Kupwara Consumer Commission Holds Oriental Insurance Liable For Deficiency In Service In Fire Insurance Claim

The District Consumer Disputes Redressal Commission, Kupwara, comprising President Peerzada Qousar Hussain and Member Ms. Nyla Yaseen, has held Oriental Insurance Company Ltd. liable for deficiency in service and unfair trade practice for failing to settle a legitimate fire insurance claim. The Commission observed that the insurer neither settled the claim nor repudiated it on valid grounds, and instead relied upon a surveyor's assessment based on “presumptions and assumptions”.

Facts

The complainant, Gh Nabi Reshi, proprietor of M/s Fashion Foot Wear, had insured his shop with Oriental Insurance Company for a sum assured of ₹11 lakh for the period from 6 March 2015 to 5 March 2016. On the intervening night of 18–19 May 2015, a devastating fire gutted the shop, resulting in complete destruction of stock and furniture. An FIR was lodged and the Fire and Emergency Services visited the spot.

The insurance company deputed a surveyor who assessed a meagre amount of loss. Aggrieved by the assessment, the complainant engaged a private surveyor who assessed the loss at ₹14,52,854. The complainant further stated that the shop had also been insured by SBI Kupwara for a loan amount of ₹5 lakh, which, according to him, was obtained without his knowledge, resulting in total insurance coverage of ₹16 lakh under two policies.

Despite submitting all requisite documents, including GST and VAT bills, the complainant alleged that the insurer failed to settle the claim, compelling him to approach the Consumer Commission.

Contentions Of The Opposite Parties

The insurer contested the complaint, asserting that it was not maintainable and contending that the claim stood repudiated due to the complainant's alleged failure to submit requisite documents despite repeated requests. It was further alleged that false bills were submitted in violation of policy conditions.

The opposite parties also claimed that the complainant had taken multiple insurance policies with mala fide intent, and that discrepancies in the rent deed and business particulars disentitled him from any relief. It was argued that there was no deficiency in service on the part of the insurer.

Observations And Findings Of The Commission

The Commission noted that it was undisputed that the shop was insured and that the fire incident occurred during the subsistence of the policy. It observed that the FIR was duly lodged, fire services visited the site, and substantial loss was caused to the insured property.

The Commission found that although the complainant had cooperated with the survey process and submitted the necessary documents, the insurer neither settled the claim nor repudiated it on cogent grounds. The loss assessment made by the insurer's surveyor was found to be based on presumptions rather than documentary evidence.

Emphasising that insurers are under a legal duty to assess claims judiciously, the Commission relied on the Supreme Court decision in Amalendu Sahoo v. Oriental Insurance Co. Ltd., (2010) 4 SCC 536, wherein it was held that insurance contracts must be interpreted reasonably and practically, and that a claim cannot be rejected merely for non-submission of certain documents when the occurrence of loss is otherwise established through evidence.

The Commission held that the non-settlement of the claim despite receipt of claim intimation and documents amounted to deficiency in service and unfair trade practice.

Decision

Allowing the complaint, the Commission directed the opposite parties to jointly pay ₹10,00,000 to the complainant along with interest at 5% per annum from the date of institution of the complaint till realization. The insurer was further directed to comply with the order within four weeks from the date of receipt of the order.

Case Title: Gh Nabi Reshi v. Oriental Insurance Company Ltd. & Anr.

Case No.: 27/2016

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