United India Insurance Co. Ltd. & Another v. Surinder Singh

2) To be referred to the Reporters or not? Yes/No

3) Whether judgment should be reported in the Digest? Yes/No Argued By:- For the appellants : Sh. Lalit Garg, Advocate JUSTICE PARAMJEET SINGH DHALIWAL, PRESIDENT The instant appeal has been filed by the appellants/opposite parties against the order dated 03.12.2020 passed by District Consumer Disputes Redressal Forum (now, Commission), First Appeal No.5 of 2021 Patiala (in short, the District Commission), whereby the complaint filed by the respondent/complainant, under Section 12 of the Consumer Protection Act, 1986, was allowed, in the following terms: In view of the aforesaid discussion, the complaint stands allowed with a direction to the OPs to pay 75% of the insured amount to the complainant along with interest @6% per annum from the date of theft i.e. 22.2.2016 till realization. The OPs are further directed to pay 25,000/- as compensation and this compensation shall be deducted from the salary of the then Sr. Branch Manager (where ever he is posted) who has wrongly and without any reason rejected the claim for the reasons best known to him. The OPs are also directed to pay 10,000/- as costs of litigation to the complainant.

2. It would be apposite to mention that hereinafter the parties will be referred, as have been arrayed before the District Commission. Facts of the Complaint

3. Brief facts, as averred in the complaint, are that the complainant, for earning his livelihood by way of self employment, purchased a new vehicle make TATA 2515 Truck, after taking loan of

8 lac. The same was registered with District Transport Officer, Ambala, vide Registration No.HR-37A-3743. It was got insured with opposite party No.1, vide Cover Note dated 07.10.2015; which was valid up to 06.10.2016. Requisite premium of 25,714/- was paid. On 21.02.2016 at about 7.00 P.M., Sh. Raj Kumar, who worked with the complainant as a co-driver, parked the said vehicle near Janta School, Railway Station, Rajpura, as usual; as most of the vehicles remain parked there throughout day and night for transportation of goods. Raj First Appeal No.5 of 2021 Kumar remained in the vehicle, in question, up to 11.00 P.M. and then he went to his house after locking the vehicle. However, in the next morning i.e. 22.02.2016, the vehicle was found missing from the spot. He immediately informed the complainant, who immediately reached the spot and after making inquires about the vehicle lodged DDR with P.S. City, Rajpura. The Insurance Company was also informed on the same day. However, the FIR was registered on 01.03.2016 after conducting preliminary inquiry. The claim lodged by the complainant was repudiated by opposite party No.1, vide letter dated 18.04.2017 on the ground of late intimation to police and leaving one key inside the vehicle, in question. The repudiation of claim is illegal, as immediate intimation of theft of the vehicle was given to the police as well as the opposite parties on 22.02.2016 itself. No key was left in the vehicle and the only one key of the vehicle was handed over to the Senior Branch Manager personally, when his case was sent to opposite party No.2 for sanction. The complainant requested opposite party No.1 to review its stand, but to no effect. The complainant sent legal notice dated 04.05.2017 to the opposite parties, which was replied, vide letter dated 12.05.2017 on same grounds. Alleging deficiency in service and unfair trade practice on the part of the opposite parties, the complainant approached the District Commission, seeking following directions to them:

i) to pay the insurance claim amounting to 4 lac; ii) to pay compensation on account of the mental agony, tension etc. suffered by the complainant; and First Appeal No.5 of 2021 iii) to pay 20,000/- as litigation expenses. Defence of the Opposite Parties

4. Upon notice, the opposite parties appeared before the District Commission and filed reply to the complaint, raising preliminary objections that the complaint is not maintainable, as the claim of the complainant has already been repudiated, vide letter dated 18.04.2017 on the ground that the alleged theft of the vehicle, in question, took place on 22.02.2016, whereas the opposite parties were intimated and FIR No.38 was registered under Section 379 IPC with Police Station, Rajpura City only on 01.03.2016. It amounts to violation of terms and conditions of the insurance policy. It is further pleaded that one of the keys was left in the vehicle, in question, due to negligence on the part of the insured. The complainant had no cause of action and locus standi to file the complaint. Complicated questions of law and facts are involved, which can be decided only by the Civil Court. On merits, insurance and theft of the vehicle, in question, are admitted. Similar other pleas, as raised in preliminary objections, were reiterated. It is further pleaded that on receipt of intimation of theft, the opposite parties immediately deputed M/s BEE VEE Investigating Agency, SST Nagar, Rajpura Road, Patiala to investigate the case. They submitted their report dated 28.11.2016, stating that the loss was intimated on 01.03.2016 and as per statement of the insured, one door key of the vehicle, in question, was left in it, which amounts to violation of terms and conditions of the insurance policy. There is no deficiency in service or unfair trade practice on the part of the opposite parties. All First Appeal No.5 of 2021 other allegations levelled in the complaint were denied and it was prayed that the complaint be dismissed. Evidence of the Parties and Finding of the District Commission

5. The complainant, in support of his claim, tendered his own affidavit Ex.C-A, along with documents Ex.C-1 to Ex.C-10. The opposite parties, in support of their defence, tendered affidavit of Sh. Mohinder Pal Dabar, Sr. Branch Manager Ex.OP-A, affidavit of Sh. H. S. Bedi, Investigator, Ex.OP-B, along with documents Ex.OP-1 to OP-

6. The District Commission, after going through the record and hearing learned counsel for the parties, allowed the complaint, vide impugned order. Hence, this appeal. Contentions of the Parties

6. We have heard learned counsel for the appellants/opposite parties at the admission stage of the appeal and carefully gone through the records of the case.

7. Learned counsel for the appellants has vehemently contended the complainant violated the terms and conditions of the insurance policy, as he failed to give immediate intimation about theft of the vehicle, in question, to the Insurance Company and police. Theft of the vehicle took place on 21/22.02.2016, whereas the opposite parties were informed and FIR was lodged only on 01.03.2016. Besides this, one of the keys of the vehicle was left inside the same, which amounts to negligence on the part of the insured. Therefore, the claim of the complainant was rightly repudiated on the above referred grounds. However, the District Commission wrongly passed the First Appeal No.5 of 2021 impugned order on the basis of conjectures and surmises. There are sufficient grounds for admitting the appeal and issuance of notice thereof to the respondent/complainant. Consideration of Contentions

8. We have given our thoughtful consideration to the contentions raised by the learned counsel for the appellants.

9. Admitted facts are that the vehicle, in question, was insured with the opposite parties, vide Motor Vehicle Insurance Cover Note, Ex.C-4, for total Insured Declared Value (IDV) of 4 lac; which was valid from 07.10.2015 to 06.10.2016. Plea of the complainant is that Sh. Raj Kumar, co-driver, had parked the vehicle near Janta School, Railway Station, Rajpura as usual on 21.02.2016, where most of the vehicles remain parked throughout day and night for transportation of goods. He went to his house at 11.00 P.M. after locking the vehicle. However, the vehicle was found missing from the spot in the morning on 22.02.2016. The claim lodged by the complainant was repudiated by the opposite parties, vide letter dated 18.04.2017, Ex.C-7, on the grounds that there was delay in intimating the Insurance Company and police about the theft incident and one of the keys of the vehicle, in question, was left inside; which amounts to negligence on the part of the complainant. The sole question to be ascertained in this appeal is, whether the repudiation of the claim on the above referred grounds is legal and valid or not? First Appeal No.5 of 2021

10. For proper appreciation of the matter, the relevant Condition No.1 of the Insurance Policy, Ex.OP-2, invoked by the opposite parties, is reproduced below:-

1. Notice shall be given in writing to the Company immediately upon the occurrence of any accidental loss or damage in the event of any claim and thereafter the insured shall give all such information and assistance as the Company shall require. Every letter claim writ summons and/or process or copy thereof shall be forwarded to the Company immediately on receipt by the insured. Notice shall also be given in writing to the Company immediately the insured shall have knowledge of any impending prosecution, inquest or fatal inquiry in respect of any occurrence which may give rise to a claim under this policy. In case of theft or criminal act which may be the subject of a claim under this policy the insured shall give immediate notice to the police and co-operate with the Company in securing the conviction of the offender. A bare perusal of this condition shows that in case of accidental loss or damage to the vehicle, the notice was required to be given in writing to the opposite parties. In case of theft or criminal act, the insured was to give immediate notice to the police and cooperate with the Company in securing the conviction of the offender. Thus, there is no condition in the insurance policy to give immediate notice to the opposite parties regarding the theft of the vehicle, in question. It also needs to be emphasized that Insurance Regulatory and Development Authority (in short, IRDA) issued Circular to all life-insurers and non- life insurers dated 20.9.2011 regarding delay in claim intimation/documents submission with respect to all life insurance contracts and all non-life individual and group insurance contracts. The same is reproduced hereunder:- INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY Ref. IRDA/HLTH/MISC/CIR/216/09/2011 Dated:20.09.2011 First Appeal No.5 of 2021 CIRCULAR To All life insurers and non-life insurers. Re: Delay in claim intimation/documents submission with respect to

i. All life insurance contracts and

ii. All Non-life individual and group insurance contracts. The Authority has been receiving several complaints that claims are being rejected on the ground of delayed submission of intimation and documents. The current contractual obligation imposing the condition that the claims shall be intimated to the insurer with prescribed documents within a specified number of days is necessary for insurers for effecting various post claim activities like investigation, loss assessment, provisioning, claim settlement etc. However, this condition should not prevent settlement of genuine claims, particularly when there is delay in intimation or in submission of documents due to unavoidable circumstances. The insurers decision to reject a claim shall be based on sound logic and valid grounds. It may be noted that such limitation clause does not work in isolation and is not absolute. One needs to see the merits and good spirit of the clause, without compromising on bad claims. Rejection of claims on purely technical grounds in a mechanical fashion will result in policyholders losing confidence in the insurance industry, giving rise to excessive litigation. Therefore, it is advised that all insurers need to develop a sound mechanism of their own to handle such claims with utmost care and caution. It is also advised that the insurers must not repudiate such claims unless and until the reasons of delay are specifically ascertained, recorded and the insurers should satisfy themselves that the delayed claims would have otherwise been rejected even if reported in time. The insurers are advised to incorporate additional wordings in the policy documents, suitable enunciating insurers stand to condone delay on merit for delayed claims where the delay is proved to be for reasons beyond the control of the insured. Sd/- J. Harinarayan CHAIRMAN.

11. Furthermore, the Honble Supreme Court in case Om Prakash v. Reliance General Insurance and Anr. 2018(1) CPR 907 (SC), wherein the truck was stolen and there was delay in giving First Appeal No.5 of 2021 intimation to the Insurance Company, while allowing the appeal, observed in Para-11 as under:-

11. It is common knowledge that a person who lost his vehicle may not straightaway go to the Insurance Company to claim compensation. At first, he will make efforts to trace the vehicle. It is true that the owner has to intimate the insurer immediately after the theft of the vehicle. However, this condition should not bar settlement of genuine claims particularly when the delay in intimation or submission of documents is due to unavoidable circumstances. The decision of the insurer to reject the claim has to be based on valid grounds. Rejection of the claims on purely technical grounds in a mechanical manner will result in loss of confidence of policy-holders in the insurance industry. If the reason for delay in making a claim is satisfactorily explained, such a claim cannot be rejected on the ground of delay. It is also necessary to state here that it would not be fair and reasonable to reject genuine claims which had already been verified and found to be correct by the Investigator. The condition regarding the delay shall not be a shelter to repudiate the insurance claims which have been otherwise proved to be genuine. It needs no emphasis that the Consumer Protection Act aims at providing better protection of the interest of consumers. It is a beneficial legislation that deserves liberal construction. This laudable object should not be forgotten while considering the claims made under the Act.

12. Ratio of the aforesaid circular issued by the IRDA and the judgment of the Honble Supreme Court is that the condition regarding the delay shall not be a shelter to repudiate the insurance claims, which have been otherwise proved to be genuine. The decision of the insurer to reject the claim has to be based on valid grounds and rejection of the claims on purely technical grounds in a mechanical manner will result in loss of confidence of policy-holders in the insurance industry. It was also observed that it would not be fair and reasonable to reject genuine claims which had already been verified and found to be correct by the investigator. Honble Supreme Court First Appeal No.5 of 2021 also reiterated that the Consumer Protection Act aims at providing better protection of the interest of consumers and it is a beneficial legislation that deserves liberal construction. This laudable object should not be forgotten, while considering the claims made under the Act.

13. Noticing that there was a conflict between the decisions of the Bench of the two Judges of the Honble Supreme Court in Om Parkashs case (supra) and in the case of Oriental Insurance Co. Ltd. v. Parvesh Chander Chadha 2009(1) CLT 552, on the question, as to whether delay in informing the occurrence of the theft of the vehicle to the Insurance Company, though the FIR was registered immediately, would disentitle the claimant of the insurance claim, the Bench of two Judges of the Honble Supreme Court, vide order dated 9.1.2018 referred the matter to a three Judges Bench. The said three Judges Bench of the Honble Supreme Court in Civil Appeal No.653 of 2020 (arising out of S.L.P. (C) No.24370 of 2015) (GURSHINDER SINGH v. SHRIRAM GENERAL INSURANCE CO. LTD. & ANR), after duly considering the judgments passed in the above said two cases, observed in Para Nos.18 to 20 in its judgment dated 24.01.2020 as under:-

18. We concur with the view taken in the case of Om Prakash (supra), that in such a situation if the claimant is denied the claim merely on the ground that there is some delay in intimating the insurance company about the occurrence of the theft, it would be taking a hyper technical view. We find that this Court in Om Prakash (supra) has rightly held that it would not be fair and reasonable to reject genuine claims which had already been verified and found to be correct by the investigator. First Appeal No.5 of 2021

19. We find that this Court in Om Prakash (supra) has rightly held that the Consumer Protection Act aims at protecting the interest of the consumers and it being a beneficial legislation deserves pragmatic construction. We find that in Om Prakash (supra) this Court has rightly held that mere delay in intimating the insurance company about the theft of the vehicle should not be a shelter to repudiate the insurance claim which has been otherwise proved to be genuine.

20. We, therefore, hold that 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 view of the law settled by the Honble Supreme Court in the above noted case, the delay in lodging the FIR and in informing the opposite parties about the theft of the vehicle cannot be a ground to deny the claim of the insured. Therefore, the repudiation of the claim on the above referred ground is not tenable.

14. So far as the plea of the opposite parties that one of the keys was left by the driver inside the vehicle, in question, it needs to be mentioned that the theft of the vehicle, in question, has been duly proved on record from perusal of FIR dated 01.03.2016, Ex.C-6, and Investigation Report dated 28.11.2016, Ex.C-10, given by BEE VEE Investigating Agency; who was deputed by the opposite parties to investigate the incident of theft. The vehicle has not been traced and the Untraced Report has also been accepted by the Sub Divisional Judicial Magistrate, Rajpura on 07.10.2016. The Investigator had recommended for settlement of the claim, subject to terms and conditions of the insurance policy. In the judgment dated 08.12.2017 First Appeal No.5 of 2021 rendered by the Honble Supreme Court in Civil Appeal No(s).21552 of 2017 (Manjeet Singh v. National Insurance Company Ltd. & Anr.), which has been relied upon by the District Commission, the vehicle was snatched by the passengers, to whom the driver had given the lift. In those circumstances, it has been held that there was no fault on the part of the owner of the vehicle and if there is breach of any condition of the insurance policy, then the claim can be allowed on Non- standard Basis i.e. 75% of the IDV.

15. In Amalendu Sahoo v. Oriental Insurance Company Limited . 2010 (1) CPC 653 (SC), the Honble Supreme Court considered the identical question and held in Paras No. 12 to 15 as follows:-

12. Reference in this case may be made to the decision of National Commission rendered in the case of United India Insurance Company Limited v. Gian Singh reported in 2006 CTJ 221 (CP) (NCDRC). In that decision of the National Consumer Disputes Redressal Commission (NCDRC) it has been held that in a case of violation of condition of the policy as to the nature of use of the vehicle, the claim ought to be settled on a non-standard basis. The said decision of the National Commission has been referred to by this Court in the case of National Insurance Company Limited v. Nitin Khandelwal reported in 2008 (7) SCALE 351. In paragraph 13 of the judgment, in the case of Nitin Khandelwal (supra) this Court held:- The appellant Insurance Company is liable to indemnify the owner of the vehicle when the insurer has obtained comprehensive policy for the loss caused to the insurer. The respondent submitted that even assuming that there was a breach of condition of the insurance policy, the appellant Insurance Company ought to have settled the claim on non-standard basis.

13. In the case of Nitin Khandelwal (supra) the State Commission allowed 75% of the claim of the claimant on non-standard basis. The said order was upheld by the National Commission and this Court refused to interfere with the decision of the National Commission. First Appeal No.5 of 2021

14. In this connection reference may be made to a decision of National Commission in the case of New India Assurance Company Limited v. Narayan Prasad Appaprasad Pathak reported in (2006) CPJ 144 (NC). In that case also the question was, whether the insurance company can repudiate the claims in a case where the vehicle carrying passengers and the driver did not have a proper driving licence and met with an accident. While granting claim on non-standard basis the National Commission set out in its judgment the guidelines issued by the insurance company about settling all such non-standard claims. The said guidelines are set out below:- Sr. No. Description Percentage of settlement

(i) Under declaration of licensed carrying capacity Deduct 3 years difference in premium from the amount of claim or deduct 25% of claim amount, whichever is higher.

(ii) Overloading of vehicles beyond licensed carrying capacity Pay claims not exceeding 75% of admissible claim.

(iii) Any other breach of warranty/condition of policy including limitation as to use Pay upto 75% of admissible claim.

15. From a perusal of the aforesaid guidelines it is clear that one of the cases where 75% claim of the admissible claim was settled was where condition of policy including limitation as to use was breached.

16. In view of the law laid down by the Honble Supreme Court in the above noted authorities, the claim of the complainant is liable to be settled on non-standard basis, even though there was violation of the terms and conditions of the policy. There is no legal flaw in the impugned order passed by the District Commission.

17. Accordingly, we do not find any ground or justification for admitting the appeal and issuing notice to the respondent/ complainant. Hence, the appeal is dismissed in limine. First Appeal No.5 of 2021

18. The appellants have deposited a sum of 2,28,816/- at the time of filing of the appeal. This amount, along with interest which has accrued thereon, if any, shall be remitted by the registry to the District Commission forthwith. The respondent/complainant may approach the District Commission for the release of the above amount and the District Commission may pass the appropriate order in this regard after the expiry of limitation period in accordance with law. (JUSTICE PARAMJEET SINGH DHALIWAL) PRESIDENT (RAJINDER KUMAR GOYAL) MEMBER (MRS. KIRAN SIBAL) MEMBER February 09, 2021. (Gurmeet S)