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2025 Supreme(Online)(SCDRC) 33391
STATE CONSUMER DISPUTES REDRESSAL COMMISSION
Bimla Kumari, Presiding Member
Leena Jain – Appellant
Versus
Tata AIG General Insurance Company Limited – Respondent
C No. 952/2019
For the Appellants/Petitioners: Mukesh Gahlot
For the Respondents: Manoj Kumar, Deepa Chacko
Insurance companies must not repudiate genuine claims on unsubstantiated grounds of non-cooperation. The Commission is competent to adjudicate insurance disputes via summary proceedings, and individuals hiring insurance services for business-related goods remain covered as consumers under the Act.
Headnote:(A) Consumer Protection Act, 1986 - Sections 2(1)(d), 2(1)(g) and 17 - Insurance Law - Fire Policy - Deficiency in service - Repudiation of claim - Non-cooperation allegations - Whether the complainant engaged in commercial activity - Whether proceedings require detailed civil evidence. Held, that hiring of insurance services for business activities does not exclude a complainant from being a consumer under the Act. Complicated issues of law or fact do not preclude adjudication by the Commission through summary proceedings (Paras 23-25).
(B) Insurance Claim - Principles of assessment - Duty of insurer - Insurers should not adopt an attitude of avoiding genuine claims on technical pretexts, as such conduct undermines credibility and increases litigation costs. Surveyors are not adjudicators of facts with the power to act against the interests of claimants based on unsubstantiated allegations of non-cooperation or misrepresentation (Paras 4, 38, 39).
Facts of the case:
The complainants held a fire insurance policy for their business premises and stock. Following a fire incident, the insurer appointed a surveyor and subsequently repudiated the claim, citing lack of cooperation and misrepresentation of facts regarding invoices and quantities. The complainants alleged deficiency in service, stating that documents were duly provided and the surveyor's assessment was biased and manipulative.
Findings of Court:
The documents on record confirmed that the complainant had provided the required information. The surveyor's report contained discrepancies, such as referring to a lower sum insured than what was stipulated in the policy. The investigation reports relied upon by the insurer to reject the claim failed to demonstrate how the complainants were responsible for the alleged non-cooperation of vendors. The insurer's repudiation was deemed unjustified and indicative of a failure to perform contractual obligations efficiently.
Issues: Whether the complainants qualified as consumers under the Act, whether the complaint required complex civil litigation rather than summary proceedings, and whether the repudiation of the insurance claim was based on valid grounds.
Ratio Decidendi: The Commission affirmed that the complainant is a consumer, rejecting the commercial purpose argument based on established legal precedents. It held that the Commission is competent to handle insurance disputes notwithstanding claims of complexity. The insurer failed to prove that the complainants misrepresented facts or withheld cooperation, rendering the repudiation of a valid claim an act of deficiency in service.
Result: Complaint allowed. Directed the insurer to pay the claimed amount with interest, plus compensation for mental harassment and litigation costs.
| Table of Content |
|---|
| 1. basis of consumer complaint regarding fire insurance claim repudiation. (Para 1 , 2 , 3 , 4) |
| 2. insurer's defense: maintainability of complaint and alleged policy violations. (Para 5 , 6 , 7) |
| 3. procedural history, interim orders, and findings on maintainability. (Para 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15) |
| 4. commercial usage does not preclude consumer status in insurance services. (Para 23 , 24) |
| 5. consumer forums can decide insurance claims through summary proceedings. (Para 25) |
| 6. deficiency in service established through unjustified claim repudiation. (Para 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39) |
| 7. final award of damages, interest, and procedural directions. (Para 40 , 41 , 42 , 43 , 44 , 45) |
IN THE MATTER OF
1. Smt. Leena Jain
W/o Sh. Rajesh Kumar Jain
Prop. Of M/s Aadinath Traders
R/o 9/6300 Jain Mandir Gali No. 1
Gandhi Nagar, East Delhi
Delhi-110031.
2. M/s Aadinath Traders
Through its Manager
Sh. Rajesh Jain
R/o 9/6300 Jain Mandir Gali No. 1
Gandhi Nagar, East Delhi
Delhi-110031
(Through: Mr Mukesh Gahlot Advocate)
.....Complainant
VERSUS
1. Tata AIG General Insurance Company Limited
Unit No. 810-816
8th Floor, World Trade Tower
Plot No. C-001, Sector 16
Noida-201301 (U.P.)
(Through: Mr Manoj Kumar, Advocate)
.....Opposite Party no. 1
2. TIM Insurance Surveyors & Loss Assessors Pvt. Ltd.
345, 1st Floor, Mahinder Park,
Rani Bagh, Delhi-110034
(Through: Ms Deepa Chacko, Advocate)
.....Opposite Party no. 2
BIMLA KUMARI, PRESIDING MEMBER
ORDER
1. By this judgment, I shall dispose of the complaint filed by the complaint under section 17 of the Consumer Protection Act 1986 for the grant of following damages: -
a) Loss of the stock amounting to Rs. 38,00,125.84
b) For mental torture and harassment Rs. 20,00,000.00
c) For business loss suffered due to Rs. 10,00,000.00
acts of the opposite parties
d) For expenses incurred in pursuing the
matter with respondent Rs. 1,00,000.00
e) Interest on the claim amount Rs. 5,13,000.00
f) Amount of counsel fee & other related expenses Rs. 2,50,000.00
Total Rs. 76,63,125.84
2. Brief facts of the case are that the complainant no. 1 is running a wholesale readymade garment business in the name of M/s Aadinath traders i.e. complainant no. 2 through its manager Rajesh Jain, who is her husband. She got insured the business premises, furniture, fixtures and the stock in trade by taking a Fire Policy for a sum of Rs 80 lakhs from opposite party no. 1 and the policy was valid from 25.10.2018 to 24.10.2019
3. It is the case of the complainants that the business premises is a four storey building constructed on a small plot of land measuring 64 square yard and is owned by complainant no.1. In the evening of 06.12.2018 at about 7:00 P.M., the fire broke out on the third floor of the business premises of the complainants i.e. building no. 9/6300 Jain Mandir, Gali No. 1, Gandhi Nagar, Delhi. The police as well as the fire brigade were informed about the same and they arrived at the spot. The fire brigade was able to extinguish the fire with strenuous effort of more than two hours. In the fire, the complainants suffered substantial loss, occurred to the stock of garments as well as clothes stored by the complainants. The portion of the business premises was also damaged in the fire. The complainants informed the opposite party no. 1 about the incident as well as the loss suffered by them. The opposite party no.1 deputed the Surveyor, namely, M/s TIM Insurance Surveyors & Loss Assessors Pvt. Limited i.e. Opposite party no. 2 to carry out the verification of the claim of the complainants. But the attitude of the opposite party no. 2, from the very beginning was to act against the complainants. The surveyor finally submitted its report dated 02.07.2019 turning down the claim of the complainants. Acting upon the report of the surveyor, the respondent no.1 repudiated the claim of the complainants vide letter dated 16.07.2019.
4. It is the case of the complainants that repudia
