Chhattisgarh State Commission Holds Oriental Insurance Co. Liable For Wrongful Repudiation Based On Overloading Despite Approval Of Revised Weight Limit

Brief Facts:

The Complainant owned a truck. He obtained an insurance policy for the truck for 1 year from Oriental Insurance Company Ltd. (“Insurance Company”). During the subsistence of the policy, the truck crashed in an accident and sustained damage on its back side. The Complainant intimidated the Insurance Company, which then appointed a surveyor to assess the damage. A claim was submitted along with the relevant documents and a damage assessment, amounting to Rs. 13,63,196/-. A few documents were missing, therefore, an approved amount of Rs. 11,41,503/- was assured to be transferred to the Complainant. However, at a later date, the Insurance Company repudiated the claim based on the ground that the truck was overloaded at the time of the accident. Feeling aggrieved, the Complainant filed a consumer complaint in the District Consumer Disputes Redressal Commission, Ambikapur Surguja, Chhattisgarh (“District Commission”).

The Insurance Company submitted that the Complainant breached the policy T&C by overloading the truck. The District Commission ruled in favour of the Complainant by observing that at the time of the accident, the truck was storing 45500 kgs of coal. Further, the Transport Department authorized it when the truck driver paid a government tax for it.

Dissatisfied with the order of the District Commission, the Insurance Company filed an appeal in the State Consumer Disputes Redressal Commission, Chhattisgarh (“State Commission”).

Observations of the Commission:

The State Commission noted that the repudiation was made based on non-disclosure of material facts related to overloading, loading, and unloading and misleading the company. It held that the Insurance Company was now restricted to plead based on these grounds only. Reliance was placed on Saurashtra Chemicals Ltd. vs National Insurance Co. Ltd. [Civil Appeal No. 2059 of 2015], where the Supreme Court held that the insurance company can't go beyond the grounds taken in the repudiation letter. Therefore, the only issue for consideration before the State Commission was whether the truck was overloaded at the time of the accident.

The State Commission observed that the Gross Vehicle Weight (“GVW”) of the truck was revised by paying the tax and the change was also endorsed in the policy. Therefore, at the time of the accident, the GVW was endorsed and revised in the policy document. Resultantly, the Insurance Company's argument that the truck was overloaded, was rejected.

As far as the quantum of compensation was concerned, the State Commission did not find any reason to interfere with the order of the District Commission, which awarded Rs. 8,28,516/- based on the loss assessed by the surveyor. Rs. 5,000/- compensation and Rs. 6,000/- litigation costs were also upheld, as against the Insurance Company