An insurance company's failure to examine the title of the immovable property before issuing the policy does not amount to non-disclosure of material facts or fraudulent misrepresentation.

Mr. Justice G.G. Loney, President—In this complaint, it is alleged that the Opposite Party namely United India Insurance Co. Limited did not settle complainant claim of insurance for Rs. 1.00 lakh. The complainant had insured stock of timber, cut-size bailies and bamboos lying in bis premises styled as KNS Enterprises situated at Shantinagar. The complainant alleged that on 3.2.1990, a riotous mob attacked his premises and damaged/pilfered the insured goods and caused him loss of Rs. 1.00 lakh. The incident was reported to the local police station. However, OP on 8.3.1990 terminated the insurance policy in question and appointed a Surveyor to assess the loss. Surveyor carried out the survey of the loss caused to the complainant and submitted his report dated 16.4.1990. Surveyor assessed the loss of the complainant for Rs. 61,700.00 but recommended only loss of Rs. 10,800.00. However, OP rejected claim of the complainant on 18.6.1990.

2. According to OP, complainant had no valid title of his property where the goods were stocked and stored and, therefore, the claim has been rejected by the OP. We have heard Shri S.S. Sridharan, Advocate for complainant and Mr. E. Afonso, advocate for opposite party. The admitted facts are that complainant’s stock was insured for an amount of Rs. 1.00 lakh and that on 3.2.1990, policy was subsisting. The incident of riot has not been seriously disputed by OP. The main reason as stated in para 4 of the written version to reject complainant’s claim is that the complainant has obtained insurance policy by fraudulent misrepresentation and non-disclosure of material facts as regards title of the insured property. On critical examination insurance policy in question, the description of place where complainant’s stock was insured is designated as “Stock of timber, cut-size bailies and bamboos in shade of first class and not in open construction situated at Shantinagar, Vasco-da-Gama.”

3. From the aforesaid reading, it is clear that insurance policy covered the risk of shade, furniture and stock of timber. There is no mention in the policy that immovable property on which the complainant’s shade and stock of timber was situated. Therefore, approach of OP was wrong to reject the complainant’s claim assuming that immovable property was insured. According to OP, there was a dispute as regards immovable property but in our view, that cannot be construed as fraudulent misrepresentation and nondisclosure of material facts because only shade and stock of timber was insured. It is the duty of the Insurance Company to verify the title of property on which the shade is situated before issuing insurance policy.

4. If the Insurance Company is not vigilant to ascertain the title of the property before issuing insurance policy, then it should not make grievance that the policy is obtained by fraudulent misrepresentation and non-disclosure of material facts. Failure on the part of Insurance Company to ascertain the title of the property to be insured before issuing the policy amounts to deficiency in its service. Non-disclosure of material facts as regards title of the property in this case cannot be said to be by fraudulent misrepresentation as policy in question is limited to cover risk on stock of timber and shade.

5. In the complaint filed by Hasan Sultan Nadaf before the Maharashtra State Commission, similar question arose for consideration. The State Commission rejected the objection of insurer on the ground of failure on the part of Insurance Company to verify the title of insured before the issue of policy. Said findings of Maharashtra State Commission is maintained by the National Commission in first appeal No. 28 of 1992, on 14.10.1992. It has been observed by the National Commission that “It is the duty of the insurer to satisfy himself before issuing the policy of insurance, that the insured has an insurable interest. Only if the insured has furnished wrong or false information, it is open to the insurer