National Consumer Disputes Redressal
Rajeshwari Devi Garg vs United India Insurance Co. Ltd. & Anr. on 17 January, 2024
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO. 2109 OF 2015 (Against the Order dated 31/01/2015 in Appeal No. 224/2013 of the State Commission Delhi) 1. RAJESHWARI DEVI GARG W/O SH.MAHENDER KUMAR, C-591, MAJLIS PARK, STREET NO-12, IIND FLOOR, AZADPUR DELHI - 110033 ...........Petitioner(s) Versus 1. UNITED INDIA INSURANCE CO. LTD. & ANR. DIVISIONAL OFFICE-27,LUSA TOWER,A-2/3, NANI WALA BAGH, AZADPUR, RING ROAD, DELHI - 110033 2. M/S. PAWA MOTORS, C-93 WAZIRPUR INDUSTRIAL AREA, MAIN RING ROAD, DELHI - 52 ...........Respondent(s)
BEFORE: HON'BLE DR. INDER JIT SINGH,PRESIDING MEMBER
FOR THE PETITIONER : MR. RAJEEV NANDA, ADVOCATE ALONGWITH
PETITIONER FOR THE RESPONDENT : MR. NAVEEN KUMAR, ADVOCATE (R-1)
NEMO (R-2)
Dated : 17 January 2024 ORDER
1. The present Revision Petition (RP) has been filed by the Petitioner against Respondent(s) as detailed above, under section 21(b) of Consumer Protection Act 1986, against the order dated 31.01.2015 of the State Consumer Disputes Redressal Commission, Delhi, (hereinafter referred to as the 'State Commission'), in First Appeal (FA) No.224/2013 in which order dated 24.01.2013, District Consumer Disputes Redressal Forum (V) (North West District), Delhi (hereinafter referred to as District Forum) in Consumer Complaint (CC) no. 422/2010 was challenged, inter alia praying to set aside the order passed by the State Commission.
2. While the Revision Petitioner (hereinafter also referred to as Complainant) was Appellant; Respondent-1 (hereinafter also referred to as OP-2) was Respondent-1 and the Respondent-2 (hereinafter also referred to as OP-1) was Respondent-2 in the said FA/224/2013 before the State Commission. the Revision Petitioner was complainant; Respondent-1 was OP-2 and Respondent-2 was OP-1 before the District Forum in the CC no. 422/2010.
3. Notice was issued to the Respondent(s). Parties filed Written Arguments/Synopsis on 11.04.2023 (Respondent-1); 07.07.2023 (Petitioner) and Respondent-2 did not file any submission.
4. Brief facts of the case, as emerged from the RP, Order of the State Commission, Order of the District Forum and other case records are that:-
The complainant had purchased an insurance policy for a car, make 'Indica' with registration number DL-3C-AC-7773, through OP-1, M/s. Pawa Motors. The policy was valid from 17.08.2009 to 16.08.2010. The complainant claimed that the car was stolen on 24.10.2009, and an FIR (First Information Report) bearing No. 309/10 was registered at P.S. Shalimar Bagh. Despite the police's efforts, the car could not be recovered, and they submitted an "untraced report." Consequently, the complainant filed a claim with OP-2, United India Insurance Co., Ltd. However, the claim was repudiated through a letter dated 11.03.2008, citing the complainant's previous insurance claim and the alleged false representation of being entitled to "No Claim Bonus" during the policy renewal. The repudiation was based on a violation of GR-27 of India Motor Tariff. The complainant contended that she had disclosed all relevant facts to OP-1, M/s. Pawa Motors, at the time of purchasing the policy. Subsequently, a complaint was filed in the District Forum.
5. Vide Order dated 24.01.2013, in the CC no. 422/2010 the District Forum has dismissed the complaint.
6. Aggrieved by the said Order dated 24.01.2013 of District Commission, Petitioner appealed in State Commission and the State Commission vide order dated 31.01.2015 in FA No.224/2013 has upheld the District Forum's order and dismissed the appeal.
7. Petitioner has challenged the said Order dated 31.01.2015 of the State Commission mainly on following grounds:
The impugned order issued by the State Commission is illegal and in violation of legal principles, warranting its nullification as the Commission failed to recognize that the Respondents/OPs concealed crucial information, known to both parties during the issuance of the policy renewal. The alleged suppression cannot be held against the Petitioner/Complainant when both parties are aware of the information. The State Commission overlooked that OP-2 misled the commission in their response, claiming the policy was not a renewal because it was issued from Delhi instead of Mumbai. However, the complainant renewed the policy through the same insurance agent and company, maintaining a common database. The assertion that this does not constitute a renewal is inherently false. The State Commission neglected to acknowledge that the insurance policy is computer-generated, and all customer records, including previous ones, are available at the time of issuance. The complainant cannot be held responsible for non-disclosure of the no-claim bonus under these circumstances.
The State Commission failed to recognize that insurance agents commonly collect premiums, and policies are generated without proposal forms. The absence of an exclusion clause GR-27 in the policy pleadings renders the repudiation unjustified, as the complainant was never informed of such a condition. The Commission did not consider that OP-2 remained silent for over two months after receiving the premium without issuing any notice of policy cancellation or informing the complainant. The lack of due diligence and the absence of a proposal form with the complainant's signature indicate a clerical and mindless approach by the OPs. The impugned order should be set aside based on the Principle of Equity, as the State Commission failed to appreciate the complainant's contentions and the OP's procedural lapses.
The State Commission overlooked a crucial clause in the Private Car Package Policy Schedule, explicitly stating that any payment made by the Company due to wider terms for compliance with the Motor Vehicle Act is recoverable from the insured. The lack of action by the Insurance company in this case implies their acceptance and non-objection to the policy, making the denial of a legitimate claim a clear deficiency of service by OP-2. Both parties in an insurance agreement stand on equal footing for indemnification of loss. The OPs acted irresponsibly by accepting premiums over the years but failed to assist the complainant when in need. This amounts to gross deficiency and harassment on the part of the OPs. Allegations of information suppression by the complainant are baseless, considering the OPs were aware of the no claim bonus yet issued the policy. OP-2 cannot retract on the claim after the vehicle theft.
The Deputy Manager of OP-2 demonstrated a lack of discernment and engaged in unfair trade practices by issuing the policy without due diligence, causing distress to the complainant. The unfair practices during policy issuance were solely for wrongful gain. The complainant, as a layman, cooperated in good faith with the insurer's agent, expecting fair treatment during claims. The impugned order by the State Commission should be set aside as it failed to acknowledge the legal principle of Estoppel under Section 115 of the Indian Evidence Act. OPs cannot deny facts already settled, such as the knowledge of the no claim bonus, as they concealed this vital information from the Commission.
The State Commission accepted the OPs' version without corroborative evidence and failed to differentiate the present case's facts from legal precedents. The Commission disregarded submitted documents, arguments, case laws, and ignored the complainant's contentions, resulting in an order that didn't address any submissions made by the complainant. The State Commission erred in dismissing the complainant's claim, as the OPs misled the Commission to defeat the complainant's claim in an arbitrary manner. The complete policy terms and conditions were not provided on record by the OPs, violating the principle of utmost good faith in insurance contracts, as established in the Supreme Court's ruling in M/s. Modern Insulators Ltd. Vs. Oriental Insurance Co. Ltd. (AIR, 2000 SC 1014). The OPs cannot claim the benefit of an exclusion clause not disclosed or a part of the contract.
The OPs did not dispute the mistake made by the agent, and it's evident from the evidence of the Insurance Company that the form, if any, was filled erroneously by the agent. Despite these facts, OP-2 deliberately withheld the claim, showcasing deficiency, unlawful conduct, and breach of contract to harass the complainant. The State Commission failed to acknowledge the Principal-Agent relationship between OP-2 and its agent. As per the Principle of Holding Out, any representation made by the company or its agent regarding insurance policies holds the company liable for the actions of its agent. The State Commission made an error by not considering conclusive evidence and allowing the OPs to misuse the provisions of the Consumer Protection Act, 1986. The OPs' failure to specifically deny the contents of the complainant's Complaint deems those contents admitted. The impugned order led to unjust gain for OP-2 at the expense of the complainant, condoning their misconduct. The Complaint of the complainant demonstrates clear instances of "deficiency of service" and "unfair trade practice" under Section 2(g) & (r) of the Act, with OPs failing in their service and engaging in unfair trade practices.
8. Heard counsels of both sides. Contentions/pleas of the parties, on various issues raised in the RP, Written Arguments, and Oral Arguments advanced during the hearing, are summed up below.
The learned counsel for Respondent-1/OP-2/Insurance Company argued that the complainant had a vehicle insured under policy no. 222700/31/08/01/00001922, valid from 28.06.2008 to 27.06.2009. However, the policy was not renewed, expiring on 27.06.2009. Following a two-month gap, the complainant approached the insurer for a new policy, claiming entitlement to No Claim Bonus (NCB) by misrepresenting that no claim was made under the previous policy. This misrepresentation was uncovered during the investigation of the present claim. The OP-2 rejected the claim for theft of the vehicle (DL-3C-7773), stating that it falls under Section-1 of the package policy and is not payable due to a violation of GR-27 of IMT. The rejection was based on the verbal declaration given to M/s Pawa Motors (Respondent-2/OP-1), the insurer's partner dealer, allowing NCB on the policy. As per the previous insurer's NCB confirmation certificate, a claim had been preferred, rendering the complainant ineligible for NCB. Consequently, as per GR27 provision, all benefits under the policy, irrespective of Section-1, were forfeited.
The learned counsel further argued that the insurance contract operates under the principle of utmost good faith (uberrima fides), placing a duty upon the insured to disclose all relevant facts and refrain from misrepresentation. In this case, the complainant obtained a policy (020900131090110002408) effective from 17.08.2009 to 16.08.2010, receiving a discount of Rs. 1840/- as No Claim Bonus (NCB). However, investigations revealed that the complainant had falsely represented not having made any claims under the previous policy, while actually claiming Rs. 26,000/-. Should the Hon'ble Commission consider the complainant eligible for a claim, it's crucial to note that ICICI has not been made a party. Additionally, the insured should be directed to execute necessary documents such as a subrogation letter and vehicle transfer documents if the claim is to be processed.
The learned counsel for Respondent-1/Insurance Company relied on following judgements:-
TATA AIG vs. Gulzari Singh (RP/1255/2009), The claim of the complainant was rightly repudiated. The similar issue was decided by this Hon'ble Commission.
Ashok Kumar vs. National insurance Co. Ltd. (RP/4045/2014), the national Commission observed that:-
10. The State Commission has rightly observed in para 10 of its Order that:
10. A reference has been made to the letter dated 17.01.2013 Ex. OP-1 vide which the complainant was asked to give the explanation why he had given the wrong declaration and claimed 20% no claim bonus and he was further asked that his policy is valid upto 30.03.2013 and that there may be possibility of loss in future. So deposit NCB being short premium to make contract valid in future. In the case the complainant returned the amount of no claim bonus, then his policy has been made valid for the remaining period. His policy from the date of inception was on the basis of wrong declaration by claiming no claim bonus in an illegal manner and accordingly his claim was repudiated. Repudiation is legal one according to the terms and conditions of the policy.- - -
(emphasis supplied)
11.The District Forum erred in not appraising the evidence correctly. Specifically, it erred in not appreciating that [a] on the relevant date, i.e. on the date of the accident, the policy suffered from the infirmities of concealment of the material fact of a claim having been taken in the previous year and of an untruthful NCB Declaration, [b] the making good of the deficit premium was made only and only after the untruthful declaration was detected and [c] paying the deficit premium made the insurance policy valid prospectively, "for future", and did not in any way retrospectively condone the untruthful NCB declaration and the short payment of premium made at the time of renewal of the insurance policy.
12.The State Commission has correctly appraised the case, no jurisdictional error, or legal principle ignored, or miscarriage of justice, is visible. Its Order of 25.08.2014 calls for no interference."
The learned counsel for Petitioner/complainant argued that the State Commission failed to recognize that the Respondents/OPs were already aware of the alleged suppressed information at the time of policy issuance. Therefore, holding the complainant responsible for suppression under such circumstances is unwarranted. The inconsistency in the OP's claim that the policy was not a renewal, despite the complainant approaching the same insurance agent and company for policy renewal, raises doubts about the validity of the denial of the claim. The fact that the insurance policy is computer-generated, and all previous records are accessible to both parties at the time of issuance. Consequently, the complainant cannot be held accountable for non-disclosure of the no-claim bonus. Standard industry practices, such as insurance agents collecting premiums without requiring signed proposal forms, were not considered by the State Commission. The absence of a signed proposal form further supports the complainant's position.
The learned counsel further asserted that the exclusion clause GR-27 of the insurance policy, crucial for understanding the basis of the claim repudiation, was not provided by the OPs, and its non-communication renders the repudiation invalid. The Respondent-1/OP-2 maintained silence for more than two months after receiving the premium and did not cancel the policy or issue any notice regarding it. This lack of due diligence on the OPs' part supports the legitimacy of the complainant's claim. The State Commission overlooked the Important Notice in the policy schedule, indicating that any payment made by the company to comply with the Motor Vehicle Act is recoverable from the insured. Since no such action was taken by the company, the denial of the legitimate claim constitutes a clear deficiency of service.
The learned counsel further argued that both parties are on equal footing in the insurance contract. The OPs' actions in accepting the premium and subsequently denying the claim when the complainant needed assistance violated the principle of good faith. The Deputy Manager's behavior displayed a lack of due diligence and engaged in unfair trade practices, breaching the contract and service standards. The principle of Estoppel should have been considered by the State Commission, preventing the OPs from denying the truth of settled facts, such as knowledge of the no-claim bonus. The State Commission failed to properly scrutinize the evidence provided by the complainant, showing bias in its decision-making. The OPs, as Principal and Agent, are liable for the actions of their insurance agent who filled the form and contributed to the issue. The State Commission's order lacked conclusive evidence against the complainant and potentially misused the provisions of the Consumer Protection Act. The order from the State Commission favored OP-2's wrongdoing, causing wrongful loss to the complainant. The OPs' conduct throughout the process reflected deficiencies in service and adoption of unfair trade practices, as outlined in the Complaint.
The failure of the State Commission to acknowledge the principle of the Principal and Agent relationship between OP-1 & OP-2 is a critical oversight. As per this principle, the Principal is indeed held responsible for the actions and oversights of its agent. Moreover, the Principle of Holding out dictates that anyone representing themselves as a partner in a firm is liable for any credit extended to the firm on the basis of that representation. In accordance with these fundamental principles, the Insurance Company, by virtue of its representation or actions as an agent, holds liability for any insurance policies procured based on such representation.
The counsel for petitioner/complainant relied on following cases:-
In the case of National Insurance Company Ltd. Vs. Nitin Khandelwal (2008) 11 SCC 259, the Supreme Court ruled that in instances of vehicle theft, breach of condition is not relevant. The Court upheld the State Commission's order to settle the claim on a non-standard basis. Consequently, the insurance company is obligated to compensate the insured for the loss incurred due to the theft of the vehicle, especially when the insured had obtained a comprehensive policy.
In United India Insurance Co. ltd. vs. Bhupinder Singh (RP/473/2013), the car owner filed claims for damages and later for theft, but the insurance company rejected both claims, citing the owner's alleged improper use of a no-claim bonus. The district forum ruled in favor of the owner, directing the insurer to cover the car's cost, compensate for mental agony and harassment, and cover litigation expenses. On appeal, the State Commission reduced the interest rate and canceled the compensation. Subsequently, the insurance company filed a Revision Petition, alleging the owner misrepresented policy details. Referring to the precedent set by National Insurance Company Ltd. Vs. Nitin Khandelwal (2008) 11 SCC 259, this Commission modified the State Commission's order, directing the insurer to settle the claim on a non-standard basis and pay 75% of the amount, deducting the no-claim bonus. This case mirrors the petitioner's factual and legal arguments.
In M/s Modern Insulators Ltd. Vs. Oriental Insurance Co. Ltd., AIR, 2000 SC 1014, the Supreme Court held that:-
"8. It is the fundamental principle of insurance law that utmost good faith must be observed by the contracting parties and good faith forbids either party from non-disclosure of the facts which the parties know. The insured has a duty to disclose and similarly it is the duty of the insurance company and its agents to disclose all material facts in their knowledge since the obligation of good faith applies to both equally.
9. In view of the above settled position of law we are of the opinion that the view expressed by the National Commission is not correct. As the above terms and conditions of the standard policy wherein the exclusion clause was included, were neither a part of the contract of insurance nor disclosed to the appellant, the respondent cannot claim the benefit of the said exclusion clause."
9. We have carefully gone through the orders of the State Commission, District Forum, other relevant records and rival contentions of the parties. In this case, there are concurrent findings of both the Fora below against the Petitioner herein. The Respondent/Insurance Company has rejected the claim on the ground of suppression of material facts with respect to the No Claim Bonus. In this case the fact of having received the No Claim Bonus was well in the knowledge of the Petitioner herein but he did not disclose the same to OP-1 at the time of obtaining insurance from OP-2/Insurance Company. State Commission and District Forum have correctly relied upon the judgment of this Commission in RP No.1255/2009 in TATA AIG General Insurance Co. Ltd. & Anr. Vs. Gulzari Singh. Further State Commission has also correctly relied upon the judgment of Hon'ble Supreme Court in LIC of India Vs. Smt. G.M. Channabasamma (1991) 1 SCC 357 in which it was held that a contract of 'insurance' is a contract of 'uberrima fides' and there must be complete good faith on the part of the assured. The State Commission in its order has observed as follows:-
14. In the present case, believing the words of the appellant, the policy for the period 17.8.09 to 19.8.10 was issued to her. In order to pay less premium the appellant had falsely represented that she was entitled for 'No Claim Bonus' on the Insurance Policy whereas on verification it was found that in the previous policy she had taken a claim of Rs.26,000/-. All these facts were in her knowledge. In these circumstances there is no deficiency on the part of the respondents in repudiating the claim. The appellant had violated GR 27 of the Indian Motor Tariff. No illegality or perversity is seen in the impugned order. The impugned order is upheld. Accordingly the appeal stands dismissed."
10. In Manmohan Nanda Vs. United India Assurance Company Limited and Anr. (2022) 4 SCC 582, Hon'ble Supreme Court observed that Insurance contracts are special contracts based on the general principles of full disclosure inasmuch as a person seeking insurance is bound to disclose all material facts relating to the risk involved. Law demands a higher standard of good faith in matters of insurance contracts which is expressed in the legal maxim uberrimae fidei. Similar observations were made by Hon'ble Supreme Court in Branch Manager, Bajaj Allianz Life Insurance Company Limited & Others Vs. Dalbir Kaur (2021) 13 SCC 553, wherein the Hon'ble Supreme Court held that the insurance claim can be repudiated on the grounds of non-disclosure of true and full material information sought in the proposal form.
11. In view of the foregoing, we tend to agree with the findings of the State Commission that the Respondent/Insurance Company was justified in repudiating the claim on account of non-disclosure of facts with respect to the 'No Claim Bonus' under the earlier policy. As was held by the Hon'ble Supreme Court in Rubi Chandra Dutta Vs. United India Insurance Co. Ltd. [(2011) 11 SCC 269], the scope in a Revision Petition is limited. Such powers can be exercised only if there is some prima facie jurisdictional error appearing in the impugned order. In Sunil Kumar Maity Vs. State Bank of India & Ors. [AIR (2022) SC 577] held that "the revisional jurisdiction of the National Commission under Section 21(b) of the said Act is extremely limited. It should be exercised only in case as contemplated within the parameters specified in the said provision, namely when it appears to the National Commission that the State Commission had exercised a jurisdiction not vested in it by law, or had failed to exercise jurisdiction so vested, or had acted in the exercise of its jurisdiction illegally or with material irregularity."
12. The Hon'ble Supreme Court in Rajiv Shukla vs Gold Rush Sales And Services Ltd. Civil Appeal No. 5928 of 2022, decided on 8 September, 2022, held that:-
"13. As per Section 21(b) the National Commission shall have jurisdiction to call for the records and pass appropriate orders in any consumer dispute which is pending before or has been decided by any State Commission where it appears to the National Commission that such State Commission has exercised its jurisdiction not vested in it by law, or has failed to exercise a jurisdiction so vested, or has acted in the exercise of its jurisdiction illegally or with material irregularity. Thus, the powers of the National Commission are very limited. Only in a case where it is found that the State Commission has exercised its jurisdiction not vested in it by law, or has failed to exercise the jurisdiction so vested illegally or with material irregularity, the National Commission would be justified in exercising the revisional jurisdiction.
14. In exercising of revisional jurisdiction the National Commission has no jurisdiction to interfere with the concurrent findings recorded by the District Forum and the State Commission which are on appreciation of evidence on record. Therefore, while passing the impugned judgment and order the National Commission has acted beyond the scope and ambit of the revisional jurisdiction conferred under Section 21(b) of the Consumer Protection Act."
13. We do not find any illegality, material irregularity or jurisdictional error in the order of the State Commission, hence, the same is upheld. Accordingly, the Revision Petition is dismissed.
14. The pending IAs in the case, if any, also stand disposed off.
................................................ DR. INDER JIT SINGH PRESIDING MEMBER