2024 (12) TMI 1014 - SC - Indian Laws

Insurance company must pay full claim amount despite delayed intimation when lower forums find delay justified

RAJESH KUMAR Versus NATIONAL INSURANCE CO. LTD.

The SC allowed the appeal and set aside the National Commission's order that reduced the insurance amount payable to the appellant. The court held that ... Interpretation of insurance policy conditions regarding vehicle damage coverage and liability of the insurer in case of an accident - delay in intimation - Scope and ambit of jurisdiction of the National Commission while exercising revisional jurisdiction. Challenge to order by the National Consumer Disputes Redressal Commission that reduced the insurance amount payable to the appellant - HELD THAT:- On a careful scrutiny of the records of the case, it is seen that both the District and State Commissions had reached a concurrent finding about whether the delay in intimation to the respondent was justified. Both held that this delay was justifiable and not fatal to the insurance claim. Both the courts had also reached the finding that the damage took place in two phases: (a) once when the vehicle fell into a ditch and capsized; and (b) when the short-circuiting took place due to the car remaining in that state. The National Commission could not have interfered with pure finding of fact arrived at by the District and State Commissions while exercising revisional jurisdiction. It is unclear as to how the National Commission perceived that the State Commission exercised jurisdiction not vested in it or has failed to exercise jurisdiction vested in. There is nothing to indicate in the decision of the National Commission as to whether there is any illegality in the approach adopted by the State Commission or that it had acted with material irregularity. The other ground that the respondent has raised is that the survey report was disregarded by the District and State Commissions but the National Commission has correctly examined and relied on it. This submission cannot be accepted, since the State Commission had examined the survey report in detail and in fact found it to be lacking. It stated that the surveyor’s claim that the vehicle was left unattended cannot be accepted since the appellant had justifiable reasons for the same. Furthermore, the finding of the surveyor that the short-circuiting was caused by the appellant himself was not based on any evidence. In the present case, no miscarriage of justice is made out by the respondent. The State Commission has addressed all the issues raised before it and found the delay in intimation to be reasonable and that the insurance claim is payable on the damage due to the accident as well as the short-circuiting. The State Commission also examined the genuineness of the accident’s claim by considering the police report and discarded the surveyor’s report for lack of evidence. It then directed the respondent to pay the entire insured sum giving its reasons for the same. Hence, the appellant is correct in stating that the National Commission has transgressed its jurisdiction by interefering with the State Commission’s order. Delay in intimation - HELD THAT:- Reference made to the decision of this Court in OM PRAKASH VERSUS RELIANCE GENERAL INSURANCE AND ORS. [2017 (10) TMI 1663 - SUPREME COURT] where it was held that the delay may be condoned if it is properly explained. The impugned order set aside - appeal allowed. Issues:Interpretation of insurance policy conditions regarding vehicle damage coverage and liability of the insurer in case of an accident.Analysis:The case involved an appeal challenging an order by the National Consumer Disputes Redressal Commission that reduced the insurance amount payable to the appellant. The appellant had purchased a Private Car Insurance Policy and met with an accident, resulting in substantial damage to the vehicle. The District Commission partially allowed the complaint, directing the release of 75% of the insurance amount. The State Commission fully allowed the appeal, ordering the release of the entire insured sum with interest. The National Commission partly allowed the appeal, reducing the insurance amount significantly based on the insurance policy conditions.The National Commission's decision was challenged on the grounds that it exceeded its revisional jurisdiction and misinterpreted the insurance policy conditions. The appellant argued that the delay in intimation to the insurer was justified and not fatal to the claim, citing precedents emphasizing strict interpretation of insurer liability in motor vehicle accidents.The respondent contended that the National Commission correctly exercised its jurisdiction, highlighting discrepancies in the lower courts' treatment of the survey report and the application of insurance policy conditions. The respondent argued that the National Commission's intervention was justified based on the findings of the District and State Commissions.Upon analysis, the Supreme Court found that the National Commission had overstepped its jurisdiction by interfering with the State Commission's order without demonstrating any illegality or irregularity in the State Commission's decision. The Court emphasized that revisional jurisdiction should only be invoked in cases of patent error or gross miscarriage of justice.The Court also examined the interpretation of Condition No. 4 of the insurance policy, which required the insured to safeguard the vehicle from further damage. The Court held that the State Commission correctly concluded that the condition did not apply in the circumstances of the case, considering the compelling situation the appellant faced in attending to the injured co-passenger.Ultimately, the Supreme Court allowed the appeals, setting aside the National Commission's order and reinstating the State Commission's judgment directing the insurer to release the entire insured sum to the appellant with interest. The Court emphasized the importance of reasonable care in interpreting insurance policy conditions and condoning delays in intimation if properly explained.In conclusion, the Supreme Court upheld the State Commission's decision, emphasizing the importance of interpreting insurance policy conditions in light of the specific circumstances of each case and ensuring fair compensation to the insured party.