The Jammu & Kashmir State Consumer Disputes Redressal Commission, Srinagar, comprising President Smt. Nighat Sultana and Member Sh. Maheep Gupta, has held United India Insurance Company Ltd. liable for wrongfully repudiating an excavator damage insurance claim by merely invoking the policy exclusion relating to "normal wear and tear" without producing evidence to establish that the exclusion was applicable.

Observing that the burden of proving the applicability of an exclusion clause rests squarely on the insurer, the Commission held that where the insurer fails to lead evidence in support of its defence, the benefit of doubt must go to the insured.

Facts

The complainant, Abdul Rashid Sumji, had obtained an insurance policy for his excavator from United India Insurance Company. During the currency of the policy, the excavator accidentally fell into the River Jhelum and remained submerged in water, resulting in extensive damage. After undertaking repairs, the complainant incurred expenses amounting to ₹18.82 lakh and sought reimbursement under the policy.

However, the insurer repudiated the claim through a letter dated August 10, 2015, contending that the damage had resulted from "normal wear and tear," an exclusion under the insurance policy. Aggrieved by the repudiation, the complainant approached the State Consumer Commission alleging deficiency in service and sought reimbursement of the repair expenses along with interest and compensation.

Contentions of the Insurer

The insurance company defended the repudiation by relying on the surveyor's report, which concluded that the loss was attributable to normal wear and tear, an excluded peril under the policy. During the proceedings, the insurer also attempted to raise an additional defence questioning the validity of the driver's licence.

Observations & Decision

The Commission first rejected the insurer's attempt to introduce an additional ground regarding the validity of the driver's licence. It observed that it is a settled legal position that an insurance company cannot justify repudiation on grounds that do not form part of the original repudiation letter. Since the issue of the driver's licence was never cited while rejecting the claim, the Commission declined to consider it.

On the principal issue, the Commission noted that although losses arising from "normal wear and tear" are excluded under the policy, the burden of proving the applicability of the exclusion clause rests squarely on the insurer. It found that United India Insurance Company had failed to adduce any evidence in support of its plea, and its right to lead evidence had already been closed. In the absence of any evidence establishing that the damage resulted from normal wear and tear, the Commission held that the insurer could not invoke the exclusion clause.

The Commission consequently held that the excavator had sustained damage after being submerged in the River Jhelum and that the loss was accidental in nature. It observed that, in such circumstances, the benefit of doubt had to be extended to the insured and the claim could not be repudiated.

While determining the quantum of compensation, the Commission observed that although the complainant had incurred repair expenses of ₹18.82 lakh, the insurer's liability had to be determined in accordance with the policy terms. It accepted the surveyor's assessment of the net loss at ₹4,84,986, holding that the deductions towards depreciation, under-insurance and the excess clause were properly justified and warranted no interference.

Allowing the complaint, the Commission directed United India Insurance Company Ltd. to pay the complainant a total of ₹8,53,084 within 30 days. The award comprised ₹4,84,986 towards the assessed insurance liability, ₹3,18,098 as compensation for delay in settlement, and ₹50,000 towards mental agony and litigation expenses.

The Commission further directed that if the insurer failed to comply within 30 days, it would be liable to pay interest at the rate of 6% per annum on the entire awarded amount of ₹8,53,084 from July 30, 2026, until realization.

Case Title: Abdul Rashid Sumji v. United India Insurance Company Ltd. & Anr.

Case No.: C.C. No. 603 of 2015

Appearance:

• For the Complainant: Sh. Sajood Amin, Advocate.

• For the Opposite Parties: Ms. Rifat Khalida, Advocate for United India Insurance Company Ltd.

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