Policy Holder Must Take Reasonable Steps To Safeguard Insured Property Against Accident And Damage, NCDRC Dismisses Appeal Against New India Assurance Co

Brief Facts:

M/s Shah Vadilal Jethalal (“Complainant”), a company operating as a distributor for TISCO, procured a 'Burglary and House Breaking Policy' from New India Assurance Co. Ltd. (“Insurance Company”). The policy covered the period from 14.11.2000 to 13.11.2001 and was intended to protect the Complainant's stock in trade, including items such as Agro buckets and tools, along with other goods held in interest or on commission, amounting to Rs. 1,00,53,000/- against a premium of Rs. 12,535/-. These insured goods were stored in a godown located at the steel yard complex allotted by Steel Chambers.

On 08.09.2001, a truck carrying burgled goods from the insured godown was intercepted, leading to the registration of a First Information Report (FIR). Subsequently, the Insurance Company was notified, and a surveyor was appointed to evaluate the extent of the loss. Following this assessment, a claim was submitted for the loss of material valued at Rs. 89,29,703.65/-. However, the Insurance Company chose to repudiate the claim.

Feeling aggrieved, the Complainant filed a consumer complaint before the State Consumer Disputes Redressal Commission, Maharashtra (“State Commission”). However, the complaint was dismissed based on non-disclosure of material facts and failure to deploy security measures. Dissatisfied with the State Commission's decision, the Complainant filed an appeal before the National Consumer Disputes Redressal Commission (“NCDRC”).

The Insurance Company contended that the Complainant had violated the T&C of the insurance policy by not taking measures to ensure adequate security. The policy required a separate security for the godown. Further, the Complainant failed to give all details to the surveyor, despite repeated notices.

Observations of the NCDRC:

At the outset, the NCDRC noted that the T&C of the insurance policy, particularly Condition No. 12, stipulated that the fulfilment of the T&C is essential for establishing the liability of the Insurance Company. Condition No. 3 required the Complainant to take 'reasonable steps' to safeguard the insured property against loss or damage. Additionally, General Condition No. 4(c) mandated the Complainant to provide the insurer with all reasonable information, assistance, and proof regarding any claim.

The NCDRC observed that the Complainant failed to fulfil its duty of reasonable care to safeguard the insured property, as outlined in General Condition 3, by relying solely on the security provided by the Association. Furthermore, the Complainant was obligated to provide details to the surveyor for finalizing the claim, which it failed to do adequately.

Regarding the appointment of a surveyor, the NCDRC held that while the assistance of a surveyor is necessary for settling a claim, the Insurance Company retains the option to accept or reject the surveyor's report. The rejection of the report must be justified and not arbitrary. The NCDRC noted that the Insurance Company provided valid reasons for appointing a second surveyor and for rejecting the report of the joint surveyor. It held that if the rejection of the report is arbitrary, courts or other forums can intervene to correct the error.

In assessing the evidence presented, the NCDRC found that the Complainant failed to establish that the surveyor's report was arbitrary or perverse. Moreover, the Complainant did not counter the Insurance Company's contention regarding the extent of the burglary and the value of the loss with evidence regarding the stock position as per audited records. The State Commission's findings were based on the evidence presented before it, and the Complainant failed to provide documentary evidence to the contrary.

Consequently, the NCDRC concluded that there were no grounds to intervene in the State Commission's order. As a result, the appeal was dismissed for lacking merits, and each party was directed to bear its costs.

Case Title: M/s Shah Vadilala Jethalal vs New India Assurance Co. Ltd.

Case First Appeal No. 681 of 2012

Advocate for the Appellant: Mr CM Sharma

Advocate for the Respondent: Mr Ravi Bakshi with Ms Sayma Feroz and Mr Manvendra Pratap Singh

Date of the Order: 8^th May 2024