Insurance Company Cannot Refuse To Grant Claim Merely Due To Delay In Informing The Company About The Occurrence Of The Theft If The FIR Was Lodged Immediately Held Supreme Court: Jaina Construction Company Vs Oriental Insurance Company Limited

DATE OF JUDGMENT:
11th February 2022

JUDGES:
Justice Sanjiv Khanna
Justice Bela M. Trivedi

PARTIES:
Appellant/Petitioner: Jaina Construction Company
Respondent: The Oriental Insurance Company Limited &Anr.

SUBJECT

In the present case, an appeal was filed in the Supreme Court of India against the order of the National Consumer Dispute Redressal Commission which refused to direct the respondent insurance company to settle the claim of the appellant due to the delay in informing the respondent insurance company about the theft of the vehicle.

JUDGMENT

1. The facts of the matter are such that the commercial vehicle belonging to the appellant was stolen on 04.11.2007. The said vehicle was insured under the plans of the respondent company. An FIR regarding the theft of the vehicle was lodged by the appellant the very next day i.e. 05.11.2007. The Police caught the accused but couldn't trace the vehicle and the same was declared in the report dated 23.08.2008.
2. Thereafter, the complainant lodged the claim with the respondents with regard to the theft of the insured vehicle. The appellant filed a complaint in the District Forum, Gurgaon, Haryana when the appellant failed to settle the claim in a reasonable time.
3. During the pendency of the complaint, the respondent company repudiated the said claim stating that condition no. 1 of the policy which mandated immediate notice to the insurer of the accidental loss/damage, and that the complainant was breached as the company was only intimated about the loss on 11.04.2008 i.e. after the lapse of more than five months and, therefore, the Insurance Company had disowned their liability on the claim of the complainant.
4. However, the district forum settled the matter in favor of the appellant and the same was reaffirmed by the State Consumer Disputes Redressal Commission (Haryana), Panchkula. Aggrieved by the order of the State Commission, the respondent company filed an appeal in National Consumer Dispute Redressal Commission, New Delhi. NCDRC by its order overturned the order of the State Commission, therefore, the appellant preferred this appeal in the Supreme Court.

ISSUES

whether the Insurance Company could repudiate the claim in toto, made by the owner of the vehicle, which was duly insured with the insurance company, in case of loss of the vehicle due to theft, merely on the ground that there was a delay in informing the company regarding the theft of vehicle?

JUDGMENT

1. Examining the matter, the Apex Court referred to the judgment in the case of Gurshinder Singh vs. Shriram General Insurance Company Ltd. & Another reported in 2020 (11) SCC 612 where the Supreme Court dealt with the matter having similar contractual conditions as the matter in the hand. The Supreme Court in the Gurshinder case held that:

a) Such contracts of insurance are to be interpreted according to the context involved in the contract. The joint intention of the parties must be taken into consideration for interpretation of the contract.

b) The rule of contra proferentem must be applied when ambiguity exists and an interpretation of the contract must be preferred which favors the party with lesser bargaining power.

c) When an insured has lodged an 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.

2. In the present case, the Supreme Court concluded that the ratio of Gurshinder case applies in the present case as the respondent Company has not repudiated the claim on the ground that it was not genuine but on the ground of delay.

3. The Court, therefore, set aside the order of NCDRC and allowed the appeal.

CONCLUSION

Insurance claims make a huge chunk of pending cases across the Courts in India. Big Insurance companies with financial and legal resources seek to avoid such claims by dragging the proceedings over a long course of time so that the Common man would give up on the claim. Hence, it becomes imperative for the Court to do swift justice so that relief against harassment and financial drain can be assured for common people.

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