NCDRC Holds Oriental Insurance Liable For Denial Of Disbursing The Insurance Policy

Contentions of the Complainant

The complainant is a company engaged in manufacturing and trading textile fabrics, specifically dealing in printed cotton/polyester material, that availed an insurance policy from Oriental Insurance/opposite party. Subsequently, a fire in one of the storage godowns was notified to the insurance company. The insurance company hired a surveyor, M/s Absolute Surveyors Pvt. Ltd., to determine the loss and calculated the loss as Rs. 46,65,777 for the fire policy. After that, the insurance company hired an investigator and rejected the claim, saying it violated policy conditions. Even though the complainant asked for a settlement, the insurance company didn't provide a solution or compensation. The complainant approached the State Commission of Maharastra but was denied the requisite relief because the State Commission inadvertently considered the previously settled 'marine claim' instead of the sought-after 'Fire claim' of Rs. 52.00 lacs and awarded the sum of Rs.15,71,157/- as assessed by the surveyor toward the 'marine claim,' which was not in line with the fire claim. The complainant filed an appeal dismissed, citing the precedent set in Harsolia Motors V/s. National Insurance Company held that services availed from an insurer by a commercial organization classified as a commercial activity. The present complaint is a first appeal filed against the order passed by the state commission, wherein the complainant is seeking Rs. 46,65,777 for the insurance claim along with Rs. 2,20,000 towards the cost of litigation.

Contentions of the Opposite Party

The insurance company argued the complaint's dismissal, citing it as time-barred as it was filed after the limitation period. Furthermore, upon receiving the claim, the company enlisted a surveyor who discovered the complainant hadn't initially disclosed storing highly hazardous materials in the godown. It was further contended that the complainant made several policy breaches, including discrepancies in the risk location and non-disclosure of risky materials. The insurance company produced reports from the fire brigade, forensic lab, and police to substantiate the case further, pointing to negligence, policy violations, and safety regulation breaches on the part of the complainant.

Observations by the Commission

The commission cited the Supreme Court Judgment in National Insurance Co. Ltd. Vs. Harsolia Motors and Ors. and observed that the fundamental nature of insurance contracts is to indemnify losses and that such contracts operate as contracts of indemnity against loss, damage, or liability arising from unknown or contingent events, applicable only to future contingencies or acts. The Commission noted that in this case, it is clear that the complainant obtained the insurance policy specifically to indemnify against the risk of loss or damages, with no intention of generating profit. The commission further observed that the directions in the order by the state commission were confined to the “quantification of the claim,” and the mandate was not extended to determining whether the complainant qualifies as a consumer at that stage. Consequently, the state commission lacked the authority to engage in a fresh adjudication of the Complaint regarding his status as a consumer. Additionally, regarding the issue of the rejection of the fire policy made by the complainant, the commission observed that the assessment made by the surveyor holds utmost importance, as established by the Supreme Court in the case of New India Assurance Co.Ltd. Vs. Pradeep Kumar (2009). Furthermore, the commission referred to the precedent in National Insurance Co.Ltd. Vs. M/s Hareshwar Enterprises Pvt. Ltd. & Ors and observed that given the circumstances, the surveyor's report was submitted as part of the natural process, and its conclusion is considered more plausible and reliable than the investigation report. Lastly, the commission observed the issue of the storage of undisclosed hazardous materials during policy initiation, the complainant clarified that they did not own the godown as it was a public facility shared with others and asserted the insurer knew the risk of the same and charged a higher premium for private storage.

The commission directed the Insurance company to pay the amount of Rs.46,65,777 to the complainant as assessed by the surveyor for the claim under their Policy @ 9% per annum from the date of filing of this Complaint till its realization along with Rs.50,000 towards the cost of proceedings.