Case Title: Jaina Construction Company Vs Oriental Insurance Company Limited
Summary
The Supreme Court ruled that an insurance company cannot refute a claim solely on the basis of a delay in notifying the insurance company about a theft. In a case where the complainant’s vehicle was the victim of a burglary, the insurance company failed to resolve the claim in a timely manner. The complainant lodged a formal complaint with the Gurgaon District Consumer Disputes Redressal Forum, but the insurance company denied the claim on the grounds that the complainant violated Condition No. 1 of the insurance contract.
The National Consumer Disputes Redressal Commission granted permission for the revision petition, while the District Forum granted permission for the complaint and the State Consumer Disputes Redressal Commission denied the insurer’s appeal. The Supreme Court ruled that the insurance company could not reject the claim solely on the pretext of a delay, as the insurance company had not denied the claim on the basis of fraudulent pretext.
About the case
The Supreme Court ruled that in the event that the FIR was filed promptly, the Insurance Company cannot refute a claim solely on the basis of a delay in notifying the Insurance Company about the theft. The complainant’s vehicle, which was protected by an insurance policy, was the victim of a burglary. The complainant filed a First Information Report (FIR) the following day, alleging the violation of Section 395 IPC. The accused were apprehended by the police, who also lodged a challan against them in the appropriate court.
Nevertheless, the vehicle in issue remained untraceable, prompting the police to file an untraceable report. The complainant subsequently filed a claim with the insurance provider concerning the larceny of the aforementioned vehicle. In light of the insurance company’s failure to resolve the claim in a timely manner, the complainant lodged a formal complaint with the Gurgaon District Consumer Disputes Redressal Forum. Amid the complaint’s pending phase, the insurance company denied the claim on the grounds that the complainant had violated Condition No. 1 of the insurance contract, which stated: “1. Immediately upon the occurrence of any accidental loss or damage in the event of a claim, the insured shall provide written notice to the company; thereafter, the insured shall furnish the company with any information and assistance it may require.” The National Consumer Disputes Redressal Commission granted permission for the revision petition, whereas the District Forum granted permission for the complaint and subsequently the State Consumer Disputes Redressal Commission denied the insurer’s appeal.
The appeal before the Apex Court pertained to whether the Insurance Company could completely reject the claim submitted by the vehicle owner, who had obtained adequate insurance coverage from the company, in the event of vehicle theft-related loss, solely on the basis of a delayed notification of the theft. The bench observed that a three-judge bench had previously deliberated on the identical matter in Gurshinder Singh vs. Shriram General Insurance Company Ltd. & Another (2020 (11) SCC 612. It was determined as follows: In cases where an insured promptly files a First Information Report (FIR) following the theft of a vehicle, the police issue a final report after conducting an investigation and the vehicle remains untraceable, and the insurance company-appointed surveyors/investigators confirm the authenticity of the theft claim, a mere delay in notifying the insurance company about the theft cannot serve as a reason to deny the insured’s claim.
The court, in granting the appeal, made the following observation: It is important to acknowledge that the Insurance Company has not denied the claim on the basis that it was fraudulent. Its repudiation is limited to the pretext of a delay. In the event that the complainant promptly filed a First Information Report (FIR) following the theft of the vehicle, the police subsequently apprehended the suspect and filed a challan with the appropriate court following their investigation, and the insured’s claim was deemed valid, the insurance company could not have denied the claim solely on the basis of a delay in notifying the insurance company regarding the theft.
They were apprehended, and a challan was issued. The complainant subsequently filed an insurance claim. The aforementioned was rejected on the basis that the insurance company was not notified of the larceny in a timely manner. While the complaint was upheld by the District Forum and State Consumer Commission, it was denied by the NCDRC due to the insurer’s revision petition. The Supreme Court, in granting the appeal, reversed the decision of the NCDRC and affirmed the order of the State Commission. Insurance Law Regarding Vehicle Theft and Claim Refutation When the insured filed the FIR immediately following the theft of the vehicle, the insurance company cannot refute the claim solely on the basis that the insured failed to notify the insurance company of the theft in a timely manner.
