Transfer Insurance Claim On Car, Not Followed Proper Procedure , Insurance Company Not Liable : NCDRC

Brief Facts of the Case

The original owner bought a Skoda Superb for ₹20.08 Lakhs and later sold it to the complainant for ₹11,26,475. The original owner informed the Registration Authority about this sale. The complainant paid the insurance premium to Oriental Insurance/insurer and requested a policy transfer to their name, but the insurer issued it in the original owner's name instead. After the car met with an accident, the complainant informed the insurer and pointed out the error in the insured party's name. The insurer responded that the policy could only be transferred after the car's Registration Certificate was updated to the complainant's name. Following an estimated repair cost of ₹21,36,572 from an authorized service center, the complainant filed a claim with the insurer, which was denied because the Registration Certificate was still in the original owner's name. Consequently, the complainant filed a complaint with the State Commission seeking compensation for the repair costs and other damages. The State Commission dismissed the complaint, citing jurisdictional challenges. Aggrieved by the State Commission's order, the complainant filed a revision petition before the National Commission.

Contentions of the Insurer

The insurer argued that since the original owner had sold the vehicle to the complainant, the original owner no longer had any insurable interest in the vehicle. Additionally, the insurer claimed they had no contractual relationship with the complainant. They further contended that the Insured Declared Value of the vehicle was only ₹14,15,780. Thus, the State Commission did not have the pecuniary jurisdiction to entertain the complaint. The insurer also noted that the sale amount of the vehicle was only ₹11,26,475 and alleged that the complainant had filed an inflated claim to meet the jurisdictional requirements of the State Commission.

Observations by the National Commission

The National Commission observed that the State Commission's dismissal of the complaint was based on the fact that the car's registration had not been transferred to the complainant when the insurer was informed of the purchase. The National Commission noted that the registration was indeed transferred later, and the insurer was not properly notified as required by the General Regulation (GR) 17. The insurer was, therefore, justified in repudiating the claim. The National Commission also addressed the issue of pecuniary jurisdiction. It cited the case of Ambrish Kumar Shukla & Ors. Vs. Ferrous Infrastructure Pvt. Ltd, which established that the total claim amount determines pecuniary jurisdiction. This was reiterated in Renu Singh vs. Experion Developers Pvt., Ltd. The complainant's claim, totaling ₹32,57,572, fell within the jurisdiction of the State Commission, contrary to the State Commission's finding. Regarding the complainant's insurable interest, the National Commission upheld the State Commission's conclusion that the complainant had no insurable interest at the time of the accident because the ownership transfer was not recorded in the insurer's records. The complainant's reliance on GR 17, which deems the policy transferred to the new owner upon intimation, was not accepted due to the lack of evidence of proper notification. The Commission referred to Shri Narayan Singh vs. New India Assurance Company Ltd., which emphasized the necessity of proper procedures for transferring insurance policies. Ultimately, the National Commission upheld the insurer's repudiation of the claim, agreeing that the policy was not effectively transferred and the complainant had no insurable interest at the time of the accident. The Commission found no merit in the argument that the claim exceeded the Insured Declared Value (IDV), as this issue would only arise if the claim were considered valid, which it was not in this case.

Hence, the National Commission dismissed the appeal.

Case Title: M/S. W.M.W. Metal Metal Fabrics Ltd.& Anr. Vs. Oriental Insurance Co. Ltd.

Case Number: F.A. No. 215/2017