7516 50 Insurance Judgements

Insurance Judgements
Insurance Judgements
Judgements on Insurance Related Matters

Supreme Court of India
&
National Consumer Disputes Redressal commission

Reference: www.judis.nic.in/supremecourt/chejudis.asp
www.ncdrc.nic.in
For details please refer full judgement of honourable court/commission

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Numerous changes have been brought into effect by insurance companies over the years after
consumer courts have ruled against them. However, a claim can also be awarded on humanitarian
grounds even if the insurance company is right like in the case of United India Assurance Vs.
Laxamma wherein the defendant had deposited a premium cheque which bounced. When the
insured died, the court ordered the company to pay the claim amount, stating that they weren't
informed about the cheque bouncing before the claim was placed.
Let us look at three landmark judgement that took place this year that will impact any insurer.
Laser eye Surgery
The case of KP Desai Vs. United India Insurance Company, Maharashtra State Consumer Disputes
Redressal Commission, January 31.
When KP Desai underwent a laser eye surgery for correcting his eyesight, it cost him Rs 50,000.
Desai had a health insurance policy with the United India Insurance Company since 1990, which he
renewed every year. After the surgery in 1997, when he filed a claim for the surgery expenses, the
company rejected it stating that the surgery was purely cosmetic and not covered by the insurance.
Desai filed a complaint with the South Mumbai District Consumer Disputes Redressal forum in 1997
and the judgement ruled in his favour in April, 2004. The insurance company then filed an appeal
with the Maharashtra State Consumer Disputes Redressal Commission, where the judgement was
upheld.
Transfer of Car Ownership
The case of New India Assurance Vs. Ashok Kumar, National Consumer Disputes Redressal
Commission, March 19.
Ashok Kumar purchased a second hand car in November, 2006, which was insured by New India
Assurance by the previous owner. Kumar did not inform the insurance company about the
registration transfer or get the insurance policy transferred to his name. When Kumar filed a claim
on the car being stolen in March, 2007, his claim was rejected on the grounds that the claim was not
in his name. Kumar filed a lawsuit and the Delhi District Commission and the State Commission
ruled in his favour. New India Assurance filed an appeal with National Consumer Disputes Redressal
Commission, which ruled in its favour stating the Irda regulation according to which the insurance
company must be informed about the vehicle transfer within 14 days, if not, the insurance company
is not liable to reimburse the claim.
Fire damage need not be caused by fire alone
Consumer Education & Research Society, Bileshwar Khand Udyog Sahakari vs. IFFCO-Tokio general
insurance, National Consumer Disputes Redressal Commission, March 19.
Ahmedabad-based Consumer Education & Research Society; Bileshwar Khand Udyog Sahakari paid
a premium of Rs 38,520 for a Rs 2.25 lakh fire cover from IFFCO-Tokio General Insurance for a
stock of molasses. While the policy was still being validated, a portion of the stock was burnt due to
spontaneous combustion. The insurance company rejected the claim on the grounds that the stock
was not burnt by an actual fire. The National Consumer Disputes Redressal Commission ruled in the
favour of the insured, stating that this amounted to deficiency of service on the insurance company's
part and it was liable to pay damages amounting to Rs 1.14 lakh along with 10 per cent interest per
year from 2003 onwards.
How these 3 Judgments Affect Policyholders?
In the first case, health insurance will, henceforth, cover corrective surgeries but that also means a
higher premium and more disclosures.
The second case was very straightforward as Irda regulations are clear-cut about disclosures,
especially with respect of transfer of the property being insured. So, it is important to read through
the policy offer document clearly to understand the rules for the transfer of policies and the
insurance company must be informed about any major changes.
In the third case, henceforth, insurance companies are liable to pay for the damages to stock
occurring due to fermentation, natural heating or spontaneous combustion under a fire policy.
The author is CEO, bankbazaar.com

S.No. Ombudsman Reference Case No. Brief facts of
the case
Findings of the case Decision
1. Bhubaneswar 21-002-0217 Insurer alleging
suppression of
material fact
concerning
health and pre-
existing illnesses
by the Life
Assured
Insurer could not
prove beyond doubt
that the Life assured
suffered from serious
illnesses before taking
the policy.
Insurer was directed to
settle the claim within
one month from the
receipt of the consent
letter.
2. Ahmedabad 21-001-0314 While taking the
policy the life
assured had
informed in great
detail the state
of his health and
habits due to
which several
Special Reports
were called for
and the proposal
was accepted
with extra
premium.
The life assured died
within ten months
from the date of
proposal. The claim
was repudiated on the
grounds of
suppression of
material facts on the
basis of certificate of
treatment,
prescription, letters of
doctors and hospital.
It was observed that
all the
diagnosis/treatment
commenced after 7
days from the date of
acceptance of risk. All
the documents proved
that the deceased
was not aware of his
ailment at the time of
taking the proposal.
The respondent (the
insurer) was directed to
pay the full claim
amount.
3. Bhopal L.I-1025-21/09-07/IND The deceased
life assured had
produced voter
I.D Card as age
proof and the
agent filled up
the proposal
form. It was an
early claim. Date
of Birth
mentioned was
1-1-1950. His
actual Date of
Birth was 1-8-
1943 and was
working as
postman in
postal
department. Had
he declared his
correct age, the
proposal would
not have been
accepted. He
had deliberately
understated his
age.
The deceased was
a government servant
and deliberately
understated his age to
defraud the
respondent (Insurer),
in order to accept the
proposal and there by
misled the respondent
in taking proper
underwriting decision.
The decision taken by
the respondent
(Insurer) in repudiating
the claim is just and fair
and hence does not
require any
interference. Therefore
the complaint is
dismissed without any
relief.
4. Chandigarh HDFC/397/Mumbai/Hissar/21/07 Insurer alleged
that it was a
case of suicide
as per complaint
of the father of
the diseased to
police; hence
suicide clause
applies and
nothing is
payable. The
claim was
repudiated.
The father was not
present at the scene
of the death. No
suicide note was
found. Chemical
analysis did not find
any poison in the
body. Post Mortem
report also did not find
any poison in the
body. The report of
Panel of doctors did
not confirm that death
was due to
consumption of
poison.
Held that the sum
assured of Rs. 5 lakhs
along with accrued
bonus if any be paid to
the
nominee/complainant.
5. Chennai IO(CHN)/21.003.2264 The insurer
alleging non
disclosure of
material fact of
suffering from
Acute
Lymphoblastic
Leukaemia
(ALL) with
relapse with
refractory
disease in the
proposal form
and hence the
claim is
repudiated.
The deceased had
been undergoing
treatment for ALL
since 2000 and he
underwent
Orchidectomy for
relapse in 2003. Did
not disclose this in
proposal form
submitted in Dec
2005
There is clear medical
evidence to show that
the deceased was
suffering from
Leukaemia well before
signing the application
for insurance. Hence
the complaint is
dismissed and the
decision of the insurer
was upheld.
6. Chennai IO(CHN)/21.006.2420 The deceased
life assured had
not disclosed
that he had
suffered from
pulmonary TB
with
Haemoptysis in
his proposal
form. The claim
was repudiated
by the insurer on
the grounds of
non-disclosure
of material facts.
The life assured had
suffered from TB and
did not mention the
same in the proposal
form since he thought
that TB is curable.
The discharge record
of K.T.V.Medical
foundations clearly
mentioned that the
policyholder was a
case of Cirrhosis of
liver, old pulmonary
TB with Haemoptysis.
The complaint was
dismissed and the
decision of the insurer
in repudiating the claim
was upheld.
7. Chennai IO(CHN)/21.05.2544 The life assured
(lady) lapsed her
policy and it was
revived with
Declaration of
Good Health
(DGH) on
9.1.2005. The
actual date of
maturation was
7.12.2004 where
as it was
mentioned in
DGH as
29.12.2004. The
revival of policy
The life assured died
within 4 months from
the date of revival.
Did not disclose that
she had Caesarian
operation in 2000.
She had miscarriage
during 2nd and 3rd
month of second
pregnancy. At the
time of death she was
pregnant. Had she
declared the date of
last menstruation as
7.12.2004, the insurer
would have
The complaint was
dismissed since there
was wrong information
about her date of last
menstruation and
insurer was deprived of
the opportunity of
assessing the risk
properly. Had it been
declared correctly, the
insurer would have
postponed the revival.
was done on
10.1.2005 and
the life assured
died on
19.5.2005.
Insurer
repudiated the
claim on the
basis of
suppression of
material fact in
DGH.
postponed the revival
of the policy. She died
of pregnancy related
complications.
8. Chennai IO(CHN)/21.03.2616 A man his wife
and her brother
were travelling in
a two- wheeler
from Kinathu
Kadavu to
Pollachi at night.
Three people
were travelling in
a two-wheeler
and they met
with an accident.
The Wife and
her brother died
in the accident.
The insurer
refused to pay
the accident
benefit sum
assured since
the accident was
caused due to
breach of law.
The FIR and PIR had
concluded that it was
breach of law since 3
people were travelling
in a 2-wheeler in
which only 2 are
allowed to travel.
Though the life
assured was only
pillion rider, she was
travelling as one of
the passengers on the
Motor Cycle (as per
the MV Act only two
persons are
permitted), which
amounts to breach of
law.
The complaint was
dismissed on the
ground that the
accident happened and
death occurred due to
breach of law and
insurer is correct in
repudiating the
Accident Benefit SA.
9. Chennai IO(CHN)/21.02.2648 The life assured
submitted
proposal on
30.3.2005.
Policy
commenced
from 28.3.2005.
The life assured
died of road
accident on
13.5.2005. The
insurer refused
to pay accident
sum assured
since the life
assured was
under the
influence of
alcohol at the
time of accident.
The claimant
argued that the
life assured was
not driving the
vehicle and
hence the
double accident
benefit claim
cannot be
The insurer
contended that as per
Medico-Legal-Manual
if the alcohol content
is 100 to 300 MG %
the person would
have some mental
confusion, emotional
instability, loss of
critical judgment,
impaired memory,
sleeplessness,
slowed reaction time,
loss of muscular
coordination etc. As
the policy conditions
of DAB, if death of the
life assured is caused
by intentional self
injury, attempted
suicide, insanity or
immorality or when
the life assured is
under the influence of
intoxicated liquor,
drug or narcotic, the
insurer is not liable to
pay the additional
sum assured.
The complaint was
dismissed since the
forum did not wish to
interfere with the policy
conditions.
rejected.
10. Hyderabad L-21-009-0438-2006-07 Death claim
under ULIP
policy. The
insurer produced
the evidence,
which proved
that the life
assured was
under the
treatment of
High BP prior to
the issue of the
policy. Due to
non disclosure of
the material fact
the SA claim
was repudiated.
The life assured is
suffering from
Hypertension. Did not
disclose in the
proposal form. Life
assure died within 9
months from the date
of commencement of
the policy. The sum
assured under the
claim was repudiated.
The decision of the
insurer was upheld
since there was
suppression of material
facts. Since the policy
has the provision for
savings, the insurer
was ordered to pay the
investment portion
(Fund Value).
Recent Cases Judgements
1. O. K. Gaur S/o Late B. R. Gaur vs Choithram Hospital and Research Centre
[NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, 09 Mar 2012]
Consumer Protection - Consumer Protection Act, 1986 - Unfair trade practices - Compensation - Delay in
filing complaint - Maintainability - Appellant suffered from polycystic kidney disease - Respondent
hospital was the only authorized hospital in the State for transplantation surgeries - Various tests were
conducted and large amount of money was extorted from appellant for tests by respondent - At last
surgery was done and appellant was in hospital for 2 months - It was also alleged by appellant that at
the time of discharge, the discharge card was purposely not given - As such appellant could not take
treatment elsewhere, and had to repeatedly go for follow-ups - Thus, there was gross negligence on the
part of respondent - On complaint filed by appellant for compensation State Commission dismissed the
same - Hence, instant appeal - Appellant contended that respondent acted in negligence and extracted
money from appellant by showing unfair trade practices - Whether complaint filed by appellant before
the State Commission was within time or the same was time barred - Held, appellant was operated for
kidney transplant on 25-8-2005, whereas complaint before the State Commission was filed on 30-7-2008
- Complaint filed was barred by limitation and no application for condonation of delay was filed by
appellant - There was no force in the plea that there was delay in performing kidney transplant - As per
material available on record, letter given for permission to respondent hospital was sent on 5-7-2005
and transplant was to be done within one month - If there had been some procedural delay, it could not
be said that delay amounted to any negligence on the part of respondent - Operation for kidney
transplant was carried out successfully and there was no evidence that any excessive amount was
charged or unnecessary tests were done - Impugned order was upheld - Appeal dismissed.

2.Haabia Advertising (India) Private Limited vs (1) United India Insurance Company Limited; (2) Project
Director (R & B) [NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, 09 Mar
2012]
Consumer Protection - Insurance - Consumer Protection Act, 1986 - Deficiency in service - Claim -
Repudiation - Validity - Appellant/complainant was engaged in advertising on behalf of its principals in
various cities by erecting sky signs and hoardings - Appellant had erected 531 hoardings with the
permission of Municipal Corporation and hoardings were insured with respondent no. 1 for
Rs.58,56,500/- - Insurance policy covered indemnification of loss or damage to hoardings caused by
various perils, including fire, burglary and 'malicious damage' - Appellant filed writ petition and sought
relief not to remove hoardings - Though HC allowed petition, respondent removed 120 hoardings in
spite of being informed the order of HC - Appellant filed contempt and the same was allowed, and
respondent was <I> </I> directed to pay a total amount of compensation of Rs.60,000/- for
the 120 hoardings of appellant removed in violation of HC order - Aggrieved by the order respondent
filed appeal and it was dismissed by DB - HC awarded only a token compensation with liberty to
appellant to establish its actual damage through appropriate proceedings - Appellant filed an insurance
claim with respondent no. 1/Insurance Company and it was repudiated - Appellant filed complaint that the
removal of its hoardings by respondent no. 2 concerned amounted to 'malicious act' in the eyes of
law and repudiation of claim was a clear deficiency in service and claimed compensation of Rs. 20 lakhs -
State Commission dismissed the complaint - Hence, instant appeal - Appellant contended that it was not
open to respondent no. 1 to contend that removal of hoardings was in accordance with the law or that
the officers concerned of respondent no. 2 removed them in bona fide exercise of their rights - Whether
repudiation of claim by respondent no. 1 was justified - Held, complainant failed to establish that there
was malice in the acts done by respondent no. 2 - If there was no material to establish that it was a
malicious act attracting the relevant clause in insurance policy, appellant could not sought for damages -
Respondent no. 1 did not appoint any surveyor to assess the insurance claim of appellant and, given the
lapse of time, it would not be useful or practicable to ask respondent no. 1 to do so then - Only available
course was to direct respondent no. 1 to pay appellant insured value for the damaged 120 hoardings,
details of which were furnished by appellant - It should be subject to the 'excess clause' and deduction
of (i) salvage value of 120 hoardings, in accordance with the terms of the policy and (ii) the sum of
Rs.60,000/- already received by appellant (as token damages in terms of the order of HC in contempt
petition) - Impugned order was set aside - Appeal allowed.

3. State Bank of Hyderabad vs (1) Nirmala W/o late Vinod Kumar; (2) SBI Life Insurance Company
Limited [NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, 29 Feb 2012]
Consumer Protection - Banking & Finance - Insurance - Claim - Repudiation - Deceased sought
housing loan of Rs.10 lakh from petitioner to construct a house - Loan was agreed but simultaneously
deceased was made to apply for insurance from respondent no. 2 Insurance Company to provide
insurance cover to the housing loan - Complainant/deceased's wife asked petitioner to have the
insurance claim settled - Respondent no. 2 rejected the insurance claim on the ground that the
deceased died before the acceptance of the proposal and therefore, there was no privity of contract
between complainant and respondent no. 2 - Thereafter, a notice was issued by petitioner asking the
Complainant to pay back the entire loan - District Forum, held that there was a presumption of
acceptance of the proposal for insurance with the receipt of premium, hence directed respondent no. 2
to pay the insurance amount proportionate to premium of Rs.27,660/- - On appeal State Commission
held that petitioner alone and not respondent no. 2 was responsible to comply with the direction of
District Forum - Hence, instant revision petition - Whether the State Commission was justified in passing
the impugned order - Held, proposal form for insurance and deduction of premium were made on same
day on which application for housing loan was accepted - Hence, despite faade of voluntary acceptance
of insurance, insurance coverage under policy was a requirement of petitioner as an additional security
for housing loan - Thus, policy was thrust upon borrower as a mandatory security for recovery of loan -
Further, respondent no. 2 insurer should not be made liable to pay for lapses on part of petitioner's
employees - Borrower insured should not be held responsible for lapses, which later resulted in contract
of insurance remaining incomplete till his death - Impugned order of State Commission was confirmed -
Revision dismissed.

National Insurance Company Limited vs Ashok Kumar Gupta S/o Late Madan Lal Gupta
[NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, 28 Feb 2012]
Consumer Protection - Insurance - Consumer Protection Act, 1986 - Deficiency in service Claim -
Repudiation -Respondent/complainant purchased mediclaim policy for Rs.2 lakh each
for himself and his wife - Respondent suddenly developed chest pain and was diagnosed with
Coronary Artery Disease, a Coronary Artery By-pass Graft (CABG) surgery was performed -
After his discharge from the hospital, respondent submitted a claim to petitioner - Petitioner
insurer repudiated the claim without sufficient ground - Respondent filed complaint before
District Forum alleged that petitioner was guilty of deficiency in service in repudiating his claim
for reimbursement of the expenditure of Rs.1,20,051/- on his medical treatment - District Forum
dismissed the complaint - On appeal by respondent State Commission reverted the order of
District Forum - Hence, instant appeal - Whether State Commission was justified in passing the
impugned order - Held, respondent did not disclose his pre-existing disease of 'hyperthyroidism'
was also clearly established by the admission record of the Hospital - Thus, respondent was
guilty of non-disclosure of material fact relating to his health in filling the forum under the
heading 'Insured Personal Details' just before obtaining the mediclaim insurance policy -
Petitioner did not disclose the fact while filling the details of the status of his health - Impugned
order of the State Commission was set aside and the order of the District Forum was affirmed -
Appeal dismissed.

4. Lord Shiva Co-operative Group Housing Society vs Vishnu Bhagwan Sharma S/o O. P. Sharma
[NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, 28 Feb 2012]
Consumer Protection - Consumer Protection Act, 1986 - Deficiency in service - Respondent/complainant
filed complaint against petitioner/opposite party alleging that he was member of petitioner's Society
which allotted him flat and he deposited the entire amount against the allotment of flat - Petitioner
demanded excess amount which was opposed - It was alleged that petitioner had not provided basic
amenities such as water connection, electricity and parking facilities, which it was bound to provide -
Thus, petitioner was liable to pay Rs.50,000/- as damages - On complaint, petitioner was set ex parte by
District Forum and held that there was deficiency in service on part of petitioner and complaint was
allowed - Aggrieved by the order of District Forum, petitioner filed an appeal along with delay
condonation petition - State Commission dismissed the application and appeal as time barred - Hence,
instant appeal - Whether petitioner had shown any reasonable cause for condonation of delay - Held,
since, petitioner instead of filing appeal against the ex parte judgement had chosen to file an application
for setting aside the ex parte order, despite the fact that there was no provision under the Act for recall
or review of any order passed by District Forum - No sufficient cause nor any cogent reason was shown
which entitled petitioner to have the delay condoned - Petitioner had no case even on merits since
evidence led by respondent had gone unrubutted and no fault could be found with the decision of
District Forum - Further, a valuable right accrued in favour of respondent of which he could not be
deprived of - Impugned order was upheld - Appeal dismissed.

5. National Insurance Company Limited vs (1) Mohd. Ishaq S/o M.A. Hafiz; (2) NIC Magma Insurance
and
Finance Coverage @ Magma Leasing Limited; (3) Orange Auto Private Limited [NATIONAL
CONSUMER DISPUTES REDRESSAL COMMISSION, 28 Feb 2012]
Consumer Protection - Insurance - Deficiency in service - Respondent took an insurance policy for
vehicle, during the period of operation of the policy, the vehicle met with an accident - Petitioner insurer
appointed a Surveyor to conduct a spot survey and submit his report - Claim of complainant under the
policy for the repair costs, remained unsettle - District Forum and State Commission rejected the
surveyors report - Hence, instant revision petition - Whether the Foras below was justified in rejecting
the report of surveyor - Held, District Forum as well as the State Commission had very rightly rejected
the report of the surveyor on the ground that it was not supported by the affidavit of its author -
Question of demurrage arose only because of non-payment of the bill for repair, which in turn, was
delayed due to non-settlement of the claim for the cost of repair under the insurance policy - Delay in
settlement of the insurance claim was the proximate cause for the demurrage cost to arose - Impugned
orders were upheld - Revisions dismissed.

6. Life Insurance Corporation of India vs Sudesh [NATIONAL CONSUMER DISPUTES
REDRESSAL COMMISSION, 27 Feb 2012]
Consumer Protection - Insurance - Consumer Protection Act, 1986 - Claim - Repudiation - Entitlement of
- Respondents husband (deceased) obtained a policy for life of Rs.5 lakhs from appellant LIC of India -
Deceased died 13 months later after taking the policy and the claim under the policy was repudiated by
appellant on the ground that the deceased had withheld material information at the time of seeking the
insurance cover - Respondent filed complaint, which was allowed by State Commission - Hence, instant
appeal - Whether the State Commission was justified in allowing the complaint - Held, appellant relied
entirely on the record of treatment for repudiation of the claim under a policy taken more than one year
- Appellant could not point to any other evidence produced before the State Commission, which could
show that the deceased suffered from any or all of those ailments at the time when the proposal for
insurance was made - Question of disentitlement under the insurance policy, on the ground of
concealment/suppression of information, would have arisen in case only if there was evidence to show
that the insured had undergone hospitalization/treatment for any disease in near proximity of the time
when insurance policy was obtained and had chosen not to disclose it - Further, voluntary disclosure of
information relating to occasional drinking, as made in the proposal form by the deceased, was not
investigated further before appellant chose to issue the insurance policy in favour of the deceased -
Impugned order of State Commission was upheld - Appeal dismissed.
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Motor Third Party Claim:Compensation for disability
Civil Appeal No.9676 of 2011
Date of Judgement:08-11-2011
Sri Laxman @ Laxman Mourya VS The Oriental Insurance Company Ltd
This is a motor third party claim where in the victim was of 24 years of age & working as a carpenter
earning Rs. 5000 per month. He suffered 38 % disability of whole body.The MACT awarded
compensation of Rs.45000 With 8 % interest from the the date of application. The High Court increased
the compensation to Rs.76000 With 6 % interest from the the date of application.In this appeal against the
judgement of Karnataka High Court honourable Supreme Court of India enhanced the compensation to
Rs.837640 with 8 % interest from the date of filing the petition.
Motor Insurance:Theft of vehicle: Delay in intimation to Insurer
National Consumer Disputes Redressal Commission
Revision Petition No.1362 of 2011
Ranglal (Deceased)through his legal representatives VS United India Insurance Company
Delay in intimation of over two months of theft of tractor to insurance company. According to the
conditions of the insurance policy, the theft had to be intimated to the insurance company immediately.
Insurer repudiated the claim. District. forum admitted & directed insurance company to pay the claim,
where as state commission set aside the order of district forum on the basis of National commission order
in the case of New India Assurance Company Ltd., vs Trilochan Jane. Agreeing with the order of state
commission, revision petition was dismissed by National Commission.
Motor Third Party Claim:Compensation for death of foetus
National Insurance company Ltd VS Kusuma & Anr
Honourable Supreme court dismissed the appeal of insurance company against the award of HC where in
high court had enhanced the compensation to Rs. 180000 with 6 % interest for the death of a 30 weeks
foetus due to a motor accident.
General Insurance:Limitation period
Revision Petition No.3118 to 3144 of 2010
Lakshmi bai & ors, Chaya bai & ors, Tulsi bai ors VS ICICI Lombard General Insurance
Company & Ors
This judgement pertains to limitation clause under section 24-A of the consumer protection act & deals
140 revision petitions of death cases, sum insured Rs. 50000 in each, of Vivekananda Insurance scheme of
Govt. of M.P. The honourable national commission remanded the cases to district forums for
consideration with the following observations:
The cases where such payment is not made, would fall in one of the following categories
1). Where no claim is made either with nodal officer or the Insurance Company, within 2 years of date of
death such claims shall be barred by limitation.
2). Cases where claim is made to nodal officer or nodal officer has forwarded the claim to Insurance
Company or claim has been directly filed with Insurance Company within 2 years of the death and the
claim has remained undecided. In such a case the cause of action will continue till the day the
Respondent/insurance company pays or rejects the claim.
3). In a case where the claim is rejected by the Respondent/insurance company, the cause of action arises
again from the date of such rejection.
In the above cases, the remedy under the Consumer Protection Act 1986, cannot be barred on the
ground that the jurisdiction of the consumer fora was not invoked within two years from the date of
death/incapacitation. Any contrary view in the matter, will result in the claimant/consumer being
penalized for the delay caused by the Respondent/insurance company.The revision petitions are
accordingly, disposed of in the above terms. The cases falling in the categories mentioned above stand
remanded to the concerned District fora for consideration afresh, in the light of the above observations.
The parties shall bear their own costs.
Motor Own damage claim:Renewal of fake driving licence
National Insurance Company Ltd VS Rajesh Ohri
It is an own damage claim & petition filed by insurance company against the orders of state commission,
quoting Supreme Court of India Judgement ( National Insurance Co. Vs. Laxminarayan Dhut Civil Appeal
No.1140 of 2007 decided on 02.03.2007) that a fake original driving licence if renewed can not make it
genuine & bonafide renewal.However to prove its contention insurance company failed to sumit
convincing evidence of licencing authority that the original licence was fake except the affidavit of
divisional manger which was not accepted by honourable national commission. Honourable commission
stated in the judgement that in the instant case, the Petitioner/Insurance Company on whom the onus was
placed to do so has not been able to produce credible evidence to conclusively prove that the original
licence was fake.The only evidence submitted is an affidavit of the Divisional Manager of the
Petitioner/Insurance Company which states that verifications made from the District Transport Office,
Gurdaspur had indicated that the licence as purported had not been issued by that office to Sucha Singh.
No affidavit or letter from the District Transport Office, Gurdaspur has been produced by the Petitioner to
further support the contentions made in the affidavit of the Divisional Manager. Counsel for Petitioner
also admitted before us during oral submissions that Petitioner had not produced either an affidavit or a
letter from District Transport Office in this respect before the Fora below.Obviously, in the absence of
this, the affidavit of the Divisional Manager of the Petitioner/Insurance Company has little evidentiary any
value and we are, therefore, unable to accept the Petitioners contention that it was conclusively proved
that the original licence of the driver Sucha Singh was fake.We, therefore, have no option but to dismiss
the present revision petition and confirm the order of the State Commission.
Motor Own damage claim:Overloading of passengers
National Insurance Company Ltd VS Ms.Usha devi
It is an own damage claim & petition filed by insurance company against the orders of state commission.
In this case a minibus permitted to carry 13 passengers were carrying 26 passengers met with accident
causing death to 7 & injury to 19 passengers. Honourable commission allowed the appeal of insurance
company & set aside the orders of state commission, restoring the district forum order where in complaint
was dismissed.
Life Insurance:Double accidental benefit in death due to accident
LIC of India VS Smt. Ranjit Kaur
LIC paid sum insured but denied double accidental benefit as per policy condition, that when accidental
death was caused insured was under influence of liquor. Distt. Forum & state commission allowed the
double accidental benefit stating the detailed reasons in the orders. Agreeing with the lower fora, National
Commission dismissed the appeal of LIC & upheld the order of state commission.
Motor Third Party Claim:Compensation in death
National Insurance company Ltd VS Shyam Singh & Others

In this case a young person bachelor of 19 years age died in motor accident on 01-11-2007.MACT
awarded a total compensation of Rs.172000 finding that the deceased was earning Rs. 3000 per month,
deducting 50 % towards personal expenses as he was bachelor, considering the age of parents 56 & 55
years, applied the multiplier of 9 with 6 % interest from date of petition. On appeal high court considering
the income Rs.4500 & applied a higher multiplier & enhanced the compensation from Rs. 172000 to Rs.
339000.In this appeal by insurance company the supreme court restored the multiplier applied by
MACT,considering the age of parents.
Motor Insurance:Liability of Insurer after sale of vehicle
Oriental Insurance Company VS M/S Kamal Tours & Travels
In the present case National Commission observed that respondent did have any insurable interest at the
time of the accident, hence set aside the order of the State Commission and accepted the revision petition
of insurance company.National Commission has already given a clear ruling that if a vehicle is sold by the
insured to another person without intimation to the insurance company then in case of any claim covered
under the insurance policy, the insured ceases to have an insurable interest. The present case is squarely
covered by the decision in New India Assurance Co. Ltd. Vs. Divya Prashad 1(2011) CPJ 22(NC).
Life Insurance:Liability of Insurer before issue of policy
LIC of India VS Smt.Jamuna & Others
Proposer paid the premium & after payment of premium died due to road accident within 12 days of
filing proposal form. LIC had not issued the policy till the death of proposer. Proposal was not accepted
by LIC for want of certain requirements and hence policy was not issued. LIC contended that there was no
concluded contract hence not liable for claim.Distt.forum & state commission accepted the complaint &
decided in favour of respondents.National commission allowed the revision petition & the set aside the
orders of lower fora ,quoting the supreme court order in Life Insurance Corporation of India vs. Raja
Vasireddy Komalavalli Kamba & Ors. - 1984 (2) SCC 719,where in it is mentioned that A contract under
the Contract Act implies offer, acceptance and consideration. Without acceptance there is no concluded
contract. If before the acceptance the offerer dies, the offer immediately lapses and hence there cannot be
any acceptance after his death.
Motor Third Party Claim:Compensation in disability case
Shri Kumaresh VS The National Insurance Company ltd & Anr.
On 1.11.2006, at about 7.15 p.m., the appellant , was proceeding on a motorcycle as a pillion rider
when a lorry came from behind at a high speed and dashed against the motorcycle. The
left wheel of the lorry ran over the right leg of the appellant, due to which he
sustained grievous injuries. The right leg of the appellant had to be amputated as a result of the
accident. The appellant filed a claim petition under section 166 of the Motor Vehicles
Act, 1988 claiming Rs.15 lacs as compensation. At the time of the accident, the
appellant was aged 20 years and claimed to be earning Rs.6000/- per month as salary as
a building centering worker. MACT awarded Rs.281200 compensation with 6 % interest..High Court of
Karnataka modified the compensation in various heads & enhanced to Rs.548000 with 6 % interest.
Honourable Supreme Court of India revised the compensation in various heads & enhanced to Rs.
1000000 with 9 % interest payable jointly & severally by respondents.
Motor Insurance:Full & final settlement/discharge of claim
Ajay Verma VS United India Insurance Company
Where claim has been accepted without any objection, full and final settlement of claim was made by
insurer, claimant cannot be allowed any further relief. National Commission dismissed the revision
petition with cost of Rs. 10000 placing reliance on observations made in case of United India Insurance
Co. vs. Ajmer Singh Cotton & General Mills & Ors. Etc. 1992 (2) CPC 601 (S.C. In another case law
cited in National Insurance Company Ltd. vs. Kuka Rice & General Mills, 2008 (1) CPC 28 (Haryana),
Commission had held "that once final settlement of claim was accepted by the complainant without any
protest it was not proper for the District Forum to enhance the claim and the order of the District Forum
was set aside".
Motor Third Party Claim:Compensation in disability case
Shri Nagarajappa VS The Oriental Insurance Company ltd
On 13-08-2004 while crossing the road in a motor accident appellant working as a coolie suffered
multiple injuries. As per doctors evidence appellant suffered gross deformity of the left forearm,
wrist and hand,wasting and weakness of the muscles of the left upper limb and shortening of
the left upper limb by 1 c.m.. As a result, the doctor stated that the appellant could not work as a coolie
and could not also do any other manual work.The doctor assessed permanent residual physical
disability of the upper limb at 68% and 22-23% of the whole body. The Tribunal awarded Rs.
170200 with 6 % interest from date of filing application which was increased to Rs.222600 by High Court
which was further increased to Rs. 477000 by honourable supreme court in this appeal with the 6 %
interest. Supreme Court mainly increased the compensation in future income from Rs.93600 to Rs
318240,loss of amenities from Rs. 30000 to Rs. 40000 & future medical expenses from Rs. 10000 to Rs.
30000.
Renewal of fake driving licence:Motor Own Damage Claim
The New India Assurance Company Ltd VS Krishan Singh rathore
In the present case, it was held that renewal of the fake license could not transform a fake license into a
genuine license. Since the vehicle in question was being driven by a driver in violation of the terms of the
policy as well as in violation of Section 3 of the Motor Vehicles Act, Petitioner Insurance Company was
entitled to repudiate the claim. For the reasons stated above, Revision Petition is allowed.
Life Insurance:Death due to suicide: Date of issue of policy
LIC of India VS Surat Mal Tak
Date of issue of policy 21-03-1996, date of death by suicide 08-03-1997. On a request made by the
insured, the policy had been back dated to 8
th
January, 1996.Claim not payable since insured committed
suicide within one year of commencement of policy. Clause 6 of policy applicable.
Life Insurance:Proposal & Acceptance of offer
LIC of India VS Smt. Bhoomikaben M Modi
Premium Cheque dated 08-07-1996 given for insurance of Rs. 100000 with accidental benefit for contract
of insurance w.e.f. 28-06-1996.Proposer died due to electric shock on 14-07-1996. Unaware of the death
of the proposer on 14.7.1996, Petitioner accepted the proposal on 15
th
July, 1996.Policy No.832471906
was blocked by incorporating the same in the first premium receipt and the policy thereafter was to be
prepared under the same number.Although the policy was subsequently prepared but owing to the demise
of the proposer it was not issued. Complainants Respondents (wife and children of the proposer) lodged
claim with the Petitioner which was repudiated on the ground that no concluded contract had come into
existence as the proposer had died prior to the acceptance of the proposal. The Petitioner had offered to
pay a sum of Rs.1,00,000/- on ex gratia basis but the Respondents refused to accept the same and
demanded the payment of Rs.2,00,000/-. As the claim was not settled, Respondents filed the complaint
before the District Forum.District Forum allowed the complaint and directed the Petitioner to pay the
insured amount as per terms and conditions of the policy along with 12% interest per annum and
Rs.5,000/- by way of compensation and Rs.2000/- costs. Petitioner being aggrieved, filed appeal before
the State Commission which has been dismissed by the impugned order.It is well settled law that a
contract is complete only on its acceptance and if death intervenes between the proposal and its
acceptance, then the proposal itself gets extinguished. No contract can either be entered into or
concluded with a deceased person by acceptance of his offer after his demise.The Supreme Court in the
case of Life Insurance Corporation of India vs. Raja Vasireddy Komalavalli Kamba and Ors. AIR 1984
SC 1014 held that a contract of insurance is concluded only when the party to whom an offer is made
accepts it unconditionally and communicates its acceptance to the person making the offer. Mere
receipt and retention of premium until after the death of the applicant or even the mere preparation of the
policy is not acceptance.Merely because the Petitioner had blocked Policy No.83241906 on acceptance
of the proposal on 15.7.1996 and thereafter preparation of the policy under the number allotted in
ignorance of death of the proposer does not result in a contract of insurance.Following the law laid down
by the Supreme Court in Raja Vasireddy Komalavalli Kamba, Honourable commission accepted this
Revision Petition, set aside the order passed by the Fora below and dismiss the complaint.However, since
the Petitioner had made an offer to the Respondents to pay the sum of Rs.1,00,000/- on ex gratia basis,
directed the Petitioner to pay the aforesaid sum of Rs.1,00,000/- to the Respondents by way of ex gratia
payment.
Permit & Fitness Certificate: Motor Own Damage Claim
United India Insurance Company Ltd VS Mr. Trilok Kaushik

Truck met with accident & on the date of accident 08-04-1987 it was not having valid permit & fitness
certificate.Honourable commission held that In view of the above,we are of the opinion that there is a
breach of fundamental conditions as well as breach of law on the part of the complainant at the time when
the accident in question took place on account of which complainant is not entitled to any compensation
claimed by him. Revision petition was allowed.

Unauthorised Passengers: Motor Own Damage Claim
Divisional Manager National Insurance Company Ltd VS Mr.Pravinbhai D. Prajapati

It was held by the commission that allowing a few more persons to travel is hardly relevant to the cause
of the accident and should not disentitled the complainant to receiving full compensation under the policy,
if otherwise eligible. Accordingly,the revision petition of insurance company against concurrent findings
of the District Forum and State Commission, was dismissed.
Compensation : Motor Third party Claim
Date of Judgement : 09-11-2010
Shakti Devi VS New India Assurance Company & Other
In this appeal honourable court revised the compensation for the death of a 22 year old son B.Com
(Honours) earning Rs. 1000 per month from general store run from house, in a motor accident from
Rs.60000 to Rs.132000 in view of the future employment considered Rs. 2000 earning per month &
multiplier was also raised to 11 from 8 with 10% simple interest from date of judgement of Tribunal.
Change of address of business premises in Policy :Loss by Flood
First Appeal No. 272 of 2010
Shri Subhash Chand Jain VS United India Insurance Company & Bank of Maharashtra

In this case the insured had claimed Rs. 1478604 for the loss suffered to stocks of lubricants due to flood
at business premises located at Durg where as in the policy the address of the business premises was at
Raipur. Insured claimed that he had informed the change of address to bank . Insurance company had
repudiated the claim that loss suffered was at a place which was not covered in the policy. State
commission Raipur citing various previous judgements of NC & SC held that from the policy it is clear
that there was no contract of insurance between the parties in respect of premises at Pulgaon Naka, Durg
at the relevant time and when there was no contract of insurance then the insurance company cannot be
blamed of committing any deficiency in service in not paying any compensation or in not settling the
claim.Regarding liability of bank,state commission citing previous judgements of NC stated that bank is
also not liable since obtaining insurance policy is the liability of insured.National Commission held that
order passed by the State Commission is based on correct and proper appreciation of the respective pleas,
evidence and material brought on record and is also in consonance with the law as laid down by the
Supreme Court and this Commission in several cases & did not see any good ground to interfere with the
well-reasoned order of the State Commission. The appeal was dismissed.
Breach of declaration clause:Marine Cargo Inland Transit Claim
M/S Surajlmal Ramniwas Oil Mills (P) Ltd VS United India Insurance Company Ltd & Anr

In this appeal honourable court decided that since there was breach of special condition on the cover note
which says that each & every consignment must be declared before despatch of goods on the part of
appellant,therefore the repudiation of the claim of the appellant by the respondents was justified.Appeal
was dismissed.

Health Insurance: Exclusion clauses
Revision Petition No. 2113 of 2006
The Oriental Insurance Company Ltd VS Shri Rajiv Bhadani

Respondent took a medi-claim policy for the period 09.04.2002 to 08.04.2003.On 11.04.2002 he felt
uneasiness coupled with chest pain. Respondent under went Coronary Angiography/ Angioplasty on
15.04.2002 and was under treatment in that Nursing Home till 25.04.2002. He filed a claim on
21.06.2002. The Petitioner repudiated the claim on the grounds that as per exclusion clause 4.2 and 4.3 of
the Insurance Policy any medical treatment/ hospitalization claim made within 30 days of
the commencement of the policy is not maintainable. The Respondent filed a complaint before the
District Forum which dismissed the complaint and concluded that the Respondent/ complainants case is
hit by the exclusion clause and therefore, the claim was rightly repudiated. The Respondent thereafter
filed an appeal before the State Commission. In the instant case, the State Commission on the basis of
credible evidence produced by the Respondent has concluded that the Respondent
was in good health and had no prior knowledge of the existence of any disease.Also the onus of
constituting a panel of medical practitioners was with the Petitioner, which they did not do. Therefore, the
claim was wrongly repudiated. Honourable National Commission considered the contention made by both
Counsel and gone through the evidence on record & concluded that there is no ambiguity in clause 4.2
and 4.3 as well as the saving clause which clearly indicates that though the exclusion clause pertains to the
first 30 days from the date of commencement of the policy but this will not apply if a panel of medical
practitioners constituted by the Petitioner company opine that the insured person did not know about the
existence of the disease at the time of applying for the insurance. Unfortunately, the learned Counsel for
the Petitioner could not explain why such a panel was not constituted. On the other hand, NC agreed that
the Respondent has been able to provide credible evidence before the State Commission that he had no
history of heart ailment and the recent ECG and medical examination proves this fact.In the light of the
above facts NC did not see any reason to disagree with the order of the State Commission which has
reached the conclusion on the basis of clear-cut and credible evidence in favour of the Respondent. Order
of the State Commission was therefore upheld in toto, with no order as to cost.

Loss of future earninings for disablement:Third party claim
Supreme Court of India:Civil Appeal No.5510 of 2005
Arvind Kumar Mishra VS New India Assurance Company Ltd
In this appeal honourable court assessed the loss of future earnings of a motor accident victim who
suffered 70 % permanent disability & enhanced the compensation from Rs.350000 to Rs.906000 with 9 %
simple interest.

Driving Licence:Own damage claim

New India Assurance Company Ltd VS Mr.B. Satyajit Reddy & Others A car was registered as taxi i.e.a
transport vehicle met with accident & owner filed an own damage claim with insurance company.Driver
was having driving licence to drive light motor vehicle only and not transport vehicle with PSV
badge.Insured contended that since the vehicle was being used for personal purpose & not as taxi at the
time of accident hence PSV badge was not required.The honourable National Commission decided that
this contention is not acceptable in view of the fact that the vehicle continued to be registered as a
transport vehicle i.e., a Taxi for which a specific authorized license was a statutory necessity. Occasionally
using it for a personal purpose cannot change these facts and held that the Petitioner was right in
repudiating the insurance claim of the Respondents.

Loss of future earnings for disablement :Motor Third party Claim
Civil Appeal No. No.7223 of 2010
Yadava Kumar VS National Insurance Company & Others
In this appeal honourable court granted loss of future earnings also,in the compensation for disablement,
and enhanced the compensation from Rs. 72000 to Rs.200000 with 8% interest.

Date & Time of commencement of Insurance:Motor Third Party Claim
Civil Appeal No. No.5204 of 2003
Oriental Insurance Company Ltd VS Dharam Chand & Others

In this case, the premium cheque for the insurance policy was received by the insurance company, on
May 7, 1998 at 4.00 pm and a cover note was issued at the same time. In the cover note, however, it was
stated that the insurance would commence from May 8, 1998 and expire on May 7, 1999.The motor
accident in regard to which the claim case was filed took place at 8:30 pm on May 7, 1998. The insurance
company sought to disown its liability on the plea that the accident took place before the commencement
of the insurance as indicated in the cover note. But, both the Tribunal and the High Court turned down the
plea and held the insurance company liable to pay the compensation amount.When this appeal was taken
up, counsel for the insurance company very fairly
stated that since the cheque for the premium amount was received by the company at 4:00 pm on May 7,
1998, the insurance must be deemed to have commenced from that time and four hours later when the
vehicle met with the accident, the owner must be deemed to have been covered by the insurance policy.
Honourable court appreciated the fairness shown by the counsel for the insurance company & dismissed
the appeal.

Life Insurance Claim:Non-disclosure of material fact in proposal form
First Appeal No.242 of 2006
Dineshbhai Chandarana VS LIC of India
Mr. Jigneshbhai had taken 16 life insurance policies and the last one was taken on 28-03-1997 for Rs 5
lakhs S.I.He at the age of 21 died in a motor accident on 29-09-1997.The LIC settled claim of first 15
policies but repudiated claim of last policy of Rs. 5 lakhs.It was held by the state commission that since
the insured had not declared the previous policies taken within three years in the proposal form while
taking policy for Rs. 5 lakhs hence repudiation was in order.NCDRC also held that the insured did not act
with utmost goodfaith as there was non-disclosure of material fact, hence repudiation of claim of 16th
policy of Rs 500000 by LIC was in order & appeal was dismissed.
Motor Third Party Claim:Compensation for death of housewife
Arun Kumar Agrawal and another VS National Insurance Company & Others

What should be the criteria for determination of the compensation payable to the dependents of a woman
who dies in a road accident and who does not have regular source of income is the question which arises
for determination in this appeal filed against the judgment of the Division Bench of Allahabad High Court
which declined to enhance the compensation awarded to the appellants by Motor Accident Claims
Tribunal, Shahjahanpur. Honourable court also observed that in our view, it is highly unfair, unjust and
inappropriate to compute the compensation payable to the dependents of a deceased wife/mother,who
does not have regular income, by comparing her services with that of a housekeeper or a servant or an
employee, who works for a fixed period. The gratuitous services
rendered by wife/mother to the husband and children cannot be equated with the services of an employee
and no evidence or data can possibly be produced for estimating the value of such services. It is virtually
impossible to measure in terms of money the loss of personal care and attention suffered by the husband
and children on the demise of the housewife. In the judgement
honourable supreme court of India raised compensation from Rs. 250000 to Rs. 600000 for the death of
house wife/mother aged 39 years.

Mediclaim Insurance:Pre-existing Disease
Revision Petition No.469 of 2006 Date of Judgement:19-05-2010
United India Insurance Company Ltd VS Subhsh Chandra

Mediclaim Insurance effective from 24-05-2002 to 23-05-2003. On 31-05-2002 insured sufferred heart
attack & had a history of diabetes mellitus and hypertension which was not disclosed prior to insurance.
NCDRC held that it is by now well settled that principle of insurance is fundamental to utmost good faith
which must be observed by the contracting parties and good faith forbids either party from non-disclosure
of the fact which the parties know and either of the parties have a duty to disclose all material facts in their
knowledge. The revision petition was allowed & the order of state commission set aside.

Driving Licence:LMV (NT) driving Medium Transport Vehicle:Liability
Oriental Insurance Company Ltd VS M.D. Srinivasa
Own damage claim .Vehicle a Medium Transport Vehicle met with accident.Driving having driving
licence of LMV (NT) category.It was held that driver was not having valid driving licence.Order passed
by state commission was set aside.

Liabilty of uninsured goods in an insured vehicle as Third party Liability
New India Assurance Company Ltd VS C P Verma & Others

It was held that it would be the joint liability of respondents no. 2 and 3 owner & driver of the truck to
make good the loss. Both the fora below have been misled to believe that the petitioner/Insurance
Company was also liable to indemnify the transported goods. Their findings being untenable, their orders
were set aside and the revision petition was accepted.

Transfer of Insurance:Own Damage Claim
Revision Petition N0. 4387 of 2009
Date of Judgement:11.03.2010
New India Assurance Company Ltd VS Chandrakant Bhujangrao Jogdand

The Complainant is not entitled to the sum insured since on the date of accident,the insurance policy had
not been transferred in favour of the Complainant and it is stood in the name of the previous owner.
Accordingly, the Complainant had no insurable interest under the said policy. Consequently, the orders
of fora below suffer from illegality which are required to be set aside.The result is that the revision is
allowed and complaint stands dismissed.

Payment of claim vis--vis Recovery of payable premium
Utmost good faith equally applicable to Insurer
Original Petition N0. 316 of 1999
M/s Chandigarh Distillers & Bottlers Ltd. Vs New India Assurance Company Ltd

The Insurance Company cannot recover the amount payable under the policy after the validity of the
policy as elapsed with short premium. Apex Court deprecated this practice of recovery of short premium
after the policy is lapsed. Law Commission in its 199th Report gave clear guidelines for the purposes of
determining procedural unfairness in the contract in Consumer Fora. The complainant who diligently paid
premium from 1989 to 1998, in tte hope that the Insurance Co. would indemnify the loss in a reasonable
time, instead of getting some relief from the opposite party at the time of dire need he was shocked to
receive the letter from the Insurance Co. that the insured in turn needs to pay Rs.43,82,384/- which is
more than the double as the settled amount was only Rs.28 lakhs.Taking clue from the same,we impose
cost of Rs. 50,000/- on the Insurance Co. who withheld relevant
information regarding premium to be paid to the insured at the time of concluding the contract. In our
view, the principle of Uberrima Fides i.e. utmost good faith is equally applicable to Insurance Co.
which has flouted this principle themselves and in our view, it is clearly deficiency in service.Their
endless delay tactics of nine years caused endless financial loss and agony to the helpless complaint who
is on the receiving end. In view of the aforesaid discussions, we allow the complaint and direct the
opposite parties to pay Rs.28,58,777/- from 12.07.1999 till the date of payment with interest at the rate
of 10 per cent and Rs. 50,000/- as cost and the order be complied within six weeks from the date of
pronouncement of the order.

Full & Final Discharge of claim by bank
First Appeal N0. 216 of 2005
New India Assurance Company Ltd VS Sushil Sharma

This appeal challenges the order dated 04.04.2005 of the Madhya Pradesh State Consumer Disputes
Redressal Commission, Bhopal (in short the State Commission) in Complaint Case no. 37/2002. By the
said order, the State Commission partly allowed the complaint of the complainant and directed the
appellant-opposite party, New India Assurance Company Limited (hereafter referred to as the Insurance
Company) to pay to the complainant the sum of Rs. 4,89,352/ (through opposite party no. 2,State Bank
of India, Govindpura Branch) with interest @ 9% per annum w.e.f.01.02.2002 and cost of Rs. 2,000/-.
The said sum of Rs. 4,89,352/- represented the difference between Rs. 12,88,106/- (the total amount held
by the State Commission to be payable by the Insurance Company on account of the loss suffered by the
complainant due to damage to the insured stocks and machinery in his business premises) and the amount
of Rs. 7,98,754/- (which the Insurance Company had already paid to the bank account of the complainant
towards settlement of his insurance claim). Aggrieved by this order,the appellant-opposite party, Insurance
Company has preferred this appeal. National Commission concluded that it is evident from the
documents on record that the so-called acceptance of the payment of Rs. 7,98,754/- in full and final
settlement of the complainants insurance claim was not that of the complainant. In fact, it was one of the
officials of the SBI who gave this discharge, without any evidence of his having taken the complainant
into confidence and obtaining his prior acceptance/consent. Therefore, we are not persuaded that it would
lie with the Insurance Company to contend in this appeal that the complainant had forfeited his right to
agitate deficiency in service on the part of the Insurance Company, by way of
this consumer complaint before the State Commission, after having accepted the aforesaid payment
towards full discharge of his insurance claim. In conclusion, the impugned order was justified and does
not suffer from any error that could call for our interference. Consequently, the appeal fails and is
accordingly, dismissed. The Insurance Company was directed to comply with the order of the State
Commission within four weeks from the date of this order and also pay a sum of Rs.5,000/- to the
complainant by way of cost of these proceedings.

Carrying of passangers in truck:Insurer not liable for OD claim
First Appeal N0. 288 of 2005
New India Assurance Company Ltd VS Pawan Kumar Takkar

Truck met with accident on 22-08-1989 & suffered extensive damage.17 persons were traveling in the
vehicle at the time of accident. NCDRC held that the breach of the policy conditions in this case where 17
unauthorized persons were carried cannot be termed as minor and if such instances are ignored it will
result in people losing respect for laws and rules. The appeal was allowed and the order of the State
Commission being not sustainable was set aside.

Driving Licence:Renewal after grace period
Chhimae Dolma VS National Insurance Company Ltd

In this case the drivers license was in force only upto 20th of August, 2003 but was subsequently renewed
w.e.f. 24th of September, 2003 and the accident having occurred on 18th of September, 2003, i.e. during
the period between the expiry of the license and its renewal, it cannot but be held that on the date of the
accident, the driver did not have a driving license as it had already expired on 20th of August, 2003 and he
did not get it renewed until 23rd of September, 2003. It was held that where the driving license is renewed
beyond period of 30 days after expiry, it will only be effective from the date of its renewal, and not to an
anterior date. No doubt, proviso to Section 14(2)(b) states that notwithstanding its expiry, a driving
license will continue to be effective for a period of 30 days from such expiry but when read in conjunction
with the proviso to Section 15 above, the situation that emerges is that the grace period of 30 days under
Section 14 is not independent of Section 15, which clearly states that in the absence of any application
for the renewal of a license within the period of 30 days,any renewal will take effect only from the date of
its actual renewal and not from the date of expiry.The revision petition was dismissed.

Compensation in Death: Motor Third Party Claim
CIVIL APPEAL NO. 7736 OF 2009
Date of judgement: 24-11-2009
Baby Radhika Gupta & others VS Oriental Assurance company Ltd

This appeal is against the judgment of the Delhi High Court delivered in Motor Accident Claims Appeal
No.239 of 2004 on 9th July, 2007. On 19th May, 1995,Pankaj Gupta, aged 32 years, died in vehicular
accident.The Motor Accident Claims Tribunal gave compensation of Rupees forty five lakhs. The
Oriental Insurance Company filed an appeal before the High Court.The High Court reduced the
compensation to Rs.5,82,132/-. According to the appellants, the High Court has erred in applying the
multiplier of 14, when, according to the second schedule to the Motor Vehicles Act, 1988, the correct
multiplier ought to be 17, because at the time of death, the deceased was 32 years' of age. The learned
counsel appearing for the appellants also submitted that, out of the total income, the High Court deducted
two-third of the amount as personal expenditure of the deceased; whereas, according to the settled legal
position it should be one-third.Honorable Supreme Court deducted one-third as personal expenditure from
the annual income of Rs.1,18,314/-& remaining multiplied by 17 & thus the amount worked-out to be
Rs.13,40,892/-.The deceased was 32 years' of age when the accident took place & also granted Rupees
two lakhs on account of future prospects. The appellants were also entitled to the amount of Rupees
five thousand, towards funeral expenses and Rupees twenty five thousand towards loss of love and
affection.

Fake Driving Licence:Motor Own Damage Claim
CIVIL APPEAL NO. 6248 of 2009
National Insurance Company Ltd VS Omprakash Jain

Honourable court held that the orders passed by the State Commission and National Commission are
liable to be set aside because the findings recorded by them on the issue of validity of driving licence are
legally untenable.In National Insurance Company Limited vs. Laxmi Narain Dhut [2007 (3) S.C.C. 700],it
has been clearly laid down that the decision in the case of National Insurance Company Limited vs.
Swaran Singh & Anr. [2004 (3) S.C.C. 297] has no application to the cases other than third-party risks and
where originally licence was a fake, renewal there of can not validate the same. In the present
case, the complaint was filed for damage of the vehicle of the insured and not the third party risk.The
District Forum and State Commission have concurrently held that the original licence of the driver
was fake. This being the position, the District Forum was justified in dismissing the complaint and the
State Commission committed an error by awarding compensation to the respondent. The orders of The
State Commission & National Commission were set aside and order of The District Forum was restored.

Total Disablement under Workmens Compensation Act 1923
Motor third Party Claim:
S.Suresh VS oriental Insurance Company Ltd & ANR

In this appeal the judgment and order dated 23rd July,2007 rendered by a Division Bench of the
Karnataka High Court has been challenged whereby the principal amount of compensation of
Rs.5,20,584/-, awarded by the Commissioner for Workmen's Compensation (for short, "the
Commissioner") has been reduced to Rs.2,60,292/-.The claimant was a lorry driver of 25 years of age.On
26th September, 2002, while driving the vehicle, he met with an accident near Ganesh Garage on
Bangalore Mangalore Road. As a result of the accident his right leg had to be completely amputed just
below the knee.Being dissatisfied with the award, the Insurance Company preferred appeal to the High
Court. As stated above, the High Court accepted the plea of the Insurance Company that as per Schedule
to the Workmen's Compensation Act, 1923 (for short, "the Act"),loss of a leg on amputation amounted to
a 50% reduction in the earning capacity.The High Court held that being an injury, specified in Schedule I,
medical opinion could not be relied upon in terms of Section 4(1)(c)(ii) of the Act. Accordingly, applying
the percentage of loss of earning capacity, as specified in Part II of Schedule I, the High Court reduced the
compensation by 50%. However, award of interest thereon @ 12% per annum from one month after the
date of accident till the date of payment was maintained.Hence the present appeal by the claimant. In
support of the plea, reliance is placed on a four-Judge Bench decision of this Court in Pratap Narain Singh
Deo vs.Srinivas Sabata & Anr.The Honourable court gave the judgement that on account of amputation
of his right leg below knee, he is rendered unfit for the work of a driver,which he was performing at the
time of the accident resulting in the said disablement. Therefore, he has lost 100% of his earning capacity
as a lorry driver, more so, when he is disqualified from even getting a driving licence under the Motor
Vehicles Act. In the result, the appeal is allowed;the judgment of the High Court is set aside and the
compensation awarded by the Commissioner is restored.

Fire Claim:Fire & Proximate Cause
New India Assurance Company Ltd VS M/s. Zuari Industries Ltd. & Ors.

Respondent-complainant took insurance policies including a fire policy from the appellant-insurance
company in respect of its factory. There was a short circuit in the main switch board receiving electricity.
It resulted in a flashover producing over currents. The entire electric supply to the plant stopped and
the boiler was damaged. Respondent- complainant filed a claim before the insurance company.The
claimant-respondent made two claims (I) Rs.1,35,17,709/- for material loss due to the damage to the boiler
and other equipments and (ii) Rs.19,11,10,000/- in respect of loss of profit for the period the plant
remained closed.Surveyors submitted the report but the appellant rejected the claim.The National
Commission allowed the claim.hence the present appeal Dismissing the appeal, The Court held that It is
admitted that the short circuit in the main switch board caused a flashover. The duration of the fire is not
relevant.As long as there is a fire which caused the damage the claim is maintainable,even if the fire is for
a fraction of a second. The term `fire' in clause (1) of the
Fire Policy `C' is not qualified by the word `sustained'. Hence repudiation of the policy on the ground that
there was no `sustained fire' is not justified.The word used in the fire policy is `fire' and not `sustained
fire'.The proximate cause is not the cause which is nearest in time or place but the active and efficient
cause that sets in motion a train or chain of events which brings about the ultimate result without the
intervention of any other force working from an independent source.In the instant case, it is evident from
the chain of events that the fire was the efficient and active cause of the damage. Had the fire not
occurred, the damage also would not have occurred and there was no intervening agency which was an
independent source of the damage. Hence, the conclusion of the surveyors that the fire was not the cause
of the damage to the machinery of the claimant cannot be accepted.

Dishonoured Cheque:Motor Third Party claim
Special Leave petition No.2009,(CC No.10993/2009)
Date of Judgement 31-08-2009
National Insurance Company Ltd Vs Parvathneni & another

There was no valid contract on the date of accident since the premium cheque had been
dishonoured.Despite this the High Court directed insurance company to pay compensation amount to
claimants with liberty to insurance company to recover the same from owner of vehicle.Honourable
Supreme Court stayed the operation of order of High court and directed that case may be placed before
Honourable Chief Justice of India for constituting a larger bench for decision.

Rate of Interest & Appointment of more than one Surveyor
Date of judgement 24-08-2009
Sri Venkateswara Syndicate VS Oriental Insurance company Ltd

In this fire claim in the judgement, the insurance company was directed to pay the claim Rs. 10500817
with interest at the rate of 9 % as compensation from the date of assessment done by the Chartered
Accountant, as against the 6 % rate of interest awarded by National Consumer Commission.This
judgement also makes observations regarding appointment of more than one surveyor for assessment of
loss.

Limitation u/s 24 A of Consumer Protection Act
Kandimalla Raghavaiha & Co. VS National Insurance company Ltd

In the judgement appeal was dismissed and it was held that the National Consumer Disputes Redressal
Commission was justified in dismissing the complaints alleging deficiency in service against two different
insurance companies on account of non-settlement of insurance claims made by the appellant, on the
ground that both the complaints were barred by limitation under Section 24 A of the consumer protection
Act.

Suppression of Material Facts: Health Insurance
Satwant Kaur Sandhu VS New India Assurance company Ltd

The case pertains to a mediclaim policy. Honourable court held that There was clear suppression of
material facts in regard to the health of the insured and, therefore, the respondent insurer was fully
justified in repudiating the insurance contract.

Fake Driving Licence
Oriental Insurance Co. Ltd. VS Jyotsna Sarkar & others

The license of the driver of the vehicle not issued by DTO. License produced by driver was fake. It was
open to the insurance company to recover the compensation money from owner of the vehicle.

Suppression of Material Facts regarding health: Life Insurance
BHAGWATI PRASAD BORASI VS DIVISIONAL MANAGER, LIFE INSURANCE
CORPORATION OF INDIA

NCDRC held that the deceased had deliberately concealed the fact that she had not been treated by a
Doctor prior to and at the time of the taking of the policies as also at the time of their revival and is guilty
of fraudulent suppression of facts regarding her health and that the respondent was justified in repudiating
the claim of the petitioner as the deceased had suppressed the material facts while taking the policies as
well as at the time when the policies were got revived.

Life Insurance: Ex-gratia Payment
Revision Petition NO. 2273 of 2004
L.I.C. OF INDIA vs Ram Narayan Yadav

In this case the life assured had a policy of Rs.5,00,000/-. He paid premium for two years. For the third
year, the life assured had issued a cheque, which stood dishonoured and returned with the remark
signing partner reported dead. Policy was in lapsed condition due to non-payment of third premium.The
LIC allowed the claim of 50% of the sum assured in terms of Clause 4.2 (b) of the Policy Servicing
Manual No.11. The payment of 50% of the assured amount was an ex-gratia payment, although under the
policy, the petitioner was not obliged to make any payment as the policy had lapsed. In the judgement, the
order passed by Foras below for payment of full sum insured were set aside and the claim was limited to
half of the sum assured, i.e., Rs.2,50,000/-

Motor Third Party Claim: Validity of Driving Licence
Oriental Insurance Co. Ltd. VS Angad Kol & others

In this case the appeal is against the judgement of Highcourt of M.P.A motor third party claim where in a
woman of 45 years died due to an accident on 31-10-2004 caused by a goods carriage vehicle.SCI held
that the respondent did not hold a valid and effective driving licence for driving a goods vehicle. Breach
of conditions of the insurance. The insurance company had been already directed to deposit 50% of the
awarded amount. SCI further directed the insurance company to deposit the balance
amount before the Tribunal with liberty to the claimants to withdraw the same and gave right to the
appellant to recover the said amount from the owner and the driver of the vehicle.SC allowed the appeal.

Salary Saving Scheme: Life insurance
Branch Manager LIC of India vs Smt.Gousabi

The deceased, husband of the respondent was employed with the West Coast Paper Mills Ltd., Dandeli as
Truck Boy and he took four life insurance policies under the Salary Savings Scheme of the LIC.The
deceased- Shri Imamsab Husensab Handur died on 25.06.2000.The respondent being a nominee under the
policies claimed the amount. Employer had committed default in payment of premium. In view of the
default committed by the employer,the petitioner Insurance Company repudiated the claim of the
complainant.NCDRC held that in view the purposive interpretation of SCI the point involved in the
present case is concluded.SCI in Delhi Electricity Supply Undertaking v. Basanti Devi and Anr.reported in
1999 VIII AD (S.C.) 454 held that Salary Savings Scheme was floated by the LIC for the benefit of an
average employee. The duty was caste on employer to deduct the premium and pay the same to the LIC
and it was the employer who was keeping all the accounts. It was duty of the employer to remit the
premium after deducting it from the salary of an employee and the employee was, at no stage, involved in
the remittance of the premium to the employer. NCDRC further held that LIC is liable to pay the sum
assured under the four policies to the respondent wife. Revision Petition was dismissed.

Suppression of Pre-existing Disease: Life Insurance
LIC of India vs Smt.M.Bhavani

It was held by NCDRC in the judgement that Declaration given while getting the policy revived was
false. Deceased was clearly guilty of suppressing the pre-existing fatal disease from which he was
suffering at the time of getting the policy revived.Suppression of pre-existing disease disentitles the
claimant to the amount insured under the policy.

No authority of Agent to accept the premium: Life insurance
LIC of India vs Girdharilal P.Kesarwani & Anr

In this case the respondents son Shailesh G. Kesarwani had obtained life insurance policy with profit and
accidental benefit in the sum of Rs.25,000/-on 28.03.1996. The premium of installment was Rs.324/- per
quarter.Deceased-Shailesh paid the premium as agreed to in the policy. The first, second
and third installments of the premium were paid in March, June and September, 1996, respectively.
Complainants son-Shailesh paid the fourth installment to Smt. Kamal Sharma who was the agent of the
LIC. Shailesh died on 08.03.1997. Smt. Kamal Sharma deposited the premium after the death of Shailesh
on 18.03.1997. NCDRC held that in view of the Judgment of the Supreme Court of India, i.e., Harshad J.
Shah & Anr. v. L.I.C. of India & Ors. reported in AIR 1997 Supreme Court 2459 wherein it was held that
an agent has no authority to accept the premium on behalf of LIC and that the deposit made by the agent
after the death of the deceased would not entitle the claimant to get the amount insured under the policy
and further accepted the Revision Petition filed
by LIC and set aside the Orders of the State Commission and of the District Forum.

Motor Third party Claim: Amount of compensation in PTD
Civil Appeal No: 106 of 2009
The Oriental Insurance company Ltd vs Ramprasad Verma & others

As reported, an Assistant Executive Engineer, was employed with ONGC. On 9.9.1998, he was hit by a
lorry which ran over his both legs, which were amputated. He was aged 55 years and his annual income
was Rs.2,27,471.00.The Motor Accidents Claims Tribunalawarded a sum of Rs.19,63,000/- with interest
at the rate of 12% per annum from the date of filing of the petition till realization.The High Court on
appeal by insurance company considering the prevailing rate of interest reduced the rate of interest from
12% per annum to 9% per annum.The Supreme Court of India in the judgement dismissed the appeal
subject to the modification that from the gross income of the respondent, the amount of income tax as was
applicable at the relevant time should be deducted.
The Tribunal was directed to redetermine the amount of compensation in the light of judgment.

Motor Third Party Claim:Death of insureds son
New India Assurance company Ltd vs Sadanand Mukhi & others

Insurance company is not liable for the compensation under Motor Vehicles Act 1988
to insured for the death of his son in a accident involving motor cycle which was being
driven by son of insured.

Motor Third Party Claim:Transfer of Registration
United India Insurance company Ltd vs Santrodevi & others

The registered owner/Insured having died in 1991 & the policy of truck being renewed regularly by the
bank in the original name of insured where the truck was hypothecated without the transfer of registration
of the truck to legal heirs.The accident took place on 15-09-94 in which driver died and the insurance
policy was in force on the date of accident.The legal heirs filed an application for compensation under
Workmen Compensation Act 1923.The Honourable supreme court of India finally decided that the
insurance company is liable for compensation under the contract of insurance.

Motor Third Party Claim:Driving by Minor
Date of judgement:24-09-2008
UNITED INDIA INSURANCE CO.LTD vs RAKESH KUMAR ARORA & ORS

It was held in the judgement that the owner of the vehicle and not the insurance company is liable for the
death of a person in an accident caused by a person of 15 years of age driving a car without having
driving license.

Motor Third Party Claim:Premium received in cash after dishonour of cheque
National Insurance Co. Ltd Vs Abhaysing Pratapsing Waghela & Ors

In short the question involved before the court was what would the effect ofdishonour of a cheque when
subsequently the amount of premium has been accepted in cash by the Insurer.Respondent was driving a
moped on 27.1.1995 which was hit by a truck.The said truck first dashed against an Ambassador car and
then hit the moped which was being driven by the respondent as a result whereof he suffered severe
injuries.For insurance of truck,a cheque was tendered to the officers of the appellant company on
23.1.1995.The accident took place on 27.1.1995. The cheque when presented to the bank for clearance
was allegedly dishonoured. On 30.1.1995,the amount of premium was paid in cash and received.The
Motor Vehicle Accident Claims Tribunal as also the High Court, however, opined that having regard to
the fact that a cover note had been issued by the appellant,it was legally obligated to reimburse the claim
of a third party.The honourable Supreme Court of India dismissed the appeal of insurer mentioning that
the judgement does not warrant any interference.

Renewal of Mediclaim Policy
CIVIL APPEAL NOS. 4113-4115 OF 2008
United India Insurance Company Limited Vs Manubhai Dharmasinhbhai Gajera & Ors With
CIVIL APPEAL NOS. 4116 OF 2008
New India Assurance Company Limited
Vs Consumer Education and Research Society & Ors And
CIVIL APPEAL NOS. 3633 OF 2008
United India Insurance Company Limited
Vs Mukat Lal Duggal & Anr
Date of judgement:16-05-2008

The question involved before the honourable court was whether renewal ofa mediclaim policy on payment
of the amount of premium would be automatic.The honourable court in the end gave the judgement in the
following paras:64. Each of the aforementioned cases clearly shows that the action on the part of the
authorities of the appellant was highly arbitrary.Respondents though werenot entitled to automatic
renewal, but indisputably, they were entitled to be treated fairly.We have noticed hereinbefore some of the
clauses contained in the prospectus as also the insurance policy. When a policy is cancelled, the
conditions precedents therefor must be fulfilled. Some reasons therefor must be assigned.When an
exclusion clause is resorted to, the terms thereof must be given effect to. What was necessary is a pre-
existing disease when the cover was inspected for the first time. Only because the insured had started
suffering from a disease, the same would not mean that the said disease shall be excluded. If the insured
had made some claim in each year, the insurance company should not refuse to renew insurance policies
only for that reason.The words incepts for the first time as contained in clause 4.1 as also the words
continuous and without break if the renewal premium is paid in time, must be kept in mind as also the
reasons for cancellation as contained in clause 7(1)(n) thereof.65. Renewal of a medi-claim policy subject
to just exceptions should ordinarily be made.But the same does not mean that the renewal is automatic.
Keeping in view the terms and conditions of the rospectus and the insurance policy, the parties are not
required to go into all the formalities. The very fact that the policy contemplates terms for renewal,subject
of course to payment of requisite premium, the same cannot be placed at parwith a case of first contract.
66. Having regard to the fact situation obtaining in each case, we are not inclined to exercise our
discretionary jurisdiction under Article 136 of the Constitution of India.Before parting with this case,
however, we would like to observe that keeping in view the role played by the insurance companies, it is
essential that the Regulatory Authority must lay down clear guidelines by way of regulations or
otherwise. No doubt,the regulations would be applicable to all the players in the field. The duties and
functions of the Regulatory Authority, however, are to see that the service provider must render their
services keeping in view the nature thereof. It will be appropriate if the Central Government or the
General Insurance Companies also issue requisite circulars.67. Appellants before us being subsidiaries to
General Insurance Corporation cannot ignore the statutory provisions. They are bound by the directions
issued by the Central Government.68. We would request the IRDA to consider the matter in depth and
undertake a scrutiny of such claims so that in the event it is found that the insurance companies are taking
recourse to arbitrary methodologies in the matter of entering into contracts
of insurance or renewal thereof,appropriate steps in that behalf may be taken.69. These appeals are
dismissed with costs. Counsels fee assessed at Rs.25,000/-(Rupees twenty five thousand only) in each
case.

Motor Third Party Claim:Liability of death of pillion rider
Oriental Insurance Co. Ltd.Vs Sudhakaran K.V. & Ors.

A pillion rider on a scooter fell down from the scooter and succumbed to the injuries sustained. The court
allowed the appeal and held that the (i) the liability of the insurance company in a case of this nature is not
extended to a pillion rider of the motor vehicle unless the requisite amount of premium is paid for
covering his/her risk (ii) the legal obligation arising under Section 147 of the Act cannot be extended to an
injury or death of the owner of vehicle or the pillion rider; (iii) the pillion rider in a two wheeler was not to
be treated as a third party when the accident has taken place owing to rash and negligent riding of the
scooter and not on the part of the driver of another vehicle.

Motor Third Party Claim:Driving Licence: Transport Vehicle
New Indian Assurance Co. Ltd Vs Roshanben Rahemansha Fakir & Anr

Insurance policy covered an autorikshaw delivery van,a commercial vehicle whereas driver was holding a
licence of three wheeler which was not meant to be used to drive a transport vehicle.In the judgement
court held that the owner of vehicle is liable for third party claim & not the insurance company.However
in exercise of jurisdiction under article 142 of constitution court directed insurance company to satisfy the
award in favour of claimants and to recover the same from owner.

Motor Third Party Claim:Driver Driving Scooter with HMV only Licence
Appeal (civil) 3055 of 2008
Oriental Insurance Co. Ltd vs Zaharulnisha & Ors
DATE OF JUDGMENT: 29-04-2008

The honourable court held that insurance company cannot be held liable to pay the amount of
compensation to the claimants for the cause of death of Shukurullah in road accident which had occurred
due to rash and negligent driving of scooter by Ram Surat who admittedly had no valid and effective
licence to drive the vehicle on the day of accident. The scooterist was possessing driving licence of
driving HMV and he was driving totally different class of vehicle which act of his is in violation of
Section 10(2) of the MV Act.The appeal is allowed to the limited extent and it is directed that the
appellant insurance company though not liable to pay the amount of compensation,but in the nature of this
case it shall satisfy the award and shall have the right to recover the amount deposited by it along with
interest from the owner of the vehicle,viz. respondent No. 8,particularly in view of the fact that no appeal
was preferred by him nor has he chosen to appear before this Court to contest this appeal. This direction is
given in the light of the judgments of this Court in National Insurance Co. Ltd. v.Baljit Kaur and Others
[(2004) 2 SCC 1] and Deddappa and Others v. Branch Manager,National Insurance Co.Ltd. [(2008) 2
SCC 595].The court allowed the appeal, in the aforesaid terms with no order as to costs.

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