Saurav Bhatti vs United India Insurance Company Limited

This revision petition has been filed under section 21(b) of The Consumer Protection Act,1986 in challenge to the Order dated 17.01.2013 of the State Commission in appeal no. 379 of 2012 arising out of the Order dated 28.09.2012 of the District Commission in complaint no. 534 of 2011.

We have heard the learned counsel and have perused the record including inter alia Order of the District Commission, the impugned Order of the State Commission and the petition.

The dispute relates to repudiation of an insurance claim.

The District Commission vide its Order of 28.09.2012 allowed the complaint and directed the insurance company:

“[a] To release the claim of the complainant (IDV - Rs.1.85 lac i.e. value of salvage realized) of Rs. 2,75,000/-,

“[b] To pay a compensation of Rs.50,000/- for mental harassment and agony to the Complainant and

“[c] To pay Rs.10,000/- as litigation costs.”

The insurance company preferred appeal before the State Commission.

The State Commission vide its Order of 17.01.2013 allowed the appeal and set aside the Order of the District Commission. Consequently the complaint stood dismissed.

The repudiation letter has not been filed by the complainant with his petition. However, a perusal of the Orders of two fora below shows that the ground for repudiation was that at the time of taking the subject insurance policy the complainant had stated that no claim had been made in the previous year and he accordingly availed of ‘no claim bonus’. The premium stood correspondingly reduced (with 20% discount due to ‘no claim bonus’). However it was later discovered that he had in fact made two claims in the previous year, and both had been settled.

The issues germane have inter alia been critiqued by the State Commission in paragraphs 10, 11 and 12 of its Order of 17.01.2013.

In paragraph 10 it has observed:

“- - the Contract of Insurance falls, in the category of Contract of 'Uberrimae Fides', meaning thereby a contract of utmost good faith, between the parties. When an information is asked for, in the proposal form, the insured is under a solemn obligation, to make a true and full disclosure of the information, on the subject, which is within his knowledge. Of course, obligation to disclose, extends only to the facts, which are known to the applicant, and not to what he ought to have known.- -”

In paragraph 11 it has observed:

“- - The Counsel for the respondent admitted that the complainant had obtained two claims, under the previous Policy, valid for the period from 2.9.2008 to 1.9.2009, in respect of the vehicle, in question. This fact was also proved, from the documents, placed on record. Since the complainant had obtained two claims, under the previous policy, in relation to the vehicle, in question, from the previous Insurer, which fell within the period of last three years, it was his bounden duty, to disclose this fact. He, however, did not disclose this material fact, by not answering the question, in the proposal form. Thus, the complainant concealed the material fact, which was in his knowledge. Had the complainant disclosed this material fact, to the Adviser/Agent of the Insurance Company, at the time of filling up the proposal form, and signing the same, he would not have become entitled to 20% NCB. On account of suppression / concealment of this material fact, he was given 20% NCB, as is mentioned against the heading "discounts & loading" in the proposal form. Not only this, he also signed the declaration, declaring, that the statements made by him, in the proposal form, were true to the best of his knowledge and belief.- - ”

In paragraph 12 it has discussed GR 27 and has reasoned out that the District Commission erred in taking a myopic astigmatic view of the provisions of GR 27 while outright ignoring the fundamental fact that it was the complainant himself who had concealed the material information of having made two claims in the previous year:

“- - No doubt, under the aforesaid Regulation, a duty is cast upon the Opposite Party / Insurer, to obtain such information, by writing a letter to the previous insurer, within 21 days. It is also, no doubt, true that this duty was not performed by the Opposite Party within the stipulated time. However, the question arises, as to whether, on account of this reason, the Contract of Insurance would become legal and valid, despite the fact that the complainant suppressed the material fact, at the time of obtaining the Insurance Policy. The answer to this question is, a big No. The Opposite Party, therefore, could not be held deficient, only on account of the reason, that it did not perform its duty of obtaining information from the previous insurer, as to whether, the insured had obtained claim under the previous Policy within the stipulated period. Since the complainant concealed the material fact, at the time of filing up the proposal form, despite the fact, that the insurer did not comply with the aforesaid Regulation, within the stipulated period, he could not escape from the consequences of the Policy, being declared as void abinitio. The repudiation, thus, made by the Opposite Party was legal and valid.- - ”

The admitted and proved facts of the case are that the complainant declared under his own hand and signature that no claim had been made in the previous year though in fact two claims had been made and both had been settled and the complainant availed of the benefit of ‘no claim bonus’ which caused consequential reduction in the amount of premium paid to the insurance co. GR 27 is a general rule meant for administrative and financial discipline and health of the concerned insurance company(ies). If, as stipulated in GR 27, the insurance company did not inquire apropos ‘no claim bonus’ from the previous insurer within the prescribed period of 21 days, that may be an aberration, which may inter alia necessitate looking into departmentally for accountability and systematic improvements, but, in the given facts and specificities of the present case at hand it does not override the fundamental and materially significant fact that it was actually the complainant himself who made two claims in the previous year (and both were settled) but yet withheld this material fact and it was the complainant himself who availed of the benefit of ‘no claim bonus’ without being entitled thereto. It does not absolve the complainant from his motivated concealment of material facts which he was dutybound to disclose. The significantly material concealment inter alia also leading to wrongful gain by way of reduction of the premium cannot be ignored or defended by taking recourse to the provisions of GR 27 as has been erroneously allowed by the District Commission and rightly overruled by the State Commission.

We find this to be a case of attempting to misuse the machinery of consumer protection fora to obtain wrong gain when in fact the blame lied at the end of the complainant himself who acted with ulterior motive and with vested dishonest purpose.

We have no hesitation in dismissing the petition. And we also feel it appropriate to impose a cost of Rs.500/- on the complainant petitioner, to be deposited in the ‘consumer legal aid account’ of the District Commission within four weeks from today.

The Registry is requested to send a copy each of this Order to the parties in the petition and to their learned counsel as well as to the District Commission immediately. The stenographer is also requested to upload this Order on the website of this Commission immediately.