The Jammu and Kashmir State Consumer Disputes Redressal Commission, Srinagar, comprising President (Officiating) Nighat Sultana and Member Maheep Gupta, has held National Insurance Company Limited guilty of deficiency in service for repudiating a motor insurance claim following the loss of a vehicle in floods, on the ground that it was not registered.
The Commission observed that an insurer cannot reject a claim solely on this ground when the insured had already initiated the registration process before the vehicle was washed away in floods, particularly when the delay in completing registration was attributable to the Regional Transport Office (RTO).
Facts of the Case
The complainant, Mohammad Yahya Khan, purchased a Wagon R Stingray VXI from Jamkash Vehicleades (Kashmir) Pvt. Ltd. on July 28, 2014. The vehicle was insured with National Insurance Company Ltd. for an Insured Declared Value (IDV) of ₹4,55,767, with the policy covering the period from July 28, 2014, to July 27, 2015.
In September 2014, devastating floods hit the Kashmir Valley, during which the complainant's vehicle was washed away and could not be traced.
The complainant lodged an insurance claim. However, the insurer repudiated it through a letter dated July 8, 2015, on the ground that the vehicle had not been registered with the concerned RTO at the time of the loss.
Aggrieved by the repudiation, the complainant approached the State Commission alleging deficiency in service.
Contentions of the Parties
The insurer's internal claim note recorded that the vehicle remained unregistered despite the expiry of its temporary registration and that the complainant had failed to furnish the permanent Registration Certificate (RC) despite repeated requests. It accordingly recommended closing the claim as a 'No Claim'.
The insurer failed to lead evidence or file written arguments despite being given sufficient opportunities.
Commission's Observations
The Commission observed that the insurer's own investigation confirmed that the vehicle had been washed away during the floods and remained untraceable, resulting in a total loss.
It noted that the complainant had initiated the registration process before the loss, as confirmed by an inspection report showing that RTO officials had inspected the vehicle on August 30, 2014. Therefore, he could not be penalised for the delay attributable to the RTO.
The Commission further observed that the vehicle was parked and not being driven on a public road when the floods occurred. Hence, no contravention of Section 39 of the Motor Vehicles Act could be attributed to the complainant.
It emphasised that even a violation of statutory provisions does not automatically justify repudiation of an insurance claim unless the policy contains a corresponding condition. The insurer had also failed to produce the complete policy terms despite being directed to do so.
Referring to its earlier decisions in four similar flood-related cases, including two involving the same insurer, the Commission observed that National Insurance should have followed those precedents instead of continuing the litigation. It accordingly held the repudiation unjustified and the insurer guilty of deficiency in service.
Decision
Allowing the complaint, the Commission directed National Insurance Company Ltd. to pay ₹7,85,963 to the complainant within 30 days. The amount includes compensation for delay calculated at 6% per annum and ₹50,000 towards mental agony and litigation expenses, in addition to the vehicle's IDV after policy excess.
Failure to comply would attract additional interest at 6% per annum on the entire awarded amount from October 16, 2026, until final payment.
Rashid appeared for the complainant, while N.A. Dendroo appeared for National Insurance Company Ltd.