1.       This revision petition has been filed under section 21(b) of the Act 1986 in challenge to the Order dated 10.09.2014 of the State Commission in appeal no. 120 of 2014 arising out of the Order dated 10.03.2014 of the District Commission in complaint no. 68 of 2012.    

2.       We have heard the learned counsel for the insurance co. (the petitioner herein) and the learned counsel for the complainant (the respondent herein) and have perused the record including inter alia the Order dated 10.03.2014 of the District Commission, the impugned Order dated 10.09.2014 of the State Commission and the petition.

3.       Admitted facts of the case are that the complainant had insured his JCB machine with the insurance co. The premium was paid. The policy was valid. During the subsistence of the policy the machine met with an accident. The claim was repudiated by the insurance co. vide its letter dated 12.05.2012.

The District Commission vide its Order dated 10.03.2014 dismissed the complaint.

The State Commission vide its impugned Order dated 10.09.2014 allowed the complainant’s appeal and ordered the insurance co. to pay a sum of Rs. 12 lakh with interest at the rate of 9% per annum from the date of filing of the complaint till the date of payment subject to the condition that the damaged JCB machine is delivered by the complainant to the petitioner.

4.       It is seen that two grounds have been taken by the insurance co. in its defence before the two fora below. The first ground was that the vehicle was being driven by one Mr. Kuldeep Kumar and the said Mr. Kuldeep Kumar did not hold a valid driving licence. In the police report furnished before the State Commission, however, it has been categorically stated (and it is now admitted) that the driver was in fact one Mr. Lochan Singh who had expired in the said accident (as had been averred by the complainant) and he was in fact holding a valid driving licence at the time of the accident. The second ground taken was that the condition in the policy was that only one driver and one conductor should be riding the machine but actually three persons were riding the machine and therefore it was a breach of the policy conditions. The State Commission, however, has duly examined this issue and has observed that in the F.I.R. it is stated that three persons were injured in the accident and has reasoned that the eventuality of the other one or two persons excluding the driver being there standing/working nearby and not actually riding the machine cannot be ruled out. A presumption that all the three persons who are stated to be injured in the F.I.R. were actually on board the machine cannot be made. The insurance co. has not been able to conclusively establish that the three persons stated to be injured were in fact actually riding the machine.

No other point of fact was argued before the State Commission, nor is any fresh point being argued today before this Commission on behalf of the insurance co. though learned counsel while assailing the impugned Order has vehemently attempted to justify the repudiation of the claim.

5.       Learned counsel for the complainant draws our attention to the repudiation letter dated 12.05.2012. The same is reproduced for ready reference:

This has reference to the claim documents submitted by you in support of the captioned claim. On a careful perusal of the claim documents and after independent inquiry, it is inferred that the facts were misrepresented, and no clarification regarding the same was given.

We therefore regret our inability to consider your claim.

We hope you will appreciate our stand that payment of any claim has to be in accordance with the terms and conditions of the policy issued. While expressing our inability to pay his claim due to the above mentioned reason we reiterate our commitment to pay all admissible claims fairly and promptly.

Learned counsel submits in rejoinder that only a bald statement “that the facts were misrepresented and no clarification regarding the same was given” has been made, the specific facts which are alleged to have been misrepresented have not been referred to at all.

Learned counsel for the insurance co. submits that this was based on earlier correspondence. She however fairly agrees that the specific facts which had been misrepresented have not been communicated in the repudiation letter.

6.       We may observe that we fail to understand that if these were the two grounds for repudiation, one, that the driver was one Mr. Kuldeep Kumar and he did not have valid driving licence and, two, that three persons were riding the machine in violation of the terms and conditions of the policy, then what prevented the insurance co. from communicating these specific grounds in its repudiation letter rather than sending a bald communication letter which in fact communicated nothing.

7.       It is quite evident that the letter of repudiation was kept open-ended, it designedly left blanket scope for adding anything and everything in subsequent examination or litigation in the matter. Not communicating the grounds of repudiation at all in the repudiation letter and then coming up with some (unsustained) grounds in litigation is both a deficient and unfair & deceptive act.

It has been conclusively shown that the insurance co. failed to honour the claim when the policy was valid and the claim was genuine (the accident had in fact taken place, an F.I.R. had been lodged, the police investigated the matter and furnished its report, the driver had expired in the accident, the police report confirmed that the driver was holding a valid driving licence and it has not at all been established that actually three persons were riding the machine in violation of the policy conditions).

These demonstrably deficient and unfair & deceptive acts of the insurance co. as evinced in this case contain ingredients of both ‘deficiency’ as well as ‘unfair trade practice’ under the Act 1986. Both terms (‘deficiency’ and ‘unfair trade practice’) are plainly defined in the Act itself (section 2(1)(g) and section 2(1)(r)). In respect of ‘unfair trade practice’ we may elaborate that the list provided under section 2(1)(r) of the Act 1986 is illustrative and not comprehensive or exhaustive. As such, an unfair method or unfair or deceptive practice, as may be judiciously determined on facts and reason after fair and objective appraisal of the evidence and material on record, would qualify as ‘unfair trade practice’ within the meaning of section 2(1)(r) .

8.       We also note that the machine in question had been financed by a State-owned bank (i.e. the state agriculture & rural development bank) and as such the complainant has been put to added prejudice because the interest on the loan taken would have added up in this period.

9.       We certainly note no jurisdictional error or material irregularity in the State Commission’s impugned Order, nor do we note any occasioning of miscarriage of justice.

10.     Sequel to the above examination we deem it appropriate and necessary to dispose of the revision petition with the following directions:

(i)      The award made by the State Commission vide its impugned Order of 10.09.2014 is sustained.

(ii)      The chief executive (i.e. the chairman or managing director or director in-charge of the affairs of the company or director in-charge of the subject-matter, whichever member of the board of directors he may be) of the insurance co. is ordered under section 39(1)(g) of the Act 2019 (corresponding section 14(1)(f) of the Act 1986) to forthwith discontinue such ‘unfair trade practice’ as is evinced in this case and to pass instructions down the line to all its offices and branches to communicate the specific grounds of repudiation in case a claim is repudiated (i.e. to send a speaking repudiation).

The chief executive shall file his report-in-compliance with the District Commission within three months from today.

(iii)     For the ‘unfair trade practice’ per se, a cost of Rs. 50,000/- is imposed on the insurance co. through its chief executive which shall be deposited in the ‘Consumer Legal Aid Account’ of the District Commission within a period of six weeks from today.

(iv)     For the protracted litigation of about 7 years in the revisional proceedings before this Commission, a cost of Rs. 50,000/- shall be paid by the insurance co. to the complainant by way of ‘payee’s a/c only’ bank demand draft within a period of six weeks from today.

(v)     The amount if any deposited by the insurance co. with the District Commission in compliance of this Commission’s Order dated 01.12.2014 along with interest if any accrued thereon shall be forthwith released by the District Commission to the respondent complainant by way of ‘payee’s account only’ demand draft as per the due procedure and after the due verification. The balance decretal amount as well as the cost(s) imposed vide this instant Order shall be made good by the insurance co. within six weeks from today, failing which the District Commission shall undertake execution,  for ‘enforcement’ and for ‘penalty’, as per the law.        

11.     The Registry is requested to send a copy each of this Order to the parties in the petition and to their learned counsel as well as to the chief executive of the petitioner bank and to the District Commission immediately. The stenographer is also requested to upload this Order on the website of this Commission immediately.