The Supreme Court of India in one of its judgement in a case involving Insurance Claim has held that unless the insured is duly informed, Exclusionary Clauses will not be applicable. 

The judgement came out in one case titled as New India Assurance Co.Ltd. v. Paresh Mohanlal Parmar. 

CASE BACKGROUND

The appellant herein has been aggrieved by the judgment of the National Consumer Disputes Redressal Commission by which the first appeal of the respondent has been allowed and directed it to pay an amount of ₹20 Lakhs as compensation amount to the respondent.

The appellant and respondent are an insurer and insured respectively in terms of the nature of their relationship. The respondent obtained a burglary and housebreaking Insurance Policy for the period from 5.06.2003 to 4.06.2004 from the appellant Insurance Company to insure his property for a total sum insured of ₹20 Lakhs. Within the time-period of the said insurance contract, the incidence of theft took place which was duly reported to the Police. 

Insurance Company was informed and their surveyor visited and submitted his preliminary report. The complaint was also submitted to Insurance ombudsman by the appellant which eventually rejected the representation on the ground that they have no pecuniary jurisdiction. The Insurance Company repudiated the claim and reiterated its stand of repudiation. The respondent then filed a complaint before the State Commission. 

The State Commission dismissed the complaint filed by the respondent relying upon the judgment of this Court in United India Insurance Co.Ltd. v. Harchand Rai Chandan Lal 2004(8)SCC 644.

After that first appeal was filed before the Commission. Allowing the appeal, the Commission took a view that when the lock of the godown was found on the Street and that the culprit was convicted under Section 454 IPC, it may be gathered that element of force was present when the culprit entered the premises of the godown.

The Commission also returned the finding that relevant terms and conditions of the Insurance Policy were not brought to the knowledge of the insurer. Aggrieved by the judgment of the National Commission, this appeal has been filed.

During the hearing, the Learned Counsel of the appellant argued that the burglary incident was staged to take up the insurance claim while the Learned Counsel of the respondent argued on the fact that claim cannot be denied as relevant terms and conditions were not supplied to the insured even after him inquiring and asking about it. 

SUPREME COURT OBSERVATION

The Court noted that it cannot find any tangible material to infer that the relevant terms and conditions of the Insurance Policy were brought to the knowledge of the appellant. 

It said:

"Before we embark upon a discussion on the issue regarding breach of the terms of the Insurance Policy, it may be mentioned that the other contentions of the respondents were rejected by the State Commission. The appellant also had contended before the State Commission that he was not furnished with the terms and conditions of the insurance policy when the insurance policy was taken by him. The fact that the appellant took a relevant insurance policy covering the period between 5.06.2003 to 4.06.2004 is not in dispute. The case of the appellant was that the annexure containing terms of the insurance policy had not been attached along with the document of the policy furnished to him. Though the respondents denied such averment of the appellant in their written version yet the appellant reiterated the same stand in his rejoinder affidavit filed before the state Commission. The State Commission did not deal with this aspect of the matter. In our opinion, it was necessary for the respondents to prove that the terms and conditions of the Insurance Policy were furnished to the appellant when the policy document was issued in his favor. We have not come across any tangible material to infer that the relevant terms and conditions of the Insurance Policy were brought to the knowledge of the appellant."

The Court also took notice of the submission of the Counsel for the appellant in which it was stated that is the National Commission erred in observing that the State Commission didn't deal with the aspect, whereas the State Commission has dealt with. The Court thus observed that when the National Commission has returned the finding that terms and conditions of the policy were not brought to the knowledge of the respondent, as it is contrary to the finding of the State Commission, the findings of the State Commission shall be treated to have been overruled. 

The Court also stated that the principles laid down in United India Insurance Co.Ltd. v. Harchand Rai Chandan Lal 2004(8)SCC 644 cannot be applied to the present case.

It observed:

"Having held this, SCDRC also came to the conclusion that the exclusion would in any event not be attracted. The finding of SCDRC in regard to the interpretation of such an exclusionary clause is evidently contrary to the law laid down by this Court in Harchand Rai. However, the relevance of that interpretation would have arisen provided the conditions of exclusion were provided to the insured. NCDRC missed the concurrent findings of both the District Forum and SCDRC that the terms of exclusion were not made known to the insured. If those conditions were not made known to the insured, as is the concurrent finding, there was no occasion for NCDRC to render a decision on the effect of such an exclusion."

The thus on the ground of all the above observations, dismissed the appeal.

The judgement has been delivered by Justice Ashok Bhushan and Justice Navin Sinha on 04-02-2020.

Read Judgement Here:

 

 

Share this Document :

Picture Source :