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NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
D.K. Jain Presiding Member and M. Shreesha, Member
GUPTA POLYESTER PVT. LTD. - Appellant
Versus
NATIONAL INSURANCE COMPANY LIMITED AND OTHERS - Respondents
First Appeal No. 293 of 2011 from Order dated 12.5.2011 in Complaint Case No. 139 of 1994 of Maharashtra State Consumer Disputes Redressal Commission.
Decided on : 25-08-2015
Sanjoy Kumar Ghosh, Advocate, for the Appellant; Ravi Bakshi, Advocate, for the Respondent
The main legal point established in the judgment is that the repudiation of an insurance claim must be justified and in adherence to the relevant regulations, particularly the IRDA (Protection of Policyholders' Interests) Regulations, 2002. The court emphasized the importance of following the claim procedure, furnishing necessary documents, and adhering to time limits for assessment and rejection of claims.
Headnote:
Consumer Protection Act - Insurance Claim - 1986 - [FIRE INSURANCE] - [Section 19] - [Summary of Acts and Sections: The court discussed the provisions of the Consumer Protection Act, 1986, particularly Section 19, which deals with the appeal against the order of the State Commission. The court also referred to the IRDA (Protection of Policyholders' Interests) Regulations, 2002, specifically Regulation 9, which outlines the claim procedure in respect of a general insurance policy. The court highlighted the importance of furnishing necessary documents, the role of surveyors, and the time limits for assessment and rejection of claims under the regulations. The interpretation of these provisions influenced the court's decision to set aside the State Commission's order and direct the first Respondent to pay 50% of the claim amount with interest at 6% per annum from the date of filing of the Complaint till the date of realization together with costs of Rs. 10,000.
Fact of the Case:
The Complainant Company filed a Complaint seeking direction to the Insurance Company to settle the claim amount with interest @ 18% together with compensation and costs after a fire broke out in Gala No. B36, destroying goods worth Rs. 20,56,571. The State Commission dismissed the Complaint, stating that the stocks destroyed in the fire belonged only to another company and not to the Complainant.
Finding of the Court:
The court found that the Insurance Company's repudiation of the claim was baseless and in violation of the IRDA regulations. It also noted that the delay in the assessment and rejection of the claim was unjustified. Therefore, the court set aside the State Commission's order and directed the first Respondent to pay 50% of the claim amount with interest at 6% per annum from the date of filing of the Complaint till the date of realization together with costs of Rs. 10,000.
Issues: The issues included whether the Insurance Company was justified in repudiating the claim and whether the Insurance Company adhered to the IRDA (Protection of Policyholders' Interests) Regulations, 2002.
Ratio Decidendi: The court held that the Insurance Company's repudiation of the claim was baseless and in violation of the IRDA regulations, particularly Regulation 9, which outlines the claim procedure in respect of a general insurance policy. The court also emphasized the importance of furnishing necessary documents, the role of surveyors, and the time limits for assessment and rejection of claims under the regulations.
Final Decision: The court allowed the Appeal, set aside the State Commission's order, and directed the first Respondent to pay 50% of the claim amount with interest at 6% per annum from the date of filing of the Complaint till the date of realization together with costs of Rs. 10,000.
ORDER
M. Shreesha, Member. - Challenge in this Appeal, by the Complainant, under Section 19 of the Consumer Protection Act, 1986 (in short "the Act"), is to the order dated 12.5.2011, passed by the State Consumer Disputes Redressal Commission, Maharashtra (for short "the State Commission"). By the impugned order, the State Commission dismissed the Complaint on the ground that the claim made by the Complainant is a fraudulent claim, as the fire broke out in Gala No. B36 and the material kept therein does not belong to the Complainant Company alone, but also belongs to M/s. Santosh Synthetics & Silk Mills Pvt. Ltd. (hereinafter referred to as "Santosh Silks").
2. The facts material to this Complaint are that the Complainant Company had taken an insurance policy No. 250500/3100440/HKG for an assured sum of Rs. 20,00,000 for its stocks through Opposite Party No. 2, i.e., State Bank of India, for the period covering 21.2.1990 to 20.2.1991. On 11.12.1990, accidentally a fire broke out in Gala No. B36 and the Complainant pleaded that goods worth Rs. 20,56,571 were burnt and completely destroyed. A claim was lodged with the Insurance Company and all the necessary documents were provided. The Complainant averred that the stock as on 30.11.1990 was Rs. 20,56,571 but as the sum assured was Rs. 20 lakh, the claim was restricted to Rs. 20 lakh. As per the certificate issued by the fire brigade office, major stock of goods in Gala No. B-36, which were destroyed, belonged to the Complainant Company.
3. The Complainant pleaded that all the information asked for by the surveyor was furnished but the Insurance Company, time and again, demanded the same particulars again and again and delayed the settlement of their claim. Letter dated 23.9.1992 was sent by the Complainant Company giving all the details of the bills with respect to purchase of machinery, etc. A legal notice was issued on 6.8.1993, for which the Respondent Insurance Company replied vide letter dated 21.9.1993.
4. The Complainant averred that the Respondent had repudiated their claim on 2.2.1994 and thereafter a letter was addressed by the Chairman-cum-Managing Director on 9.2.1994 stating that there was a lot of unsold stock, as they had undertaken job work for Santosh Silks, but the said goods were kept in Gala No. 35 and were with respect to "Grey Cloth" only. The Appellant pleaded that Gala B36 was in their possession since January, 1988 and that both the finished goods and yarn were kept on a wooden loft. After March 1990, the sales went down and the stocks piled up, so they took up processing work from Santosh Silks, who supplied their yam. The Appellant averred that the balance sheet certified by the Chartered Accountant for the year 1990-91 would show purchase of yam and the bills/purchases reflected therein include the excise duty paid to the Government. The stock in Gala No. B36, which was destroyed by fire, was hypothecated to the second Opposite Party Bank and the same was informed to the Insurance Company vide letter dated 11.8.1992.The letters of the said Bank show that the stock was valued at Rs. 20,56,571. Despite giving the relevant information to the surveyor, the Insurance Company repudiated their claim. Hence, the Complainant filed a Complaint before the State Commission seeking direction to the Insurance Company to settle the claim amount with interest @ 18% together with compensation and costs.
5. The first Respondent/National Insurance Company Ltd. filed its written version, admitting the issuance of Fire and Special Perils Policy No. 250500/3100440/HKG, for a sum insured of Rs. 20 lakh, covering the period from 21.2.1990 to 20.2.1991. The Insurance Company pleaded that the fire, which occurred on 11.12.1990, in the complainant's premises was restricted to Gala No. B36 and that at that point of time, the Appellant Company was doing job work for Santosh Silks. The stock of Santosh Silks consisting mainly of yam and lying on the loft, was insured with United In
