Non-Standard Basis Of Insurance Claim Is Fair If Breach Has Occured From Both Parties: NCDRC

Brief Facts of the Case

The complainant's husband insured his vehicle, financed by Indusind Bank with Cholamandlam Insurance/insurer before his death.Following his death, the loan was repaid, but transferring the insurance policy to legal heirs was hindered by delays in obtaining a No Objection Certificate (NOC) from the bank. Despite a court ruling directing the bank to issue the NOC, delays persisted, and when finally issued, it bore an incorrect date. Due to the RC transfer issue, the policy was not transferred, and the complainant renewed it in the deceased's name as advised. However, following an accident resulting in a total loss, the insurer repudiated the claim, citing failure to transfer the policy within the specified time-frame after the husband's death. This led the complainant to file a Consumer Complaint before the District Forum, alleging wrongful denial of their rightful claim, which allowed the complaint and directed the insurer to pay Rs. 13,75,000 to the complainants as compensation for the cost of the vehicle. Aggrieved by the District Forum's order, the insurer appealed to the State Commission of Punjab. The State Commission modified the District Forum's order and directed the insurer to pay 75% amount of the insured declared value of Rs. 13,75,000 on a non- standard basis i.e. Rs.10,31,250 and Rs. 25,000 as litigation costs. Being dissatisfied by the State Commission's modification, the complainant filed a revision petition before the National Commission.

Contentions of the Insurer

The insurer asserted that no legal heir certificate was provided, and the policy was not transferred to the complainant's name, which they cited as reasons for rejecting the claim. They argued that the complainants did not initiate the process for transferring the policy, thereby disputing the occurrence of the incident claimed. The insurer denied the accusations and requested the dismissal of the complaint along with costs.

Observations by the National Commission

The National Commission observed that the main issue at hand was whether it was justified for the State Commission to modify the District Forum's order and direct the insurer to pay 75% of the insured declared value, amounting to Rs. 10,31,250, on a non-standard basis, along with interest. It was noted that the insurance policy had been renewed after the death of the complainant's husband, and the insurer was aware of this during the renewal process. Despite the complainant's payment of all dues to the bank, they did not possess the No Objection Certificate, resulting in the policy being renewed in the deceased person's name. The Commission recognized minor breaches of contractual obligations on both sides. Therefore, in light of these circumstances, the Commission affirmed that the State Commission's reasoned decision, which applied the non-standard basis, was fair and lawful.

Consequently, the Commission dismissed Revision Petition without imposing any costs.

Case Title: Kuljit Kaur Vs. Cholamandlam Ms. General Insurance Co. Ltd

Case Number: R.P. No. 925/2019