BEFORE THE DISTRICT CONSUMER  DISPUTES REDRESSAL FORUM; FATEHABAD.

Complaint Case No.89 of 2017.

 Date of Instt.:20.04.2017.

Date of Decision:  10.11.2017.

Smt. Nisha Arora wife of Sunil Chabra, resident of H.No.79-C, Near the House of Professor Bhayana, Jagjiwanpura, Fatehabad and  District Fatehabad.

                                                                          ..Complainant

                                     Versus

United India Insurance Company Limited, Branch Office 75-Anaj Mandi, Fatehabad, Tehsil and District Fatehabad through its Branch Manager.

         ..Respondent/OP

Before:                Sh.Raghbir Singh, President.

                            Mrs.Ansuya Bishnoi, Member.

                            Sh.R.S.Panghal, Member.

Present:               Sh.Devi Lal, Adv.for the complainant.

                            Sh.N.D.Mittal, Adv. for the OP.

                            The present complaint under Section 12 of Consumer Protection Act, 1986 has been filed by the complainant against the OP with the averments that she is the registered owner of Car bearing Registration No.HR-22J-4984, Model 2013 and she got insured the aforesaid vehicle with the OP vide insurance policy No.1119033115P109209044 for a sum insured of Rs.5,50,000/-. The validity of the insurance policy was from 10.11.2015 to 09.11.2016 and a premium of Rs.10,996/- was paid by the complainant to the OP at the time of issuance of insurance policy. Therefore the complainant is the consumer of OP as defined in Consumer Protection Act, 1986. It is further submitted that the aforesaid vehicle met with an accident on 15.10.2016 and on account of the accident the vehicle was totally damaged. Thereafter the complainant gave intimation to the OP regarding the accident and damage of the vehicle. After intimation the surveyor of the company visited the spot and prepared the estimated loss of car and observed that the vehicle has been totally damaged. The surveyor report was submitted to the insurance company. Thereafter the complainant submitted the relevant papers to the OP and the OP assured to the complainant that the claim amount of total loss of the vehicle will be paid to the complainant very soon. However vide letter dated 21.03.2017 the OP repudiated the claim of the complainant on false and baseless ground that no claim bonus was obtained by the complainant at the time of getting the said vehicle insured whereas the complainant had obtained OD claim from the previous insurance company. It is further submitted that the repudiation of the claim of the complainant by the OP is totally false, illegal, arbitrary, null & void and as such the same is liable to be set aside. The complainant is entitled to get the sum assured of Rs.5,50,000/- along-with compensation on account of mental agony and physical harassment suffered by him. Hence, this complaint.

2.               On notice the OP appeared and resisted the complaint by filing a written statement wherein various preliminary objections regarding maintainability, cause of action etc. have been taken. In reply on merits, it is admitted that the vehicle in question was insured with the OP, however the insurance was got by the complainant by concealing the facts of taking OD claim under the previous policy and by giving wrong declaration. It is further submitted that the vehicle in question was earlier insured by the Oriental Insurance Company Limited and the inquiry made by the OP from them revealed that the previous claim had been taken by the complainant under the old policy. She was, therefore, not entitled to be given no claim bonus while obtaining the new policy. Since she had made a false declaration the benefits under the policy stood forfeited and this fact has been stated in the declaration signed by the complainant herself. Since the complainant had intentionally furnished wrong and false information in availing no claim bonus to which she was not entitled as such the repudiation of her claim by the OP is perfectly in accordance of the terms and conditions of the policy and sustainable in the eyes of law. The OP further prayed for dismissal of the complaint being without any merit.

3.               In evidence the complainant tendered her affidavit as Annexure CW1/A wherein the averments made in the complaint have been affirmed. The complainant also tendered in evidence documents as Annexure C1 and C2 and closed her evidence. On the other hand Sh.K.R.Jain, Divisional Manager submitted his affidavit on behalf of OP as Annexure RW1/A. The OP also tendered in evidence documents Annexure R1 to Annexure R10 and closed the evidence.

4.               The learned counsel for the complainant in his arguments submitted that it was the duty of the insurance company to verify the averments made by the petitioner before insuring the vehicle and had that been done, it would have come to know that in fact the complainant had taken a claim against the above referred vehicle. He further submitted that the complainant cannot be made to suffer for the negligence on the part of the official of the insurance company, in not verifying the aforesaid fact from the previous insurance company. He placed reliance upon Section 27(f) of the Indian Motor Tariff, which reads as under:-

        “(f)    In the event of the insured, transferring his insurance from one insurer to another insurer, the transferee insurer may allow the same rate of NCB which the insured would have received from the previous insurer. Evidence of the insured’s NCB entitlement either in the form of a renewal notice or a letter confirming the NCB entitlement from the previous insurer will be required for this purpose.

Where the insured in 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 wording:

“I / We declare that the rate of NCB claimed by me/us is correct and that no claim as arisen in the expiring policy period (copy of the policy enclosed). I/We further undertake that if this declaration is found to be incorrect, all benefits under the policy in respect of Section 1 of the policy will stand forfeited”

Notwithstanding the above declaration, the insurer allowing the NCB will be obliged to write to the policy issuing office of the previous insurer by recorded delivery calling for confirmation of the entitlement and rate of NCB for the particular insured and the previous insurer shall be obliged to provide the information sought within 30 days of receipt of the letter of enquiry failing which the matter will be treated as a breach of Tariff on the part of the previous insurer. Failure of the insurer granting the NCB to write to the previous insurer within 21 days after granting the cover will also constitute a breach of the Tariff.

                  The learned counsel for complainant further argued that in view of the above provision it was obligatory on the part of the insurer to write to the previous insurer, seeking confirmation of the entitlement of NCB. Their failure to write to the previous insurer within 21 days after granting the cover will constitute a breach of policy. In support of his contentions the counsel relied upon the case law cited as law Herald (Supreme Court) 2016(3) Page 2288.

5.               The learned counsel for the OP in his arguments submitted that the contract of insurance is a contract of utmost good faith. The learned counsel further contended that while obtaining the policy in question from them, the complainant had made a false declaration  dated 09.11.2015 in the proposal form regarding No Claim Bonus (NCB). The said declaration reads as under:

        “I/We hereby declare that the rate of NCB claimed by me/us is correct and that no claim has arisen in the expiring policy period (copy of the policy enclosed). I/We further undertake that if this declaration is found to be incorrect, all benefits under the policy in respect of Section-1 of the policy stand forfeited:

                  The learned counsel further pleaded that the vehicle was earlier insured by the Oriental Insurance Company Ltd. and the enquiries made from them had revealed that a previous claim had been taken by the complainant under the old policy. He was, therefore, not entitled to be given NCB, while obtaining the new policy. Since, he had made a false declaration, the benefits under the policy stood forfeited and this fact has been stated in the declaration signed by the complainant itself. In support of his contention the learned counsel placed reliance on the decisions rendered by Hon’ble National Commission in case titled as Inder Pal Rana Vs. National Insurance Company decided on 02.01.2015 and case Brij Bhusan Vs.  National Insurance Company, decided on 22.08.2012. The learned counsel also place reliance on the case titled as United India Insurance Company Vs. Ranjit Singh decided by Hon’ble High Court of Punjab and Haryana on 08.03.2013.

6.               We have duly considered the arguments advanced by learned counsel for both the parties and have also examined the entire material placed on the record of this case. It is not in dispute that the insured had taken advantage of No Claim Bonus in the form as 25% discount in the insurance premium by making false declaration in the proposal form. It is also not in dispute that complainant  insurance company  notwithstanding the mandate of GR 27 of Indian Motor Tariff did not take steps to verify the correctness of declaration regarding “No Claim Bonus” from the previous Insurance Company within 21 days of the issue of insurance cover.. The question which needs answer is as to whether the petitioner opposite party was right in repudiating the claim on the plea of concealment and misrepresentation of facts irrespective of the fact that complainant insurance company has failed to seek verification of declaration given by the insured in support of his plea for No Claim Bonus, within 21 days of the issue of insurance cover as envisaged in GR 27 of Indian Motor Tariff?

                  The above issue is no more Res intergra. The above question  has been answered by the Hon’ble National Commission vide its order dated 2.02.2017 in the matter of United India Insurance Company Ltd. vs. Mls Jindal Poly Buttons Limited & Branch Manager, National Insurance Company Ltd. Vs. Naresh Kumar  passed in Revision Petition No.2920 of 2015 and 1836 of 2016, as under:

        “(a) The cases in which it is established that the insured by making wrongful declaration has taken benefit of No Claim Bonus and the insurer had means to verify the correctness of the declaration of the insured seeking No Claim Bonus by exercising ordinary diligence of verifying the truthfulness of the claim from the insurer’ own record, Exception to 19 of Indian Contract Act would come into play and the insurer would not be justified in repudiating the insurance claim on the ground of misrepresentation or concealment of fact. However, because the insured had taken benefit of No Claim Bonus and paid less premium, the insurance claim would be reduced proportionately.

        (b) In case of the insured taking the insurance policy of the vehicle from new Insurance Company and it is established that the insured by making wrongful declaration has taken benefit of No Claim Bonus and where the insurer had failed to seek confirmation regarding correctness of the declaration submitted by the insured in support of plea of No Claim Bonus within the stipulated period as provided in GR 27 of Indian Motor Tariff, the insurer would not be justified in repudiating the insurance claim. However, because the insured had taken benefit of  No Claim Bonus by making false declaration his insurance claim would be reduced proportionately.

7.                         In view of the above finding by the Hon’ble National Commission, we are of the opinion that repudiation of the insurance claim by the Insurance Company was not justified because insurance company failed to fulfill its obligation under GR 27 of Indian Motor Tariff. Reliance is also placed on the decision rendered by the Hon’ble National Commission in case titled as New India Assurance Company Vs. Shinder Pal Singh cited as III(2017) CPJ559(NC).  However as the complainant  had paid 25% less premium, equity demands that insurance company should have allowed the insurance claim on pro rata basis i.e. by reducing the entitlement under the claim by 25% . The surveyor vide his survey report has assessed the loss for Rs.3,59,000/- on NETT Off salvage basis with R/C and the same has been agreed by the complainant vide consent letter Annexure R-4. Therefore the present complaint is accepted and the OP is directed to make a payment of Rs.3,59,000/- by reducing 25% to the complainant along-with compensation of Rs.5000/- on account of mental agony, physical harassment and litigation charges suffered by her. The order be complied within a period of one month. A copy of this order be supplied to both the parties free of cost as provided in the rules.  File be consigned after due compliance.

ANNOUNCED IN OPEN FORUM.                                                   Dt.10.11.2017                                                        

                     (Ansuya Bishnoi) (R.S.Panghal)                                  (Raghbir Singh)

                         Member              Member                                         President                                                                                                                                                                                                        DCDRF, Fatehabad