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1993 Supreme(Bom) 129
IN THE HIGH COURT OF BOMBAY
(BOMBAY)
Justice G.G. Loney, President, M.G. Gavai Smt. Ellen Dharkar, Members.
Manjeshwar Vishwanath... Complainant.
Versus
The New India Assurance Co. Ltd. and another ... Opponent.
Complaint No. 225 of 1991, decided on 9-3-1993.
Insurance companies are liable to settle the claims of the insured within a reasonable time and any delay in settlement of the claim amounts to deficiency in service.
Headnote:
CONSUMER PROTECTION ACT, 1986 - INSURANCE - SECTION 2(1)(O) - DEFICIENCY IN SERVICE - INSURANCE COMPANY LIABLE TO SETTLE CLAIM OF INSURED WITHIN REASONABLE TIME - DELAY IN SETTLEMENT OF CLAIM AMOUNTS TO DEFICIENCY IN SERVICE.
Fact of the Case:
Complainant purchased a Light Motor Vehicle and insured it with the opposite party. The vehicle was burnt down by miscreants. The complainant informed the opposite party to carry out the survey and settle the insurance claim. The surveyor estimated the loss at Rs. 2,13,368.55. However, the opposite party rejected the claim on the ground that the vehicle was being used as a 'public carrier' contrary to the terms of the insurance policy.
Finding of the Court:
The court found that the reason for rejection of the complainant's claim was imaginary and unreasonable. The court held that the insurance company was liable to settle the claim of the insured within a reasonable time and the delay in settlement of the claim amounted to deficiency in service.
Issues: Whether the insurance company was liable to settle the claim of the insured within a reasonable time.
Ratio Decidendi: The court held that the insurance company was liable to settle the claim of the insured within a reasonable time and the delay in settlement of the claim amounted to deficiency in service. The court relied on the decision of the National Commission in the case of Umedilal Aggarwal v. United India Assurance Company Ltd., where it was held that failure on the part of the insurer to settle the claim of the insured within a reasonable time amounts to deficiency in the service in terms of the definition of section 2(1)(o) of the Consumer Protection Act.
Final Decision: The complaint was allowed. The opposite party was directed to settle the complainant's claim for Rs. 2,13,000/- within 30 days from the receipt of the order. The aforesaid amount was to carry interest at the rate of 18% p.a. from 4-10-1989, i.e. from the date of surveyors' report till payment. The complainant was also to be paid Rs. 500/- as cost.
2. The opposite party No. 1 filed its written version and denied the claim of the complainant for the similar reasons mentioned above.
3. We have heard Shri Rajan Pillay, Advocate for the complainant and Shri Mokashi, Advocate for the respondent.
4. The factum of insurance policy and vehicle being burnt down by the miscreants are all admitted facts. The only controversy between the parties is whether in terms of the Insurance policy in question the claim of the complainant was required to be settled in favour of the complainant by the opposite party No. 1. According to Shri Mokashi, the vehicle in question was a "public carrier" and therefore, the claim of the complainant was not payable as the vehicle was being used contrary to the terms of the Insurance policy. According to Shri Rajan Pillay, the vehicle was being used as a "private vehicle" by the applicant and therefore, the claim of was wrongly rejected by the opposite party No. 1. We have perused the Insurance Policy in question which is issued in the name of complainant Shri Manjeshwar Vishwanath. The total value of the policy is for Rs. 2,25,000/- valid between the period 17-3-1989 and 16-3-1990. The incident of burning occurred on 30th June, 1989 was within the period of valid insurance policy. In the Insurance policy, it is nowhere mentioned that the insurance claim is not payable to an insured in case of use of vehicle as "private carrier" or "public carrier". We therefore, see no reason as regards the controversy of vehicle being a "public carrier" or a 'private vehicle'. It is therefore, apparent that the claim of the complainant was rejected by the opposite party No. 1 for imaginary considerations.
5. We find the reason for rejection of complainant's claim is totally imaginary and unreasonable. The justified claim of the complainant has been wrongly rejected. In our view, there has been a deficiency in the service of the opposite party in not settling a justified claim of an insurer.
6. The surveyor of the opposite party No. 1 has assessed the complainant's loss at Rs. 2,65,000 as the salvage price. However, the complainant has placed on record the estimate from Jaika Motors Pv
