Non-Standard Basis Of Settling Insurance Claims Apply To Both Private And Public Insurance Companies, NCDRC Holds Bajaj Allianz General Insurance Co. Liable

Brief Facts:

The Complainant operated as a dealer and commission agent in both edible and non-edible items. It procured an Open Marine Policy from Bajaj Allianz General Insurance Company Ltd. (“Insurance Company”). Despite not receiving a copy of the policy, the Complainant operated under the belief that its T&C mirrored those of two other policies obtained by the Complainant. Later, the Complainant contracted M/s Sahni Tanker Service to transport 30.850 tons of rice bran oil to a consignee in Kanpur Dehat, valued at Rs. 16,25,795/-. The oil was being transported in a tanker when it was involved in an accident near Agra, leading to the loss of the entire consignment. An FIR was subsequently filed to report the accident.

Upon notifying the Insurance Company's office in Agra, a surveyor was appointed to assess the damages. Following the surveyor's inspection and submission of a survey report, the Insurance Company requested additional documentation for the claims process, which the Complainant promptly provided. However, the Insurance Company rejected the claim. Subsequently, the Complainant issued a Legal Notice, demanding payment of the claim amount within 15 days. Despite this, no response was received from the Insurance Company. Feeling aggrieved, the Complainant filed a consumer complaint in the District Consumer Disputes Redressal Commission, Ludhiana, Punjab (“District Commission”).

The District Commission dismissed the complaint. The Complainant then filed an appeal before the State Consumer Disputes Redressal Commission, Punjab (“State Commission”). The State Commission allowed the appeal and directed the Insurance Company to pay 75% of the insured amount along with interest at 8%. The State Commission's order was based on the cases like Amalendu Sahu Vs. Oriental Insurance Co. Ltd. [2010 (III) CLT 01], which established that where the breach of the T&C of the policy is not fundamental, the claim should be settled on a non-standard basis. In cases of overloading beyond licensed capacity, the Supreme Court held that the claim should not exceed 75% of the insured amount.

Dissatisfied with the order of the State Commission, the Insurance Company filed a revision petition in the National Consumer Disputes Redressal Commission (“NCDRC”).

Contentions of the Insurance Company:

The Insurance Company argued that the guidelines governing the payment of claims on a non-standard basis did not apply to private insurance companies. Additionally, the Complainant knowingly engaged the services of M/s Sahni Tanker Service and overloaded the tanker with rice bran oil, exceeding its carrying capacity as per the Registration Certificate and National Permit. This excessive loading constituted a material violation of the policy terms, justifying the repudiation of the claim. The Insurance Company relied on Bhagirath Bishnoi v. New India Assurance Co. Ltd. [RP No. 3369 of 2010], which held that when overloading exceeds 75% of the licensed carrying capacity of the vehicle, the insured is not entitled to compensation.

Observations by the NCDRC:

The NCDRC referenced the decision in Amalendu Sahoo Vs. Oriental Insurance Company Limited [2010 (III) CLT 01] held that the guidelines for settling non-standard claims are applicable regardless of whether the insurance company is private or public.

Furthermore, the NCDRC addressed arguments made by the Insurance Company regarding overloading beyond 75% of the permissible limit. The NCDRC concluded that the Complainant was entitled to compensation as it did not overload the tanker beyond 75%, even though proportionately reduced due to the degree of overloading.

Consequently, the NCDRC allowed the revision petition, modifying the State Commission's order to direct the Insurance Company to pay the claim on a non-standard basis. It deducted an equitable amount proportional to the excess loading and directed to Insurance Company to reimburse 63.32% of the insurance amount.

Case Title: Bajaj Allianz General Insurance Company Ltd. vs M/s Kay Vee Enterprises

Case No.: Revision Petition No. 2426 of 2017

Advocate for the Petitioner: Mr Ankit Chaturvedi

Advocate for the Respondent: Mr Manan Bhall

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