Ferozepur Commission Orders National Insurance Company To Pay Rs. 36k Insurance And 5k For Litigation Costs

Brief Facts:

Mohinder Singh (“Complainant”) got his motor cycle (“vehicle”) insured with the National Insurance Company Limited (“Insurance Company”). The Insured Declared Value (“IDV”) of the motorcycle was declared at Rs. 49,362. On 26.07.2021, the vehicle was stolen and consequently, a complaint was filed at the police station in Guruharsarai under Section 379 of the Indian Penal Code. During the time of the theft, the vehicle was in the possession of one, Raj Kumar, who borrowed the vehicle for a few days from the complainant. After lodging the complaint in the police station, Raj Kumar submitted all the documents required by the insurance company however, the claim was rejected on the basis that instead of giving the possession for a few days, the complainant had sold the vehicle to Raj Kumar. Alleging deficiency in service and unfair trade practices, the complainant filed a consumer complaint in the District Consumer Disputes Redressal Commission, Ferozepur (“District Commission”).

The insurance company contended that there was no deficiency in their service and that the complainant concealed important information from the District Commission. The vehicle had insurance coverage under the name of the complainant. The complainant provided a written statement indicating that he had sold the vehicle to Raj Kumar. However, despite this statement, both the insurance documents and the vehicle's registration certificate remained in the complainant’s name. Further, Raj Kumar, who was claiming for the theft/loss, lacks a valid insurance interest in the vehicle. According to the policy's terms and conditions, only individuals with insurable interest are eligible to make claims.

On the other hand, the complainant contended that the registration of the vehicle was still under the complainant’s name and mere parking of the vehicle at Raj Kumar’s premises does not mean that the vehicle was sold to him. This, the insurance amount must be provided.

Observations of the Commission:

Upon reviewing the case documents and the evidence presented by both parties, the District Commission established that the vehicle in question remains registered under the complainant's name, and the insurance policy was also in the complainant's name. There was no evidence of any transfer of ownership. Thus, the insurance company failed to provide substantial proof that the complainant sold the motorcycle to Raj Kumar or anyone else. The District Commission noted that the complainant's claim was rejected on the basis that the vehicle had been sold, thus implying the complainant lacked insurable interest after selling it to Raj Kumar. However, the commission observed that there is no concrete documentation to confirm this sale, apart from referencing the complainant's statement to the insurance company's investigator.

The vehicle remained registered in the complainant's name, and there was no updated registration certificate in Raj Kumar's name. The insurance company did not present any valid documentation showing the vehicle's sale from the complainant to Raj Kumar. Furthermore, the complainant clarified his ownership status in a letter dated July 30, 2021, to the insurance company. Thus, the District Commission held the insurance company liable for deficiency in service.

Resultantly, the District Commission ordered the insurance company to pay an amount of Rs. 36272/- along with an interest of 6% per annum. The insurance company was further ordered to pay Rs. 5000/- for mental agony, pain and harassment as well as litigation expenses.

Case: Mohinder Singh vs National Insurance Company Limited

Case No.: C.C. No.399 of 2021

Advocate for the Complainant: Sh. Pankaj Malhotra

Advocate for the Respondent: Sh. A.K. Sharma

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