Overloading by 610 kg is a policy breach, claim payable on a non-standard basis: Gujarat State Consumer Commission - 2025-01-09

Gujarat Consumer Commission Upholds Partial Insurance Payout for Overloaded Tanker

Ahmedabad: The Gujarat State Consumer Disputes Redressal Commission has dismissed an appeal by The New India Assurance Co. Ltd., upholding a District Commission's order to award additional compensation to a tanker owner whose claim was partially repudiated on grounds of overloading. The Commission, presided over by Smt. Archanaben C. Raval, affirmed that while overloading constitutes a breach of policy conditions, the insurer is still liable to settle the claim on a non-standard basis, typically at 75% of the assessed amount.

Background of the Dispute

The case originated from a complaint filed by Manubhai R. Chavda, a transport business owner, against The New India Assurance Co. Ltd. Mr. Chavda's insured TATA tanker met with an accident in 2015, sustaining significant damage. He filed a total claim amounting to ₹10,18,195 for repairs.

The insurance company, however, approved and paid only ₹4,90,994, citing a breach of policy terms. The insurer's investigation revealed that the tanker was overloaded by 610 kg at the time of the accident. The permitted Gross Vehicle Weight (GVW) was 40,200 kg, whereas the tanker was carrying a load of 40,810 kg. The company settled the claim on a "non-standard" basis, deducting 25% from the assessed loss.

Dissatisfied, Mr. Chavda approached the District Consumer Disputes Redressal Commission, Kutch-Bhuj, which partially allowed his complaint and ordered the insurer to pay an additional lump sum of ₹2,00,000 with 7% interest. The insurance company challenged this order before the State Commission.

Arguments from Both Sides

The New India Assurance Co. Ltd. (Appellant): The insurer argued that the overloading was a clear violation of the insurance policy's terms and conditions. They contended that the claim was rightly settled on a non-standard basis at 75% of the surveyor's assessment, and the payment of ₹4,90,994 was final and justified. The company further argued that since the complainant had accepted the payment by signing a discharge voucher, he was not entitled to any further relief. They cited judgments from the National Commission to support their stance that claims in cases of policy breaches should be settled on a non-standard basis.

Manubhai R. Chavda (Respondent): The complainant's counsel argued that the minor overload of 610 kg was due to items like diesel, a jack, and repair tools, and not intentional. It was contended that the surveyor had wrongly applied depreciation on several parts despite the policy being a "Nil Depreciation" policy. He also pointed out a calculation error, stating that even at 75% of the surveyor's total assessed loss of ₹6,64,090, the payable amount should have been ₹4,98,067.50, which is more than what was paid. The complainant maintained that he accepted the initial payment under duress and immediately wrote to the company demanding the balance, proving it was not a final settlement.

Commission's Analysis and Ruling

The State Commission concurred with the fundamental legal principle that overloading a vehicle is an undisputed breach of the insurance policy. Citing precedents from the National Commission, it affirmed that in such cases, the claim should be settled on a non-standard basis, entitling the claimant to 75% of the admissible claim amount.

The Commission performed its own calculation based on this principle. It noted the complainant's total claim was ₹10,18,195. Applying the 75% rule, it calculated that Mr. Chavda was entitled to receive approximately ₹7,63,646. After deducting the ₹4,90,994 already paid by the insurer, the Commission found that a balance of around ₹2,72,652 was still payable.

In its judgment, the Commission observed:

"As per the judgments of the Hon'ble National Commission and the Hon'ble Supreme Court... when there is a breach of any insurance condition, the policyholder is entitled to receive 75% of his claim amount on a non-standard basis."

Considering that the District Commission had awarded a lump sum of ₹2,00,000 and the complainant had not filed an appeal seeking a higher amount, the State Commission found the awarded sum to be reasonable and saw no grounds to interfere with the lower forum's decision. It dismissed the insurer's argument regarding the discharge voucher, noting that the complainant's immediate follow-up letter for the remaining claim demonstrated that the acceptance was not a final settlement.

Final Decision

The appeal filed by The New India Assurance Co. Ltd. was dismissed, and the order of the District Consumer Disputes Redressal Commission, Kutch-Bhuj, was confirmed. The judgment reinforces the established principle that minor breaches like slight overloading do not permit an insurer to completely repudiate a claim; instead, it warrants a settlement on a non-standard basis.