MANU/SC/1343/2010

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 6739 of 2010 (Arising out of SLP (C) No. 12741 of 2010)
Decided On: 17.08.2010
Appellants: Oriental Insurance Co. Ltd.
Vs.
Respondent: Parvesh Chander Chadha
Hon'ble Judges/Coram:
G.S. Singhvi and A.K. Ganguly, JJ.
Counsels:
For Appellant/Petitioner/Plaintiff: P.K. Seth, Adv. and Manjeet Chawla, A.O.R.
Case Note:
Consumer - Deficiency of service - Direction to settle claim - Respondent's
claim for compensation was repudiated by Appellant on ground of breach of
conditions of policy - Inasmuch as no intimation was given about alleged
theft of vehicle for almost five months - Respondent filed complaint and
claimed compensation - District Forum held Appellant guilty of deficiency of
service and granted compensation along with interest and cost of litigation
- State Commission dismissed appeal filed by Appellant - Revision was
dismissed by National Commission - Hence, present appeal - Whether
direction given by District Forum to Appellant to settle claim of Respondent
on non-standard basis was legally correct - Whether State Commission and
National Commission rightly declined to interfere with same
Facts:
The Complainant-Respondent had obtained insurance policy in respect of
his car for a period of one year commencing from 17.1.1995. The car was
said to have been stolen between 18.1.1995 and 20.1.1995. He claimed to
have lodged First Information Report on 20.1.1995 about the alleged theft
of car but no intimation was given to the Appellant-Insurance Company till
22.5.1995 when a letter is said to have been sent to the Branch Manager.
The Respondent's claim for compensation was repudiated by the Appellant
on the ground of breach of the conditions of policy inasmuch as no
intimation was given about the alleged theft of the vehicle for almost five
months. The Respondent filed complaint and claimed compensation with
interest by asserting that in terms of the policy, he was entitled to be
compensated for loss of the car. The District Forum held the Appellant
guilty of deficiency of service and granted compensation along with interest
and cost of litigation. The appeal preferred by the Appellant was dismissed
by the State Commission and the revision filed against the order of the
State Commission was dismissed by the National Commission. Hence, the
present appeal.
Held, while allowing the appeal:
(i) The Respondent had not informed the Appellant about the alleged theft

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of the insured vehicle for almost five months. In the complaint filed by him,
the Respondent did not give any explanation for this unusual delay in
informing the Appellant about the incident. In terms of the policy, the
Respondent was required to inform the Appellant about the theft of the
insured vehicle. In terms of the policy issued by the Appellant, the
Respondent was duty bound to inform it about the theft of the vehicle
immediately after the incident. On account of delayed intimation, the
Appellant was deprived of its legitimate right to get an inquiry conducted
into the alleged theft of vehicle and make an endeavour to recover the
same. The Appellant could not be saddled with the liability to pay
compensation to the Respondent despite the fact that he had not complied
with the terms of the policy. The impugned order as also those passed by
the District Forum and the State Commission were set aside and the
complaint filed by the Respondent was dismissed. [9] and[10]
ORDER
1. Leave granted.
2 . Whether the direction given by District Consumer Disputes Redressal Forum-I,
Delhi (District North) (for short, 'the District Forum') to the Appellant-Oriental
Insurance Co. Ltd. to settle the claim of the complainant-Respondent on non-
standard basis was legally correct and justified and whether the State Consumer
Disputes Redressal Commission, Delhi (for short, 'the State Commission') and the
National Consumer Disputes Redressal Commission (for short, 'the National
Commission') rightly declined to interfere with the same is the only question which
requires consideration in this appeal.
3. The Respondent had obtained insurance policy in respect of his car bearing No. DL
2C E 9425 for a period of one year commencing from 17.1.1995. The car is said to
have been stolen between 18.1.1995 and 20.1.1995 from outside the house of the
Respondent. He claims to have lodged First Information Report on 20.1.1995 about
the alleged theft of car but no intimation was given to the Appellant till 22.5.1995
when a letter is said to have been sent to the Branch Manager.
4. The Respondent's claim for compensation was repudiated by the Appellant on the
ground of breach of the conditions of policy.
5. The Respondent filed complaint Under Section 12 of the Consumer Protection Act,
1986 and claimed compensation to the tune of Rs. 1,85,000/- with interest by
asserting that in terms of the policy, he was entitled to be compensated for loss of
the car. The Appellant contested the claim mainly on the ground that the Respondent
had violated the conditions of policy inasmuch as no intimation was given about the
alleged theft of the vehicle for almost five months.
6 . By an order dated 14.7.2000, the District Forum held the Appellant guilty of
deficiency of service and issued the following directions:
i) To settle the claim of the complainant on 'Non-Standard Basis' and pay to
him 75% of the amount of loss of Rs. 1,85,000/- along with interest at the
rate of 12% p.a. from 20.7.1995 i.e. the date of repudiation till payment is
made;
ii) Also pay to complainant Rs. 1,000/- as cost of litigation.

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7. The appeal preferred by the Appellant was dismissed by the State Commission and
the revision filed against the order of the State Commission was dismissed by the
National Commission.
8 . We have heard Mr. P.K. Seth, learned Counsel appearing for the Appellant.
However, we do not have the benefit of hearing the counsel representing the
Respondent because he has thought it proper not to appear despite the fact that we
waited for about fifteen minutes for his appearance.
9. Admittedly, the Respondent had not informed the Appellant about the alleged theft
of the insured vehicle till he sent letter dated 22.5.1995 to the Branch Manager. In
the complaint filed by him, the Respondent did not give any explanation for this
unusual delay in informing the Appellant about the incident which gave rise to cause
for claiming compensation. Before the District Forum, the Respondent did state that
he had given copy of the first information report to Rajender Singh Pawar through
whom he had insured the car and untraced report prepared by police on 19.9.1995
was given to the said Shri Rajender Singh Pawar, but his explanation was worthless
because in terms of the policy, the Respondent was required to inform the Appellant
about the theft of the insured vehicle. It is difficult, if not impossible, to fathom any
reason why the Respondent, who is said to have lodged First Information Report on
20.1.1995 about the theft of car did not inform the insurance company about the
incident. In terms of the policy issued by the Appellant, the Respondent was duty
bound to inform it about the theft of the vehicle immediately after the incident. On
account of delayed intimation, the Appellant was deprived of its legitimate right to
get an inquiry conducted into the alleged theft of vehicle and make an endeavour to
recover the same. Unfortunately, all the consumer foras omitted to consider this
grave lapse on the part of the Respondent and directed the Appellant to settle his
claim on non-standard basis. In our view, the Appellant cannot be saddled with the
liability to pay compensation to the Respondent despite the fact that he had not
complied with the terms of the policy.
10. In the result, the appeal is allowed, the impugned order as also those passed by
the District Forum and the State Commission are set aside and the complaint filed by
the Respondent is dismissed.
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