IN THE CONSUMER DISPUTES REDRESSAL COMMISSION, KOTTAYAM
Dated this the 30th day of July, 2021
Present: Sri. Manulal V.S. President
Smt. Bindhu R, Member
Sri. K.M. Anto, Member
C C No. 51/2018 (filed on 20/03/2018)
Petitioners : S.D. Suresh Babu,
S/o. Damodharan,
Sreebhavan,
Brahmamangalam P.O.
Vaikom, Kottayam.
(Adv. Naveen Chandran and Adv. Mini Mohan)
Vs.
Opposite Party : The National Insurance Co. Ltd.
Tripunithura,
Ernakulam,
Rep. by its Divisional Manager,
CSI Square, Baker Junction,
Kottayam – 686001.
(Adv. C.J. Jomi)
O R D E R
Smt. Bindhu R, Member
The complainant was the registered owner of Maruti swift car bearing registration no KL-36-C-2000 of Sub RTO Vaikom. The said vehicle was validly insured with the New India Assurance at the time of purchase but dissatisfied with their service, later the complainant switched the policy to the opposite party through their recognised agent. While so in the policy period itself, the vehicle met with an accident in which the vehicle was extensively damaged on 15.03.17. The policy period was from 15.06.2016 to 14.06.2017 with an IDV of Rs.3, 00,000/-. The opposite party was immediately intimated and their licensed surveyor cum assessor inspected the vehicle and total damage of the vehicle was declared. Accordingly the matter was settled between the parties and consent letter was duly executed by the complainant on 15.06.2017 after making due attestation by the recognised agent of the opposite party as witness. Thereafter the said vehicle was sold to a third party through the said approved surveyor of the opposite party for a scrap value of Rs.1,10,000/- . The opposite party is liable to compensate the complainant to the tune of Rs.189000/- out of the IDV of 3, 00,000/- deducting the scrap value of the vehicle amounting to Rs.1,10,000/- and Rs.1,000/- as policy excess from the IDV of the vehicle. Evenafter several requests and demands, the opposite party did not pay the said amount and finally they answered that the amount could not be disbursed as there were certain claims made by this complainant previously from the earlier insurance company and the same was not disclosed at the time of proposal. The complainant being a layman, is not conversant with the intrinsic procedures and technicalities of the opposite party and nothing has been suppressed materially. The opposite party is legally bound to verify the proposal made by a customer at the time of taking coverage. The opposite party has accepted the proposal of the complainant only after thorough scrutiny. Hence they are legally estopped from denying the claim on the aforesaid ground. Besides, this is not a material suppression as the alleged omission to mention about the previous claims that too in another company will not in any way affect or prejudice the opposite party. So the opposite party cannot abnegate the complainant’s legal right which is accrued in his favour from a valid contract. The above mentioned act of the opposite party amounts to deficiency of service and they are bound to compensate for the same.
Upon notice the opposite party appeared and filed version.
The contentions of the opposite parties are that the issuance of policy is admitted. The opposite party issued the policy in question in favour of the complainant on the basis of the proposal form submitted by the complainant. In order to get the policy for a particular vehicle, proposal form shall be given either by the proposer or the agent. In this case the complainant has submitted the proposal by himself declaring that there was no previous claim with respect to the vehicle for previous years as Nil in column no 19 of the declaration. Believing this in good faith the opposite party has allowed a discount of 35% in premium. If a policy is taken suppressing the material facts, the policy can be considered as a policy void ab-initio. The complainant has switched over the policy from the previous company only to suppress the previous claims and to grab no claim policy benefits. There was a specific condition in the proposal form based on the India Motor Tariff with the following “I/we 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 will
stand forfeited.”
It is admitted that the opposite party has appointed a surveyor to assess the damages. Before sanctioning the claim the opposite party made an enquiry regarding the previous claims, then it was found that the complainant has already lodged two claims in the previous year with New India Insurance Company. The complainant has purposefully taken the policy from another insurance company to get discount in premium by filing a false declaration. The act of the complainant is a clear case of fraud and cheating. If the previous claims were reported to the opposite party at the time of submitting proposal, the opposite party would not have issued the policy with 35% discount on premium. Since the policy is obtained by suppression of material facts, the policy is void ab initio with respect to own damage portion as per India Motor tariff. The opposite party has acted only in accordance with the directions of the IRDA and there is no deficiency of service. The policy was issued fully trusting the declaration of the insured in the proposal form and it is not possible to trace the previous history of each and every prior policy of the vehicle, especially when the prior policy was from another company. The complainant is not entitled for any compensation and the complaint is liable to be dismissed.
The complainant adduced evidence through proof affidavit and documents marked as Exibit A1 to A3. Complainant was examined as PW1.The opposite party adduced evidence through affidavit and deposition of one Mahesh K Rajan, the administrative officer of the opposite party and marked Exhibits B1 to B4 in which B4 is marked as subject to proof.
On a detailed examination of evidence and pleadings, we consider the following points to be considered:
- Whether the complainant has substantiated the deficiency of service
from the part of the opposite party?
2. If so what are the reliefs?
For the sake of convenience, we would consider point no 1 and 2 together.
The complainant’s case is that after issuing a policy in his name the opposite party is bound to award his claim for compensation arising out of an accident and the opposite party was entitled to check whether he had a previous claim with the previous insurance company or not, if not done they could not repudiate the claim on the basis of non-disclosure of facts. Whereas the opposite parties strong contention is that the contract of insurance is a contract of utmost faith, they could award the claim only on the basis of the disclosure of the insured. The opposite party has produced Exhibit B2 document which is the insurance proposal form submitted by the complainant in which it is stated that the complainant was eligible for no claim bonus and a deduction of 35% is shown in the premium amount. The claim history also is shown as NIL.
Again in Exbt B1, which is a letter sent by the complainant to the opposite party admitting that there were some claims on the insured vehicle, but he forgot to state them at the time of proposal as the vehicle had been used by his son.
Whether the statements in the proposal form need to be correct and bonafide? As per the insurance Act, the contract of insurance between the insured and the insurer is a contract of utmost faith, which is considered to be filled up by the proposer bonafidely and the policy is issued on the basis of this declaration. Here the complainant has even deposed that “BZy-Im-e-§-fn New India Insurance Company bn Bbn-cp¶p hn-bpsS insurance. B Ime-b-f-hn Cu hml-\-¯n\v H¶n-e-[nIw accident IÄ Dm-Ip-Ibpw AXnsâ insurance claim hm§p-Ibpw sNbvXn-«p-v.” The complainant again admits that he had many vehicles and as the impugned vehicle was in the use of his son, he did not notice whether there was a previous claim or not and because of that he had not stated about this in the proposal form. So documents and deposition shows that the complainant had wilfully suppressed the fact of previous claim at the time of giving the proposal form to the second insurance company which is the opposite party herein.
The counsel for the opposite party produced decisions of apex courts in support of his arguments.
In Oriental Insurance Company Limited Vs. Mahendra Construction2019 KHC 6436,Hon’ble Supreme court held that “ConsumerprotectionAct,1986 – S-19 – Insurance Act, 1938, S.45 – Insurance Regulatory and Development Authority Act, 1999 S.26 – Insurance Regulatory and Development Authority (Protection of Policy Holders Interest) Regulations, 2002, Regn.2(1)(d) – Material Fact – Information regarding insurance claims lodged by claimant in proceeding 3 years was a material fact – The disclosures which were required in paragraph 25 (g) of the proposal form were material to assess the risk profile of the vehicle at the time of accepting the proposal for insurance – The mere disclosure of a previous insurance policy did not discharge the obligation which was cast on the respondent, as the proposer to make a full, true and complete disclosure of the claims which were lodged under the previous policy in the preceding three years – Non disclosure of settlement of previous claim by other insurance policy by proposer – Leads to suppression of material fact and goes to the very root of contract of insurance which would vitiate grounds on which claim repudiated by insurer”
In the Insurance Regulations, GR27.(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 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 wording:
“I / We 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 I 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.”
So in the light of above evidence and decision, we arrive at the conclusion that as the contract of insurance is a contract of utmost faith and there must be complete good faith on the part of the insured. The assured is under a solemn obligation to make full disclosure of material facts which may be relevant for the insurer to take into account while deciding whether the proposal should be accepted or not. The insured cannot escape from the civic responsibility to make a full and true disclosure of information in the proposal form.
Here in the case on hand, we see that the complainant has not disclosed the previous claims even though he was in knowledge of the same and hence the complaint is dismissed.
Pronounced in the Open Commission on this the 30th day of July, 2021.
Smt. Bindhu R, Member Sd/-
Sri. Manulal V.S. President Sd/-
Sri. K.M. Anto, Member Sd/-
Appendix
Witness from the side of complainant
Pw1 : S.D. Suresh Babu
Witness from the side of opposite party
Dw1 : Mahesh K. Rajan
Exhibits marked from the side of complainant
A1 – Copy of RC book (KL-36-C-2000)
A2 – Photocopy of insurance policy No.570800/31/16/6100006971 of National
Insurance Company Ltd.
A3 – Copy of letter dtd.14-06-16 issued by opposite party
Exhibits marked from the side of opposite party
B1- Letter dtd.14-07-2017 from complainant to opposite party
B2 – Copy of proposal form issued by opposite party
B3 – Copy of policy with terms and conditions
B4- Copy of policy certificate issued by opposite party
By Order
Senior Superintendent
