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KERALA STATE CONSUMER DISPUTES
REDRESSAL COMMISSION, THIRUVANANTHAPURAM
Hon’ble Mr. Justice P.K. Shamsuddin, President
and Smt. C.G. Sethu Lakshmi, Member
ABDUL AZEEZ RASHEED—Complainant
versus
THE DIRECTOR OF INSURANCE & ANOTHER—Respondents
Complaint No. 274 of 1991—Decided on 20.9.1993
Counsel for the Parties :
For the Complainant :Mr. S. Ajith Kumar, Advocate.
For the Respondents:Mr. S.S. Kalkura, Advocate.
An insurance company is liable to pay the insurance claim if the vehicle is stolen and cannot refuse to pay the claim on the ground that the vehicle was used for illegal purposes unless there is evidence to support the allegation.
Headnote:
CONSUMER PROTECTION ACT, 1986 - INSURANCE CLAIM - DEFICIENCY IN SERVICE - INSURANCE COMPANY'S REFUSAL TO HONOUR CLAIM DUE TO ALLEGED ILLEGAL USE OF VEHICLE - NO EVIDENCE TO SUPPORT ALLEGATION - HELD: INSURANCE COMPANY LIABLE FOR DEFICIENCY IN SERVICE.
Fact of the Case:
The complainant purchased a vehicle which was insured by the first opposite party. The vehicle was stolen and the complainant filed a claim with the insurance company. The insurance company refused to honour the claim on the ground that the vehicle was used for illicit transport of timber and was liable to be confiscated under the Kerala Forest Act. The complainant filed a complaint with the Consumer Commission alleging deficiency in service.
Finding of the Court:
The Consumer Commission held that there was no evidence to support the insurance company's allegation that the vehicle was used for illicit transport of timber. The Commission also found that the insurance company did not make any enquiry from the Police as to the fact of loss of vehicle. The Commission held that there was deficiency in service on the part of the insurance company in not releasing the insurance claim of the complainant.
Issues: 1. Whether there is deficiency in service on the part of the first opposite party in not honouring the Insurance claim? 2. What are the reliefs to which the complainant is entitled? 3. What is the order to be passed as to cost?
Ratio Decidendi: The Consumer Commission relied on the following legal principles in reaching its decision: * The insurance company is liable to pay the insurance claim if the vehicle is stolen. * The insurance company cannot refuse to pay the insurance claim on the ground that the vehicle was used for illegal purposes unless there is evidence to support the allegation. * The insurance company is required to make a reasonable enquiry into the facts of the case before refusing to pay the insurance claim.
Final Decision: The Consumer Commission directed the insurance company to release the insurance claim of the complainant within a period of one month from the date of the order. The Commission also directed the parties to bear their own respective costs.
Mr. Justice P.K. Shamsuddin, President— The complainant purchased a LMV Goods Carriage KL-01 /4122 which is under hypothecation to Kerala Financial Corporation, the second respondent herein. The vehicle was covered with a valid insurance policy for the period from 17.7.1990 to 15.7.1991. Exbt. R-1 is the certificate of insurance. Exbt. R-1 shows the vehicle insured was the one with registration No. KL-01 /4122. Address of the insured is shown as A. Rasheed, Thushara Manzil, Elavattom P.O., Palode. The vehicle was stolen between 10.1.1991 10.30 p.m. and 11.1.1991 7 a.m. The complainant lodged a complaint before the Nedumangad Police Station and a Crime was registered by that Police Station as Crime No. 9/91 for an offence of theft. Exbt.P-1 is the First Information Report. It appears that Ned umangad Police filed a report before the Judicial IInd Class Magistrate Court, Nedumangad stating that inspite of best efforts they could not detect the accused. Exbt. P-2 is the said report.
2. The complainant made a claim before the first respondent supported by copies of documents filed before the Court and documents of vehicle. The grievance of the complainant is that the first respondent sent a letter dated, 22.8.1991 refusing to honour the claim. It is in those circumstances, this complaint is filed.
3. The first opposite party, namely the Director of Insurance, filed a version in which it is contended that the complaint is not maintainable. The allegation that the vehicle was lost by way of theft was disputed. It is further stated that the Forest Range Officer, Palode by his letter dated 27.4.1992 intimated the opposite party that the vehicle bearing Registration No. KL-01/4122 owned by Rasheed was used for illicit transport of timber from the Forest area within the jurisdiction of Palode Range, that therefore the vehicle was liable to be confiscated under Section 61-A of the Kerala Forest Act and that in the circumstances, the amount claimed towards insurance policy may not be released to the owner of the vehicle. They also stated that the allegation of the complainant that the vehicle was stolen is false and untrue. According to the first opposite party they could not honour the Insurance claim by reason of the above facts.
4. The second opposite party also filed a version though no relief was claimed against the second opposite party. It has been specifically mentioned therein that the complainant had filed application for loan for a sum of Rs. 1,88,000/- and the second opposite party had sanctioned the loan to the complainant. It is also alleged that the complainant is not a Consumer of the second opposite party.
5. In order to substantiate the case of the complainant they have examined the complainant and also P.W-2, the Investigating Officer in trial No. 9/91. The complainant also produced and marked Exbts. P-1 to P-9. On behalf of the first opposite party, R.W.-1, the Assistant Director of Insurance was examined and Exbts. R-1 to R-3 were marked.
6. The points that arise for consideration are:—
(i) Whether there is deficiency in service on the part of the first opposite party in not honouring the Insurance claim ?
(ii) What are the reliefs to which the complainant is entitled ?
(iii) What is the order to be passed as to cost?
7. The complainant has given evidence as P.W-1 and he has spoken in terms of the allegations contained in the complaint. He deposed that he is the owner of KL-01/4122 and the vehicle has been hypothecated to the second opposite party. He also stated that the first opposite party has issued a policy in respect of the vehicle covering the period from 17.7.1990 to 15.7.1991 and the vehicle was stolen on 10.1/91. He lodged a complaint before the Police. However the vehicle could not be detected. He also proved the First Information Report Exbt. P-1 and also the report made by the Police stating that they could not detect the accused. Exbt. P-2 is the said report. Exbt. P-3 is the photocopy of the registrati
