Delhi State Commission Holds IFFCO-Tokio Liable For Deficiency In Service Over Wrongful Repudiation Of Claim

Brief Facts of the Case

The complainant purchased a refrigerated van and insured it with IFFCO-Tokio Insurance/insurer under a policy for the period from January 2013 to January 2014. The policy was later renewed for the following year with an insured declared value (IDV) of Rs. 28,11,300. Subsequently, the vehicle was involved in an accident near Baroda, Gujarat, causing significant damage to both the vehicle and the goods being transported. The complainant promptly informed the insurer, and a surveyor was appointed to assess the damage. The vehicle was transported to a workshop for repairs, and the cost was estimated at Rs. 17,08,807. The repair cost for the refrigerated section was estimated at Rs. 14,00,000. The complainant submitted all necessary documents to the insurer, but no response was received despite several follow-ups. The insurer requested additional documents, which the complainant provided, but the claim was still not settled. The complainant filed a complaint before the State Commission of Delhi, seeking payment of Rs.41,08,464 (claim amount) and Rs. 5,00,000 as compensation for mental agony.

Contentions of the Insurer

The insurer argued that the complainant is not a “consumer” under the Consumer Protection Act, 1986, as the insurance was bought for commercial purposes. The complainant is in the business of transporting perishable goods, making it a commercial activity. The insurer also claimed the complaint is time-barred, as the alleged accident occurred in 2014, and the complaint was filed in 2017, beyond the two-year limitation period. The insurer further stated that the complaint involves complex issues that cannot be resolved through summary proceedings. Additionally, the insurer pointed out that the claim could not be processed due to the complainant's failure to provide the necessary information despite reminder letters.

Observations by the State Commission

The State Commission observed the first issue as whether the complainant qualifies as a 'consumer' under the Consumer Protection Act, 1986. The insurer argued that the complainant used the insurance for commercial purposes, but the Commission referred to Harsolia Motors vs National Insurance Co. Ltd and found that the complainant used the insurance to protect his livelihood, thus qualifying as a consumer. Further, the Commission addressed the timeliness of the complaint. Since the complaint was filed within two years from when the insurer closed the claim, it was within the permissible period under Section 24A of the Act. The Commission then considered whether the case involved complicated questions. It was highlighted that the issue was straightforward: the complainant's vehicle had an accident, but the insurer failed to settle the claim. The complainant had provided all required documents multiple times, yet the insurer kept requesting the same documents without settling the claim. There was no complication in facts or law, and the case was within the Commission's jurisdiction. Finally, the Commission concluded that the insurer was deficient in providing services. The complainant was entitled to the full insured declared value (IDV) of the vehicle, as the repair costs exceeded 75% of the IDV, making the vehicle a Constructive Total Loss (CTL) under the terms of the insurance policy. The State Commission allowed the complaint and directed the insurer to pay Rs.28,11,300 at 6% interest, Rs. 1,00,000 as compensation for mental agony and Rs. 50,000 as litigation costs.

Case Title: Mr. Sanjay Sharma Vs. IFFCO-Tokio General Insurance Company Limited

Case Number: C.C. No. 933/2017

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