Case Name: Majestic Graphic and Machinery India Pvt. Ltd. vs United India Insurance Co. Ltd.
Case number: Complaint Case 484/2013
Summary of the Case:
The Delhi State Consumer Disputes Redressal Commission upheld the denial of an insurance claim by United India Assurance Co. Ltd., ruling that the insured’s failure to comply with the terms of the insurance policy constitutes a breach of contract. The Commission, comprising President Sangita Dhingra Sehgal and Judicial Member Pinki, determined that the non-submission of essential documents required for claim assessment was a material violation of the insurance contract. Additionally, the Commission rejected the insurer’s argument that the complainant was not a ‘consumer’ under the Consumer Protection Act, 1986, clarifying that insurance policies meant to indemnify losses do not qualify as commercial transactions intended for profit. Therefore, while the complainant was deemed a consumer under the Act, the insurer was justified in repudiating the claim due to contractual non-compliance.
Detailed Explanation:
The dispute arose when the complainant filed a claim under a fire insurance policy, which was denied by United India Assurance Co. Ltd. on multiple grounds, including non-maintainability, breach of the insurance contract, and failure to provide the required documentation. The insurer argued that since the insurance policy was taken for commercial purposes, the complainant was not a ‘consumer’ under the Consumer Protection Act. However, the Commission, relying on judgments such as Lilavati Kirtilal Mehta Medical Trust v. Unique Shanti Developers & Ors. and India Insurance Company Ltd. v. Levis Strauss (India) Pvt. Ltd., clarified that an insurance contract is a means of indemnifying loss and does not generate profit for the insured. Therefore, the complainant was deemed a consumer under the Act.
On the issue of policy violation, the Commission referred to Condition 6(1)(b) of the insurance policy, which mandated the insured to submit all relevant documents, investigation reports, and evidence related to the cause of fire and the extent of damages. The complainant failed to provide essential records such as the Book of Accounts and did not cooperate in conducting a joint physical inspection of the damaged stock, which was critical for claim assessment. The Commission held that such actions materially hindered the insurer’s ability to determine the claim amount and constituted a breach of the insurance contract. Consequently, the denial of the insurance claim was deemed valid, and the complaint was dismissed by the Commission.
