Burden of Proof is on the Consumer to Prove Actual Loss; Inconsistent Claims Can Lead to Reduced Payout: UP State Consumer Commission - 2025-04-08

UP Consumer Commission Slashes Inflated Insurance Claim, Cites Complainant's Inconsistent Statements

Lucknow, UP – The Uttar Pradesh State Consumer Disputes Redressal Commission, in a significant ruling, has emphasized that the burden to prove the actual loss in an insurance claim lies squarely on the consumer. The Commission substantially reduced the compensation awarded to a mobile phone retailer, citing major inconsistencies in the number of stolen items reported at different stages.

The bench, comprising Officiating President Hon'ble Mr. Sushil Kumar and Judicial Member Hon'ble Mr. Vikas Saxena, partially allowed the appeal filed by Oriental Insurance Co. Ltd. and dismissed the one filed by the complainant, M/s Munna Dail System, for enhancement of compensation.

A Tale of a Theft and Shifting Numbers

The case originates from a theft that occurred on the night of November 13, 2011, at the premises of M/s Munna Dail System in Firozabad. The proprietor, Shri Shanti Swaroop, had an insurance policy from Oriental Insurance Co. Ltd. covering stock-in-trade (mobiles and accessories) up to ₹7,00,000.

Following the theft, the proprietor filed an insurance claim which was repudiated by the company, leading to a consumer complaint. The dispute revolved around the quantum of loss, which saw the complainant altering his stance multiple times: -

First Information Report (FIR): Mentioned the theft of 13 specific mobile phones (with product numbers) and cash. -

Statement to Surveyor: The number of stolen phones increased to 150. -

Final Claim Form: The figure was further inflated to 351 stolen mobile sets.

The District Consumer Forum, Firozabad, in its order dated February 8, 2023, had accepted the complainant's claim of ₹6,75,968 and awarded the amount with 8% interest, along with costs. This order was challenged by both the insurance company (seeking it to be set aside) and the complainant (seeking higher compensation).

Arguments Before the Commission

The insurance company argued that the District Forum's order was contrary to the evidence on record. They highlighted the complainant's failure to cooperate with the surveyor, non-submission of required documents, and the glaring inconsistencies in the claimed number of stolen phones. They pointed out that a previous order by the District Forum awarding ₹5,00,000 had been set aside by the State Commission itself, with directions for a fresh hearing which were not properly followed.

The complainant's counsel contended that only 13 phones were detailed in the FIR because their product numbers were readily available at the time. They argued that the compensation awarded by the District Forum was inadequate and sought a higher interest rate of 14% per annum, citing IRDA rules.

Commission's Findings: Inconsistencies Undermine the Claim

The State Commission critically analyzed the facts and found the complainant's explanations unconvincing. The bench observed that the District Forum had failed to comply with its earlier remand order, which specifically directed a comparative analysis of purchase invoices and VAT returns to ascertain the actual stock at the time of theft.

In a pivotal excerpt from the judgment, the Commission noted:

"The complainant kept changing his stand regarding the number of stolen sets from time to time... In this regard, the complainant's learned advocate's argument that since the product numbers were not available at the time of writing the first information report, therefore, the other sets were not mentioned, is not convincing."

The Commission held that the complainant had ample opportunity to prepare a list of stolen goods before filing the FIR. The constant and significant changes in the claimed number of stolen phones indicated an attempt to gain undue advantage from the insurance policy rather than seeking compensation for the actual loss.

While acknowledging the legal principle that insurance claims should not be rejected on minor technical grounds, the Commission reiterated a fundamental tenet:

"It is a settled law that a claim should not be denied on minor technical grounds, but the burden of proving how much loss was actually caused to the consumer lies on the consumer himself."

Finding no reliable evidence from the complainant to justify the loss beyond the surveyor's assessment, the Commission relied on the surveyor's report, which had quantified the loss at ₹26,816.

Final Order

The Commission modified the District Forum's order, directing the Oriental Insurance Co. Ltd. to pay: -

₹26,816 as compensation for the loss. -

Interest at 12% per annum on this amount from the date of filing the complaint until payment. -

₹15,000 as litigation costs.

The Commission set aside the award for "mental agony," stating that the grant of a high interest rate of 12% covers such damages. The complainant's appeal for enhancement was dismissed.