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PUNJAB STATE CONSUMER DISPUTES
REDRESSAL COMMISSION, CHANDIGARH
Hon’ble Mr. Justice A.L. Bahri, President;
Mr. Jasbir Singh & Mrs. D.K. Bhamrah, Members
RAJ KUMAR—Complainant
versus
THE UNITED INDIA INSURANCE CO. LTD.—Respondent
Original Complaint No. 85 of 1998—Decided on 8.9.1999
Counsel for the Parties :
For the Complainant :Mr. M.S. Sethi, Advocate.
For the Respondent:Mr. Pradeep Bedi, Advocate.
A beneficiary of an insurance contract is a consumer under the Consumer Protection Act, 1986, and is entitled to file a complaint with the consumer forum if the insurance company repudiates the claim arbitrarily.
Headnote:
INSURANCE - INSURANCE POLICY - REPUDIATION OF CLAIM - ARBITRARY - CONSUMER PROTECTION ACT, 1986 - SECTION 2(1)(d) - CONSUMER - BENEFICIARY OF INSURANCE CONTRACT - ENTITLED TO FILE COMPLAINT - INSURANCE COMPANY LIABLE TO PAY COMPENSATION WITH INTEREST FOR DELAY IN SETTLEMENT OF CLAIM.
Fact of the Case:
Raj Kumar purchased a car from Daya Singh and obtained an insurance policy from United India Insurance Company. The car was stolen, and Raj Kumar filed a claim with the insurance company. The insurance company repudiated the claim on the ground that Daya Singh had no insurable interest in the car. Raj Kumar filed a complaint with the consumer forum.
Finding of the Court:
The consumer forum held that Raj Kumar was a consumer as defined under the Consumer Protection Act, 1986, and was entitled to file the complaint. The forum also held that the repudiation of the claim by the insurance company was arbitrary and that the insurance company was liable to pay compensation to Raj Kumar with interest for the delay in settlement of the claim.
Issues: 1. Whether the complainant is a consumer, as defined, entitled to file the complaint having locus standi to do so? 2. Whether repudiation of the claim by the Insurance Company is arbitrary? 3. To how much compensation, if any, the complainant is entitled to from the opposite party? 4. Relief.
Ratio Decidendi: The consumer forum relied on the following legal principles in reaching its decision: * A person who hires the services of an insurance company for consideration is a consumer under the Consumer Protection Act, 1986. * A beneficiary of an insurance contract is also a consumer under the Consumer Protection Act, 1986. * Repudiation of a claim by an insurance company on the ground that the insured person had no insurable interest is arbitrary if the insured person has a beneficial interest in the insured property. * An insurance company is liable to pay compensation to the insured person for delay in settlement of a claim.
Final Decision: The consumer forum allowed the complaint and directed the insurance company to reconsider the case of the complainant and pass appropriate orders for settlement of the claim within three months from the receipt of the copy of the order. The forum also directed the insurance company to pay costs of Rs. 1,000/- to the complainant.
Mr. Justice A.L. Bahri, President—Raj Kumar has filed this complaint against United India Insurance Company Limited claiming Rs. 4,35,000/- with 18% interest w.e.f. December 4, 1996 till payment alongwith Rs. 2,000/- cost of litigation and Rs. 50,000/- compensation for mental tension and delay in settlement of the claim.
2. Raj Kumar had purchased Maruti Esteemed Car No. DL-4 CD 3590 on February 5, 1995 from Daya Singh, resident of Village Basrampur, District Jalandhar on payment of Rs. 4,40,000/-. He obtained an agreement as well as affidavit from Daya Singh in this respect alongwith the car and Registration Book. On October 30, 1996, he obtained Insurance Policy for the aforesaid car from the opposite party United India Insurance Company for a period of one year from October 30, 1996 on payment of Rs. 13,836/- premium in cash through Mr. Wadial, Development Officer of the Insurance Company and obtained Cover Note No. 600267. The value of the car for which the Insurance Policy was taken was stated to Rs. 4,25,000/- + Rs. 10,000/- for the Sterio, in all Rs. 4,35,000/-. The Cover Note was issued in the name of Daya Singh because in the Registration Book, change of ownership had not taken place. On December 4, 1996, the aforesaid Car was stolen. The Insurance Company was informed. Report with Police Station was also lodged. The car was not traceable, hence claim was lodged with the Insurance Company. Annexure B is the copy of the F.I.R. and Annexure C is the intimation given to the Insurance Company. Sh. R.S. Ahluwalia, Investigator was appointed by the Insurance Company who submitted his report. The claim was repudiated by the Insurance Company vide letter dated May 26, 1998 addressed to Daya Singh that after transfer of the car, he was left with no insurable interest. Thus, Raj Kumar has come up claiming the amount from the Insurance Company. The claim was contested by the Insurance Company by submitting a written version. Preliminary objections were taken that the complaint was not maintainable. The complainant had no locus standi to file the complaint. The car was still in the name of Daya Singh and Insurance Cover was also in his name although car stood sold and Raj Kumar had no insurable interest. There was no deficiency in rendering service on the part of the Insurance Company. On merits, for want of knowledge, it was denied that the car had been purchased by the complainant. Issuance of the Insurance Policy in the name of Daya Singh was admitted who was stated to be the registered owner. The claim intimation was given by Daya Singh to the Insurance Company vide Annexure R3. R.S. Ahluwalia’s report was admitted to be of June 12, 1997, copy Annexure R-4. The repudiation was bona fide and correct as per facts. There was no privity of contract between the Insurance Company and the complainant. Both the parties produced their evidence on affidavits and documents. The complainant produced the Cover Note as issued by the Insurance Company Annexure A and copy of F.I.R. Annexure B with its English translation, intimation to the Insurance Company (Annexure C) as signed by Raj Kumar for Daya Singh. Copy of the affidavit of Daya Singh (Annexure D) with regard to sale of the car in favour of Raj Kumar after receipt of full payment. Annexure E is the letter from the Insurance Company repudiating the claim that Daya Singh had no insurable interest. Annexure F is the report of the Investigator Mr. R.S. Ahluwalia. On the other hand, the Insurance Company produced Annexure R-1, the repudiation letter already referred to above. Annexure R-2 is the another copy of the same dated May 26, 1998. Annexure R-3 is the letter of Raj Kumar giving intimation of theft though signed for Daya Singh. Ex. R-4 is the report of Sh. R.S. Ahluwalia. The following questions require consideration in the present case :
1. Whether the complainant is a consumer, as defined, entitled to file the complaint having locus standi to do so ?
2. Whether repudiation
