BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION

VAZHUTHACAUD, THIRUVANANTHAPURAM.

PRESENT

C.C. No. 170/2017 Filed on 25/04/2017

ORDER DATED:  21/10/2022

ORDER

SRI. VIJU V.R : MEMBER

The complainant has presented this complaint before this Commission under Section 12 of the Consumer Protection Act 1986.  The complainant is the owner and in possession of an ENFIELD MOTOR CYCLE bearing Reg.No.KL 21F 5021.  The complainant purchased this Motor Cycle under the Hypothecation of Mahindra and Mahindra Financial Services Limited.  The motor Cycle was insured with the opposite party for an amount of Rs.1,09,509/- and the opposite party issued comprehensive insurance policy for a period of 14/08/2012 to 13/08/2013.  The motor Cycle was stolen from his residence in between 10.30 PM on 10/08/2013 and 5 AM on 11/08/2013.  The theft was registered before the Kattakkada Police by the complainant on 12/08/2013 and FIR No.790/2013 was registered on 16/08/2013.  The police have taken the Statement of the complainant and conducted details enquiry and finally the Police filed U.N.Report before the Judicial First Class Magistrate Court, Kattakkada.  The complainant reported the theft before the opposite party and filed an application for getting compensation of claim amount along with documents.  After the loss/theft of the Motor Cycle the complainant failed to remit EMI before the Financier and the Finance company filed Arbitration case against the complainant and surety and an award was passed on 27/01/2015 for realising an amount of Rs.98,077/- with interest of 3% per annum from the date of award till realisation and 10,000/- as cost of arbitral proceedings.  On 30/07/2015 the opposite party issued a letter to the complainant requesting to submit certain clarification.  Accordingly the complainant submitted detailed clarification letter on 26/08/2015 requesting to settle the motor claim without further delay.  The opposite party was failed to take necessary steps to settle the claim.  The complainant was forced to issue a Registered with A/D legal notice to the opposite party through a lawyer on 13/03/2017 requesting to pay an insurance claim of Rs.1,09,509/- along with Rs.50,000/- as compensation and cost.  The opposite party received the said notice on 17/03/2017 and A/D Card was returned duly signed and sealed by the opposite party.  After receiving the Advocate notice on 17/03/2017 the opposite party has failed to give a reply to the complainant and not turned up to settle the matter by giving the insurance claim to the complainant, hence this complaint.   

The opposite party entered appearance and filed version.  The opposite party has averred that the petition filed by the complainant is not maintainable either in law or on facts.  It is also submitted that the complaint is hopelessly time barred as the same is not filed within 2 years from the date of loss of the vehicle.  The opposite party acknowledges the existence of insurance coverage as per policy No.570203/31/12/6260006586 which is valid form 14/08/2012 to 13/08/2013 for an IDV of Rs.1,09,509/-.  As per condition No.1 of the terms and conditions of the policy it is mandatory that, ‘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...... in the case of theft or criminal acts which may be the subject of a claim under the policy, the insured shall give immediate notice to the police and cooperate with the company in securing the conviction of the offender”.  Further as per condition No.4 of the terms and conditions of the policy, the insured shall take all reasonable steps to safeguard the vehicle from loss or damage and to maintain it in efficient condition.  With regard to the alleged theft, the Kattakada Police, on 16/08/2013 had registered a crime vide crime no.790/13 u/s.379 IPC and the occurrence date in the FIR is seen mentioned as 10/08/2013 between 10.30 PM to 5 AM on the next day.  In the event of theft, the first reaction will be to intimate the loss to the police at the earliest.  Even though the place of occurrence is very near to the police station the matter is seen informed to police only after a delay of 6 days i.e., only on 16/08/2013.  Further there is an inordinate delay in informing the insurance company regarding the alleged theft.  He had informed the company only on 30/09/2013 and submitted the duly filled claim form.  There is an inordinate delay in informing the matter to the insurance company and the police and hence the said act of the insured has prejudiced the recovery rights.  Hence, as per condition no.1 of the terms and conditions of the policy it is a gross violation on the part of the insured and hence the same is not payable under the policy.  The complaint itself is lacking bonafide and hence no relief can be granted.               

Issues to be ascertained:

(i). whether the complaint is maintainable or not ?

(ii). Whether there is deficiency in service from the side of opposite party?    

(iii). Whether the complainant is entitled to get the reliefs?

Issue (i): The opposite party raised the contention that the complaint was filed after 2 years from the date theft.  It can be seen from Ext.P6 that the opposite party has issued a letter dated 30/7/2015 to the complainant for a detailed explanations regarding the theft. But after that opposite party has not given any intimation to the complainant whether the claim was allowed or repudiated.  The opposite party has not even cared to reply to the Advocate notice send by the complainant, hence  cause of action continues, so it cannot be said to be barred by limitation.

Issues (ii) & (iii):- Both these issues are considered together for the sake of convenience.   The complainant has filed affidavit in-lieu of chief examination and has produced 10 documents which were marked as Exts.P1 to P10. The complainant was examined as PW1 & was cross-examined by opposite party. During cross-examination Exts.D1 to D3 were marked through the complainant.  Opposite party filed affidavit in-lieu of chief examination. The complainant & opposite party filed Argument Notes.  The policy issued to the complainant was admitted by the opposite party.  The opposite party has vehemently contended that 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 10/8/2013 between 10.30pm & 5.00am on the next day. But the FIR was lodged only on 16.08.2013, which amounts to negligence on the part of the insured.  It is admitted that the vehicle, in question, was insured with the opposite party for a total Insured Declared Value (IDV) of Rs 1,09,509; which was valid from 14/8/2012 to 13/08/2013. The opposite party has stated Condition No.1 of the terms & conditions of the Insurance Policy which says:-

"1. Notice shall be given in writing to the Company immediately upon the occurrence of any accidental or 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 or loss or damage" to the vehicle, the notice was required to be given in writing to the opposite party. 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 party regarding the theft of the vehicle, in question. It also needs to be emphasized that Insurance Regulatory and Development Authority (in short, "IRDA") issued a 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 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 insurer's 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 Hon'ble Supreme Court in case Om Prakash v. Reliance General Insurance and Anr. 2018(1) CPR 907 (SC), wherein a truck was stolen and there was delay in giving 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 Hon'ble 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. Hon'ble Supreme Court 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 Hon'ble Supreme Court in Om Parkash's 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 Hon'ble Supreme Court, vide order dated 9.1.2018 referred the matter to a three Judges Bench. The said three Judges Bench of the Hon'ble 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 No.19 in its judgment dated 24/01/2020 as under.

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”.

                      The leaned counsel for the Op has cited some judgments regarding the contractual obligations between insurer & insured, but in view of the law settled by the Hon'ble Supreme Court in the case stated supra the delay in lodging the FIR and in informing the opposite party about the theft of the vehicle cannot be a ground to deny the claim of the insured.

        Hence we find that the claim was wrongly and illegally repudiated by the opposite party and there is deficiency in service from the side of opposite party.   The opposite party is liable to compensate the complainant.

In the result, the complaint is allowed. The as compensation for the mental agony suffered by the complainants and Rs 2,500/-(Rupees Two Thousand Five Hundred Only) towards the cost of the proceedings within one month from the date of receipt of this order failing which the entire amount except cost carries interest @ 9% per annum from the date of filing this petition i.e.25/04/2017.

A copy of this order as per the statutory requirements be forwarded to the parties free of charge and thereafter the file be consigned to the record room.

Dictated to the Confidential Assistant, transcribed by her, corrected by me and pronounced in the Open Commission, this the 21^th  day of October,  2022.

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P.V.JAYARAJAN                 : PRESIDENT 

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PREETHA G. NAIR             : MEMBER   

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                                                                 VIJU V.R                           : MEMBER

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C.C. No. 170/2017

APPENDIX

  I         COMPLAINANT’S WITNESS:

II          COMPLAINANT’S DOCUMENTS:

III         OPPOSITE PARTY’S WITNESS:

IV        OPPOSITE PARTY’S DOCUMENTS:

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PRESIDENT

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