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Claim Rejected but Oriental Insurance Asked To Pay Rs1 Lakh Compensation for Its ‘Dilatory and Harassing Attitude’

While rejecting an insurance claim, the national consumer disputes redressal commission (NCDRC) directed Oriental Insurance Co Ltd to pay Rs1 lakh to compensate the complainant for the insurer’s dilatory and harassing attitude before belatedly repudiating the insurance claim. In this case, the commission upheld that legal heirs of an insured must get the policy transferred in their names within the stipulated time to claim the insurance.

In an order issued last week, the bench of Binoy Kumar (presiding member) and justice Sudip Ahluwalia (member) says, “…while holding that the claim of the complainant was not tenable on account of non-compliance of relevant policy conditions which required him to get the policy transferred in his name within the time specified, the revision is allowed after setting aside the impugned order of the state commission. At the same time, a compensation of Rs1 lakh towards mental pain and harassment is awarded to the respondent on account of the dilatory and harassing attitude of the insurance company before belatedly repudiating his insurance claim.”

Delhi-based Sujap Singh, son of Amarjeet Singh, had filed the complaint before the district forum against the insurer. Amarjeet Singh bought an Rs7 lakh insurance policy for his truck from Oriental Insurance from 8 September 2004 to 7 September 2005. However, on 3 November 2004, Amarjeet Singh died. The truck was stolen on the night of 22nd and 23 May 2005.

The Singh family filed a first information report (FIR) and intimated the insurer. However, despite collecting all relevant documents from the Singhs, Oriental Insurance rejected the claim. The Singh family then filed a complaint before the district forum.

During the hearing before the district forum, Oriental Insurance denied any deficiency in service. It contended that “as per terms and conditions of the insurance policy in the event of death of the sole insured, the policy does not lapse immediately but remains valid for a period of three months from the date of death of insured or until the expiry of policy (whichever is earlier) and during such period, the legal heirs of the insured may apply for the transfer of the policy to their name or obtain a new policy.”

In the present case, the insurer submitted that Sujap Singh got the vehicle transferred in his name on 18 May 2006 or after the theft, violating condition no10 of the insurance policy. “At the time of the theft of the vehicle, the policy was not in force and the same had already lapsed as per the terms of the policy and it had rightly repudiated the claim,” it says.

The district forum dismissed the complaint filed by Sujap Singh. Aggrieved by this order, he filed the first appeal before the state commission at Delhi.

While setting aside the order passed by the district forum, the state commission directed Oriental Insurance to pay the claim amount to Sujap Singh. “Having regard to the discussion done and law laid down we are of the considered view that the repudiation of the claim is not sustainable. The insurance company cannot escape its responsibility and obligation to allow the claim. Accordingly, we set aside the orders passed by the district fora and direct the insurance company to settle and pay the claim within 30 days from the date of receipt of the order.”

Oriental Insurance challenged the order before NCDRC. It contended that it is settled law that in the event of any failure on the part of a transferee of an insured vehicle to comply with the relevant terms and conditions in the insurance policy within the period provided therein, the insurer is not liable to satisfy the claim.

After hearing both sides, the NCDRC observed that on the existing position of law in this regard, particularly in the light of some subsequent decisions of the apex court, the claim of Mr Singh is not tenable.

“This is so because it has to be noted that breach of policy conditions which in the present case happen to be failure to get the policy transferred in the name of the complainant within the time prescribed, ipso facto disentitles him from claiming the compensation as on the relevant date i.e. three months after death of his father- registered owner and insured, as there was no privity of contract between him and the insurance company,” it stated.

However, NCDRC says, “considering the unprofessional and unfair conduct on the part of the insurance company in not promptly repudiating the claim of Mr Singh for the reason that he had failed to comply with the relevant clause for transfer of the insurance policy in his name within the specified time from the date of death of his father or original insured, would certainly invite censure.” 

“It is a matter of record that intimation of the claim was submitted as far back as on 26 May 2005. But, Mr Singh was made to approach the insurance company again and again on various pretexts and asked to submit some documents or the other which would have been altogether irrelevant if his claim was to be ultimately repudiated solely on the ground that he had failed to comply with the requisite policy terms and conditions. The documents asked from him during the intervening period were such irrelevant ones as the original cover note, financial repayments, status, and proof of the existence of the vehicle in November 2004, apart from asking him to comply with some other formalities vide letter dated 10 January 2007. But, a copy of the such letter has not been placed on record on behalf of the insurance company.”

“The claim was finally repudiated almost two years later on 18 April 2007 after the complainant had been made to submit all the information and documents sought from him. He certainly deserves to be compensated for such harassment, callousness and uncalled-for attitude on the part of the insurance company in making him run from pillar to post before finally repudiating his claim for a reason which had no nexus with the various compliances he had been made to perform for a long time span of almost two years,” NCDRC says.

While rejecting the insurance claim, the NCDRC directed Oriental Insurance to pay Rs1 lakh towards mental pain and harassment before belatedly repudiating his insurance claim.

(Revision Petition No2037 of 2018  Date: 3 March 2023) Source: moneylife.in