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Insurers Cannot Introduce New Repudiation Grounds : Delhi State Commission Holds National Insurance Liable
Ayushi Rani
30 Dec 2024 3:15 PM IST
The Delhi State Commission, presided by Justice Sangita Dhingra Sehgal and Ms. Pinki held National Insurance liable for deficiency in service over wrongful repudiation of legitimate insurance claims. It further held that insurers cannot introduce new repudiation grounds during the policy claim. Brief Facts of the Case The complainant, a garment shop owner, had purchased a fire...
The Delhi State Commission, presided by Justice Sangita Dhingra Sehgal and Ms. Pinki held National Insurance liable for deficiency in service over wrongful repudiation of legitimate insurance claims. It further held that insurers cannot introduce new repudiation grounds during the policy claim.
Brief Facts of the Case
The complainant, a garment shop owner, had purchased a fire policy on the stock in the shop with National Insurance/Insurer. A fire occurred, damaging very expensive clothes goods when the policy was within its time period. As soon as the loss occurred, notice was given and a surveyor appointed but no compensation was awarded while submitting the necessary documents. The complainant filed a complaint before the District Commission, which allowed the complaint. It directed the insurer to pay Rs.1,68,00,000 with 7.5% interest rate, Rs. 2,00,000 as compensation and Rs. 25,000 as litigation costs. Aggrieved, the insurer appealed before the State Commission of Delhi
Contentions of the Insurer
The insurer contended that the complainant violated policy conditions by failing to disclose a past fire incident. They argued that this constitutes material non-disclosure, rendering the policy voidable. The insurer also relied on the surveyor's report, which significantly reduced the assessed loss. They claimed that the complainant's documentation was incomplete and that their claim amount was exaggerated.
Observations by the State Commission
The State Commission observed the complainant's policy and the previous fire incident pertained to different premises and policies. It held that non-disclosure of the unrelated incident did not breach the terms of the current policy. It was found that the insurer failed to establish that the alleged non-disclosure was material to the present claim. The surveyor's report was deemed unreliable as it ignored documents provided by the complainant. Citing precedents, including Saurashtra Chemicals Ltd. vs. National Insurance Co. Ltd., the commission ruled that insurers cannot introduce new repudiation grounds beyond the original rejection letter. The commission upheld the District Commission's order and directed the insurer to pay the claim amount with interest and additional compensation for mental agony and litigation costs. Consequently, the appeal was dismissed.
Case Title: National Insurance Co. Ltd. Vs. M/S. Shiva Fashion
Case Number: F.A. NO. 642/2023
