Insurance Claim Wrongly Repudiated For Film Distribution Losses Due To Telangana Agitation; NCDRC Awards ₹3.80 Crore Compensation

The National Consumer Disputes Redressal Commission, comprising Justice A.P. Sahi (President) and Bharatkumar Pandya (Member), allowed the complaint filed by M/s Asian Theatres Pvt. Ltd. against Oriental Insurance Co. Ltd. & Anr., holding that the repudiation of the insurance claim was arbitrary and amounted to deficiency in service. The Commission set aside the repudiation letter dated 12.06.2012, holding that the complainant had duly communicated the release dates of the film and that the insurer had wrongly denied the claim on untenable grounds. Brief Facts: The complainant, M/s Asian Theatres Pvt. Ltd., engaged in film distribution in the Nizam area (present-day Telangana), obtained a “Distributors Loss of Revenue Insurance Policy” from Oriental Insurance Co. Ltd. for the Telugu film “Adhurs”. The film was initially scheduled for release on 23.12.2009. However, due to the Telangana agitation, its release was postponed to 30.12.2009 and subsequently to 13.01.2010. The complainant communicated these changes to the insurer directly as well as through the broker. The complainant claimed that it suffered losses due to disruption in screening and additional publicity expenditure caused by the postponement of release. A surveyor was appointed to assess the loss. The insurer repudiated the claim on 12.06.2012 citing non-communication of material facts, breach of policy conditions, and alleged aggravation of loss due to statements made by the producer. Aggrieved, the complainant approached the Commission alleging deficiency in service. Contentions of the Opposite Parties: The insurer contended that the complainant failed to directly communicate the release date within the stipulated time and had breached policy conditions. It further contended that statements made by the producer aggravated the situation, thereby increasing the losses. The opposite party No. 2 (the broker) contended that it was only a facilitator and that communication to the broker could not be treated as compliance with policy conditions. Observations and Decision: The Commission held that the ground of non-communication was factually incorrect. It found that the complainant had communicated the change in release dates and that such communication had reached the insurer, including through the broker. The Commission held that communication through the broker constituted valid compliance with policy conditions. The Commission observed that the repudiation was based on incorrect facts and contrary to the material on record. It further held that the complainant, being a distributor, could not be held responsible for any alleged aggravation of loss due to statements made by the producer, in the absence of any evidence. The Commission held that the losses suffered due to agitation, bandh, and disruption of screening were covered under the policy and that there was no breach of policy conditions by the complainant. Relying on Galada Power & Telecommunication Ltd. v. United India Insurance Co. Ltd., Saurashtra Chemicals Ltd. v. National Insurance Co. Ltd., and New India Assurance Co. Ltd. v. Mudit Roadways, the Commission reiterated that the insurer cannot travel beyond the grounds mentioned in the repudiation letter. Accordingly, the Commission allowed the complaint and set aside the repudiation dated 12.06.2012, holding that wrongful repudiation of a valid claim amounted to deficiency in service. The insurer was directed to pay ₹3,80,35,045/- (after adjusting policy excess) along with interest at 6% per annum from the date of filing of the complaint till realization, and 9% in case of default. The Commission also awarded ₹1,00,000/- as compensation and ₹50,000/- as litigation costs. Case Title: M/s Asian Theatres Pvt. Ltd. v. Oriental Insurance Co. Ltd. & Anr. Case Number: NC/CC/133/2013 Click Here To Read/Download Order

Insurance Claim Wrongly Repudiated For Film Distribution Losses Due To Telangana Agitation; NCDRC Awards ₹3.80 Crore Compensation

Praveen Mishra

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