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

National Consumer Disputes Redressal Commission
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]