Burglary In Industrial Outlet, Chandigarh District Commission Orders United India Insurance Co. To Pay Rs. 13.4 Lakhs, Rs. 20k Compensation And Rs. 10k Costs

Brief Facts:

Amartex Industries Limited (“Complainant”) had a business engaged in manufacturing, and selling clothing, and ready-made garments, operating a food chain division, and retailing general merchandise across Punjab, Haryana, and Himachal Pradesh, including outlets in the tri-city region. United India Insurance Company Ltd. (“Insurance Company”) approached the Complainant through its agent, Garg Insurance Consultancy Services (“Agent”) proposing comprehensive insurance coverage to the Complainant for stocks at 12 different outlets against fire, theft, burglary, and other related risks. The Complainant, enticed by the assurances, purchased the Burglary Standard Policy for a premium of Rs. 2,25,942/- out of which Rs 2,77,469/- was allocated for fire policy and Rs. 8,474/- for burglary, theft, and shortage of stocks. Further, the Complainant downloaded the policy from the insurance company's website and received it via email on March 5, 2021, indicating a total insured value of Rs. 25,53,00,000/-.

The insurance policy covered the entire stock and trade of the Complainant's Mohali outlet, with a total value of ₹ 4,50,00,000/-. Subsequently, the Complainant discovered that there were incidents of stolen items at the Mohali outlet, with broken windows of the store. The Complainant promptly reported these incidents to the police and the insurance company and informed them that there was an estimated loss of Rs. 22.00 lacs. Despite informing the insurance company and its agent about the incidents and submitting relevant documents, the claim was repudiated by the insurance company stating that it was a case of theft and not burglary. The Complainant, through an RTI application, obtained the surveyor's report. The Complainant informed the insurance company that there was a misinterpretation of the policy's terms and conditions in stating that the incident was burglary and not theft. Thereafter, the Complainant made several communications with the insurance company and its agent but never received a satisfactory response. The Complainant approached the District Consumer Disputes Redressal Commission-I, Chandigarh (“District Commission”) and filed a consumer complaint against the insurance company and its agent.

The insurance company and its agent didn't appear before the District Commission.

Observations by the Commission:

The District Commission noted that the repudiation letter from the insurance company stated that there was an absence of signs of forceful entry and on this basis, the insurance company concluded that the incident was a case of theft which was not covered under the policy. However, the District Commission noted that the Complainant's evidence, including the untraced report and photographs, suggested a different scenario.

The District Commission found several discrepancies in the surveyor's report. Further, it noted that the police investigation report along with the photographs indicated that there was a significant hole in the wall through which miscreants could have entered. The District Commission held that the surveyor incorrectly determined the incident as theft and not burglary, despite compelling evidence presented by the Complainant which suggested burglary.

Consequently, the District Commission concluded that the insurance company was not justified in repudiating the Complainant's genuine claim. The District Commission held the insurance company liable for deficiency in service. The District Commission directed the insurance company to pay ₹ 13,40,941/- to the Complainant, along with 9% interest per annum from the date of claim repudiation (May 6, 2022). Additionally, it was directed to pay a compensation of ₹ 20,000/- to the Complainant for mental agony and harassment. It was further directed to pay ₹ 10,000/- to the Complainant for the litigation costs incurred by him.

Case Title: Amartex Industries Ltd. vs United India Insurance Company Ltd. and others

Case No.: CC/830/2022

Advocate for the Complainant: Pulkit Sachdeva

Advocate for the Respondent: None

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