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Oriental Insurance Co. Ltd. Petitioner(S) v. Brahmanand Javvadi (S).
Factual and Procedural Background
The respondent's insured vehicle, which was insured with the petitioner Oriental Insurance Company Ltd., was allegedly stolen on 24.07.2012. The complainant had left the vehicle with the driver when the complainant and family travelled to Hyderabad and returned on 26.07.2012 to find the vehicle missing. The complainant was unable to contact the driver and searched for the vehicle without success. The complainant alleges that he informed the insurance company on 03.08.2012 and produced a receipt bearing the company's seal. The complainant was advised by police staff to search for the vehicle first and thereafter lodge an FIR; an FIR was lodged on 07.08.2012.
The complainant filed Consumer Complaint No. 320 of 2013 before the District Consumer Disputes Redressal Forum, Raipur. The District Forum allowed the complaint by order dated 30.04.2014 and directed payment of Rs. 5,15,625/- with simple interest @ 9% from the date of complaint (14.08.2013), Rs. 10,000/- for mental harassment and Rs. 2,000/- towards advocate fee and costs.
The insurer appealed to the Chhattisgarh State Consumer Disputes Redressal Commission. The State Commission, by order dated 30.10.2014, partially modified the District Forum's award and directed payment of Rs. 3,86,719/-, with the balance of the District Forum's order left intact; it also fixed appeal cost at Rs. 3,000 to be borne by the appellant insurance company.
Aggrieved, the insurer filed the present revision petition (Revision Petition No. 292 of 2015) before the National Consumer Disputes Redressal Commission challenging the State Commission's order dated 30.10.2014.
Legal Issues Presented
- Whether delay in intimation to the insurance company and delay in lodging the FIR (a delay of approximately 9–13 days as argued) permits repudiation of the insurance claim under the motor insurance policy or requires any reduction of the claim.
- If breach of policy conditions occurred (specifically failure to inform police/insurer immediately), whether the insurer can repudiate the claim outright or is confined to settling the claim on a "non-standard" basis (reduced percentage of the IDV), and if so, what percentage is appropriate.
- Whether the concurrent findings of the two consumer fora below (District Forum and State Commission) allowing the claim (either fully or on a non-standard basis) should be interfered with on revision.
Arguments of the Parties
Petitioner's (Insurer's) Arguments
- There was a delay of 13 days in filing the FIR; no timely intimation was given to the insurer—intimation purportedly on 03.08.2012 was delayed and lacked signs of any official of the insurance company.
- Reliance on Gurshinder Singh v. Shriram General Insurance Co. Ltd. (Civil Appeal No. 653 of 2020) — argument that if intimation is delayed, the claim can still be allowed only if the FIR has been lodged immediately after the theft; in this case the FIR was delayed so the claim should not be allowed.
- Reliance on Oriental Insurance Co. Ltd. v. Parvesh Chander Chadha (Civil Appeal No. 6739 of 2010) — submitted authority that insured is duty bound to inform immediately and delayed intimation deprives insurer of opportunity to investigate; on that basis claim should be repudiated.
- Contended that there was violation of condition no.1 of the policy (failure to inform police/insurer immediately) and that neither police nor insurer had opportunity to search or apprehend culprits, producing prejudice to insurer's rights.
Respondent's (Complainant's) Arguments
- The insurer never pointed out any specific condition of the policy as having been violated in its written statement nor identified which condition was breached; therefore insurer lacks basis to repudiate at this stage.
- The circumstances explained why there was a delay — the complainant initially could not trace the driver, did not immediately realise theft, and police staff advised to search first before lodging FIR; thus delay was circumstantial and not deliberate.
- Even though intimation dated 03.08.2012 was produced, insurer did not appoint any surveyor or investigator, implying deficiency in service by the insurer.
- Both the District Forum and the State Commission gave concurrent findings in favour of the complainant (one allowing full IDV, the other on a non-standard basis), and the scope for interference in a revision petition is limited.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Gurshinder Singh vs Shriram General Insurance Co. Ltd. & Anr. (Civil Appeal No. 653 of 2020) | Delayed intimation to insurer will not automatically forfeit the insured's claim if the FIR has been lodged within a reasonable time and other conditions are met. | The Commission noted this Larger Bench observation but found it not directly exculpatory here because the FIR itself was not lodged immediately; therefore the Gurshinder Singh principle does not justify full claim allowance in this case. |
| Oriental Insurance Co. Ltd. vs Parvesh Chander Chadha (Civil Appeal No. 6739 of 2010) | Insured was duty bound to inform insurer immediately after theft; delayed intimation deprived insurer of its right to investigate and could justify repudiation. | Relied on by the petitioner; the Commission observed that delayed intimation can cause prejudice and that non-compliance with the policy condition was material in this case. |
| National Insurance Company Ltd. vs Nitin Khandelwal (2008) 11 SCC 259 | In theft cases, breach of certain policy conditions may not be germane to disallowance of claim; the Court recognized contexts where breach may not bar recovery. | The State Commission relied on this judgment. The National Commission acknowledged the principle but distinguished the present facts on the basis that here condition no.1 (immediate intimation to police) was breached. |
| Amalendu Sahoo vs Oriental Insurance Company Limited (2010) 4 SCC 536 | If a policy condition is violated in a motor vehicle policy, the claim may be settled by the insurer on a non-standard basis (up to 75% of the otherwise admissible claim); settlement at that percentage is not mandatory in every case. | The Commission applied this principle to justify reduction from full IDV; it also used the discretion recognized by this precedent to fix a lower non-standard percentage (50% in this case) rather than 75%. |
| United India Insurance Company Limited vs Aji Pal and Ors. (RP No. 2089 of 2019, decided 13.02.2019) | Commission's earlier decision where both FIR and intimation were delayed and the insurance claim was allowed at 50% of IDV. | The Commission relied on its own similar earlier decision and found it appropriate to follow that approach, allowing the claim at 50% of the IDV in the present case. |
Court's Reasoning and Analysis
The Commission undertook a step-wise analysis grounded in the factual record and existing authority:
- The Commission reviewed the authorities relied upon by both sides. It acknowledged the Larger Bench ruling in Gurshinder Singh that delayed intimation to the insurer does not, by itself, necessarily foreclose claim entitlement where the FIR is lodged within a reasonable time and other conditions are satisfied. However, the Commission found the facts here distinguishable because the FIR was not lodged immediately after theft.
- The Commission recognized that in theft cases immediate intimation to the police is particularly important because timely police action may enable recovery of the vehicle or apprehension of culprits; delay can enable transfer or dismantling of the vehicle and may materially prejudice insurer's investigation and recovery prospects.
- Examining the record, the Commission found that the complainant admitted contacting police only around 01.08.2012 (about five days after returning from Hyderabad) and lodged an FIR only on 07.08.2012 (about 13 days after the theft). No satisfactory explanation was provided for this delay in informing the police immediately, and the Commission observed that such a delay is not merely technical but has “wide and far reaching ramifications”.
- The Commission noted that the insurer had not specified the precise policy clause violated at the earlier fora, but nevertheless concluded that condition no.1 (immediate intimation to police/insurer) had been breached.
- Applying Amalendu Sahoo, the Commission accepted the principle that where policy conditions are violated, settlement on a non-standard basis is permissible (up to 75%), but that percentage is not mandatory in every case. The Commission considered its own earlier decision in United India Insurance Co. Ltd. v. Aji Pal (where delays in FIR and intimation had led to allowance at 50% of IDV) as an appropriate comparable and determined that 50% of IDV should apply here.
- On the basis of these findings, the Commission balanced the prejudice to the insurer caused by delay against the insured's entitlement and discretionary relief recognized by precedent, and fixed the claim at 50% of the IDV with interest and specified costs. The Commission also set aside the separate Rs. 10,000 mental agony award on the basis that interest awarded functions as compensation.
Holding and Implications
Holding: The revision petition is partly allowed. The petitioner insurer is directed to pay Rs. 2,57,812/- (50% of the IDV of Rs. 5,15,625/-) to the respondent within 45 days from the date of the order, together with interest at 6% per annum from 14.08.2013 (date of filing of the complaint) until actual payment. The District Forum's award of Rs. 10,000/- for mental agony is set aside. Litigation cost of Rs. 2,000/- (and the appeal cost of Rs. 3,000/- awarded by the State Commission) are allowed.
Implications:
- Direct effect on the parties: The insurer must pay 50% of the IDV with specified interest and costs; the complainant will not receive the full IDV previously awarded by the District Forum but will receive a reduced award (50%) and interest instead of the nominal mental agony amount.
- Application of precedent: The Commission applied and distinguished Supreme Court authorities (Gurshinder Singh, National Insurance v. Nitin Khandelwal, Amalendu Sahoo) and followed a prior Commission decision (United India Insurance Co. Ltd. v. Aji Pal) in selecting the non-standard percentage (50%).
- No broader or novel legal principle was announced by the Commission in this opinion beyond the application and reconciliation of existing authorities; the decision effects a discretionary reduction of quantum on the facts before the Court rather than establishing a new precedent.
Judge(s): Hon'ble Mr. Prem Narain, Presiding Member; Hon'ble Mr. C. Viswanath, Member. Date of decision recorded in the opinion: 29 Sep 2020.
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
NEW DELHI
REVISION PETITION NO. 292 OF 2015
(Against the Order dated 30/10/2014 in Appeal No. 407/2014 of the State Commission Chhattisgarh)
1. ORIENTAL INSURANCE CO. LTD.
MADINI BUILDING, MEDICAL COLLEGE ROAD, P.O &
DISTRICT : RAIPUR
C.G ...........Petitioner(s) Versus
1. BRAHMANAND JAVVADI
S/O SHRI RAMRAO JAVVADI, R/O NEAR SAI MANDIR,
MAITRI NAGAR, SUNDERLAL SHARMA WARD,
MAHADEV GHAT ROAD, POST &
DISTRICT : RAIPUR
C.G ...........Respondent(s)
BEFORE:
HON'BLE MR. PREM NARAIN,PRESIDING MEMBER HON'BLE MR. C. VISWANATH,MEMBER For the Petitioner : MR. KISHORE RAWAT For the Respondent : MR. NAVNEET KUMAR Dated : 29 Sep 2020
ORDER
PER MR PREM NARAIN, PRESIDING MEMBER
This revision petition has been filed by the petitioner Oriental Insurance Company Ltd., challenging the order dated 30.10.2014 passed by the Chhattisgarh State Consumer Disputes Redressal Commission Raipur, (in short 'the State Commission') in Appeal no. FA/14/ 407.
2. The brief facts of the case are that the vehicle of the respondent which was insured by the petitioner insurance company was stolen on 24.07.2012. In fact, the complainant along with his family had gone to the airport and the driver of the vehicle left the family at the airport on 24.07.2012. The complainant and his family went to Hyderabad and the complainant returned back from Hyderabad on 26.07.2012 and he contacted the driver for the vehicle. However, when he reached his house, he came to know that the vehicle was not there. He tried to contact the driver, but his mobile phone was switched off, thereafter, complainant tried to search the vehicle and the driver but in vain. It is the case of the complainant that the complainant informed the insurance company on 03.08.2012 and a receipt was obtained from the office of the petitioner insurance company along with the seal of the company. It is the case of the complainant that the complainant had informed the police about the theft, however, the police asked him to search for the vehicle first and then lodge an FIR. Accordingly, an FIR was lodged on 07.08.2012 with the concerned police station. When there was no response from the
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insurance company, the complainant filed a Consumer Complaint no. 320 of 2013 before the District Consumer Disputes Redressal Forum, Raipur (in short 'the District Forum'). The complaint was contested by the insurance company by filing written statement stating that no intimation was given by the complainant about the theft of the vehicle to the insurance company. It was further stated that due to the delay in filing the FIR, the conditions of the policy have been violated therefore, the claim was not payable. The District Forum, however, allowed the complaint vide its order dated 30.04.2014 as under:
"In view of the above discussion, the complaint of the complainant under section 12 of the Consumer Protection Act is partly allowed and the respondent is directed to pay the following amount within a period of one month from the date of the order:
The respondent will pay Rs.5,15,625/- to the complainant along with simple interest @ 9% from the date of complaint dated 14.08.2013;
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The respondent will pay Rs.10,000/- on account of mental harassment to the complainant; and
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The respondent will also pay Rs.2,000/- to the complainant towards advocate fee and cost of litigation".
3.
3. Aggrieved by the order of the District Forum, the insurance company preferred an appeal before the State Commission. The State Commission vide its order dated 30.10.2014 has partly allowed the appeal and modified the order of the District Forum as under:
"The order dated 30.04.2014 passed by the District Forum is partially modified and it is directed that the appellant insurance company will pay the sum of Rs.3,86,719/- instead of Rs.5,15,625/- to the respondent/ complainant. Rest of the order passed by the District Forum is not interfered and it will remain same. The cost of the appeal will be borne by the appellant/insurance company himself and the respondent/complainant which is assessed at Rs.3,000/-".
4. Hence, the present revision petition has been filed by the insurance company.
5. Heard the learned counsel for both the parties and perused the record. Learned counsel for the petitioner/ insurance company has stated that in the present case, there is a delay of 13 days in filing the FIR and no intimation was ever received by the insurance company. Learned counsel for the petitioner has stated that as per the latest judgment of the Hon'ble Supreme Court in the case of Gurshinder Singh vs Shriram General Insurance Co. Ltd., and Anr. (Civil Appeal no. 653 of 2020) decided on 24.01.2020, if intimation to the insurance company has been delayed, the claim can still be allowed if the FIR has been lodged immediately after the theft. It was argued that in the present case, FIR has been lodged after 13 days of the incident and therefore, the claim cannot be allowed. Learned counsel has further referred to the judgment of the Hon'ble Supreme Court in the case of Oriental Insurance Co. Ltd., vs Parvesh Chander Chadha (Civil Appeal no. 6739 of 2010) decided on 17.08.2010 wherein it
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has been held as under:
"In terms of the policy issue by the appellant, the respondent was duty bound to inform it about the theft of the vehicle immediately after the incident. On account of delayed intimation, the appellant was deprived of its legitimate right to get an inquiry conducted into the alleged theft of vehicle and make an endeavor to recover the same. Unfortunately, all the consumer foras omitted to consider this grave lapse on the part of the respondent and directed the appellant to settle his claim on non-standard basis. In our view, the appellant cannot be saddled with the liability to pay compensation to the respondent despite the fact that he had not complied with the terms of the policy."
6. The Hon'ble Supreme Court has clearly held that if the FIR has not been lodged immediately after the theft, the insurance claim can be repudiated by the insurance company. On the basis of these two judgments, the learned counsel emphasised that in the present case, the claim cannot be allowed even on non-standard basis. It was further stated that there was no sign of any official of the insurance company on the alleged letter dated 03.08.2012 which was produced by the learned counsel for the complainant/ respondent as proof of receipt of intimation to the insurance company. Even if this letter is taken to be the intimation letter, then this letter is also delayed by about 9 days. Clearly, neither the police nor the insurance company got any opportunity to search for the vehicle and to apprehend the culprit. Clearly, if there is a delay in the police action, the person stealing the vehicle may take the vehicle to a far off place and may even dismantle and give a new look to the vehicle, thus, immediate intimation to the police and to the insurance company was essential. Learned counsel has further stated that even the alleged letter dated 03.08.2012 states that the complainant went to the police station on 01.08.2012 and gave information about the theft to the police. Thus, clearly intimation may have been given to the police only after about 5-6 days whereas the complainant had come back from Hyderabad on 26.07.2012 and should have informed the police on the same day or the next day. Clearly condition no. 1 of the policy has been violated. Learned counsel has admitted that copy of the condition has not been filed before any of the Consumer Fora/ Commission. This Commission then directed the learned counsel for the petitioner to file the copy of the policy within 3-4 days with the Court Master for the perusal of the Bench. The same has been filed.
7. Learned counsel for the petitioner has pointed out that the State Commission has relied upon mainly on the judgment of the Hon'ble Supreme Court in the case of National Insurance Company Ltd., vs Nitin Khandelwal - (2008) 11 SCC, 259 and the judgment of the Hon'ble Supreme Court in the case Amalendu Sahoo Vs. Oriental Insurance Company Limited, (2010) 4 SCC 536, wherein it directed the insurance company to pay the claim on non-standard basis. It was argued by the learned counsel that in those cases FIR was timely lodged whereas in the present case, there is a delay of 13 days in filing the FIR. Thus, the judgments relied upon by the learned State Commission cannot be applied in the present case.
8. On the other hand, the learned counsel for the respondent/ complainant has stated that no where it has been revealed by the insurance company that the complainant has violated any specific condition of the policy. No condition of the policy is mentioned as having been violated by the complainant in the written statement filed by the opposite party or in the
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evidence submitted by them. Learned counsel has further argued that the judgment of
Gurshinder Singh vs Shriram General Insurance Co. Ltd., and Anr., (Supra) is not applicable in the present case as circumstances of the case at hand are totally different with that of Gurshinder Singh vs Shriram General Insurance Co. Ltd., and Anr. case. It was stated that when the complainant came back from Hyderabad on 26.07.2012, he did not find his car in the house and then he tried to contract his driver who was not traceable. Obviously, the complainant did not realise immediately that the vehicle could have been stolen. When the complainant could not contact the driver for few days, then it was realised that the vehicle was stolen either by the driver or with the connivance of the driver. Then the complainant contacted the police station and gave information orally to the staff at the police station who advised the complainant to search for the vehicle for some more time and then lodge an FIR. Accordingly, FIR was finally lodged on 07.08.2012. Thus, there was no intentional or purposeful delay in filing the FIR rather it was only a circumstantial delay for which the complainant cannot be penalised. In-spite of receipt of intimation dated 03.08.2012 the insurance company did not appoint any surveyor or any investigator in the present matter. Thus, it is a deficiency in service on the part of the opposite party. The District Forum had relied on the intimation letter dated 03.08.2012 and the circumstances under which FIR was lodged on 07.08.2012 and has allowed the claim on full IDV basis. The State Commission relying upon the case of National Insurance Company Ltd., vs Nitin Khandelwal (Supra) and Amalendu Sahoo Vs. Oriental Insurance Company Limited, (Supra) has modified the order of the District Forum and allowed the claim on non-standard basis. Both the Fora below have given a concurrent finding and allowed the insurance claim of the complainant and there is some difference in the amount only. The scope under the revision petition is quite limited particularly in the light of the concurrent finding given by the Fora below. It was the duty of the insurance company to file the terms and conditions of the policy, before the District Forum and it should have clearly pointed out as to which condition has been violated. In the absence of the said assertion, the insurance company does not have any legal basis to repudiate the claim. The insurance company cannot be allowed to specify the condition at this stage and to file the terms and conditions of the policy.
9. We have carefully considered the arguments advanced by the learned counsel for the parties and have examined the record. Larger Bench of the Hon'ble Supreme Court in the case of Gurshinder Singh vs Shriram General Insurance Co. Ltd., and Anr., (Supra) has observed that delayed intimation to the insurance company will not forfeit the total insurance claim of the insured if the FIR has been lodged immediately within a reasonable time and all other conditions are met. The Hon'ble Supreme Court in the case of National Insurance Company Ltd., vs Nitin Khandelwal has clearly observed that in the case of theft of vehicle breach of policy conditions is not germane. Clearly, there is a breach of condition no.1 of the policy in the present case, that immediate intimation was not given to the police, nor the insurance company was informed immediately. In the matter of theft, intimation to the insurance company may not be much relevant as per the Hon'ble Supreme Court in the case of
Gurshinder Singh vs Shriram General Insurance Co. Ltd., and Anr., (Supra), however, immediate intimation to the police is very important because then the police can search for the vehicle and culprits may be apprehended before they take the vehicle to far off places and succeed in dismantling the vehicle. Clearly all the conditions of the policy are meant to be observed by both the sides, i.e., insurer as well as insured. In the case of National Insurance Company Ltd., vs Nitin Khandelwal (Supra), the driver has lodged the FIR after theft so that
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no question mark was raised on the incident of theft. Learned counsel for the complainant has stated that in the present case, FIR has been lodged and final report has been filed by the police, therefore, the genuinity of the theft is proved but this cannot be accepted in this simple manner. For 12-13 days of theft, no action could be taken by the police because the police was not informed and no FIR was lodged. Even if we believe the letter dated 03.08.2012 of the complainant written to the insurance company informing the incident of theft, it is stated therein that the police was contacted on 01.08.2012. Clearly the complainant contacted the police only after about 5 days of his return from Hyderabad. No reason has been given by the complainant for not informing the police in these 5 days about the theft of the vehicle. Thus, the complainant has allowed the culprit to take the vehicle to far off place in this period and even involvement of the complainant in the theft cannot be ruled out. It is not only a technical breach of the condition of the policy, rather, it has vide and far reaching ramifications as already mentioned. In these conditions, clearly the complainant has breached the very important condition of the policy that the complainant should have informed the police and insurance company immediately after the incident of theft. The Hon'ble Supreme Court in the case of Amalendu Sahoo Vs. Oriental Insurance Company Limited (Supra) has held that if the policy condition is violated in a motor vehicle policy the claim may be settled by the insurance company on non-standard basis upto 75% of the otherwise admissible claim. It is not necessarily to settle the claim in all cases of violation @ 75% of the insurance claim.
10. This Commission in a similar case of United India Insurance Company Limited vs Aji Pal and Ors (in RP no. 2089 of 2019) decided on 13.02.2019, where FIR as well as intimation to the insurance company were delayed, has allowed the insurance claim @ 50% of the IDV. Relying on this judgment, we deem it appropriate to allow the insurance claim @ 50% of the
IDV.
11. Based on the above discussion, the revision petition no.292 of 2015 is partly allowed and the petitioner insurance company is directed to pay Rs.2,57,812/- (Rupees two lakh fifty seven thousand eight hundred twelve only) (i.e., 50% of the IDV of Rs.5,15,625/-) to the respondent/ complainant within a period of 45 days from the date of this order along with interest @ 6% per annum from the date of filing of the complaint, i.e., 14.08.2013 till the actual payment. The order of the District Forum in respect of compensation of Rs.10,000/- for mental agony is set aside, as the interest is being allowed in the form of compensation only. The litigation cost of Rs.2,000/- as well as the cost of appeal of Rs.3,000/- awarded by the State Commission are allowed.
......................
PREM NARAIN
PRESIDING MEMBER
......................
C. VISWANATH
MEMBER
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