2026 Supreme(Online)(NCDRC) 683

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
A. P. Sahi, President, Bharatkumar Pandya, Member
Capri Global Capital Ltd – Appellant
Versus
United India Insurance Co Ltd – Respondent
CONSUMER COMPLAINT NO. NC/CC/245/2011

An insurance policy condition requiring 'immediate' notice of claims and prior written consent for litigation expenses is a fundamental condition precedent. Failure to comply with these requirements until after policy expiry renders a claim for indemnity inadmissible as it prejudices the insurer's right to evaluate and conduct the defense.

Headnote:(A) Consumer Protection - Directors and Officers Liability Policy - Clause 3(g)(i) - Scope of coverage - Indemnity for legal expenses - Claim for legal costs incurred in defending criminal proceedings - Requirement of immediate notice and prior consent - Breach of condition precedent - Failure to provide immediate intimation regarding legal proceedings and expenses incurred during policy period - Held, duty to intimate and seek consent is fundamental to the policy contract. (Paras 18-21, 46-48)

(B) Insurance Law - Claim intimation - 'Immediate' notice - Requirement of promptness - Failure to notify insurance provider during policy duration while incurring expenses - Effect of delayed intimation - Insurance company deprived of right to evaluate claim and conduct defense - Claim held inadmissible. (Paras 34, 41-42, 48)

Facts of the case:
The complainant, a financial services company, purchased a liability policy to cover costs and expenses for the defense of its directors and officers. Following criminal investigations and arrests of certain directors, the company engaged legal counsel and incurred substantial litigation expenses. The company notified the insurer of these claims after the policy had expired and only after significant legal costs had been incurred without seeking the insurer's prior consent or immediate notification as required by the policy terms.

Findings of Court:
The court found that the complainant breached the essential conditions of the policy by failing to provide immediate notice and failing to obtain the insurer's consent before incurring legal expenses. The insurance contract mandated that notice of any claim must be given immediately and that costs should be incurred with the insurer's consent. The delay in intimation, which occurred only after the policy's expiry, prejudiced the insurer's right to assess the defence and the legitimacy of the claims.

Issues: 1. Whether the complainant's failure to provide immediate notice of criminal proceedings constitutes a breach of the policy conditions. 2. Whether the insurer is liable to indemnify legal expenses incurred without the insurer's prior consent under the terms of the policy.

Ratio Decidendi: The policy explicitly requires the insured to provide immediate notice of claims and to obtain the insurer's consent before incurring legal expenses. These conditions are not mere procedural formalities but are fundamental to the contract of insurance, ensuring the insurer can effectively evaluate and conduct a defense. Where a policyholder ignores these conditions and acts unilaterally, they forfeit their right to indemnity.

Result: Complaint dismissed.