Himachal Pradesh State Commission Holds Oriental Insurance Co. Liable For Wrongful Repudiation Of Genuine Claim

Brief Facts:

M/s Himalyan Camping (“Complainant”) was working on a project valued at Rs. 3,10,66,572/-. The said project was insured with Oriental Insurance Company Ltd. (“Insurance Company”). Due to heavy rainfall and flash floods in River Beas, the Complainant's project suffered damages. The project's basement was flooded, and significant damage was caused to carpets, huts, drywalls, and furniture. Documentation including a police report and a report from the Village Revenue Officer, estimating damages between Rs. 62,00,000/- to Rs. 65,00,000/-, was submitted to the Insurance Company. Despite repeated requests and document submissions, the Complainant's claim was rejected by the Insurance Company. Feeling aggrieved, the Complainant filed a consumer complaint in the State Consumer Disputes Redressal Commission, Himachal Pradesh (“State Commission”).

In response, the Insurance Company disputed the valuation of damages and claimed that the Village Revenue Officer's report was solicited by the Complainant unilaterally. Further, the report indicating the project's value at Rs. 3,10,66,572/- lacked expertise and conclusiveness. The Insurance Company appointed a surveyor, Sh. Sanjay Vaidya, who assessed the loss at Rs. 1,35,846/- during the preliminary survey. It was revealed during the surveys that the property was leased to M/s Ananta Oorja Entertainment Pvt. Ltd., and the Complainant made renovations and installations in anticipation of the tourist season. The Insurance Company argued that since the property was leased out, the Complainant lacked insurable interest and thus, no claim was payable.

Observations by the State Commission:

The State Commission noted that the Insurance Company repudiated the claim primarily on the grounds that the project was leased out. However, the State Commission found this argument lacking merit based on several factors. Firstly, it noted that the insurance contract was between the Complainant and the Insurance Company, and the Complainant paid the premiums which established his insurable interest. Secondly, the lease agreement with the lessee only granted a permissive use of the property and its fittings, not ownership or insurance rights. Additionally, the lessee explicitly stated it didn't make any claim or insured the property separately.

The State Commission acknowledged the Complainant's claim of Rs. 65,56,800/- for flood-related losses but held that it lacked in detailing and was possibly exaggerated. Conversely, the surveyor appointed by the Insurance Company assessed the loss at Rs. 1,35,846/- after applying various factors and deductions, which the State Commission found reasonable.

Therefore, the State Commission partly allowed the complaint and directed the Insurance Company to pay Rs. 1,35,846/- to the Complainant along with interest at 9% per annum from the date of filing the complaint. Additionally, the Insurance Company was ordered to pay Rs. 50,000/- as compensation to the Complainant, along with litigation charges amounting to Rs. 20,000/-.

Case Title: M/s Himalyan Camping vs Oriental Insurance Company Ltd.

Case Number: RBT/C.C. No. 56/2019

Advocate for the Complainant: Mr Jia Lal, Mr Maan Singh

Advocate for the Opposite Party: Mr Lalit K. Sharma

Date of the Order: 29^th May 2024