Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(SCDRC) 3176

STATE CONSUMER DISPUTES REDRESSAL COMMISSION
Sangita Dhingra Sehgal, President, Bimla Kumari, Member
BIJENDER – Appellant
Versus
BAJAJ ALLIANZ INSURANCE CO. LTD. – Respondent
CONSUMER COMPLAINT NO.- 318/2012

Advocates:
For the Appellants/Petitioners: Ashok Tomar
For the Respondents: Suman Bagga, Virender Prabhakar

An insurer cannot enforce policy exclusion or warranty clauses to repudiate a claim if the specific terms and conditions were not disclosed or supplied to the insured at the time of the contract, violating the principle of utmost good faith.

Headnote:(A) Consumer Protection Act, 1986 - Section 2(1)(d) - Insurance - Claim repudiation - Non-supply of policy documents - Whether an insured who engages in commercial activity is a consumer - Held, an individual using a vehicle for earning a livelihood through self-employment is a consumer under the Act. (Para 16)

(B) Insurance Law - Duty of disclosure - Insurer failed to provide policy terms, conditions, or exclusions to the insured - Exclusion clause regarding hilly terrain warranty cannot be enforced if not communicated. (Paras 23, 26)

Facts of the case:
The complainant, an uneducated individual, insured his JCB excavator with the opposite party. The insurer repudiated the claim following an accident on the grounds that the vehicle was operating in prohibited hilly terrain, violating a warranty clause. The complainant alleged that the policy and its restrictive terms were never disclosed or supplied at the time of issuance.

Findings of Court:
The commission found that the insurer failed to prove that the policy conditions were supplied or explained. Citing the principle of utmost good faith, the court held that an insurer cannot rely on exclusion clauses not disclosed to the insured.

Issues: 1. Whether the complainant qualifies as a 'consumer' despite hiring out the machinery. 2. Whether the insurer is justified in repudiating the claim based on a warranty clause not disclosed/supplied to the insured.

Ratio Decidendi: An insurer has a fundamental duty of disclosure. If an insurance policy containing specific exclusion clauses is not supplied to the insured, the insurer cannot claim the benefit of such clauses to repudiate the claim.

Result: Complaint allowed; Opposite party directed to pay the assessed value of the machinery with interest and compensation for mental agony and litigation costs.

Table of Content
1. overview of parties' allegations and factual history regarding the repudiated insurance claim. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9)
2. determination of 'consumer' status for self-employment enterprises. (Para 10 , 11 , 12 , 13 , 14 , 15 , 16)
3. evidentiary analysis of whether terms and conditions were communicated to the insured. (Para 17 , 18 , 19 , 20 , 21 , 22 , 23)
4. the obligation of disclosure and the invalidity of undisclosed exclusion clauses. (Para 24 , 25 , 26 , 27 , 28 , 29)
5. final orders, valuation of loss, and directions for compensation and interest. (Para 30 , 31 , 32 , 33 , 34 , 35)

PER: HON’BLE MS. BIMLA KUMARI, MEMBER (FEMALE)

JUDGMENT

1. Brief facts of the case are that the Complainant is an uneducated person and the owner of “JCB Excavator JS200,” (hereinafter referred as JCB) which he gave on rent to contractor for earning his livelihood. The Complainant got insured the said JCB from the Opposite Party No.1 vide policy bearing no. OG-11-1104-0410-00000055 w.e.f. 21.01.2011 to 20.01.2012 with a sum insured of Rs.43,80,000/-. The Complainant had paid premium of Rs.37,322/- towards the said policy.

2. It is the case of Complainant that neither the policy was handed over to him nor contents of the same were explained to him. The Opposite Party No. 1 had also not given any proposal form for signatures and had given only ‘Head Cover Note’ dated 20.01.2011 explaining that the “machine can be operated at anywhere in India.” He had given the JCB to sub-contractor on rent for work. On 17.07.2011 at about 12:30 p.m., the JCB was coming back from the site of work. Unfortunately, the soil beneath the JCB got caved in and the JCB fell into the valley, due to which the JCB was damaged beyond repair. Subsequently, he lodged the complaint pertaining to the accident and also lodged the claim with the Opposite Party No. 1. However, the Opposite Party vide letter dated 12.11.2011 repudiated his claim on the ground that there was breach of warranty as the machine was working in Hilly Terrain in Uttaranchal. He was shocked to receive the repudiation letter as the policy was neither handed over to him nor contents of the same were explained to him. Thereafter, he made constant requests to the Opposite Party No. 1, but no action was taken by Opposite Party No. 1.

3. It is the further case of Complainant that the Opposite Party No. 1 adopted unfair trade practice at the time of issuing the policy as another person, known to Complainant, namely, Sh. Jagdish had also taken the policy bearing no. OG-11-1104-0410-00000069 from the Opposite Party No. 1 for his JCB and had paid less premium of Rs.29,892/- to the Opposite Party. But the said policy, issued to Sh. Jagdish nowhere mentioned that the JCB cannot work in hilly terrain. The Opposite Party No. 1 had failed to disclose the terms and conditions of policy to the Complainant and misled the Complainant.

4. The Complainant filed the present complaint against the Opposite Parties alleging deficiency in service and unfair trade practice. He has prayed that the Opposite Party No. 1 be directed to pay a sum of Rs.43,80,000/- as well as third party claim of Rs.4,38,000/- along with interest @ 18% p.a. He has further prayed that the Opposite Party No. 1 be directed to pay a sum of Rs.10,000/- towards mental agony and harassment and a sum of Rs.2,000/- towards litigation costs.

5. The Opposite Party No. 1 filed the written statement, wherein it is stated the Complainant obtained the Contractor Plant and Machinery policy bearing no. OG-11-1104-0410-00000069 for his JCB JS 200 for sum insured of Rs.43,80,000/- w.e.f. 21.01.2011 to 20.01.2012. The JCB of Complainant was damaged due to falling in valley on 17.07.2011 and the Complainant lodged a claim with the Opposite Party No.1. Subsequently, the Opposite Party No. 1 appointed IRDA approved Surveyor, who visited the site on 20.07.2011 and carried out survey in the presence of Complainant. At that time,

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2026 Supreme(Online)(SCDRC) 3176

STATE CONSUMER DISPUTES REDRESSAL COMMISSIONSangita Dhingra Sehgal, President, Bimla Kumari, MemberBIJENDER – AppellantVersusBAJAJ ALLIANZ INSURANCE CO. LTD. – RespondentCONSUMER COMPLAINT NO.- 318/2012

An insurer cannot enforce policy exclusion or warranty clauses to repudiate a claim if the specific terms and conditions were not disclosed or supplied to the insured at the time of the contract, violating the principle of utmost good faith.

Cases Referred (1)

STATE CONSUMER DISPUTES REDRESSAL COMMISSION
Sangita Dhingra Sehgal, President, Bimla Kumari, Member
BIJENDER – Appellant
Versus
BAJAJ ALLIANZ INSURANCE CO. LTD. – Respondent
CONSUMER COMPLAINT NO.- 318/2012