Shimla District Commission Holds Reliance General Insurance Co. Liable For Wrongful Repudiation Of Genuine Claim

Brief Facts:

Mr. Ramesh Chand, the husband of Complainant No. 1, father of Complainants No. 3 to 5, and son of Complainant No. 2, owned a Maruti Car. The vehicle was insured with Reliance General Insurance Company Limited. In 2014, the car met with an accident. Mr. Chand, who was driving the car, died in the accident. An FIR was registered against Mr. Chand for offenses under sections 279, 337, and 304-A of the IPC. Although the vehicle's registration was in Mr. Chand's name, the insurance policy remained in the name of the previous owner because Mr. Chand passed away before transferring the insurance policy. Despite this, the Complainants argued that the insurance policy was valid at the time of the accident and accused the insurer of not settling their legitimate claim. The Complainants approached the District Consumer Disputes Redressal Commission, Shimla, Himachal Pradesh (“District Commission”) and filed a consumer complaint against the insurance company.

In response, the insurance company argued that the complaint was not maintainable as no formal claim was lodged by the Complainants. It contended that the Complainants suppressed facts and presented a fabricated story to benefit from the insurance company. It stated that Mr. Chand, although the registered owner of the vehicle, had no insurable interest since the insurance policy was still under the previous owner's name. It denied the occurrence of the accident and Mr. Chand's death, noting discrepancies in the dates of the accident and the filing of the FIR. It highlighted that the complaint was filed nearly four years after the accident.

Observations by the District Commission:

The District Commission held that even if the insurance policy remained in the name of the previous owner, it could not be concluded that there was no insurable interest. It held that the insurance policy was issued after the premium was received and the vehicle documents, including the registration certificate, were verified by the insurer. If there was any error in the insured's name, the Complainants should not suffer due to no fault of their own. Furthermore, it held that the insurer did not claim that the premium was paid by the previous owner. It held that there was no violation of the policy's terms and conditions, as Mr. Chand held a valid and effective driving license at the time of the accident. Consequently, the District Commission held that the Complainants had an insurable interest, and the insurer was obligated to indemnify them for the personal accident (PA) claim according to the policy terms.

Regarding the compensation amount, the policy provided a PA cover of Rs. 1,00,000 for the owner-cum-driver. Thus, the District Commission held that the Complainants were entitled to this amount from the insurer. The District Commission directed the insurance company to pay Rs. 1,00,000/- to the Complainants with an interest of 9% per annum. Additionally, the insurance company was directed to pay Rs. 10,000/- to the Complainants as compensation for mental harassment and agony and Rs. 10,000/- as litigation costs.

Case Title: Smt. Sunoru Devi and Ors. vs Reliance General Insurance Company Limited

Case Number: 235/2018

Date of Pronouncement: June 7^th, 2024

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