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Noting that when the complainant-insured had lodged the FIR immediately after the theft of the vehicle, and when the police after the investigation had arrested the accused and also filed challan before the concerned Court, and the claim of the insured is found to be genuine, the Supreme Court held that an Insurance Company could not have repudiated the claim merely on the ground that there was a delay in intimating the Insurance Company about the occurrence of the theft.

The top Court relied on its three Judge Bench decision in case of Gurshinder Singh vs. Shriram General Insurance Company Ltd. & Another wherein the FIR was lodged immediately on the next day of the occurrence of theft of the vehicle by the complainant, accused were also arrested and charge-sheeted, however, the vehicle could not be traced out. The top court had thus held,

"We, therefore, hold that when an insured has lodged the FIR immediately after the theft of a vehicle occurred and when the police after investigation have lodged a final report after the vehicle was not traced and when the surveyors/investigators appointed by the insurance company have found the claim of the theft to be genuine, then mere delay in intimating the insurance company about the occurrence of the theft cannot be a ground to deny the claim of the insured.”

Jaina Contruction Company approached the court in appeal against an order of the NCDRC whereby it had allowed the Revision Petition filed by The Oriental Insurance Company Limited and had set aside the order passed by the State Consumer Disputes Redressal, Commission, Haryana at Panchkula and the orde passed by the District Consumer Disputes Redressal Forum, Gurgaon.

A vehicle i.e., Tata Aiwa Truck was robbed by some miscreants. Consequently, an FIR was registered for the offence under Section 395 IPC. The police arrested the accused and also filed the challan against them in the concerned Court, however, the vehicle in question could not be traced and, therefore, the police filed untraceable report. 

Thereafter, Jaina lodged the claim with the Insurance Company with regard to the theft of the vehicle in question. The Insurance Company, however, failed to settle the claim within a reasonable time, and therefore, Jaina filed a complaint before the District Consumer Disputes Redressal Forum, Gurgaon.

During the pendency of the complaint before the District Forum, the Insurance Company repudiated the claim on the grounds that there was a breach of condition no. 1 of the policy which mandated immediate notice to the insurer of the accidental loss/damage, and since the complainant had intimated about the loss after a lapse of more than five months , the Insurance Company had disowned their liability.

The district forum allowed the said claim by holding that Jaina was entitled to the insured amount on non-standard basis, i.e., Rs. 12,79,399/- as 75% of the IDV i.e., Rs. 17,05,865/- with interest @ 6% p.a. from the date of filing of the complaint till realization from the Insurance Company. The District Forum also awarded compensation of Rs.10,000/- and litigation expenses of Rs.5,000/- to the complainant.

By way of an appeal, Oriental approached the State forum which went on to dismissed the same and partly allow the appeal filed by Jaina by increasing rate of interest awarded by the District Forum from 6% to 9%

A bench of Justice Sanjiv Khanna and Justice Bela M Trivedi held that the NCDRC should not have set aside the orders of the District Forum and the State Commission by holding that the repudiation of the insurance claim by the insurance company was justified.

Accordingly, the bench allowed the appeal, affirming the order of the State Commission.

Cause Title: Jaina Construction Company vs The Oriental Insurance Company Ltd