Delhi

North East

CC/253/2017

Bobby - Complainant(s)

Versus

The New India Assurance Co. - Opp.Party(s)

24 Jan 2020

ORDER

 DISTRICT CONSUMER DISPUTES REDRESSAL FORUM: NORTH-EAST

GOVT. OF NCT OF DELHI

D.C. OFFICE COMPLEX, BUNKAR VIHAR, NAND NAGRI, DELHI-93

 

Complaint Case No. 253/17

 

In the matter of:

	Bobby S/o Sh. Chhotey Khan R/o E-175-1, Rajeev Nagar Khajoori Khas, Delhi-110094.	Complainant
	Versus
1.       2.	New India Assurance Co. Ltd 10th Floor, Scope Minar, Laxmi Nagar, Delhi-110092.   The Branch Manager The New India Assurance Co. Ltd Divisional Office-II 105- Shanti Nagar, Civil Lines Moradabad-244102.	Opposite Parties

 

DATE OF INSTITUTION:       JUDGMENT RESERVED ON:               DATE OF DECISION      :

28.07.2017 24.01.2020 24.01.2020.

 

N.K. Sharma, President

Ms. Sonica Mehrotra, Member

 

Order passed by Ms. Sonica Mehrotra, Member

 

ORDER

1. Succinctly put, the grievance of the complainant in the present complaint are that the complainant had got his vehicle Force Moto/Cruiser bearing registration No. UP-14-DT-2919 insured with OP vide Commercial Vehicle Package Policy No. 34050031160100007277 w.e.f. 06.10.2016 to 05.10.2016 for a total IDV of Rs. 4,00,000/- on payment of premium of Rs. 24,008/- to OP. However the subject vehicle suddenly got fired in the night of 17.01.2017 near Welcome, Delhi and despite best efforts by fire brigade and complainant to put out / extinguish the fire to save the vehicle, it could not be saved and got completely burned in the process. The complainant immediately intimated the OP about the mishap and lodged total loss claim with OP and supplied all required documents in this regard but OP gave no proper response and lastly repudiated the claim vide rejection letter dated 26.04.2017 on grounds of complainant having availed of no claim discount from its previous insurer Shri Ram General Insurance Co. Ltd which had certified to this effect though complainant had given contrary information in this regard to OP at the time of availing the insurance policy and also 25% No Claim Discount therewith. Therefore, feeling aggrieved at the wrongful repudiation by OP causing mental agony and harassment to the complainant, complainant alleging deficiency of service and unfair trade practice on the part of OP filed the present complaint before this Forum for issuance of directions against OP to release the IDV of the said vehicle i.e. Rs. 4,00,000/- alongwith 18% interest thereon till realization and compensation of Rs. 5,00,000/- for mental agony physical harassment and litigation charges of Rs. 25,000/-.

Complainant has attached copy of policy schedule cum certificate of insurance with collection receipt/voucher, copy of RC, copy of fitness, copy of tourist permit, copy of DL, copy of fire report dated 20.01.2017 issued by Delhi Fire Service with respect to fire report received for the complainant insured vehicle, copy of photograph of complainant’s burnt vehicle, copy of claim dated 18.01.2017 lodged with OP by the complainant, copy of correspondence dated 23.01.2017 and 30.01.2017 by the complainant to OP for final survey and copy of repudiation letter dated 26.04.2017 by OP to the complainant rejecting his total loss claim.

2. Notice was issued to the OP on 17.10.2017. OP entered appearance and filed written statement in which while admitting the factum of insurance coverage, it took the preliminary objection of non disclosure by the complainant about previous claim taken by him from previous insurer Shri Ram General Insurance Co. Ltd which was revealed vide e-mail dated 18.01.2018 by the said company to the OP confirming that complainant had availed of claim on 16.01.2016 for a sum of Rs. 16,500/- for accident dated 21.11.2015 against claim No. 10000/31/16/C/043135 against policy No. 10003/31/16/319238 and therefore after the said verification, complainant was not eligible for no claim bonus as per IMT GR-27(F) which stipulated that “in the event of the insured, transferring his insurance from one insurer to another insurer, the transferee 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.” Insurance being a contract of utmost good faith and complainant having taken the policy on mis-representation, the claim was repudiated for the above said reason of false representation as OP being a public sector undertaking is a trusty of public funds and duty bound insured only approval of genuine claims. Therefore OP prayed for rejection of the complaint. OP has attached copy of e-mail correspondence dated 18.01.2018 sent by NCB Confirmation team of Shri Ram General Insurance Co. Ltd to OP reporting claim status information of the complainant qua previous policy availed of by him with it.
3. Rejoinder to the written statement of OP and evidence by way of affidavit was filed by the complainant in reassertion of grievance against OP and exhibited documents filed as Exhibit CW1/A-1 to CW1/A-17.
4. Evidence by way of affidavit was filed by OP in reassertion of its defence taken in the written statement and exhibited e-mail from Shri Ram General Insurance and GR IMT.
5. Written arguments were filed by both the parties reaffirming their respective grievance / defence.

On directions of this Forum to OP to place on record by way of affidavit as to what would have been the actual premium amount on disclosure of non claim discount of 25%, OP filed affidavit that instead of the premium amount of Rs. 24,008/-, the complainant would have had to pay Rs. 24,792.75Paise as premium and therefore he had availed of NCB discount of Rs. 784.75Paise from OP.

During the course of oral arguments, OP relied upon judgments of Hon'ble Supreme Court in LIC Vs Smt. G.M. Channabasamma (1991) I SCC 357 and General Assurance Society Ltd Vs Chandumull Jain 1966 AIR 1644 in support of its defence of contract of insurance being contract uberrima fides (good faith) and assured being under solemn obligation to make full disclosure of material facts relevant for the insurer while deciding acceptance / non acceptance of proposal. OP further relied upon judgment of Hon'ble NCDRC in RP No. 1255/2009 titled Tata AIG General Insurance Co. Ltd Vs Gulzari Singh passed by Single Member on 26.02.2010 regarding no claim bonus non adjustment against amount of damage assessed.

6. We have heard the rival contentions of both the parties and have bestowed our anxious consideration to the documentary evidence placed on record / relied upon by both sides.

To succinctly bring the rival contentions into focus, it is ascertainable that the insured had availed of accident claim from its previous insurer Shri Ram General Insurance Co. Ltd in January 2016 with respect to the subject vehicle and had taken advantage of No Claim Bonus in the form of 25% discount in the insurance premium to the tune of Rs. 784.75/- by making a false declaration at the time of taking insurance policy with OP. In this regard, the mandate of GR 27(f) of Indian Motor Tariff (IMT) assume importance / relevance which provision is reproduced as under:

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 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 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 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 inquiry 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.”

7.  From the fact of the case, we observe that the OP did not take steps as per the GR 27(f) of IMT to verify the correctness of declaration regarding “No Claim Bonus” from the previous insurance company. The question which needs answer and issue for adjudication before us is therefore whether OP was right in repudiating the claim on the plea of concealment and misrepresentation of facts irrespective of it having failed to seek verification from previous insurer of the complainant within 21 days of issuance of insurance cover as envisaged in GR 27(f) of IMT.

The above issue is no more Res integra, having been answered by the Larger Bench of Hon'ble NCDRC in orders dated 20.02.2017 passed in the matters of United India Insurance Co. Ltd. Vs M/s Jindal Poly Buttons Ltd. in RP no. 2920 / 2015 and Branch Manager National Insurance Co. Ltd. Vs Naresh Kumar in RP no. 1836 / 2016 in which the Hon'ble National Commission held as under:

1. 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 exercise ordinary diligence of verifying the truthfulness of the claim from the insurer’s own record, Exception to 19 of Indian Contract Act* would come into play and the insure 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.
2. In cases 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 for 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.

*Exception to Section 19 of Indian Contract Act stipulates that if such consent was caused by misrepresentation or by silence, fraudulent within the meaning of Section 17, the contract, nevertheless, is not voidable, if the party whose consent was so caused had the means of discovering the truth with ordinary diligence.

Therefore, on reading of the Exception to Section 19, it is clear that even in the case in which consent was caused by misrepresentation or by silence fraudulently, the contract would not be voidable if the party whose consent was so caused had the means of discovering the truth with ordinary diligence.

8.  It would therefore be seen that where the insured is unable to produce evidence pertaining to his NCB entitlement, he may be permitted to give a declaration to that effect as per the Tariff. Notwithstanding, the insurer allowing the NCB shall be under obligation to write to the previous insurer seeking confirmation of entitlement of insured and rate of NCB and previous insurer shall be bound to respond to the said query within 30 days. Failure on the part of insured granting NCB to write to previous insurer within 21 days shall constitute breach of Tariff.
9.  In the present case, on appreciation of facts before us, both complainant as well as OP are in breach of the Tariff conditions which qua OP disentitles it to take shelter of the plea of misrepresentation of facts on the part of complainant but the fact remain that the complainant, on the basis of false declaration given to the OP paid 25% less premium. Therefore, the equity demand that bonus payable to the complainant in respect of his insurance  claim should be decreased proportionately as per the settled law on non standard basis but would still be payable as OP had opportunity to verify the veracity of statement made by complainant regarding NCB status but the same was not done. The Hon'ble National Commission in National Insurance Co. Ltd. Vs Harpreet Singh III (2016) CPJ 58 (NC), New India Assurance Co. Ltd. Vs Shinder Pal Singh III (2017) CPJ 559 (NC), Oriental Insurance Co. Ltd. Vs Mahendra Construction IV (2018) CPJ 387 (NC) and Bharti Axa General Insurance Co. Ltd. Vs Satya Narayan I (2019) CPJ 414 (NC) has consistently upheld the settled law on NCB as laid down in Jindal Poly Button Vs Naresh Kumar (supra).

In view of the above finding and settled law laid down by Hon'ble National Commission, we are of the considered opinion that repudiation of insurance claim by OP of complainant was unjustified because OP failed to fulfill its obligation under GR 27 of IMT. However, as complainant paid 25% less premium, equity demands that OP should have allowed / approved the claim on pro rata basis that is by reducing entitlement of Rs. 4,00,000/- to Rs. 3,00,000/- (75%) of the IDV. Pursuant to directions issued by this Forum vide order dated 29.11.2019 and 12.12.2019 to the complainant as well as OP’s dealing office at Moradabad, U.P. to furnish the NOC from Shri Ram Finance Co. Ltd with which the subject vehicle was hypothecated, it being the first charge holder consequent thereupon, the concerned D.O. of OP vide letter dated 16.01.2020 furnished a copy of NOC dated 03.03.2017 to the registering authority in favour of the complainant with respect to vehicle No. UP-14-DT-2919 for removal of its name from the RC of the said vehicle with termination of hypothecation.

10.  Accordingly, we dispose of the present complaint with directions to the OP to pay Rs. 3,00,000/- towards less claim on No Claim Bonus Deduction basis alongwith interest @ 6% from the date of filing of the complainant till realization to the complainant. We also direct the OP to pay a sum of Rs. 5,000/- as compensation for mental harassment and agony for wrongful repudiation of claim in entirety and Rs. 3,000/- towards the cost of litigation. Let the order be complied with by OP within 30 days from the date of receipt of copy of this order.
11.   Let a copy of this order be sent to each party free of cost as per regulation 21 of the Consumer Protection Regulations, 2005.
12.   File be consigned to record room.
13.  Announced on 24.01.2020.

 

(N.K. Sharma)     President

(Sonica Mehrotra)  Member