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An insurance company cannot travel beyond the grounds mentioned in the letter of repudiation: SC


The appellant purchased a standard fire and special perils policy from the respondent National Insurance Company Ltd and an additional premium of Rs.59200/- was paid on account of spontaneous combustion. The appellant was declared a Sick Unit and was registered under SICA. On a particular period the amount of stock was destroyed by spontaneous combustion and intimation was sent to the respondent-insurer. Later a survey was conducted in the premises. The claim of the appellant was repudiated by the respondent-insurer saying that the fire was not a result of spontaneous combustion and thus no liability under the policy.  The appellant approached the National Consumer Disputes Redressal Commission (NCDRC) on being denied the claim. The NCDRC rejected the claim holding that the complainant that is the appellant had contravened Clause 6(i) of the General Conditions of Policy.

The issues in this case are Whether the respondent-insurer, by appointing a surveyor, waived the condition relating to delay in intimation and lodging of the claim? Whether in the absence of the mention of delay in intimation and violation of conditions of Clause 6(i) of General Conditions of policy, could be taken as a defence before the NCDRC?

Sh. Nikhil Goel appeared representing the appellant. It submitted that NCDRC’s defeating the claim was a mistake because of delayed intimation as mentioned in Clause 6(i) of the General Conditions of Policy. Also, as the respondent company had appointed a surveyor, its right to advance the plea cannot be maintained. Since the letter of repudiation does not even refer to delayed intimation, the said ground cannot be taken as a defence to the claim. This was held in Galada Power and Telecommunication Ltd. vs. United India Insurance Company Ltd & Another.

Sh. Yogesh Malhotra for the respondent-insurer supported the order passed by the NCDRC. Thus there should be no waiver of the condition relating to delay in intimation as stipulated in the General Conditions of Policy. The cases Galada and Sonell Clocks and Gifts Ltd v. New India Assurance Company Ltd were also referred.

The court observed that from the repudiation letter there is no reference it is clear that there is no reference to any of the aspects enumerated in Clause 6(i) of the General Conditions of Policy. The court considered the judgment of Sonnel Clocks for answering issue no (1). By appointing a surveyor the respondent-insurer is stopped from raising the plea of violation of condition prescribing a time limit for intimation/lodging of the claim. The court also explained issue no(2). The respondent-insurer repudiated the claim because the fire did not result out of spontaneous combustion. There was no liability under the policy.

“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 before NCDRC. Admittedly in the case at hand there was no reference of delay in intimation or lodging of the claim as stipulated in Clause 6(i) of the General Conditions of Policy in the repudiation letter. The NCDRC has failed to take into consideration this aspect of the matter and, therefore, cannot be held to be justified in rejecting the claim of the appellant, on that ground.”

From the above analysis the court held that the appeal stands allowed and the order of NCDRC is set aside.




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