It is common knowledge that the Insurance Companies in matter of Theft, Fire, Accident, Health Insurance Claims etc. shirk from their pecuniary liabilities on frivolous, hyper technical grounds but the Courts have univocally held that the claims cannot be rejected on technical grounds specially where there is delay in intimating Insurance Company or lodging delayed claims with them.
It would be trite to refer to the case of Om Prakash vs Reliance General Insuarance in Civil Appeal No. 15611 of 2017 decided by the Apex Court on 4 October, 2017, wherein it was categorically held that delay in intimating Insurance Company would not disentitle the sanction of insurance claim.
The brief facts of the case are that the said
appellant got his truck insured with Reliance General Insuarance Company Ltd. The said vehicle was stolen on 23.03.2010 and an FIR was lodged on 24.03.2010 in the concerned Police Station. Thereafter, the appellant visited the office of the Insurance Company but the office was found to be closed. Then the appellant went to the place of theft and met the driver and the concerned police official and thereafter the appellant along with the truck driver, went with the police officials to search the vehicle. However, the appellant lodged the insurance claim with the Insurance company after 8 days of the theft of the vehicle and also provided the necessary documents which were demanded by the respondent-company. An Investigator was appointed by the Insurance company who verified & confirmed the factum of theft. An amount of Rs.7,85,000/- was approved for the said claim of the appellant by the Corporate Claims Manager buy inspite of repeated requests, the claim was neither sanctioned nor disbursed. Finally, the appellant served a legal notice in August 2011to the Insurance company but it repudiated the insurance claim of the appellant citing breach of Condition No. 1, i.e. immediate information about the loss/theft of the vehicle.
The appellant filed complaint before the, District Consumer Disputes Redressal Forum which was dismissed holding that there is no deficiency of service on the part of respondents. The appeal against the said order was dismissed by the State Commission and Revision Petition against the order of the State Commission was also dismissed by the National Commission. The appellant filed appeal in the Apex Court questioning the legality and correctness of the said order.
On behalf of the appellant, it was argued that there were cogent reasons for the delay in lodging the complaint by just 8 days while it was argued on behalf of the Insurance Company that the insured ought to have given the intimation to the respondent-company immediately upon the occurrence of theft and therefore the claim has been rightly repudiated.
The Court took note of the fact that the Condition No.1 of the Insurance Policy states 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 has to give all such information and assistance as the company may require but did not agree to the contentions of the Insurance Company and held thus:
“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.”
Thus the Court allowed the appeal and directed the Insurance Company to pay a sum of Rs. 8,35,000/- to the appellant with interest @ 8% per annum from the date of filing of the the claim petition till the date of payment within a period of 8 weeks.
It is relevant in the case of Gurshinder Singh vs. Shriram General Insurance Co. Ltd. being Civil Appeal No. 653 of 2020 decided by the Apex Court on 24.01.2020, a reference was made by the SC bench for a larger bench to decide whether the view taken in Om Prakash vs Reliance General Insuarance (supra) or a contrary earlier view taken by the Apex Court in Oriental Insurance Co. Ltd. vs. Parvesh Chander Chadha (C.A.No. 6739 of 2010 decided on 17.8.2010) was a correct view.
The Court after in depth analysis held that delay in intimating Insurance Company or lodging Claim would not disentitle sanction of claim. The Court approved the dictum of Omprakash(supra) and held as under:
“13. In our view, applying the aforesaid principles, Condition No. 1 of the Standard Form for Commercial Vehicles Package Policy will have to be divided into two parts. The perusal of the first part of Condition No. 1 would reveal, that it provides that ‘a notice shall be given in writing to the company immediately upon the occurrence of any accidental loss or damage’. It further provides, that in the event of any claim and thereafter, the insured shall give all such information and assistance as the company shall require. It provides, that every letter claim writ summons and/or process or copy thereof shall be forwarded to the insurance company immediately on receipt by the insured. It further provides, that a notice shall also be given in writing to the company immediately by the insured if he 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.
14. A perusal of the wordings used in this part would reveal, that all the things which are required to be done under this part are related to an occurrence of an accident. On occurrence of an accidental loss, the insured is required to immediately give a notice in writing to the company. This appears to be so that the company can assign a surveyor so as to assess the damages suffered by the insured/vehicle. It further provides, that any letter claim writ summons and/or process or copy thereof shall be forwarded to the company immediately on receipt by the insured. As such, the intention would be clear. The question of receipt of letter claim writ summons and/or process or copy thereof by the insured, would only arise in the event of the criminal proceedings being initiated with regard to the occurrence of the accident. It further provides, that the insured shall also give a notice in writing to the company immediately if the insured shall have the knowledge of any impending prosecution inquest or fatal inquiry in respect of any occurrence which may give rise to a claim under this policy. It will again make the intention clear that the immediate action is contemplated in respect of an accident occurring to the vehicle.
15. We find, that the second part of Condition No. 1 deals with the ‘theft or criminal act other than the accident’. It provides, that in case of theft or criminal act 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. The object behind giving immediate notice to the police appears to be that if the police is immediately informed about the theft or any criminal act, the police machinery can be set in motion and steps for recovery of the vehicle could be expedited. In a case of theft, the insurance company or a surveyor would have a limited role. It is the police, who acting on the FIR of the insured, will be required to take immediate steps for tracing and recovering the vehicle. Per contra, the surveyor of the insurance company, at the most, could ascertain the factum regarding the theft of the vehicle.
16. It is further to be noted that, in the event, after the registration of an FIR, the police successfully recovering the vehicle and returning the same to the insured, there would be no occasion to lodge a claim for compensation on account of the policy. It is only when the police are not in a position to trace and recover the vehicle and the final report is lodged by the police after the vehicle is not traced, the insured would be in a position to lodge his claim for compensation. As observed by the bench of two learned Judges in the case of Om Prakash (supra), after the vehicle is stolen, a person, who lost his vehicle, would immediately lodge an FIR and the immediate conduct that would be expected of such a person would be to assist the police in search of the vehicle. The registration of the FIR regarding the theft of the vehicle and the final report of the police after the vehicle is not traced would substantiate the claim of the claimant that the vehicle is stolen. Not only that, but the surveyors appointed by the insurance company are also required to enquire whether the claim of the claimant regarding the theft is genuine or not. If the surveyor appointed by the insurance company, upon inquiry, finds that the claim of theft is genuine then coupled with the immediate registration of the FIR, in our view, would be conclusive proof of the vehicle being stolen.
17. That the term ‘cooperate’ as used under the contract needs to be assessed in facts and circumstances. While assessing the ‘duty to cooperate’ for the insured, inter alia the Court should have regards to those breaches by the insured which are prejudicial to the insurance company. Usually, mere delay in informing the theft to the insurer, when the same was already informed to the law enforcement authorities, cannot amount to a breach of ‘duty to cooperate’ of the insured.
18. We concur with the view taken in the case of Om Prakash (supra), that in such a situation if the claimant is denied the claim merely on the ground that there is some delay in intimating the insurance company about the occurrence of the theft, it would be taking a hyper technical view. We find, that this Court in Om Prakash (supra) has rightly held 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.
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.
20. We, therefore, hold that when an insured has lodged the FIR immediately after the theft of a vehicle occurred and when the police after investigation have lodged a final report after the vehicle was not traced and when the surveyors/investigators appointed by the insurance company have found the claim of the theft to be genuine, then mere delay in intimating the insurance company about the occurrence of the theft cannot be a ground to deny the claim of the insured.”
Thus with the authoritative pronouncement of larger bench in Gurshinder Singh (supra) it is no longer res integra that delay in intimating the Insurance companies will not be a technical ground to repudiate the genuine claim of the insured.