SC: Insurance Company cannot demand any Document from Claimant which is beyond his control, Read Judgment

The Supreme Court has shun the practice of Insurance Companies refusing claim on flimsy grounds and/or technical grounds and remarked that 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

The Division Bench of Justice MR Shah anbd Justice BV Nagarathna while deciding an appeal, appealed for leniency on part of Insurnace Companies while settling claims and not raise hyper-technical grounds to deny the same.

Case Background

The Insurance Company herein failed to settle a theft insurance claim in relation to which, the insured took the the grievance before the District Consumer Forum which disposed of the complaint with the direction that he would furnish duplicate certified copy of the certificate of registration of Truck to the insurance company within a month and that the insurance company within a month after receiving the same would settle the claim as per the terms and conditions of the insurance policy. He then submitted an application before the RTO for obtaining duplicate certified copy of the certificate of registration of the Truck in question. However, RTO denied to issue duplicate certified copy of the certificate of registration on the ground that due to the report of the theft of the Truck, the details regarding registration certificate on the computer has been locked.

He then submitted an application before the insurance company along with photocopy of the certificate of registration and registration particulars, as provided by the RTO but in vain. Thereafter, he filed a fresh consumer complaint. The District Consumer Forum this time dismissed the complaint noting that as he had not filed the relevant documents for settlement of claim therefore, the non settlement of the claim cannot be said to be deficiency in service. The order was later upheld by both State and National Commission.

Supreme Court's Observation

The Court after analysing the facts observed that when the appellant had produced the photocopy of certificate of registration and the registration particulars as provided by the RTO, solely on the ground that the original certificate of registration (which has been stolen) is not produced, nonsettlement of claim can be said to be deficiency in service.

It stated that the Insurance Company became too technical while settling the claim and has acted arbitrarily.

"The appellant has been asked to furnish the documents which were beyond the control of the appellant 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 and ought not to have refused to settle the claim on non-submission of the duplicate certified copy of certificate of registration, which the appellant could not produce due to the circumstances beyond his control."

The Court further didn't approve of this general practice which it mentioned has come up in many cases.

The appeal was thus allowed.

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

Case Details: CIVIL APPEAL NO. 4071 OF 2022; May 20, 2022

Coram: Justice MR Shah anbd Justice BV Nagarathna

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