An insurance company is not liable to pay a claim if it has reasonable grounds to doubt the genuineness of the claim.

Headnote:
CONSUMER PROTECTION ACT - INSURANCE - REPUDIATION OF CLAIM - DEFICIENCY IN SERVICE - JURISDICTION OF CONSUMER FORUM - INSURANCE COMPANY REPUDIATED THE CLAIM AFTER INVESTIGATION - NO DEFICIENCY IN SERVICE - COMPLAINT DISMISSED.
Fact of the Case:

The complainant, a manufacturer of insecticides, obtained an insurance policy from the insurers covering road risk, rail risk, TPND, all risk including leakage and SRCC risk for transit from Jaipur and/or Indore, and/or Delhi and/or Sri Ganganagar to any place in India including deposit transfer of goods. The insurance was extended to cover warehouse to warehouse risk with extension of storage cover for 14 days at destination. The policy was for the period 1.1.1986 to 1.12.1986. The sum originally assured was Rs. 3,20,00,000/- vide Marine Cargo Cover Note No. NA 81 No. 64560 dated 1.1.1986. The sum assured was increased from time to time by payment of additional premiums for additional 50 lacs each time vide receipt No. 988298 dated 3.9.1986, Receipt No. 039255 dated 6.10.1986, receipt No. 039373 dated 20.10.1986 and receipt No. 002960 dated 17.11.1986. Ultimately the sum assured was increased to Rs. 5,20,00,000/-. The amount of premium paid was Rs. 88,001/- for the original sum assured and on each further extension for additional 50 lacs a sum of Rs. 13,750/- was paid with each of the extensions by 50 lacs in insured amount. The complainant transported the goods in 33 consignments during the currency of the policy. The complainant alleged that due to leakage and/or shortage of the goods, loss occurred which according to it was assessed at Rs. 2,48,551/- by the surveyors. The insured had paid a sum of Rs. 17,597/- as survey fee for the survey conducted by the surveyors. The insured filed a claim for Rs. 2,66,148/- with the Insurers. According to the insured the claim was not settled until the date of the filing of the complaint. The insurers repudiated the claim after investigation and further investigation by two letters dated 30.12.1987 and 15.3.1989.
Finding of the Court:

The court held that the insurance company had reasonable grounds to doubt the genuineness of the claim and when such is the case non-payment of the insurance amount under the policy cannot be deemed to be deficiency in service arising from negligence. The court also held that the complainant had not produced primary evidence to prove the damage or the papers relating to the actual survey.
Issues: Whether the insurance company was justified in repudiating the claim? Whether the complainant had produced sufficient evidence to prove the damage?
Ratio Decidendi: The court held that the insurance company had reasonable grounds to doubt the genuineness of the claim and when such is the case non-payment of the insurance amount under the policy cannot be deemed to be deficiency in service arising from negligence. The court also held that the complainant had not produced primary evidence to prove the damage or the papers relating to the actual survey.
Final Decision: The court dismissed the complaint subject to observations that the complainant may file a Civil Suit for recovery of the disputed amount if so advised.

ORDER

Mr. Justice S.K.M. Lodha, President — M/s. Gupta Chemicals Pvt. Ltd. has filed this complaint against the opposite parties who will hereinafter be referred to as the “Insurers” for indemnifying the loss etc. amounting to Rs. 4,13,860/- before the State Commission on 2.1.1990. The complainant is manufacturers of insecticides and selling goods throughout India either from the factory located at Jaipur or through its various branches/depots located at Indore, Delhi and Sri Ganganagar. The complainant (insured) obtained an insurance policy from the insurers covering road risk, rail risk, TPND, all risk including leakage and SRCC risk for transit from Jaipur and/or Indore, and/or Delhi and/or Sri Ganganagar to any place in India including deposit transfer of goods. The insurance was extended to cover warehouse to warehouse risk with extension of storage cover for 14 days at destination. The policy was for the period 1.1.1986 to 1.12.1986. The sum originally assured was Rs. 3,20,00,000/- vide Marine Cargo Cover Note No. NA 81 No. 64560 dated 1.1.1986. The sum assured was increased from time to time by payment of additional premiums for additional 50 lacs each time vide receipt No. 988298 dated 3.9.1986, Receipt No. 039255 dated 6.10.1986, receipt No. 039373 dated 20.10.1986 and receipt No. 002960 dated 17.11.1986. Ultimately the sum assured was increased to Rs. 5,20,00,000/-. The amount of premium paid was Rs. 88,001/- for the original sum assured and on each further extension for additional 50 lacs a sum of Rs. 13,750/- was paid with each of the extensions by 50 lacs in insured amount. The case of the complainant is that the total premium paid was Rs. 1,43,001/- and policy covered the risk of Rs. 5,20,00,000/-. The complainant transported the goods in 33 consignments during the currency of the policy. The complainant has alleged that due to leakage and/or shortage of the goods, loss occurred which according to it was assessed at Rs. 2,48,551/- by the surveyors. The insured had paid a sum of Rs. 17,597/- as survey fee for the survey conducted by the surveyors. The insured filed a claim for Rs. 2,66,148/- with the Insurers. According to the insured the claim was not settled until the date of the filing of the complaint. Schedule-1 was appended to the complaint containing details of claims lodged with the insurers during the year 1986 which remain unsettled. There were 38 consignments sent to different buyers at different places on different dates. Dates of arrival at destination range from 31.5.1986 to 8.8.1986 date of delivery to the buyers are from 31.5.1986 to 8.8.1986 and the dates of survey are from 7.6.1986 to 14.8.1986. The loss is said to have occurred on account of leakage and shortage during transportation and it was assessed by Mr. Rajkatia who is surveyor and loss assessor. It may be mentioned at this stage that Shri Rajkatia was not appointed by the insurers. What the complainant has stated is Mr. Rajkatia were licenced Surveyor and being generally appointed as surveyor on behalf of the insurers for survey and assessment of loss. The complainant approached the insurers for settlement after due verification. Letters were also addressed but the insurers avoided the settlement under one pretext or the other such as that investigation is under progress or that matter was in trusted to M/s. J.N. Sharma and Co., Chartered Accountant for investigation. The complainant has further alleged that time was gained by the insurers to coerce to Shri Rajkatia to withdraw the finding given in the survey reports. The complainant had intimated the necessary facts to M/s. J.N. Sharma and Co. vide letter dated 15.6.1987 in regard to the appointment of Shri Rajkatia surveyor. A letter was sent to the insurers dated 23.6.1987 informing that they have taken up the matter with surveyors and are hopeful of quick disposal of the claims. In para 7 of the complaint the insurers had alleged that by letter dated 30.12.1987 the insurers informed t

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An insurance company is not liable to pay a claim if it has reasonable grounds to doubt the genuineness of the claim.

Cases Referred (7)