Punjab

StateCommission

FA/95/2014

Oriental Insurance Co. Ltd. and another - Complainant(s)

Versus

Harjinder Singh Lal - Opp.Party(s)

Brig B.S. Taunque, Retd.

06 Feb 2015

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION,  PUNJAB DAKSHIN MARG, SECTOR 37-A, CHANDIGARH.

 

  First Appeal No.95 of 2014                                                      

            Date of institution  :    30.01.2014  

Date of decision     :    06.02.2015

 

1.      General Manager, Oriental Insurance Company Limited,          Oriental House, PB No.7037, A-25-27, Asaf Ali Road, New           Delhi-110002, through its Manager (Legal), Regional Office       SCO No.109-111, Sector 17-D, Chandigarh.

2.      Oriental Insurance Company Limited, Branch office: G.T.        Road, Khanna, District Ludhiana-141001, through its Branch          Manager.

…….Appellants/Opposite Parties

Versus

Harjinder Singh Lal S/o Sh. Ram Singh, R/o 1044, Guru Nanak Street, Samrala Road, Khanna (Ludhiana).

 

                                                          …Respondent/Complainant 

First Appeal against the order dated 19.12.2013 of the District Consumer Disputes Redressal Forum, Ludhiana.

Quorum:- 

          Hon’ble Mr. Justice Gurdev Singh, President.

                        Shri Baldev Singh Sekhon, Member.

                        Mrs. Surinder Pal Kaur, Member.

 

Present:-

          For the appellants     :         Shri B.S. Taunque, Advocate.

          For the respondent   :        Shri Vaibhav Sehgal, Advocate.

 

 

JUSTICE GURDEV SINGH,  PRESIDENT :

 

                   The appellants/opposite parties have preferred this appeal against the order dated 19.12.2013 passed by District Consumer Disputes Redressal Forum, Ludhiana (in short, “District Forum”), vide which the complaint filed by Harjinder Singh Lal, respondent/complainant, under Section 12 of the Consumer Protection Act, 1986 (hereinafter referred to as, “the Act”), was allowed and the opposite parties were directed to pay him the settled amount on the basis of survey report within 30 days of the receipt of the copy of the order and failing that, to pay interest @ 9% per annum from the date of lodging of the claim till the realization of that amount. They were further directed to pay Rs.10,000/-, as compensation and Rs.2,000/-, as litigation expenses and were given the liberty to deduct the amount of NCB of Rs.1,251/- from the claim amount of the complainant.

  1.           The complainant alleged, in his complaint, that he is the registered owner of vehicle make Indica Vista 2009 model, bearing registration No.PB-26-E-0600 and got the same insured with the opposite parties for the period 10.05.2011 to 09.05.2012, vide cover note No.CHD-D-278288, which was issued in his name by opposite party No.1 on 09.05.2011, after he deposited the insurance premium with it. At that time, he delivered to that opposite party, copy of the registration certificate of the car and also informed that earlier, he had taken insurance cover for the car from New India Assurance Company Limited, Khanna, and delivered to it the relevant information qua the earlier insurance policy. It was only thereafter that the opposite parties, satisfying themselves, insured the car with them. The car met with an accident on 11.03.2012, regarding which DDR No.29 dated 11.03.2012 was lodged in Police Station, Mulepur, District Fatehgarh Sahib. He also informed the opposite parties about the accident and lodged insurance claim with the local Branch Office at Khanna, for reimbursement of the insurance claim. Sh. Vinod Bhan, Surveyor and Loss Assessor, was appointed by the opposite parties, who inspected the vehicle and assessed the damage to the same to the tune of Rs.2,80,000/- and the value of the wreckage was assessed at Rs.90,000/-. The opposite parties after satisfying themselves agreed to reimburse the insurance claim and on their demand, he got transferred the registration certificate in their name and the salvage of the car was also collected from him. However, the claim was repudiated by opposite party No.1, vide letter dated 04.12.2012, on the ground that there was major violation of the terms and conditions of the policy, as a result of the concealment of facts.  In fact, he never made any such concealment, nor violated any such term and condition. He time and again requested the staff of the opposite parties to redress his genuine claim, but of no avail. The opposite parties proved to be negligent and deficient in service; as a result of which, he suffered mental agony, hardship and deprivation of the insurance claim and for the same, he is entitled to Rs.5,00,000/-, as compensation. He is entitled to interest on that amount @ 24% per annum, as well as litigation costs. He prayed for the issuance of directions accordingly.
  2.           The opposite parties filed joint written reply before the District Forum. In the written reply, they did not dispute that the car was insured with them and that the claim made by the complainant, regarding the damage caused to the car in the accident, was repudiated by them. While denying the other allegations made in the complaint, they pleaded that previously, the vehicle was insured with New India Assurance Company Limited, Khanna and in the proposal form, which was filled up by the complainant on 09.05.2011, the previous claim experience was stated as Nil. It was on that ground, that they issued the cover note/policy, allowing “No Claim Bonus” @ 20%. On 08.10.2012, they received a letter from that insurance company, providing full details of the claims taken by the complainant during the year of insurance.  He had obtained three such claims regarding the damage to the car on account of accident and the details thereof are given in Para No.6 of the written reply. Thus, the complainant made serious violation of the policy terms and conditions and committed breach of utmost good faith, by concealing the said facts. The reasons for repudiation were explained in the repudiation letter itself. He has not come to the District Forum with clean hands and is guilty of suppressing those true and material facts. They prayed for the dismissal of the complaint with costs, under Section 26 of the Act; being false, frivolous, vexatious and having been filed with ulterior motive to harass and humiliate them.
  3.           Both the sides produced evidence in support of their respective averments before the District Forum, which after going through the same and hearing learned counsel on their behalf, allowed the complaint, vide aforesaid order.
  4.           We have heard the learned counsel for the parties and have carefully gone through the records of the case.
  5.           While challenging the findings recorded by the District Forum in favour of the complainant, it was submitted by the learned counsel for the opposite parties, that “No Claim Bonus” was claimed by the complainant at the time of obtaining the policy, by producing the certificate of the previous insurance company, in which it was mentioned that he had not obtained any claim and in the proposal form also, he specifically mentioned that no claim was made by him throughout the previous insurance year. From the evidence produced on the record, it stands proved that he had obtained three claims under the previous insurance policy and, as such, was not entitled to “No Claim Bonus”. He committed the breach of utmost good faith, on which the insurance contracts are based; as a result of which the insurance contract became void ab initio. The District Forum committed an illegality, while allowing the claim of the complainant and granting liberty to the opposite parties to deduct the amount of Rs.1251/-, allowed as “No Claim Bonus”, from the insurance claim.  Once the contract of insurance was proved to be void ab initio, no such claim was payable to the complainant. Therefore, the findings recorded by the District Forum are liable to be set aside.
  6.           On the other hand, it was submitted by the learned counsel for the complainant that after taking into consideration the evidence produced on the record, correct findings were recorded by the District Forum in favour of the complainant. It cannot be made out from the proposal form that the declaration contained therein, and on the basis of which the “No Claim Bonus” was claimed, was ever signed by the complainant. The same purports to have been signed by one Surinder Singh and not by the complainant. The certificate, so referred by the counsel for the opposite parties, was obtained by the opposite parties themselves and was never produced by the complainant. Even if the complainant had wrongly claimed the “No Claim Bonus” by relying upon the declaration made in the proposal form, even then the opposite parties, by virtue of Regulation No.27 of the Indian Motor Tariff, were required to obtain information from the other insurance company within the period mentioned therein.   It is not the case of the opposite parties that such an information was obtained; which amounts to the breach of the Tariff, and in those circumstances, the opposite parties were not entitled to repudiate the claim of the complainant, on the ground that “No Claim Bonus” was claimed by the complainant wrongly. There is no ground for upsetting the well reasoned findings recorded by the District Forum.
  7.           In view of the controversy raised in the present appeal, it is to be determined, as to who had procured the letter/certificate Ex.RW-7, in which it was mentioned by the previous insurance company (The New India Assurance Company Limited), that no claims were reported under that policy as on 27.04.2012? It is very much clear from the evidence produced on the record that this letter was written in respect of the previous policy, which had been obtained by the complainant for the car from the said insurance company, which was for the period 10.05.2010 to 09.05.2011. The proposal form filled up by the complainant was proved on the record, as Ex.RW-1, in which the previous policy number is mentioned as 36120031100100000684. The same policy number is mentioned in this letter Ex.RW-7. The proposal form was filled up on 09.05.2011, whereas the letter Ex.RW-7 was generated on 27.04.2012. Before the filling up of the proposal form, opposite parties had no relation with the complainant and it was for the first time that the dealings started between them on 09.05.2011, when the proposal form was filled up. Thus, there was neither any occasion nor any opportunity with the opposite parties to obtain such information from the New India Assurance Company Limited, which is mentioned in the letter Ex.RW-7. The matter is set at rest from the perusal of that letter itself; which is addressed to the complainant.  Thus, it was the complainant, who collected that letter from New India Assurance Company Limited and filed the same with the opposite parties. It is different question, whether the contents of that letter were correct or not, but the fact remains that by relying upon the contents of that letter and by giving reply in column No.6 of the proposal form Ex.RW-1 that no such claim was ever lodged by him during the preceding three years that the complainant obtained the “No Claim Bonus” to the tune of Rs.1,251/- , as is clear from the cover note proved on the record, as Ex.P-3. It is pertinent to note that previous policy number is mentioned in this cover note also.
  8.           In reply to the argument of the counsel for the complainant, that the declaration in the proposal form was never signed by the complainant and that the same was signed by one Surinder Singh, it was pointed out by the learned counsel for the opposite parties, that the claim was also lodged on behalf of the complainant by this Surinder Singh and in support of that contention, he had shown the file being maintained by the insurance company; which contains the claim form signed by Surinder Singh on behalf of the complainant. Even if the declaration was not signed by the complainant himself, even then he is bound by the information disclosed in the proposal form and as per that information, he had not made any claim under the previous insurance policy.  
  9.           The opposite parties, in support of the fact that three claims were lodged under the previous insurance policy by the complainant, proved on record the letter dated Nil, written by New India Assurance Company to the opposite parties, Ex.RW-3. It is clearly mentioned therein that the insured made three claims during the policy period, as per “Claim Synopsis” Ex.RW-6, and that the complainant was not entitled to “No Claim Bonus” in the next renewal of the insurance. It was also mentioned in that letter that the system, by mistake, had shown entitlement of “No Claim Bonus”. The system might have shown the same by way of mistake, but the complainant had the knowledge that he had made three claims under the previous insurance policy and still, he claimed and obtained “No Claim Bonus”. In these circumstances, the District Forum was not justified in recording a finding that the said error cannot be attributed to the complainant, and also erred while holding that the opposite parties can now claim the amount of “No Claim Bonus” from the complainant. There is no such provision, under which such a direction could have been issued.
  10.           GR-27 of the Indian Motor Tariff deals with “No Claim Bonus”. A minute perusal of that regulation makes it clear that the insurance company was duty bound to call for the confirmation of entitlement and the rate of NCB for the particular insured from the previous insurance company, only when “No Claim Bonus” was allowed on the basis of the declaration made by the insured. The relevant part of that Regulation is reproduced below:-

 

“When the insured is unable to produce such evidence of NCB entitlement from the previous insurer, the claimed NCB may be permitted after obtaining from the insured a declaration as per the following words.”

 

  1.           In the present case, keeping in view the evidence produced on the record and which has been discussed above, it cannot be held that the NCB was allowed to the complainant on the basis of the declaration made by him in the proposal form. It was on the basis of the letter Ex.RW-7, which was produced by the complainant before the opposite parties, that the NCB was allowed. In these circumstances, the opposite parties were not duty bound to obtain the necessary information from the previous insurance company under the above said Regulation.
  2.           What is the effect of claiming this “No Claim Bonus”, by concealing the material facts?
  3.           The contracts of insurance are based on the doctrine of Uberrima-fides, i.e. utmost good faith. The person, obtaining the insurance policy, is required to disclose all the material information in his knowledge, which may affect the mind of the insurer, to accept or reject the proposal made for the insurance. It is very much clear from the contents of the proposal form itself, that in case any information furnished by the complainant was found to be false, all the benefits under the insurance policy were to be forfeited. It is now well settled that the contracts of insurance are to be construed strictly. The facts were similar in Tata AIG General Insurance Company Limited & Another Vs. Gulzari Singh  (2010) (2) CPJ (NC) 272. In that case also, the insurance policy regarding the vehicle was obtained by suppressing the material facts regarding making of claims under the previous insurance policy and by giving wrong declaration regarding “No Claim Bonus”. By relying upon the judgment of the Hon’ble Supreme Court reported in (1991) 1 SCC 357 (LIC of India Vs. G.M. Channabasamma); wherein it was held that a contract of insurance is a contract of  Uberrima-fides and there must be complete good faith on the part of the assured and the assured is under a solemn obligation to make full disclosure of material facts which may be relevant for insurer to take into an account the claim of the complainant was disallowed by the Hon’ble National Commission. It was held therein that the directions, to adjust “No Claim Bonus” against the amount of damage assessed, passed by the State Commission clearly violates the settled principle of law and, therefore, cannot be sustained.  In view of the ratio of those judgments, it is to be held that the opposite parties were justified in repudiating the claim of the complainant, on the ground of obtaining the “No Claim Bonus”, by concealing the material facts, rendering the contract of insurance void ab initio. In these circumstances, the findings recorded by the District Forum, to the contrary, cannot be sustained and are set aside.
  4.           In the result, the appeal is allowed, the order passed by the District Forum is set aside and the complaint filed by the complainant is dismissed.
  5.           The appellants/opposite parties deposited the sum of Rs.25,000/- on 30.01.2014 at the time of filing the appeal. They deposited another sum of Rs.76,000/- on 17.04.2014 in compliance of the order dated 25.03.2014. Both these sums, along with interest, which has been accrued thereon, if any, shall be remitted by the registry to the appellants/opposite parties by way of a crossed cheque/demand draft after the expiry of 45 days of the sending of certified copy of the order to them.
  6.           The arguments in this case were heard on 04.02.2015 and the order was reserved.  Now, the order be communicated to the parties.
  7.           The appeal could not be decided within the statutory period due to heavy pendency of court cases.

 

 

                                                        (JUSTICE GURDEV SINGH)

                                                                       PRESIDENT  

                                                         

 

 

                                                       (BALDEV SINGH SEKHON)

                                                                        MEMBER

                                                         

 

 

                                                      (MRS. SURINDER PAL KAUR)

February 06, 2015                                       MEMBER

(Gurmeet S)

 

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