Non-settlement of insurance claim solely because original certificate of registration of stolen vehicle is not produced amounts to deficiency in service: Supreme Court

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Noting that when a claimant has produced the photocopy of the certificate of registration of an insured vehicle and the registration particulars as provide by the RTO, the Supreme Court has held that non-settlement of claim by the insurance company solely on the ground that the original certificate of registration (which has been stolen along with the vehicle) was not produced, amounts to deficiency in service.

The Top Court further observed that in the instant dispute, the insurance company became too technical while settling the claim and could be said to have acted arbitrarily. 

"In many cases, it is found that the insurance companies are refusing the claim on flimsy grounds and/or technical grounds. While settling the claims, the insurance company should not be too technical and ask for the documents, which the insured is not in a position to produce due to circumstances beyond his control...", observed a bench of Justices MR Shah and BV Nagarathna.

One Gurmel's truck was stolen. A First Information Report was immediately lodged in the Police Station, and on the same day, the insurance company as well as the Regional Transport Office (RTO) was informed regarding the theft of the truck. 

The District Commission dismissed the complaint filed by Gurmel observing that as the relevant documents for settlement of claim were not filed, the non-settlement could not be said to be 'deficiency in service'. This order was confirmed by the State Commission and by National Consumer Disputes Redressal Commission (NCDRC) by the impugned judgment and order.

Court noted that when Gurmel had applied for the duplicate certified copy of the certificate of registration,  RTO denied such request on the ground that in view of information/report regarding the theft of the vehicle, which has been registered with the RTO, the details regarding registration certificate on the computer has been locked. 

"...the appellant did produce photocopy of certificate of registration and other registration particulars as provided by the RTO. Even, at the time of taking the insurance policy and getting the insurance, the insurance company must have received the copy of the certificate of registration. Therefore, the appellant had tried his best to get the duplicate certified copy of certificate of registration of the Truck", further noted the bench.

The division bench remarked that Gurmel was asked to furnish the documents which were beyond his control to procure and furnish. "Once, there was a valid insurance on payment of huge sum by way of premium and the Truck was stolen, the insurance company ought not to have become too technical...", said the Top Court.

Accordingly, Court held that Gurmel was entitled to an insurance amount of Rs. 12  lakhs along with interest @ 7% from the date of submitting the claim. 

"The respondent – insurance company is also saddled with the liability to pay the litigation cost, which is quantified at Rs. 25,000/­ to be paid to the appellant herein. The aforesaid amount is to be paid by the insurance company to the appellant within a period of four weeks from today", further ordered the Top Court.

Case Title: Gurmel Singh vs Branch Manager, National Insurance Co. Ltd.