Insurer Cannot Deny Liability Based On Non-Transfer Of Policy: NCDRC

Brief Facts of the Case

The complainant bought a vehicle that was insured with IFFCO General Insurance/insurer from a third party. After the vehicle was involved in an accident and declared a total loss, the insurer denied the claim. The insurer cited the complainant's lack of insurable interest despite timely notification and a surveyor's inspection. The complainant filed a complaint before the District Forum, which dismissed the complaint. Being aggrieved, the complainant filed an appeal before the State Commission, which allowed the complaint. It directed the insurer to refund the claim amount of Rs. 7,37,134 with interest @9%, along with Rs.30,000 for compensation and Rs. 15,000 as litigation costs. Consequently, the insurer filed a revision petition before the National Commission.

Contentions of the Insurer

The insurer contested the complaint, arguing that on the date of the accident, the complainant was not the insured under the policy. They stated that a third party originally purchased the policy and that the complainant had not provided the necessary 'GR-17' form to transfer the insurance policy into his name. However, the insurer acknowledged that the vehicle was insured under the policy for an Insured Declared Value (IDV) of Rs. 7,37,134.

Observations by the National Commission

The National Commission observed that the primary issue is whether the complainant, who owned the vehicle at the time of the accident but had not transferred the insurance policy in his name, is entitled to claim compensation under the previous owner's insurance policy. The commission noted that under Section 157 of the Motor Vehicles Act, the insurance policy is deemed transferred with the vehicle ownership. The Hon'ble Supreme Court in Surendra Kumar Bhilawe vs. The New India Assurance Company upheld that the insurer could not deny liability based on the non-transfer of the policy. The commission concluded that the insurer's repudiation of the claim was illegal and upheld the complainant's entitlement to compensation.

Consequently, the National Commission upheld the State Commission's order and dismissed the revision petition.

Case Title: IFFCO Tokio General Insurance Company Ltd. Vs. Harmanpreet Singh

Case Number: R.P. No. 1195/2022