Insurer Can't Add New Repudiation Grounds During Appeal; Delay In Intimation Not Fatal To Theft Claim If FIR Lodged: Punjab State Consumer Commission - 2025-09-05

Insurer Cannot Introduce New Grounds for Repudiation During Appeal, Rules Punjab State Consumer Commission

Chandigarh – In a significant ruling reinforcing policyholder rights, the Punjab State Consumer Disputes Redressal Commission has held that an insurance company cannot introduce new reasons to reject a claim at the appellate stage if those grounds were not mentioned in the original repudiation letter. Upholding a District Commission order, the bench, presided over by Justice Daya Chaudhary, also reiterated that a delay in intimating the insurer about a vehicle theft is not a valid reason to deny a genuine claim, especially when an FIR has been lodged.

The Commission dismissed an appeal filed by ICICI Lombard General Insurance against an order directing it to pay ₹46,526 to a policyholder whose motorcycle was stolen.

Case Background

The case originated from a complaint filed by Rahul Babbar, who had purchased a Splendor motorcycle in June 2016 and insured it with ICICI Lombard. The motorcycle, with an Insured Declared Value (IDV) of ₹46,526, was stolen on December 12, 2016. Babbar stated that he immediately informed the police by dialing 100, though the formal FIR was registered on January 21, 2017. Subsequently, he lodged a claim with the insurance company on January 30, 2017.

The District Consumer Disputes Redressal Commission, Jalandhar, had allowed Babbar's complaint, directing ICICI Lombard to pay the full IDV along with ₹7,000 as compensation for mental harassment and litigation costs.

Insurer's Arguments in Appeal

ICICI Lombard challenged the District Commission's order, raising several key arguments:

1. Delay: There was an inordinate delay of 40 days in lodging the FIR and 49 days in intimating the insurance company about the theft.

2. Non-Cooperation: The complainant failed to provide necessary documents requested by the insurer, such as proof of intimation to the RTO and the police control room.

3. Expired Registration: A new ground was introduced during the appeal, alleging that the vehicle's temporary registration had expired before the date of the theft, making the claim invalid.

Commission's Analysis and Legal Precedents

The State Commission meticulously dissected the insurer's contentions, relying on established legal principles and Supreme Court judgments.

On Introducing New Grounds for Repudiation: The Commission firmly rejected the insurer's argument regarding the expired temporary registration. It observed that this reason was never cited in the original repudiation letter sent to the complainant. Citing the Supreme Court's decision in Saurashtra Chemicals Ltd. v. National Insurance Co. Ltd. (2019), the Commission highlighted the settled law on this issue.

"It is a settled position that an insurance company cannot travel beyond the grounds mentioned in the letter of repudiation. If the insurer has not taken delay in intimation as a specific ground in letter of repudiation, they cannot do so at the stage of hearing of the consumer complaint…"

The Commission concluded that ICICI Lombard could not be permitted to raise a new defense during the appeal.

On Delay in Intimation: The Commission addressed the core issue of delay by referring to a landmark three-judge bench decision of the Supreme Court in Gurshinder Singh v. Shriram General Insurance Co. Ltd. (2020). The apex court had previously held that a mere delay in informing the insurance company cannot be a ground to deny a claim if the FIR was lodged promptly and the claim is found to be genuine.

The judgment distinguished between the insured's duty in case of an accident versus a theft. For theft, the primary responsibility is to give "immediate notice to the police" to enable recovery efforts. The claim with the insurer is lodged only after the police are unable to trace the vehicle.

Quoting the Supreme Court, the Commission noted:

"We, therefore, hold that when an insured has lodged the FIR immediately after the theft of a vehicle occurred and when the police after investigation have lodged a final report after the vehicle was not traced... then mere delay in intimating the insurance company about the occurrence of the theft cannot be a ground to deny the claim of the insured."

The Commission found no evidence that the claim was ingenuine or that the delay in lodging the FIR had prejudiced the investigation, as the police had submitted an untraced report.

Final Decision

Finding no merit in the arguments presented by ICICI Lombard, the State Commission dismissed the appeal and upheld the District Commission's order. It affirmed that the original order was based on a proper appreciation of evidence and required no interference. The insurer was directed to comply with the order to pay the IDV and compensation to Rahul Babbar.