FCS DEEPAK P. SINGH | Apr 16, 2022 |
Some Important Judgements on Various Aspects of Insurance
R. Geethabanu v. Government of Tamil Nadu
Madurai Bench of Hon’ble Madras High Court.
Case No.: CMA (MD) Nos. 1448 of 2016 and 166 of 2017.
Reserved on : 16/02/2022, Pronounced on : 08/04/2022
The Madras High held that the aggrieved person cannot file claim petitions both under the Motor Vehicles Act ,1988 as well as the Workmen Compensation Act,1923 in respect of the very same accident. The court also held that previous decisions of various High Courts in this regard is no longer good law.
a). Whether the learned Deputy Commissioner is right in fixing the salary of the deceased?
b). Whether the learned Deputy Commissioner is right in neighboring the award the interest to the award after one month from the date of the accident?”
“Section 4(1)(a) of The Workmen’s Compensation Act, 1923:
“(1) Subject to the provisions of this Act, the amount of compensation shall be as follows, namely: —
(a) where death results an amount equal to forty percent from the injury of the monthly wages of the deceased workman multiplied by the relevant factor; or the amount of Rs. 20,000/- whichever is more.
Explanation. — Any payment or allowance which the workman has received from the employer towards his medical treatment shall not be deemed to be a payment or allowance received by him by way of compensation within the meaning of Clause(a) of the proviso.
”23. From an analysis of the above said judgments and the reasoning assigned by this court, the principles governing the election provided under Section 167 of the Motor Vehicles Act, 1988 and the corresponding bar can be deduced as follows:
1) In case the accident arises out of the use of the motor vehicle and it results in death or injury, the legal heirs of the deceased or the injured shall be entitled to claim compensation under the provisions of the Motor Vehicles Act, 1988 against the owner, driver and insurer of the offending vehicle on the basis of the tortuous liability which has been made statutory;
2) In case the owner of the offending vehicle happens to be the employer of the deceased or injured, as the case may be, then the legal heirs of the deceased or the injured may make a claim either under the Motor Vehicles Act, 1988 or under the Employees Compensation Act, 1923;
3) If the claim is made under the Employees’ Compensation Act, 1923 and it is allowed by the Commissioner, then the claimants cannot make a claim under the Motor Vehicles Act, 1988;
4) If the claim made under the Employees’ Compensation Act is dismissed holding that the deceased or the injured was not a workman under the alleged employer or that the accident did not arise out of and in the course of the employment of the deceased or injured, then the dismissal of the claim under the Employees’ Compensation Act, 1923 will not be a bar for making a claim under the Motor Vehicles Act, 1988;
5) In case the claim is made at the first instance under the Motor Vehicles Act, 1988, there is no possibility of the claim being negatived in toto if the accident had resulted in death or permanent disability attracting the no-fault liability clauses found in the Motor Vehicles Act, 1988. In such cases, the claimants cannot make a claim under the Employees’ Compensation Act, 1923, after getting an award in the Motor Accident Claims Tribunal;
6) In case the claim is made under the Motor Vehicles Act, 1988 against the owner of the offending vehicle, who was not the employer of the deceased or injured, as the case may be, and the driver or insurer of the said vehicle, after an award is passed by the Motor Accident Claims Tribunal, a claim against the employer of the deceased or the injured, as the case may be, under the Employees’ Compensation Act, 1923, who was not a respondent in the claim will be maintainable, but after ascertaining the amount payable under the Employees’ Compensation Act, 1923, the Commissioner shall direct the employer and its insurer to pay only the difference between the amount calculated under the Employees Compensation Act and the amount awarded by the Motor Accident Claims Tribunal under the Motor Vehicles Act, 1988, only if the compensation payable under the Employees’ Compensation Act exceeds the amount awarded under the Motor Vehicle Act;
7) In case claim is made under the Employees’ Compensation Act against the employer and an award is passed and a claim for compensation is made under the Motor Vehicles Act against the owner of the offending vehicle not being the employer of the deceased or injured and against the driver and insurer of the offending vehicle on the basis of tort, then while determining the compensation under the Motor Vehicles Act, the amount obtained as compensation under the Employees’ Compensation Act, 1923 shall be taken into account and that should be deducted. After deducting the same, the balance amount alone shall be awarded as compensation in the MCOP before the Motor Accident Claims Tribunal.”
In the above said judgment of the Hon’ble Supreme Court, it is observed as under:
“Special Leave to Appeal (Civil) No(s).1271/2010 before the Hon’ble Supreme Court and their Lordships of Hon’ble Supreme Court allowed the special appeal and quashed the judgment passed by the Coordinate Bench of this Court by observing thus:- “Learned counsel for the appellant relies on judgment of this court titled as National Insurance Company Limited versus Mastan and another, reported in 2006(2) SCC 641 in support of the submission that if both the remedies under the Motor Vehicles Act, 1988 and the Workmen’s Compensation Act, 1923, are available, the respondents were required to opt for either one of the remedies. The respondents cannot claim compensation under both the acts.
In the aforesaid judgment, it is held as under: –
“22. Section 167 of the 1988 Act statutorily provides for an option to the claimant stating that where the death of or bodily injury to any person gives rise to a claim for compensation under the MVA 1988 as also the WCA 1923, the person entitled to compensation may without prejudice to the provisions of Chapter X claim such compensation under either of those Acts but not under both. Section 167 contains a non obstante clause providing for such an option notwithstanding anything contained in the 1923 Act.
23. The “doctrine of election” is a branch of “rule of estoppel”, in terms whereof a person may be precluded by his actions or conduct or silence when it is his duty to speak, from asserting a right which he otherwise would have had. The doctrine of election postulates that when two remedies are available for the same relief, the aggrieved party has the option to elect either of them but not both. Although there are certain exceptions to the same rule but the same has no application in the instant case.” In view of the above, the judgment of the High Court cannot be sustained. In view of the above, we allow this appeal and set aside the judgment of the High Court.”
Section 167 of MV Act 1988: – Option regarding claims for compensation in certain cases — Notwithstanding anything contained in the Workmen’s Compensation Act, 1923 (8 of 1923) where the death of, or bodily injury to, any person gives rise to a claim for compensation under this Act and also under the Workmen’s Compensation Act, 1923, the person entitled to compensation may without prejudice to the provisions of Chapter X claim such compensation under either of those Acts but not under both.
The Court held that in view of the judgement of the Hon’ble Supreme Court, the above said Bidami’s case reported in 2010 (1) TNMAC 645 (Raj) [New India Assurance Co., Ltd., vs. Bidami] and the decision reported in 2005 (1) TNMAC (Guj) [Nasimbanu v. Ramjibhai Bahubhai Ahir] and the decision of this Court in C.M.A(MD)No.443 of 2012 in Astalingam’s case is no longer good law.
Accordingly, the point raised by the appellant Insurance Company is answered accordingly and claim petition simultaneously or one after another cannot be maintained.
In the instant case, the claim petition filed under the Motor Vehicles Act was dismissed on the ground that the salary of the deceased was exceeding the statutory limit and liberty was given to move under the Workmen’s Compensation Act and hence on the facts and circumstances of the case, the order passed by the learned I-Additional District Judge giving liberty while dismissing the claim petition filed under the Workmen’s Compensation Act to be maintainable.
CONCLUSION: from above decision of Hon’ble Madras High Court earlier decision of other High Courts are not maintainable in which claimants are allowed to file claim petition under both Motor Vehicles Act, 1988 and Workmen’s Compensation Act, 1923, which is not good in law. The Apex Court held that the “doctrine of election” is a branch of “rule of estoppel”, in terms whereof a person may be precluded by his actions or conduct or silence when it is his duty to speak, from asserting a right which he otherwise would have had. The doctrine of election postulates that when two remedies are available for the same relief, the aggrieved party has the option to elect either of them but not both. Please note that a claimant can apply compensation under WCA,1923 if his /her claim petition has been rejected by the MACT but he/she is not allowed to apply for claim and compensation under both laws at the same time.
JACOB PUNNEN & ANR. Vs. UNITED INDIA INSURANCE CO. LTD.
THE SUPREME COURT OF INDIA
CIVIL APPEAL NO. 6778 OF 2013
THE LEARNED COUNCIL OF THE APPELLANT
The learned council for appellant argued , placing reliance on Biman Krishna Bose v. United India Insurance Co. Ltd. , and United India Insurance Co. Ltd. v. Manubhai Dharmasinhbhai Gajera3 , it was argued that the renewal of an insurance policy would imply that the existing terms would bind the parties. As a consequence, the insurer being a party cannot impose unilateral changes, either at the point of time when the policy is renewed or during its currency
“5. A renewal of an insurance policy means repetition of the original policy. When renewed, the policy is extended and the renewed policy in identical terms from a different date of its expiration comes into force.
In common parlance, by renewal, the old policy is revived, and it is sort of a substitution of obligations under the old policy unless such policy provides otherwise.
It may be that on renewal, a new contract comes into being, but the said contract is on the same terms and conditions as that of the original policy.
Where an insurance company which has exclusive privilege to carry on insurance business has refused to renew the Mediclaim policy of an insured on extraneous and irrelevant considerations, any disease which an insured had contacted during the period when the policy was not renewed, such disease cannot be covered under a fresh insurance policy in view of the exclusion clause.
The exclusion clause provides that the pre-existing diseases would not be covered under the fresh insurance policy. If we take the view that the Mediclaim policy cannot be renewed with retrospective effect, it would give handle to the Insurance Company to refuse the renewal of the policy on extraneous consideration thereby deprive the claim of the insured for treatment of diseases which have appeared during the relevant time and further deprive the insured for all time to come to cover those diseases under an insurance policy by virtue of the exclusion clause. This being the disastrous effect of wrongful refusal of renewal of the insurance policy, the mischief and harm done to the insured must be remedied.
We are, therefore, of the view that once it is found that the act of an insurance company was arbitrary in refusing to renew the policy, the policy is required to be renewed with effect from the date when it fell due for its renewal.”
Be it that the policy purported to incorporate the substantive limitation, the appellant can be relieved of the result of the deficiency in service by the insured. This can be done by restoring the position, the appellants would occupy if there was no breach.
CONCLUSION: from above decision it is clear that an insurance company has obligation and duty to intimate the insured at the time of renewal of exiting insurance polices ,if there is any change in the terms and conditions of insurance. It is generally assumed that renewal of an insurance policy will be held on the basis of terms and conditions contains in the old insurance policy and there is no change. One of the most important principles on which insurance is based is ”Utmost Good Faith,” it means than insurer and the insurance company has to declare and reveal and material facts to each other on the basis of which contract of insurance entered. If there is any change in the terms and conditions of insurance same should be intimated and shared with the insured ,so that insured will take informed decision and his /her claim would not be repudiated by the insurance company at the time of need.
Oriental Insurance Company Limited v/s Mahendra Construction
Civil Appeal No. 3359 of 2019
Supreme Court of India
Decided On, 01 April 2019
(i) The date of purchase of the vehicle by the proposer;
(ii) Whether the vehicle was new or second-hand at the time of purchase;
(iii) Whether the vehicle was in a good condition and, if not, full details;
(iv) The name and address of the previous insurer;
(v) The previous policy number, together with the period of insurance;
(vi) The type of cover; and
(vii) Claims lodged during the preceding three years.
In MacGillivray on Insurance Law (Twelfth Edition, Sweet and Maxwell (2012) the rule concerning duty of disclosure is stated in the following terms:
“[Subject to certain qualifications considered below], the assured must disclose to the insurer all facts material to an insurer’s appraisal of the risk which are known or deemed to be known by the assured but neither known or deemed to be known by the insurer. Breach of this duty by the assured entitles the insurer to avoid the contract of insurance so long as he can show that the non-disclosure induced the making of the contract on the relevant terms…”
Elaborating on the principle, in Life Insurance Corporation of India v. Smt. G M Channabasamma, (1991) 1 SCC 357, this Court has held:
“7…It is well settled that a contract of insurance is contract uberrima fides and there must be complete good faith on the part of the assured. The assured is thus 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. While making a disclosure of the relevant facts, the duty of the insured to state them correctly cannot be diluted…”
In LIC of India v. Asha Goel, (2001) 2 SCC 160, a two-judge Bench of this Court held thus:
“12…The contracts of insurance including the contract of life assurance are contracts uberrima fides and every fact of material (sic material fact) must be disclosed, otherwise, there is good ground for rescission of the contract. The duty to disclose material facts continues right up to the conclusion of the contract and also implies any material alteration in the character of the risk which may take place between the proposal and its acceptance. If there are any misstatements or suppression of material facts, the policy can be called into question. For determination of the question whether there has been suppression of any material facts it may be necessary to also examine whether the suppression relates to a fact which is in the exclusive knowledge of the person intending to take the policy and it could not be ascertained by reasonable enquiry by a prudent person.” (Emphasis supplied)
In Satwant Kaur Sandhu v. New India Assurance Co. Ltd, (2009) 8 SCC 316, a two-judge Bench of this Court held that under a contract of insurance, the insured is under a “solemn obligation” to make a true and full disclosure of information asked for in the proposal form:
“18…Nonetheless, it is a contract of insurance falling in the category of contract uberrimae fidei, meaning a contract of utmost good faith on the part of the assured. Thus, it needs little emphasis that when an information on a specific aspect is asked for in the proposal form, an assured is under a solemn obligation to make a true and full disclosure of the information on the subject which is within his knowledge. It is not for the proposer to determine whether the information sought for is material for the purpose of the policy or not. Of course, the obligation to disclose extends only to facts which are known to the applicant and not to what he ought to have known. The obligation to disclose necessarily depends upon the knowledge one possesses. His opinion of the materiality of that knowledge is of no moment…” (Emphasis supplied)
It was further held there is a clear presumption that any information sought in the proposal form is a “material fact”:
“25. The upshot of the entire discussion is that in a contract of insurance, any fact which would influence the mind of a prudent insurer in deciding whether to accept or not to accept the risk is a “material fact”. If the proposer has knowledge of such fact, he is obliged to disclose it particularly while answering questions in the proposal form. Needless to emphasise that any inaccurate answer will entitle the insurer to repudiate his liability because there is clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of insurance.”
Information regarding insurance claims lodged by the respondent for his excavator in the preceding three years was a material fact. The burden of establishing that the insured made a false representation and suppressed material facts lies on the insurer.
The insurer has placed on the record the best possible evidence in support of the plea that there was a misrepresentation and a suppression of material facts. 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. The proposal form contained a specific question regarding claims lodged in the preceding three years. The respondent was under a bounden duty to disclose that the excavator was previously insured with another insurer and that a claim for damage to the excavator on 12 April 2005 had been settled. It was only in the affidavit of evidence dated 6 January 2017, that the respondent disclosed that New India Assurance Company Limited had paid an amount of Rs. 36.66 lakhs by cheque on 23 September 2005.
IFFCO TOKIO GENERAL INSURANCE COMPANY LTD. Vs. PEARL BEVERAGES LTD.
IN THE SUPREME COURT OF INDIA
CIVIL APPEAL NO. OF 2021
THE SUPREME COURT: In an interesting case, the 3-judge bench of Shree UU Lalit, Smt. Indira Banerjee and Shree KM Joseph, JJ has held that while in case where there is a blood test or breath test, which indicates that there is no consumption at all, undoubtedly, it would not be open to the insurer to set up the case of exclusion, however, the absence of test may not disable the insurer from establishing a case for exclusion from liability on ground of drunk driving.
If in a case, without there being any blood test, circumstances, associated with effects of consumption of alcohol, are proved, it may certainly go to show that the person who drove the vehicle, had come under the influence of alcohol. The manner, in which the vehicle was driven, may again, if it unerringly points to the person having been under the influence of alcohol, be reckoned.
“Evidence, if forthcoming, of an unsteady gait, smell of alcohol, the eyes being congested, apart from, of course, actual consumption of alcohol, either before the commencement of the driving or even during the process of driving, along with the manner in which the accident took place, may point to the driver being under the influence of alcohol. It would be a finding based on the effect of the pleadings and the evidence.”
Section 185 of the Motor Vehicles Act creates a criminal offence dealing with driving by a drunken person or by a person under the influence of drugs. The Section mandates the proving of the objective criteria of presence of alcohol exceeding 30 mg per 100 ml. of blood in a test by a breath analyser.
Being a criminal offence, it is indisputable that the ingredients of the offence must be established as contemplated by law which means that the case must be proved beyond reasonable doubt and evidence must clearly indicate the level of alcohol in excess of 30 mg in 100 ml blood and what is more such presence must be borne out by a test by a breath analyzer.
Therefore, the understanding appears to be that only in circumstances, where the act of driving, having consumed liquor, attracts the wrath of Section 185 and an offence is committed thereunder, that the opprobrium of the Exclusion Clause in the Contract of Insurance, for own damage, is attracted.”
If prosecution has not filed a case under Section 185, that would not mean that a competent Forum in an action alleging deficiency of service, under the Consumer Protection Act, is disabled from finding that the vehicle was being driven by the person under the influence of the alcohol.
“The presence of alcohol in excess of 30 mg per 100 ml. of blood is not an indispensable requirement to enable an Insurer to successfully invoke the clause. What is required to be proved is driving by a person under the influence of the alcohol. Drunken driving, a criminal offence, under Section 185 along with its objective criteria of the alcohol-blood level, is not the only way to prove that the person was under the influence of alcohol. If the Breath Analyzer or any other test is not performed for any reason, the Insurer cannot be barred from proving his case otherwise.”
Further, should the Insurer fail to establish a case in terms of Section 185 BAL (Blood Analyzer Test), it would fail, may not be the proper approach to the issue.
“It is not difficult to contemplate that the accident may take place with the driver being under the influence of alcohol and neither the Breath Test nor the laboratory test is done. A driver after the accident, may run away. A test may never be performed. However, there may be evidence available which may indicate that the vehicle in question was being driven at the time of the accident by a person under the influence of alcohol.”
Hence, in such circumstances, it cannot then be said that merely because there is no test performed, the Insurer would be deprived of its right to establish a case which is well within its rights under the contract.
Driving by a drunken person or by a person under the influence of drugs. —
Whoever, while driving, or attempting to drive, a motor vehicle, —
(a) has, in his blood, alcohol exceeding 30 mg. per 100 ml. of blood detected in a test by a breath analyzer, or
(b) is under the influence of a drug to such an extent as to be incapable of exercising proper control over the vehicle shall be punishable for the first offence with imprisonment for a term which may extend to six months, or with fine which may extend to two thousand rupees, or with both; and for a second or subsequent offence, if committed within three years of the commission of the previous similar offence, with imprisonment for term which may extend to two years, or with fine which may extend to three thousand rupees, or with both.
Explanation. —For the purposes of this section, the drug or drugs specified by the Central Government in this behalf, by notification in the Official Gazette, shall be deemed to render a person incapable of exercising proper control over a motor vehicle.
CONCLUSION: from above decision of the Apex Court, it is clear that drunk driving is a criminal act if it comes under provisions of Section 185 of the Motor Vehicles Act, 1988 i.e., if traces of alcohol found in the body of a driver exceeding 30 mg/100 ml or he is under influence of a drug due to which he was incapable of exercising proper control on the vehicle. In these cases, the insurance claim will not be payable. But if an insurance company fails to apply alcohol test of breath analyzer test even in those case insurance company take stand and repudiate the claim on the basis that at the time of driving the driver was under influence of alcohol.
M/s. Oriental Fire Insurance Company Vs Mrs. Saroj Gupta & Anr. Patna High Court /Dated 16th July, 1996
The Oriental FireInsurance Company through the Deputy Manager has filed this Miscellaneous Appeal challenging the judgment and award passed by the Additional Motor Accident Claims Tribunal, Muzaffarpur, whereby the Tribunal has awarded a compensation of Rs. 1,87,200/- against the appellant-insurer as compensation to the claimant-respondent No. 1, after deducting a sum of Rs. 50,000/- which was already paid along with interest at the rate of 12% per annum.
SECTION 96(2) OF MOTOR VEHICLES ACT,1988. Duty of insurers to satisfy judgments against persons insured in respect of third-party risks. —
(2) No sum shall be payable by an insurer under Sub-section (1) in respect of any judgment unless before or after the commencement of the proceedings in which the judgment is given the insurer had notice through the Court of the bringing of the proceedings, or in respect of any judgment so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such proceeding is so given shall be entitled to be made a party thereto and to defend the action’ on any of the following grounds, namely:
(a) that the policy was cancelled by mutual consent or by virtue of any provisions contained therein before the accident giving rise to the liability, and that either the certificate of insurance was surrendered to the insurer or that the person to whom the certificate was issued has made an affidavit stating that the certificate has been lost or destroyed, or that either before or not later than fourteen days after the happening of the accident the insurer has commenced proceedings for cancellation of the certificate after compliance with the provisions of Section 105; or
(b) that there has been a breach of a specified condition of the policy, being one of the following conditions namely:
(i) a condition excluding the use of the vehicle–
(a) for hire or reward, where the vehicle is on the date of the contract of insurance a vehicle not covered by a permit to ply for hire or reward, or(b) for organised racing and speed testing, or(c) for a purpose not allowed by the permit under which the vehicle is used, where the vehicle is (a transport vehicle), or(d) without side-car being attached, where the vehicle is a motor cycle, or (ii) a condition excluding driving by a named person or persons or by any person who is not duly licensed, or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification; or (iii) a condition excluding liability for injury caused or contributed to by conditions of war, civil war, riot or civil commotion; or (c) that the policy is void on the ground that it was obtained by the non-disclosure of a material fact or by a representation of fact which was false in some material particular.
To start with it is necessary to remember that apart from the statute an insurer has no right to be made a party to the action by the injured person against the insured causing the injury. Sub-section (2) of Section 96 however gives him the right to be made a party to the suit and to defend it. The right therefore is created by statute and its contents necessarily depend on the provisions of the statute.
The question then really is, what are the defenses that Sub-section (2) makes available to an insurer?
That clearly is a question of interpretation of the sub-section.
Now the language of Sub-section (2) seems to us to be perfectly plain and to admit of no doubt or confusion. It is that an insurer to whom the requisite notice of the action has been given shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely, after which comes an enumeration of the grounds. It would follow that an insurer is entitled to defend on any of the grounds enumerated and on others. If it were not so, then of course no grounds need have been enumerated. When the grounds of defence have been specified, they cannot be added, to. To do that would be adding words to the statute.
Sub-section (6) also indicates clearly how Sub-section (2) should be read. It says that no insurer to whom the notice of the action has been given shall be entitled to avoid his liability under Sub-section (1) “otherwise than in the manner provided for in Sub-section (2)”.
Now the only manner of avoiding liability provided for in Sub-section (2) is by successfully raising any of the defences therein mentioned. It comes then to this that the insurer cannot avoid his liability except by establishing such defences. Therefore, Sub-section (6) clearly contemplates that he cannot take any defence not mentioned in Sub-section (2), If he could, then he would have been in a position to avoid his liability in a manner other than that provided for in Sub-section (2). That is prohibited by Sub-section (6).
We therefore think that ‘Sub-section (2) clearly provides that an insurer made a defendant to the action is not entitled to take any defence which is not specified in it
Having regard to the clear pronouncement of the Apex Court in British India General Insurance Company (supra) as well as the National Insurance Co. Ltd. (supra) (Full Bench), the submission that the insurer, namely, Insurance Company cannot challenge the award on merit, is accepted and, accordingly, the preliminary objection raised by the learned Counsel for the respondents sustains.
DECISION OF COURT: In that view of the matter, whatever meagre amount is permissible under the statute must reach the victim’s family without any loss of time when the compensation is sought for before the Court. The statute has taken care of the sufferings and pains of the deceased’s family and, as such, a summary proceeding has been provided for deciding the claim of the claimants.
Even though the persons who have suffered injuries and/or met with an accident are legally entitled to claim, damages under the law of Torts’ by initiating a regular suit, in order to avoid mental harassment and monetary loss the summary procedure has been prescribed under the statute which must be kept in view by the Court concerned while deciding such claim.
In the result, this appeal is dismissed but without cost However, the Insurance Company, namely, appellant, is directed to pay the compensation amount as early as possible preferably within six weeks, failing which the Insurance Company shall be liable to pay interest at the rate of 25% per annum on the balance amount to be paid to the claimant.
SECTION 173 OF THE MOTOR VEHICLES ACT, 1988 provides for filing of an appeal against the award passed by the Claims Tribunal. It is settled law that an appeal is continuation of the proceedings of the original Court/Tribunal. An appeal is a valuable right of the appellant and at the stage of an appeal, all questions of fact and law decided by the Tribunal are open for the reconsideration. Therefore, the appellate court is required to address all the questions before it and decide the case by giving reasons.
CONCLUSION: from above decision is it clear that an insurance company can file appeal against award passed by the MACT only on the grounds mentioned in the provisions of Section 96(2) of the Motor Vehicles Act, 1988. Now the only manner of avoiding liability provided for in Sub-section (2) is by successfully raising any of the defences therein mentioned. It comes then to this that the insurer cannot avoid his liability except by establishing such defences. Therefore, Sub-section (6) clearly contemplates that he cannot take any defence not mentioned in Sub-section (2), If he could, then he would have been in a position to avoid his liability in a manner other than that provided for in Sub-section (2). That is prohibited by Sub-section (6).
Kamlesh Vs. Shriram General Insurance Company Ltd.
Supreme Court of India
[Civil Appeal No. 8796 of 2019]
“a) That a direction may be issued to the opposite party no.1 for repudiating the insurance claim of the complainant amounting to Rs.13,50,000/- in his favour;”
In its counter affidavit the stand taken by the respondent( the insurer) was as under:
“6. That the respondent appointed independent surveyor Shri S.K. Tiwari for spot survey on intimation of the alleged fire loss of the insured Truck. The Surveyor submitted spot report dated 23.6.2009 after inspecting the spot and vehicle on 3.6.2009. The spot surveyor in its report apart from pointing out the damages to the insured truck due to alleged fire, specifically gave observations to the effect that “it is the case of manipulations and fabrication. It needs further investigation”. The spot surveyor also submitted zerox copy of newspaper (Dainik Jagaran Daily) dated 3.6.2009. The observation of the spot surveyor to the effect that green grass and leaves etc. surrounding the burnt parts was well in order i.e. smiling, is very significant.
STATE CONSUMER DISPUTES REDRESSAL FORUM:-
It was, therefore concluded as under:
“It is established from the evidence produced by the opponent insurance company that the truck of the complainant was found in burnt condition at the place of accident on the next day of alleged incident. In these circumstances, we are of the view that the opponent insurance company is deficient in services by repudiating the insurance claim of the complainant. The insured value of the Truck in question is admittedly Rs.13 Lakh 50 Thousand.
Therefore, we are of the view that the complainant is entitled to this amount with interest from the opponent insurance company.”
The claim of the appellant was accepted and following directions were issued: “The opponent insurance company is hereby directed to pay the complainant 13,50,000 with 9% interest from the date of institution of the complaint till its payment within a period of one month. The opponent will also pay a Rs.10,000/- to the complainant as litigation expenses within the fixed period. If the above amount is not paid within the time fixed then the opponent will be liable to pay interest at the rate of 12% on the entire amount to the complainant. Both the parties will bear their own litigation expenses.”
Relying on the decision of this Court in Amalendu Sahu vs. Oriental Insurance Co. Ltd. [(2010) 4 SCC 536], the National Commission quantified the claim at 60% of IDV of the vehicle. The matter was considered by the National Commission as under:-
“7. I have given a thoughtful consideration to the arguments advanced by the learned counsel for the parties. Though it has been argued by the learned counsel for the appellant that the truck was deliberately put on fire to get the insurance claim, but no independent proof has been filed by the appellant to prove that the damage was stage managed. Even the statements of the reporter as well as of the sales man of the petrol pump relied upon by the investigator have not been filed because those persons have refused to give any statement in writing. This appeals to logic that if a truck is purchased only 2-3 months back, why the truck owner will put the truck into fire, because in any case the insurance claim can be awarded to the value of IDV at the most.
Learned counsel for the Insurance Company has not been able to pin point any purpose behind the deliberate action of the owner of the truck to put the truck on fire. Clearly there is delay in giving intimation to the police and no proper justification has been given by the complainant. Though, it is true that it is not a case of theft where immediate intimation to the police is required yet the role of FIR in such a case cannot be minimized.
Here, the surveyor could only be appointed on 03.06.2005 who could not verify the recovery of truck by the crane which is a crucial factor in the present case. Definitely the respondent/complainant has violated the condition of the policy by not immediately giving information to the Insurance Company.
The State Commission has not given any importance to this delay and has allowed the insurance claim for full IDV of the vehicle. Clearly, the delay in giving intimation to the Insurance Company is an important factor, which should be taken into consideration while deciding the insurance claim.
As observed above, the accident of the vehicle and consequently the vehicle catching fire are the proved facts, respondent/complainant is entitled to insurance claim.
Hon’ble Supreme Court in Amalendu Sahu vs. Oriental Insurance Co. Ltd. II(2010) C.P.J. 9 (S.C.), has observed:
“14. In this connection reference may be made to a decision of National Commission in the case of New India Assurance Company Limited v. Narayan Prasad Appaprasad Pathak, reported in (2006) CPJ 144 (NC). In that case also the question was, whether the insurance company can repudiate the claims in a case where the vehicle carrying passengers and the driver did not have a proper driving licence and met with an accident. While granting claim on non-standard basis the National Commission set out in its judgment the guidelines issued by the Insurance Company about settling all such non-standard claims.
The said guidelines are set out below:-
|Sl. No.||Description||Percentage of settlement|
|(I)||Under declaration of licensed carrying capacity||Deduct 3 years’ difference in premium from the amount of claim or deduct 25% of claim amount, whichever is higher|
|(ii)||Overloading of vehicles beyond licensed carrying capacity||Pay claims not exceeding 75% of admissible claim.|
|(iii)||Any other breach of warranty/condition of policy including limitation as to use.||Pay upto 75% of admissible claim.|
DECISION OF NATIONAL CONSUMER DISPUTES REDRESSAL FORUM:-
Ms. Meenakshi Midha, learned advocate appearing for the respondent supported the decision of the National Commission and submitted that there was delay in intimating the Insurance Company and as such there was breach of warranty/condition of Policy. She also submitted that the intimation to Police was given only on 6.6.2009 and therefore, the National Commission was justified in reducing the claim amount.
Under the caption “conditions” which are part of the Policy, the relevant condition states:-
“1. 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. 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.”
The accident had occurred during the night of 1st and 2nd June, 2009 and the intimation was given to the respondent on 3rd of June, 2009. In our view, the notice was not delayed on any count and did satisfy the requirements contemplated by the conditions in the policy.
New India Assurance Co. Ltd. Vs. Paresh Mohanlal Parmar
Civil Appellate Jurisdiction
Civil Appeal No. 10398/2011
Supreme Court of India.
In this case the Supreme Court of India in one of its judgements in a case involving Insurance Claim has held that unless the insured is duly informed, Exclusionary Clauses will not be applicable.
This appeal has been filed against the judgment of National Consumer Disputes Redressal Commission dated 19.07.2011 in First Appeal No.45/2007 by which the First Appeal of the respondent was allowed and National Commission allowed the complaint and directed to pay an amount of Rs.20,00,000/- (Rupees Twenty Lakhs only) to the respondent with interest @ 6% p.a. from the date of repudiation till filing of the complaint and 9% from the date of filing of compliant till the date of realization of the entire amount.
The respondent obtained a burglary and house breaking Insurance Policy for the period from 5.06.2003 to 4.06.2004 from the appellant Insurance Company to insure his property for a total sum insured of Rs.20 Lakhs. During the night of 11.01.2004 an incidence of theft took place and 324 mobile phones were found to be stolen from the godown and FIR lodged with the concerned Police SHORTLY.
Insurance Company was informed and their surveyor visited and submitted his preliminary report dated 16.1.2004.
The complaint was also submitted to Insurance ombudsman by the appellant. Vide order dated 9.12.2005 the Insurance ombudsman rejected the representation on the ground that they have no pecuniary jurisdiction.
The Insurance Company repudiated the claim and reiterated its stand of repudiation. The respondent filed a complaint before the State Commission.
STATE COMMISSION: By order dated 21.12.2006 the State Commission dismissed the complaint filed by the respondent relying upon the judgment of this Court in United India Insurance Co.Ltd. Vs. Harchand Rai Chandan Lal 2004(8)SCC 644.
United India Insurance Co.Ltd. Vs. Harchand Rai Chandan Lal 2004(8)SCC 644.
This appeal is directed against the order passed by the National Consumer Disputes Redressal Commission, New Delhi in Revision Petition No.2159 of 2002 confirming the order passed by the State Consumer Disputes Redressal Commission, New Delhi as well as the order passed by the Consumer Disputes Redressal Forum-II (District Forum II), New Delhi.
The question arose that according to the complaint burglary took place from the cashier’s cash box. The surveyor’s report was that the stolen jewels had not been kept in safe locker and the theft was not covered under burglary insurance policy.
Though the District Forum directed the insurance company to pay a sum of Rs. 43,729.25 however, the State Commission observed that what is insured is not the contents of the cash box but the jewels kept in the safe which means a safety locker made by Tansi as agreed to in the proposal form. And it was observed that jewels kept in the cashier’s cash box which were not covered by the policy.
The State forum overruled the order passed by the District Forum. The order passed by the State Commission in revision was reversed by the National Commission.
The matter came before this Court in Special Leave Petition by Insurance Company. Their Lordships’ observed that there was no necessity of referring to the dictionaries for understanding the meaning of the word “safe” which the parties in the instant case are proved to have understood while submitting the proposal and accepting the insurance policy. The cashier’s box could not be equated with the safe within the meaning of the insurance policy. The alleged burglary and the removal of the jewellery from cash box, the cash box was not covered by the insurance policy between the parties.
The insurance policy has to be construed having reference only to the stipulations contained in it and no artificial farfetched meaning could be given to the words appearing in it. And, therefore, they set aside the order of the National Commission.
Similarly, in the case of Oriental Insurance Co.Ltd. Vs. Sony Cheriyan reported in (1999) 6 SCC 451 an insurance was taken out under the Motor Vehicles Act, 1988 in which their Lordships observed:
“The insurance policy between the insurer and the insured represents a contract between the parties. Since the insurer undertakes to compensate the loss suffered by the insured on account of risks covered by the insurance policy, the terms of the agreement have to be strictly construed to determine the extent of liability of the insurer. The insured cannot claim anything more than what is covered by the insurance policy.”
Similarly in the case of General Assurance Society Ltd. Vs. Chandumull Jain and Anr. reported in (1966) 3 SCR 500 the Constitution Bench has observed that the policy document being a contract and it has to be read strictly. It was observed, ” In interpreting documents relating to a contract of insurance, the duty of the court is to interpret the words in which the contract is expressed by the parties, because it is not for the court to make a new contract, however reasonable, if the parties have not made it themselves. Looking at the proposal, the letter of acceptance and the cover notes, it is clear that a contract of insurance under the standard policy for fire and extended to cover flood, cyclone etc. had come into being.”
Therefore, it is settled law that the terms of the contract have to be strictly read and natural meaning be given to it. No outside aid should be sought unless the meaning is ambiguous.
From the above discussion, we are of the opinion that theft should have preceded with force or violence as per the terms of insurance policy. In order to substantiate a claim an insurer has to establish that theft or burglary took place preceding with force or violence and if it is not, then the insurance company will be well within their right to repudiate the claim of the insurer.
However, all the three forums have already awarded compensation and the amount has been paid to the respondent, therefore, on the point of equity we would not like to disturb the payment which has already been made. However, in view of legal position stated by us, the orders of the District Forum, State Commission and the National Commission cannot be upheld.
NATIONAL CONSUMER DISPUTES REDRESSAL FORUM: The first appeal was filed before the Commission. The commission by the impugned judgment has allowed the appeal.
The Commission took a view that when the lock of the godown was found on the Street and that the culprit was convicted under Section 454 IPC, it may be gathered that element of force was present when the culprit entered the premises of the godown.
The Commission also returned the finding that relevant terms and conditions of the Insurance Policy were not brought to the knowledge of the insurer. Aggrieved by the judgment of the National Commission, this appeal has been filed.
Learned counsel for the appellant contents that the claim of the respondent was not covered by the policy. He has referred to Clause 3A as extracted by the State Commission and submits that there being no force entry in the premises and the premises having been opened by duplicate key, the claim was not covered.
With regard finding of the Commission that terms and conditions were not informed to Insured, he submits that the State Commission has held that terms and conditions were informed but the National Commission has erroneously observed that the State Commission has not dealt with the matter.
The Court noted that it cannot find any tangible material to infer that the relevant terms and conditions of the Insurance Policy were brought to the knowledge of the appellant.
“Before we embark upon a discussion on the issue regarding breach of the terms of the Insurance Policy, it may be mentioned that the other contentions of the respondents were rejected by the State Commission. The appellant also had contended before the State Commission that he was not furnished with the terms and conditions of the insurance policy when the insurance policy was taken by him. The fact that the appellant took a relevant insurance policy covering the period between 5.06.2003 to 4.06.2004 is not in dispute.
The case of the appellant was that the annexure containing terms of the insurance policy had not been attached along with the document of the policy furnished to him. Though the respondents denied such averment of the appellant in their written version yet the appellant reiterated the same stand in his rejoinder affidavit filed before the state Commission.
The State Commission did not deal with this aspect of the matter. In our opinion, it was necessary for the respondents to prove that the terms and conditions of the Insurance Policy were furnished to the appellant when the policy document was issued in his favor.
We have not come across any tangible material to infer that the relevant terms and conditions of the Insurance Policy were brought to the knowledge of the appellant.”
The Court also took notice of the submission of the Counsel for the appellant in which it was stated that is the National Commission erred in observing that the State Commission didn’t deal with the aspect, whereas the State Commission has dealt with.
The Court thus observed that when the National Commission has returned the finding that terms and conditions of the policy were not brought to the knowledge of the respondent, as it is contrary to the finding of the State Commission, the findings of the State Commission shall be treated to have been overruled.
The Court also stated that the principles laid down in United India Insurance Co.Ltd. v. Harchand Rai Chandan Lal 2004(8) SCC 644 cannot be applied to the present case.
“Having held this, SCDRC also came to the conclusion that the exclusion would in any event not be attracted. The finding of SCDRC in regard to the interpretation of such an exclusionary clause is evidently contrary to the law laid down by this Court in Harchand Rai. However, the relevance of that interpretation would have arisen provided the conditions of exclusion were provided to the insured.
NCDRC missed the concurrent findings of both the District Forum and SCDRC that the terms of exclusion were not made known to the insured. If those conditions were not made known to the insured, as is the concurrent finding, there was no occasion for NCDRC to render a decision on the effect of such an exclusion.”
The thus on the ground of all the above observations, dismissed the appeal.
CONCLUSION: we are aware that an Insurance Policy is a contract binding insurer and the insured. It is a contract of good faith in which insured has to disclose all relevant material facts to the insurance company on the basis of which the insurance company decide to underwrite the risk and the amount of premium to be charged. A policy document is prepared by the insurance company on the specified and standard terms and conditions, in this case insured has nothing to say. While interpreting clauses of an insurance policy, courts generally favor the insured. It is duty of the insured to reveal all terms, conditions or exclusions to the insured and if there is any negligence on the part of insurer to explain such terms and conditions, then insurer cannot repudiate the claim on that basis. In the above case the point of contention was that the exclusion clauses were not explained to the insured. Thus, it is utmost important for insurance company to explain and take a declaration from the insured that he /she has understand and fully explained terms and conditions of the insurance policy to avoid further litigation.
Royal Sundaram Alliance Insurance Co Ltd v Pawan Balram Mulchandani
The apex consumer body, the National Consumer Disputes Redressal Commission (National Commission), while hearing an appeal filed against the order of the Maharashtra State Consumer Disputes Redressal Commission (State Commission), has recently held in Royal Sundaram Alliance Insurance Co Ltd v Pawan Balram Mulchandani that murder of an Insured is to be treated as an accident under a personal accident policy, unless expressly excluded and/or caused as a result of the Insured’s own deliberate acts.
The National Commission’s ruling was in relation to an accidental death claim raised by the deceased Insured’s son in 2009. The Insured was murdered in relation to a property dispute, while returning from his place of work. The respondent filed a death claim with the Insurer under the personal accident policy, but it was repudiated on the ground that the death was not due to an “accident”, but was a case of a “murder simplicitor”.
The respondent filed a complaint before the State Commission which directed the Insurer to pay the sum assured of ₹2,000,000, along with accrued interest.
This order of the State Commission was the subject matter of challenge in the present appeal.
Before the National Commission, the Insurer primarily raised 3 contentions:
The National Commission first considered whether the murder was to be considered under the definition of “accident”, and subsequently, whether the Insurer’s repudiation of the claim was valid.
In this regard, the National Commission referred to the UK Court of Appeal’s judgment in Nisbet v Rayne and Burn where when a cashier was robbed and murdered, it was held that murder was an accident from the stand point of the person who suffered from it. The National Commission noted that the death of the Insured took place due to injuries caused by external, violent, visible means, and did not find any evidence suggesting that the Insured put himself to risk of injury by either an immediate wilful deliberate act or carelessness or instigation or aggression.
The National Commission thus reached the conclusion that in case the immediate cause of injury was not the result of any deliberate or wilful act of the Insured and the incident was not expected on the part of the Insured, the murder was to be considered an “accident”.
The National Commission also examined the exclusions under the policy and noted that while the policy contained exclusions for “intentional self injury, suicide or attempted suicide” and “war, rebellion, revolution, insurrection, mutiny, military or usurped power”, none of the policy exclusions were applicable in the present facts and circumstances of the case. Since the insurance policy did not explicitly state that the Insurer would not be liable for death caused due to the act of murder, the National Commission was of the view that the Insurer’s claim repudiation was unjustified.
The claim was repudiated on 26th May 2009 and the respondent’s complaint before the District Forum was disposed of on 5th August 2011 on the ground of territorial jurisdiction. The National Commission noted that since the limitation period under the Consumer Protection Act was 2 years, and the respondent’s right to approach an appropriate forum remained unaffected, the objections on limitation and territorial jurisdiction were erroneous and lacked merit.
The National Commission also applied the doctrine of “Contra Proferentum”, noting that the Insurer had left gaps and ambiguity in the policy terms and conditions, and held that in case of ambiguities in adhesion contracts such as an insurance policy, the interpretation is to be done in favour of the Insured. The Commission also held Insurer’s actions repudiating the claim per its own interpretation, to be tantamount to unfair trade practice. The Insurer was directed to discontinue its unfair trade practice immediately, unless such claims were expressly excluded and specified to be excluded in its policy terms and conditions.
The Commission directed the Insurer’s CEO to file a report-in-compliance before it within a period of 3 months, and noting the difficulty caused to the Insured’s family, the Commission further awarded an additional compensation of ₹2,00,000 to the respondent.
On the basis of the foregoing, the National Commission held that an act of the murder must be treated as an accidental death if the same is not the result of any deliberate act of the Insured himself. Consequently, the Insurer’s appeal was dismissed, and the State Commission’s order was upheld by the apex consumer body.
M/s Rajankumar and Brothers (Impex) – Appellants
Oriental Insurance Company Ltd. – Respondents
Citation : 2020 Latest Caselaw 144 SC
Judgement Date : 07 Feb 2020
Case No : C.A. No.-000971-000971 / 2014
This appeal arises out of judgement of the National Consumer Disputes Redressal Commission (`NCDRC’) dated 12.11.2013, dismissing the consumer complaint filed by the Appellant herein.
The Appellant is a partnership firm in the business of import-export of various commodities, including steel coils. The Respondent insurance company issued a Marine Cargo Cover Note (hereinafter `Cover Note’) dated 14.5.2010 for a sum of 12,63,712.50 US Dollars, covering voyage from any port in China to Mumbai Port. It was stated in the aforesaid Cover Note that a policy document would be issued once the Appellant furnished the requisite particulars of the vessel in which the cargo was being carried. Accordingly, the Appellant forwarded the particulars of `Khalijia-III’, the vessel in which the cargo was to be carried (hereinafter `subject vessel’), to the Respondent, vide letter dated 26.5.2010. It was stated in this letter that the subject vessel was built in March 1985, and its “class” was specified as `I.R.S.’. The Appellant’s case is that it had communicated the aforementioned details regarding the subject vessel to the Respondent, as well as the Respondent’s insurance broker, as per the documents presented by the Overseas Seller.
Accordingly, the Appellant requested its insurer i.e. the Respondent, to issue a General Average Guarantee in `Form B’, as required by the GAA. The Respondent consequently issued a guarantee dated 3.8.2010, agreeing to pay the GAA on behalf of the Appellant, for contribution towards the General Average, as well as towards other special charges. These documents were submitted by the Appellant to the GAA.
The NCDRC further found that the subject vessel had been more than 25 years old on the date of loss i.e. when it ran aground on 18.7.2010, and the Appellant had not produced any document showing that the subject vessel was classed as `I.R.S.’ Hence, the complaint was dismissed.
Heard learned counsel for both parties.
“6 For coverage of shipments by sea: the vessel shall conform to the current Institute Classification Clause; otherwise the cover shall be subject to additional steamer extra premium such as coverage, under tonnage, nonclassification and non-approval extra at underwriter’s discretion.”
Learned counsel also referred to the Institute Marine Cargo Clause (A) (`Cargo Clause’) within the Marine Insurance Policy, which provides for waiver of any breach of implied warranties of seaworthiness of the subject vessel. He argued that under the terms of the Cargo Clause, the Respondent would have the right to not indemnify the Appellant only if the Appellant or its servants were privy to such unseaworthiness. It was argued that the Appellant was merely a cargo-importer, and not the vessel owner, and had communicated all the particulars of the vessel as provided to it by the Overseas Seller. Therefore, the Appellant could not be said to have been privy to the unseaworthiness, if any, of the subject vessel.
Lastly, it was contended that indemnification by the Respondent could not be dependent on the amount of loss caused to the insured or on the nature of accident that caused the loss. It was argued that that once the Respondent provided the General Average Guarantee, it was estopped from claiming that the Respondent had breached the ICC.
In response to the Appellant’s argument that the Respondent was estopped from claiming breach of the ICC by its conduct in providing the General Average Guarantee, it was submitted that at the time when such Guarantee was sought for by the Appellant, the priority of all parties involved was to ensure mitigation of losses by saving as much of the cargo as possible. It was only after the collision of the subject vessel on 07.08.2010 that the Respondent began investigating into the seaworthiness of the vessel, and found out that it was not a classed vessel at the time of issuance of the Marine Insurance Policy. Therefore, it was submitted that the Respondent would not be estopped from claiming breach of the ICC merely because it had, in good faith, provided the General Average Guarantee so as to mitigate the Appellant’s losses.
Upon our perusal of the material on record and after hearing the learned counsels, we find that two issues arise in the instant case:
i) First, whether the Appellant had committed breach of warranty with respect to compliance with the ICC?
ii) Second, whether the Respondent had waived such breach of warranty by the Appellant?
Under the facts and circumstances of this case, the breach of warranty occurred when the Appellant informed the Respondent by letter dated 26.5.2010 that the subject vessel was classed by `I.R.S.’, thereby indicating the subject vessel was compliant with the ICC.
After the subject vessel ran aground on the midnight of 18.7.2010, the Appellant requested the issuance of General Average Guarantee, and the same was issued on 3.8.2010.
At the outset, the General Average Guarantee in `Form B’ dated 3.8.2010 issued by the Respondent to the GAA was only an undertaking to pay the shipowners and the GAA on behalf of the Appellant for their contribution to the General Average, as and when such contribution was ascertained. This Guarantee was issued as per Clause 2 of the Marine Insurance Policy, under which the Respondent had agreed to cover all general average and salvage charges. Clause 2 reads as follows:
“2. This insurance covers general average and salvage charges, adjusted or determined according to the contract of affreightment and/or the governing law and practice, incurred to avoid or in connection with the avoidance of loss from any cause, except those excluded in Clauses 4, 5, 6 and 7 or elsewhere in this insurance.”
At the time the aforesaid General Average Guarantee dated 3.8.2010 was issued, the Respondent was still under the impression that the subject vessel is in compliance with the ICC. Obviously, such impression was based on the representation made by the Appellant that the subject vessel was classed with I.R.S. It was only by the e-mail dated 9.8.2010 from its claim settling agent that the Respondent came to know that the subject vessel does not meet the prescribed classification.
Subsequently, the Respondent withdrew the Guarantee and refused to pay the separate salvage security.
Hence, the issuance of the General Average Guarantee cannot not be understood as a waiver inasmuch as the Respondent, on the date of such issuance, did not have the knowledge of the breach of warranty committed by the Appellant and was only fulfilling its duty to contribute to the General Average (as explained supra) in good faith, as required by Clause 2 of the Marine Insurance Policy.
DECISION OF SUPREME COURT-
Therefore, it cannot be said that the Respondent had waived the breach of warranty through its conduct or representations after the claim was made by the Appellant.
Since we have concluded that the liability of the insurer was discharged on account of the breach of warranty caused by non-compliance with the classification requirement within the ICC, we do not consider it relevant to deal with the age limitation requirement therein for the purpose of the present case.
Manmohan Nanda Vs. United India Assurance Co. Ltd.,
Court: Supreme Court of India.
Citation : 2021 Latest Caselaw 642 SC
Judgement Date : 06 Dec 2021 , Case No : C.A. No.-008386-008386 / 2015
INSURANCE COMPANY’s VIEW–On 22nd August, 2009, appellant received a letter from respondent No. 2 ( the insurer) stating that his claim had been repudiated as the appellant had a history of hyperlipidaemia and diabetes and the policy did not cover per-existing conditions and complications arising therefrom. The said repudiation was with regard to Bill No.1 i.e. the bill raised by the Medical Centre for USD 2,29,719. The appellant protested against the repudiation and requested his claim to be settled on a priority basis as the Medical Centre and the other centre in the USA where he had taken treatment had started pressing for release of payment. In this regard a representation was sent on 16th November, 2009. However, by its letter dated 9th April, 2010, respondent No.1 reiterated its repudiation of the claim made by the appellant.
Being aggrieved, the appellant filed a complaint under Section 21 (9) of the Consumer Protection Act, 1986 (hereinafter referred to as “Act” for brevity) against the respondents, being Consumer Complaint No.92/2010 before the Commission.
The Apex Court observed that ;
CONCLUSION: from above decision it is clear that “Once the policy has been issued after assessing the medical condition of the insured, the insurer cannot repudiate the claim by citing an existing medical condition, which was disclosed by the insured in the proposal form and which condition has led to a particular risk in respect of which the claim has been made by the insured,”.The Supreme Court said the repudiation of the policy by the United India Insurance company was illegal and not in accordance with law.
It said the object of buying a mediclaim policy is to seek indemnification in respect of a sudden illness or sickness that is not expected or imminent and that may occur overseas.
“If the insured suffers a sudden sickness or ailment, which is not expressly excluded under the policy, a duty is cast on the insurer to indemnify the appellant for the expenses incurred thereunder,” the bench said.
This is an absurd case ;we are going to discuss and this case shows how an insurance company not applied his mind to decline a claim. We are purchasing an insurance for safety and financial security of our beloved one. But a family of a person who has died in an accident and his insurance company has declined a claim on the basis of absurd point or non-application of its mind will cos a lot.
If you use your bike to commute regularly and buy a personal accident policy to protect your family’s financial future in case of your death while riding the two-wheeler. Due to your love for bikes you own one with an engine capacity of 350cc. If you die in an accident, however, your family may not be eligible for the claim amount due to the higher engine capacity ,this is an absurd point of rejection of a claim. But this was happen in case of HDFC ERGO.
A Ludhiana-based policyholder died in an accident last year and HDFC ERGO denying the accidental death claim made by family members on the grounds that the person was riding a bike of more than 150cc capacity.
Insured was riding 346cc bike and as per policy terms and conditions, the claim is not payable under general exclusions clause 8 for bodily injury sustained whilst or as a result of riding or driving a motorcycle or motor scooter of over 150cc.
The company, on its part, says that the clause formed part of its older policies and was removed in October 2020. Also, the claim was paid to the family eventually.
“The specific case being highlighted in social media is an old case and in fact the claim is already paid to the customer. We would like to clarify that the particular exclusion which existed in all of our old products was removed in October 2020.
We would also like to assure our existing and new customers that our PA (Personal Accident) policy covers all motorcycles regardless of their engine capacity (CC). We take pride in our industry-best claim settlement ratio and for the highest number of claims settled in the industry. We continue to strive to maintain this benchmark and evolve continuously to match customer needs and market changes,”
The insurance company tries its best to remain its reputation by paying the claim to the family of insured. But the denial of a claim on death of a person on the basis of absurd point is the fault of the company and its claim handling team. This will cost a lot to the suffered family members of deceased.
Independent insurance experts believe this is a legacy clause – relic of the times when bikes of over 150cc were used for racing or recreational purposes, and not regular commuting. “Some policies had this clause 10-15 years ago. But policies have to evolve with time, as today such bikes are used for regular commute too. It is a case of flawed drafting of the clause,”.
While the insurer says it has eliminated the controversial clause now, existing policyholders need to be vigilant. “Given that this product was discontinued only for new business in October 2020, it is unclear how many still hold outdated policies today.
It is advisable for policyholders to review their existing polices or go through their fresh polices and utilize Free Lok Period appropriately to check /review terms and conditions of insurance policy and return the same if these terms and conditions are not acceptable or not fulfil their need.
Customers holding an accident cover in any form should review their policy documents with their financial advisor and request for migration to a newer product at the time of renewal,”.
Surendra Kumar Bhiwale (Appelant) vs. The New India Assurance Company Limited (Respondent)
Supreme Court of India
Sub: Claim cannot be denied to the seller of the vehicle on the fact that the vehicle is sold to another person unless the sale is complete and ownership of the vehicle is transferred to buyer.
The Appellant was the owner of truck which was covered by a Policy of Insurance. The said lorry, which was loaded with Ammonia Nitrate and met with an accident on journey. The accident was reported to the Police Station and the Appellant lodged a claim with the Insurer, through one person. On receipt of information regarding the accident, and the claim, the Insurer appointed an independent Surveyor and Loss Assessor to conduct a spot survey. The independent Surveyor and Loss Assessor appointed by the Insurer, conducted a spot survey and submitted his report. However, instead of reimbursing the loss, the Insurer issued a show cause Letter to the Appellant requiring the Appellant to show cause why the claim of the Appellant should not be repudiated, on the allegation that, he had already sold the said truck to the other person. It was, however, not in dispute that the Appellant continued to be the registered owner of the said truck, on the date of the accident. The Appellant himself submitted a motor claim again but the Insurer refused to accept the same. Aggrieved by the action of the Insurer company in not releasing the claim of the Appellant, towards reimbursement of losses on account of the accident, the Appellant approached the District Forum.
THE DISTRICT FORUM allowed the complaint filed by the Appellant and directed the Insurer to pay sum to the Appellant within a month along with interest.
The Insurer appealed to the State Commission. The said appeal, was dismissed by the State Commission which was challenged by the Insurer before the National Commission by filing the Revision Petition.
THE NATIONAL COMMISSION set aside the orders of the District Forum and the State Commission, thereby rejecting the concurrent factual finding of both the forum, and dismissed the complaint on the ground that the Appellant had sold his vehicle to other person.
Held, while allowing the appeal:
The judgment and order of the National Commission is unsustainable. The appeal is, therefore, allowed. The impugned order of the National Commission under appeal is set aside and the order of the District Forum is restored. The Insurer shall pay to the Appellant a sum of Rs. 4,93,500/- as directed by the District Forum with interest as enhanced by the Supreme Court to 9% per annum from the date of claim till the date of payment. The sum of Rs. 5,000/- awarded by the District Forum towards compensation for mental agony and Rs. 2,000/- awarded towards the cost of litigation, is in the view of Supreme Court is grossly inadequate.
The Insurer shall pay a composite sum of Rs. 1,00,000/- to the Appellant towards costs and compensation for the agony caused to the Appellant by withholding his legitimate dues. The amounts as directed above shall be paid to the Appellant within six weeks from date of the judgment and order.
CONCLUSION: while going through above case ,it is clear that at the time of accident the sale procedure /transfer of ownership of alleged truck has not been completed and the person who lodged the claim was the owner of the truck. The insurance company is on fault for repudiating the claim filed by the insured.
*Section 2(30) in The Motor Vehicles Act, 1988
(30) “owner” means a person in whose name a motor vehicle stands registered, and where such person is a minor, the guardian of such minor, and in relation to a motor vehicle which is the subject of a hire-purchase, agreement, or an agreement of lease or an agreement of hypothecation, the person in possession of the vehicle under that agreement;
# Section 157 in The Motor Vehicles Act, 1988
157. Transfer of certificate of insurance.—
(1) Where a person in whose favour the certificate of insurance has been issued in accordance with the provisions of this Chapter transfers to another person the ownership of the motor vehicle in respect of which such insurance was taken together with the policy of insurance relating thereto, the certificate of insurance and the policy described in the certificate shall be deemed to have been transferred in favour of the person to whom the motor vehicle is transferred with effect from the date of its transfer.
Explanation.—For the removal of doubts, it is hereby declared that such deemed transfer shall include transfer of rights and liabilities of the said certificate of insurance and policy of insurance.
(2) The transferee shall apply within fourteen days from the date of transfer in the prescribed form to the insurer for making necessary changes in regard to the fact of transfer in the certificate of insurance and the policy described in the certificate in his favor and the insurer shall make the necessary changes in the certificate and the policy of insurance in regard to the transfer of insurance.
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI
FIRST APPEAL NO. 12 OF 2016
M/S. DHARMANANDAN DIAMONDS PVT. LTD. Vs. SENIOR DIVISIONAL MANAGER, THE NEW INDIA ASSURANCE CO. LTD.
BRIEF FACTS: of the case are that complainant , M/s.Dharmanandan Dismonds Pvt. Ltd. has given diamonds to one commission agent Mr. Arjanbhai Mangukia to show the diamonds to the prospective buyers by issuing “Janghad slip” on 10.06.2002. However, on 11.06.2002, it was informed by the police that Mr. Arjanbhai Mangukia was murdered and he did not possess the diamonds. On 11.06.2002 the complaint was lodged with the police. On 12.6.2002, the Insurance Company was also informed about the incident. The police did not lodge the FIR and therefore, criminal complaint was lodged with Additional Chief Metropolitan Magistrate. The claim for Rs.78,62,388/- was lodged with the Insurance Company.
The Insurance Company appointed a surveyor who has assessed the loss to the tune of Rs.55,19,316/- .
The Insurance Company repudiated the claim on the following grounds on 19.07.2007:-
The complainant then filed a consumer complaint before the State Commission being complaint no.40 of 2007. The complaint was resisted by the Insurance Company on the same grounds on which the repudiation letter was issued. However, the State Commission allowed the complaint and passed the following order:-
Both the parties filed appeals against the order dated 30.10.2015 of the State Commission passed in complaint No.40/2007.
THE NCDRF – Heard the learned counsel for both the parties and perused the record. The parties are being referred to as complainant and the opposite party for clarity. The learned counsel for the opposite party/ Insurance Company stated that the commission agents are covered under Section II of the Policy and the following warranty is mentioned for this Section:-
“Warranted that if insured property with any one person specified in Section II of the schedule exceeds Rs.2 Lacs, the same shall be placed in an inbuilt locker of a steel cupboard. But if the property exceeds Rs.10 Lacs it must necessarily be secured in a safe of standard make.”
From the above warranty, it is clear that the insured property was required to be kept in a safe lock of a standard make. The commission agent has been murdered at Mumbai residence and the insured property has not been recovered from there. It means that the insured property was not kept inside a safe lock as required under the warranty clause. It was also argued by the learned counsel that it was not correct to say that commission agent was to return the insured property by the evening of the same day.
The complainant in the consumer complaint has itself mentioned the following:-
“10. Arjanbhai used to travel regularly in the morning from Surat to Mumbai and use to stay in Mumbai from Monday to Saturday and for his stay he rented one small Mezanine compartment, 306, 3rd Floor, Building No.42/276, Nanubhai Desai Marg, Suttar Gali, Mumbai-4 and he used to stay there alone from Monday to Saturday and used to have food on different lodges and on Friday or Saturday evening he used to return home to Surat and stay with his family.”
THE FORUM observed that para 6 of the complaint, the complainant has mentioned that the commission agent takes the diamond and returns the same on the same day by evening. These two averments made in the complaint are contradictory to each other. The complainant had admitted that the commission agent Mr. Arjanbhai Mangukia was staying at Mumbai residence for five days and that he was coming back to Surat on weekends. Thus, it was not possible for the commission agent to have come back and to have returned the insured property on the same day. Thus, if the case property was to be kept for more time at the residence of commission agent at Mumbai, it was required to be kept in the safe as per the warranty clause. This warranty has been clearly breached and therefore, the claim is not payable. Though, the surveyor has assessed the loss, however, the surveyor has not given any observation on the adherence to the warranty clause. Clearly, the surveyor has omitted his comment on warranty either purposely or inadvertently, therefore, fact of assessment of the loss by the surveyor cannot be read in favour of the complainant.
DECISION OF NCDRF- It seems that the State commission has agreed with the assertion of the complainant that the condition of the warranty was impractical and could not be observed as main work of the commission agent was to show the diamonds to prospective buyers and therefore, it was not possible to keep the diamonds in standard safe all the time, said NCDRC.
It said the argument did not hold good in the case, as the diamonds were given to the commission agent at Surat, from where the precious stones were brought to Mumbai, where the agent was to stay for the whole week. Clearly, when the diamonds were to be kept at a residence, they were required to be kept under locked safe of standard make as per the warranty condition of the policy, but there was no safe at Mumbai premises of the deceased agent.
We are of the considered opinion that the warranty mentioned in the policy has been breached and therefore, the insurance claim is not payable,” by the insurance company and the insurance company has rightly repudiated the claim of insurance on the basis of violation of warranty mentioned in the Insurance Policy.
CONCLUSION: as you know that warranties in an insurance policy is some terms and conditions , the fulfilment of those are necessary to bind both parties on contract of insurance. It is utmost important to follow and fulfil warranty and any breach of warranty may lead to termination or avoidance of contract by the insurance company.
A warranty in an insurance policy is a promise by the insured party that statements affecting the validity of the contract are true. A promissory warranty is a statement about future facts or about facts that will continue to be true throughout the term of the policy.
A warranty by which the assured undertakes to do or not to do a particular thing, or satisfy a particular condition and whereby he affirms or negated the existence of a particular state of facts.
A warranty is either an undertaking by the assured that some particular thing shall or shall not be done or that some condition shall be fulfilled, or it is a statement which affirms or negatives the existence of a particular state of facts. A warranty is a condition precedent to the policy, and whether material to the risk or not must ,unless waived , be fulfilled with the most scrupulous exactness.
Rajendra Singh and Ors (Appelant) Vs. National Insurance Company Limited and Ors (Respondent)
Supreme Court of India- Civil Appeal arising out of SLP (C) No. 13964 of 2018
HELD THAT: Passengers travelling in vehicle cannot be held responsible for contributory negligence of the driver of the vehicle and claim cannot be reduced on the same ground.
The deceased in the appeal was a housewife aged about 30 years. The second deceased was her daughter aged about 12 years. The claimants are the husband/father of the deceased and three minor siblings. The two deceased on 25.12.2012 were travelling in a horse cart along with some others to a religious congregation. The horse cart was hit by a bus resulting in their death. The Tribunal assessed the notional income of the first deceased at Rs.36,000/ per annum and after 1/4 the deduction towards personal expenses, with a multiplier of 17 awarded a compensation of Rs.4,59,000/. The Tribunal then deducted 50% on ground of contributory negligence as the horse cart was stated to have been in the middle of the road when the accident took place. A sum of Rs.1,00,000/ was then added as loss of consortium and Rs.25,000/ towards funeral expenses leading to an award total of Rs.3,54,500/ with interest at the rate of 7.5%.
In so far as the minor child is concerned, the notional income was assessed at Rs.36,000/ per annum, applying a 50% deduction towards personal expenses with a multiplier of 15, the compensation was awarded at Rs.2,70,000/ out of which 50% was again deducted towards contributory negligence. A sum of Rs.25,000/ was added towards funeral expenses, leading to an award total of Rs.1,60,000/ with interest at the rate of 7.5%.
The appeal for enhancement of compensation was dismissed by the High Court.
APPEAL FOR ENHANCED COMPENSATION; Learned counsel for the appellant submits that the notional income of the first deceased has been wrongly fixed ignoring her income of Rs.5000/ per month from dairy farm business. Nothing has been awarded towards future prospects. With regard to the second deceased it was submitted that she was studying in a school and her notional income should have been assessed at Rs.54,000/ per year. Nothing has been awarded towards loss of estate, loss of consortium and funeral expenses. The submission in the appeals was that deduction on ground of contributory negligence was unsustainable and unjustified. Reliance was placed on Kajal vs. Jagdish Chand & Ors., AIR 2020 SC 776, to contend that the income of the deceased child should have been assessed at Rs.4846/ per month.
The finding with regard to contributory negligence against both the deceased were therefore set aside.
Therefore, the courts have used the expression just compensation to get over the difficulties in quantifying the figure to ensure consistency and uniformity in awarding compensation. This determination shall not depend upon financial position of the victim or the claimant but rather on the capacity and ability of the deceased to provide happiness in life to the claimants had she remained alive. The compensation was for loss of prospective happiness which the claimant would have enjoyed had the child not died at the tender age. Since the child was studying in a school and opportunities in life would undoubtedly abound for her as the years would have rolled by, compensation must also be granted with regard to future prospects. It could safely be presumed that education would have only led to her better growth and maturity with better prospects and a bright future for which compensation needs to be granted under non-pecuniary damages.
EARLIER in case of In New India Assurance Co. Ltd. vs. Satender, (2006) 13 SCC 60, the deceased victim of the accident was a nine year old school going child. Considering the claim for loss of future prospects in absence of a regular income, it was observed that the compensation so determined had to be just and proper by a judicious approach and not fixed arbitrarily or whimsically. The uncertainties of a young life were noticed in the following terms:
“12. In cases of young children of tender age, in view of uncertainties abound, neither their income at the time of death nor the prospects of the future increase in their income nor chances of advancement of their career are capable of proper determination on estimated basis. The reason is that at such an early age, the uncertainties in regard to their academic pursuits, achievements in career and thereafter advancement in life are so many that nothing can be assumed with reasonable certainty. Therefore, neither the income of the deceased child is capable of assessment on estimated basis nor the financial loss suffered by the parents is capable of mathematical computation.”
The Civil Appeal arising out of SLP (C) No. 13964 of 2018 is allowed and the Civil Appeal arising out of SLP (C) No. 16261 of 2018 is allowed to the extent indicated in the order only.
THE SUPREME COURT OF INDIA
CIVIL APPEAL NOS. 18490-18491 OF 2017
Uttar Pradesh State Road Transport Corporation.
National Insurance Co. Ltd. & Others.
Order date : 14th July,2021
Motor Vehicles Act – Third Party Insurance Deemed To Be Transferred Along With Effective Control Over Vehicle In A Hire Agreement.
When a transport corporation hires a motor vehicle for use from its registered owner, the third-party insurance coverage will also be deemed to be transferred along with the vehicle, reiterated the Supreme Court in a recent decision. The person who is having the effective control and command of the vehicle will be regarded as the ‘owner’. Therefore, along with the vehicle it must be deemed that the existing insurance policy also remains transferred for the period of hire as agreed.
Based on this principle, which was settled in the 2011 precedent Uttar Pradesh State Road Corporation v. Kulsum & Ors, the Supreme Court overturned a judgment of the Allahabad High Court.
FACTS TO BE DECIDED ; if an insured vehicle is plying under an agreement with the Corporation on the route as per permit granted in favour of the Corporation and in case of any accident during that period, whether the Insurance Company would be liable to pay compensation or would it be the responsibility of the corporation or the owner.
BACKGROUND The Uttar Pradesh State Road Transport Corporation (Corporation) hired a bus which met with a fatal accident resulting in the death of one person. The legal heirs of the deceased raised a claim petition before the Motor Accident Claim Tribunal, Bahraich, Uttar Pradesh. The Corporation filed its written statement bringing on record the contract entered into between the Corporation and the bus owner as well as the factum of insurance of the bus with the Insurance Company.
The Insurance Company filed its response admitting the existence of the Insurance Policy with respect to the said bus during the relevant period. The Tribunal fastened the liability to the insurance company and directed the payment of compensation of Rs. 1,82,000/- with interest @6% p.a. to the claimant.
DECISION OF ALLAHABAD HIGH COURT;
The Insurance Company preferred an appeal before the Allahabad High Court mainly on the ground that it is not liable to pay the compensation as awarded by the Tribunal as the Corporation was operating the said bus when the accident took place. It argued that it was in fact the Corporation who is liable to satisfy the Award. The Allahabad High Court held that the Insurance Companies are not liable to pay compensation to the third parties in the event the buses were operated under-the control of the Corporation.
After that, the Corporation filed an appeal in the Supreme Court.
FINDINGS ; The Supreme Court overturned the judgement of the Allahabad High Court, fastening liability on the Corporation. It heavily relied on its earlier decision in Uttar Pradesh State Road Corporation v. Kulsum & Ors (2011), whereby it was held that effective control and command is the real test of ownership. Thereby under a hire agreement, the insurance policy is deemed to be transferred along with the vehicle.
It had remarked, If the Corporation had become the owner even for the specific period and the vehicle having been insured at the instance of the original owner, it will be deemed that the vehicle was transferred along with the Insurance Policy in existence to the Corporation and thus Insurance Company would not be able to escape its liability to pay the amount of compensation”.
The Supreme Court also remarked in its’ 2011 judgement that the compulsory insurance of the vehicle is meant to benefit Third Parties. The owner’s liability to have compulsory insurance is only regarding Third Party and not to the property.
Therefore, once the vehicle is insured, the owner and any other person can use the vehicle with the owner’s consent. Section 146 of the Act does not provide that any person who uses the vehicle independently should take a separate insurance policy.
The purpose of compulsory insurance in the Act has been enacted with an object to advance social justice, the Court had observed.
Therefore, relying on the 2011 judgement, the Supreme Court, in the instant matter, affixed the liability on the Insurance Company. It directed the Insurance Company to deposit Rs.1,82,000/-plus interest on the above compensation amount at the rate of 6% per annum from the date of filing of the claim petition till the date of deposit , in settlement of award by the tribunal.
THE APEX COURT SAID THAT ; “..through the definition of “vicarious liability” it can be inferred that the person supervising the driver is liable to pay the compensation to the victim. During such time, however, it will be deemed that that vehicle was transferred along with the insurance policy, even if it were insured at the instance of the original owner. Thus, the Insurance Company would not be able to escape its liability to pay the amount of compensation”.
CONCLUSION: from above judgement of the apex court , we shall draw this conclusion that If you have bought a second-hand vehicle and got the vehicle registered in your name but have not made any change in the insurance policy, then you will not get the claim if the vehicle meets with an accident.
If the vehicle meets with an accident, then the claim for the damage caused to the vehicle i.e. the own damage component of the insurance cover will neither be given to the new owner of the vehicle nor to the person whose name is there is the insurance policy that is the seller of the vehicle.
Insurance Company is liable to pay third party compensation or third-party insurance claim ,even if policy has not been transferred in the name of new owner.
KIRTI & ANR. ETC.VS. ORIENTAL INSURANCE COMPANY LTD.IN THE SUPREME COURT OF INDIACIVIL APPELLATE JURISDICTIONCIVIL APPEAL NOS.1920 of 2021[Arising out of Special Leave Petition(C) Nos.1872829 of 2018]
BRIEF FACTS OF THE CASE:HELD THAT : In the recent case passed by the three-judge bench of the Supreme Court on 5 January 2021, the court granted future prospects even in cases of national income.
The present civil appeal was filed by the three surviving dependents of the two deceased in which they have challenged the judgment passed by the Delhi High Court on 17 July 2017. Vide this judgment, the Delhi High Court reduced the amount of motor accident compensation awarded by the Motor Accident Claims Tribunal, Rohini (hereinafter referred to as “Tribunal”) under Section 168 of the Motor Vehicle Act, 1988 from Rs. 40.71 Lakhs to Rs 22 Lakhs.
This judgment of the tribunal was challenged by the respondent-insurer before the Delhi High Court on the following grounds:
THE DELHI HIGH COURT accepted most of the contentions of the respondent-insurer and reduced the amount of compensation to Rs 22 Lakhs. Against this judgment of the Delhi High Court, the present civil appeal was filed by the claimants.
SUPREME COURT’S ANALYSIS:
The Apex Court has decided in this case that future prospects should be paid in case of notional income also. The Court further decided that in the case of fixing compensation to homemakers-is of special significance as it will give recognition to the work, labor, and sacrifices of homemakers. In addition to that, it is in furtherance to India’s obligations under international law and will promote the principles of social equality and dignity to all, as envisaged in the Constitution of India. The notional income of the homemaker can be determined by various methods. The court must ensure that the method used in determining the national income is just as per the facts and circumstances of the particular case.
Earlier , health insurers clearly stated that laser eye surgery was cosmetic and excluded it from the policy. However, the ruling questions the assumption of the surgery being cosmetic. As a person opts for it only to correct his vision, it cannot be said that the surgery is only to enhance his appearance. In future, insurers may refrain from listing lasik under its set of exclusions, though they may charge a higher premium from customers with defective vision.
INFORM INSURANCE COMPANY ABOUT TRANSFER OF VEHICLE TO CLAIM BENEFIT.
If you are buying a preowned car, inform the insurance company about the transfer of registration within 14 days of the sale and also get the policy transferred in your name. If you fail to do so, only third party claims will be admissible under Section 157 of the Motor Vehicles Act, which states that the certificate of insurance ‘shall be deemed to have been transferred in favour of the person to whom the motor vehicle transferred.
DAMAGE NEED NOT BE CAUSED BY ‘FIRE’ ALONE
Now, any damage to stock due to fermentation, natural heating or spontaneous combustion will also be covered by a fire policy. The insurance company’s contention that the complaint be dismissed since the petitioners were not ‘consumers’ as they had taken the policy in relation to commercial activity was rejected by the Commission. So, even those who purchase goods or services for commercial activity can now approach a consumer court if they are not satisfied.
POLICY WORDINGS AND FUNNY CASE OF INSURANCE FRAUD
As we know that frauds are present in every section, where money involved. The financial sector is more vulnerable for fraud than other sectors. The frauds generally happen for sake of financial gain by applying dubious methods by the fraudsters. Insurance industry is the most vulnerable for various types of fares by policyholders, intermediaries , employees and others. Since insurance companies being custodian of the money of public , then it is important for insurance companies to take all available measures to prevent frauds and to protect interest of policyholders.
Health Insurance fraud is described as an intentional act of deceiving, concealing, or misrepresenting information that result in healthcare benefits being pai illegitimately to an individual or group.
These frauds may even affect solvency position of a company, its reputation ,business and efficiency of handling claims. The fraud may lead to charging of higher premium, rejection of renewals, higher insurance co-payments, denial of future coverage and also impacts quality of care services provided by the insurers.
The policy wordings play an important role in fraud management and servicing of customers. The insurance companies are always on default side in case of any disputes in policy wordings, because the Insurance Contract( Policy) is drafted by the insurance companies.
LET’S CONSIDER A CASE – a very famous and humorous incident that happen long ago.
Once Mr. X purchased a box of rare and expensive cigars and got fire insurance cover for his cigars.
The insurance company also understood the importance of the rarity of the branded cigars and insured it with utmost good faith.
The customer smoked the entire cigars within a month and claimed to the insurer that cigars were lost in a series of small fires( which indirectly means that he has used cigars for personal purpose).
The insurance company refused to honor the claim stating that the consumption of cigars will not qualify for the claims.
A case was filed before the court and court ruled in favour of the customer stating that the insurance company did not define in its policy as “ what is considered to be unacceptable fire and acceptable fire” and hence ,ordered the insurance company to honor the claim.
The insurance company honored the verdict of the court and paid the claim. But the insurance company had him arrested on 24 counts of arson. With his own insurance claim and testimony from the previous case being used against him, the customer was convicted for intentionally burning his insured property and was sentenced to 24 months in jail and fine.
CONCLUSION: the above case seems funny but point out loopholes in wordings of an insurance policy. The fraudsters generally take advantage of faulty wordings to plan their activities. The prevention of insurance frauds should be the priority of an insurance company and its depends on its internal control management, risk management procedures ,fraud management philosophy and policy ,action taken for customer education, robust system of fraud monitoring , the training and education of claim handling and policy servicing employees etc.
The information provided in above article does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available in this article are for general informational purposes only. Information in this article may not constitute the most up-to-date legal or other information. The views expressed in above article are personal views of the author and same will not be considered as professional advice. In case of necessity do consult with tax consultants for more understanding and clarity on subject matter.
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