-12-2021]


Kamini Sharma, Editorial Assistant has put this report together


Appearance by:

For the Appellant: Gopal Sankarnarayanan, Senior Counsel along with Zehra khan, Counsel

For the Respondents: Sunaina Phul, Counsel


*Judgment by: Justice B.V. Nagarathna

Case BriefsTribunals/Commissions/Regulatory Bodies

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

Case BriefsTribunals/Commissions/Regulatory Bodies

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]

Case BriefsTribunals/Commissions/Regulatory Bodies

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]

Case BriefsTribunals/Commissions/Regulatory Bodies

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]

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):  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]

Case BriefsTribunals/Commissions/Regulatory Bodies

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)