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Mere Delay in Intimating Insurance Company about theft can't be Ground to deny the claim of insured


Cause Title: Jaina Construction Company v. The Oriental Insurance Company Limited and Another

Case Number: Civil Appeal No. 1069/2022

Quorum: Justice Sanjiv Khanna and Justice Bela M. Trivedi

Judgment Date: 11/02/2022

Counsel for Appellant: Mr. Avinash Lakhanpal

Author: Pragash B, Advocate, Madurai Bench of Madras High Court

Background of the Case

The Vehicle in question i.e., Tata Aiwa Truck bearing Registration No. RJ-02-098177 was purchased by the appellant on 31.10.2007. The said vehicle was duly insured with Respondent No. 1 – Insurance Company. The said vehicle was robbed by some miscreants on 04.11.2007 and in consequence an FIR was registered by the appellant-complainant on 05.11.2007 for the offence under Section 395 IPC at Police Station Nagina, District Mewat (Haryana). The police arrested the accused and filed the challan against them in the concerned Court but the vehicle in question could not be traced and therefore the police filed untraceable report on 23.08.2008. Thereafter, the complainant lodged the claim with the Insurance Company with regard to the theft of the vehicle but the Company failed to settle the claim within a reasonable time. Therefore, the appellant filed a Consumer Complaint No. 63/2010 before the District Consumer Disputes Redressal Forum, Gurgaon.

During the pendency of the complaint before the District Forum, the Insurance Company repudiated the claim of the complainant vide its letter dated 19.10.2010 stating inter alia that there was a breach of Condition No. 1 of the policy which mandated immediate notice to the insurer of the accidental loss/ damage, and that the complainant had intimated about the loss on 11.04.2008 i.e., after a lapse of five months and therefore the Insurance Company had disowned their liability on the claim of the complainant.

The District Forum, through its order dated 26.02.2015, allowed the claim of the complainant and held that the complainant was entitled to the insured amount on non-standard basis, i.e., Rs. 12,79,399/- as 75% of the IDV i.e., Rs. 17,05,865 with interest @ 6% per annum from the date of filing of the complaint till realisation from the Insurance Company. The District Forum also awarded Rs. 10,000/- compensation and Rs. 5,000/- as Litigation Expenses. The aggrieved Insurance Company preferred an appeal in Appeal No. 612/2015 before the State Consumer Disputes Redressal Commission (Haryana), Panchkula. The Complainant also preferred an appeal in Appeal No 537/2015 for enhancement of the compensation. The State Commission dismissed the appeal by the Insurance Company and partly allowed the appeal filed by the complainant by increasing the rate of interest from 6% to 9% through its judgment dated 16.12.2015. The aggrieved Insurance Company preferred the Revision petition No.1104/2016 before the National Commission Disputes Redressal Commission which was allowed through its order dated 09/09/2016 which is the impugned order herein.

Question Raised

Whether the Insurance Company could repudiate the claim in toto, made by the owner of the vehicle, which was duly insured with the insurance company, in case of loss of the vehicle due to theft, merely on the ground that there was a delay in informing the company regarding the theft of vehicle?

Findings of the Court

The Honourable Supreme Court of India placed heavy reliance on the three-judge bench decision given by the Court in Gurshinder Singh Case and also cited relevant paragraphs(Paras 9, 10, 11, 12, 13, 14, 15, 17 and 20) in the judgment. The Honourable Apex Court observed that

In the opinion of the Court the afore-stated ratio of the judgment clinches the issue involved in the case on hand. In the instant case also, the FIR was lodged immediately on the next day of the occurrence of theft of the vehicle by the complainant. The accused were also arrested and charge-sheeted, however, the vehicle could not be traced out. Of course, it is true that there was a delay of about five months on the part of the complainant in informing and lodging its claim before the Insurance Company, nonetheless, it is pertinent to note that the Insurance Company has not repudiated the claim on the ground that it was not genuine. It has repudiated only on the ground of delay. When the complainant had lodged the FIR immediately after the theft of the vehicle, and when the police after the investigation had arrested the accused and also filed challan before the concerned Court, and when the claim of the insured was not found to be not genuine, the Insurance Company could not have repudiated the claim merely on the ground that there was a delay in intimating the Insurance Company about the occurrence of the theft.” (Para 9)

In that view of the matter, the Court is of the opinion that the NCDRC should not have set aside the orders of the District Forum and the State Commission by holding that the repudiation of the insurance claim by the insurance company was justified. The impugned order being erroneous and against the settled position of law, deserves to be set aside, and is set aside, accordingly. (Para 10)

The appeal is allowed, affirming the order of the State Commission. (Para 11)

Cases Referred

1. Om Prakash v. Reliance General Insurance and Another

2. Oriental Insurance Company Limited v. Parvesh Chander Chada

3. Gurshinder Singh v. Shriram General Insurance Company Limited and Another, 2020 (11) SCC 612.



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