August 5, 2023 In Uncategorized


A Two Bench of the Supreme Court comprising of Justice J.K. Maheshwari,  and K.V. Viswanathan passed a Judgment dated 31.07.2023 in a recent case of Ashok Kumar Vs New India Assurance Co. Ltd., Civil Appeal No. 4578 of 2023 and observed that in respect of repudiation of insurance claim, in certain cases, even though the insured is proved to be careless to some extent, 75% of the claim amount is admissible on a non-standard basis.

Generally, where a breach of insurance policy condition or warranty are not the cause of loss or do not contribute to the extent of loss incurred by the insured, such claim is treated as a ‘standard claim’. However, there are certain claims that cannot be settled in a standard form i.e. where all terms, conditions and warranties of the policy are not fully complied by the insured, such claims may be treated as ‘non-standard claims’.


1) In the present case, one, Ashok Kumar the owner of the truck (Claimant / Complainant / Appellant) bearing Registration No. HR-55C-5385 (Theft Vehicle) had a valid insurance policy bearing Policy No. 354101/31/07/01/00013342 for the Insured Value of Rs.8,40,000/- for the period of 20.02.2008 to 19.02.2009 with the New India Assurance Co. Ltd. the Respondent Company herein.

2) The Claimant filed a Complaint on 27.06.2008 with the Police Station of Bilaspur, Gurgaon alleging that on 26.06.2008, the truck driver, Mam Chand had to unload stone dust at one, Mittal’s Farm at Shankar ki Dhani, and left the key in the ignition when he got out to look around for “Mittal Farm’s” address. When he had gone some distance, he heard the sound of starting of the Vehicle. As soon as he came back, he noticed that two persons were sitting on the driver’s seat of the Vehicle and that they allegedly stole the Vehicle and drove away.  Thereafter, the Police Registered FIR No.77 of 2008 under Section 379 of the Indian Penal Code 1860 (IPC) (Punishment for theft).

3) The Claimant then submitted a Claim of Rs. 8,40,000/- on 02.07.2008 for the Theft Vehicle with the Respondent Insurance Company.

4) Thereafter, the Claimant filed a Complaint on 11.06.2009 vide CPA No. 515 of 2009 before the Ld. District Forum, Gurgaon (District Consumer Forum) alleging that the Respondent Company was delaying the settlement of the Claim and as a result, it has committed deficiency in service.

5) Meanwhile, the Insurance Company had not repudiated the Claim. The Insurance Company had appointed an Agency named “Delta Detectives” to investigate the matter and the said Agency, on 27.10.2009, had recommended repudiation of the Claim. Thus, the Respondent Company rejected the Claim on 15.10.2009.

6) When the Complaint CPA No. 515 of 2009 came up before the District Forum on 22.11.2010 for hearing, the following statement was recorded in respect of the Advocate for the Claimant:

“I, Surender Kumar Gulia, Advocate, state that I do not want to proceed with my case. It may be dismissed.”

7) Upon the aforementioned statement of Complainant’s Advocate, the District Forum, vide Order dated 22.11.2010, disposed of the said Complaint in the following terms:-

“Statement of the learned counsel for the complainant for withdrawal of the complaint recorded, separately. In view of the statement, the complaint of the complainant is hereby dismissed as withdrawn. File be consigned to record room after due compliance.”

8) Thereafter, aggrieved by the Respondent’s repudiation of the Claim, the Complainant filed a fresh Complaint bearing C. No. 134 of 2012 before the District Forum. The second Complaint stated that, after filing the earlier Complaint, the Counsel for the Respondent Company took numerous dates for arguments on one pretext or the other, hence, the Complainant’s Counsel got annoyed with the attitude of the said Advocate and, by mistake, withdrew the case on 22.11.2010. The Complainant further pleaded that the withdrawal of the first Complaint was unfortunate, and that the Claimant should not be made to suffer for the wrong deeds of his Counsel. Further the Complainant, prayed for a direction to the Respondent Insurance Company to pay the Claimant-Insured an amount of Rs. 8,40,000/- with interest @ 18% p.a. and Rs.20,000/- on account of mental agony, delay and harassment.

9) The Ld. District Forum passed as an Order dated 06.03.2012 in the second Complaint C. No. 134 of 2012 and directed the Respondent Company to pay a sum to the extent of 75% of the sum assured, on non-standard basis.

10) Aggrieved by Ld. District Forum Order dated 03.2012, the Respondent Company filed an Appeal bearing Appeal No. 1135/2015before Ld. State Commission, Haryana alleging that the intimation of theft was given to the Insurance Company on 02.07.2008 i.e., six days after the theft and that there was violation of Condition No.5 of the Insurance Policy by the Insured, which is reproduced as follows:

”The Insured shall take all reasonable steps to safeguard the Vehicle insured from loss or damage and to maintain it in efficient condition and the Company shall have at all times free and full access to examine the Vehicle insured or any part thereof or any driver or employee of the insured. In the event of any accident or breakdown, the Vehicle insured shall not be left unattended without proper precautions being taken to prevent further damage or loss and if the Vehicle insured be driven before the necessary repairs are effected, any extension of the damage or any further damage to the Vehicle shall be entirely at the insured’s own risk.”

11) Thereafter, the State Commission observed that in the case of the National Insurance Company Limited vs. Nitin Khandelwal, [(2008) 11 SCC 259], the Hon’ble Supreme Court held that in respect of repudiation of insurance claim, despite breach of a clause by the insured, the claim could not have been repudiated in totality and that 75% of the claim is admissible on non-standard basis. Thus, the State Commission dismissed the Appeal of the Respondent Insurance Company vide Order dated 08.08.2016 and thereby, upheld the District Forum Order dated 06.03.2012.

12) Aggrieved by the State Commission Order dated 08.08.2016, the Respondent Company filed Revision Application bearing No.REVP-3415-2016 before the Hon’ble National Consumer Disputes Redressal Commission (National Commission) on the ground that the withdrawal of first Complaint 515 of 2009 foreclosed the Complainant from filing a fresh Complaint and that the Complainant had also violated the Condition No.5 of the Insurance Policy, hence, its Complaint was not maintainable.

13) Thereafter, the Ld. National Commission, vide Order dated 24.01.2018, rejected the reasons cited by the Complainant for filing a fresh Complaint and the grounds for withdrawal of the first Complaint bearing No. 515 of 2009 under Order XXIII Rule (1) (4) of the Code of Civil Procedure (CPC) (Withdrawal of suit or abandonment of part of Claim). Further, the National Commission observed that the Claimant breached the Condition No.5 of Insurance Policy condition, as the Vehicle was unattended on the road side with keys left behind in the key hole. Hence, the National Commission, vide Order dated 24.01.2018, allowed the Respondent’s Company Revision Application and set aside the Orders of the District Commission and State Commission dated 06.03.2012 and 08.08.2016 respectively.

Supreme Court Analysis and Observations

Aggrieved by the National Commission Order dated 24.01.2018, the Appellant filed Civil Appeal No. 4578 of 2023 before the Hon’ble Supreme Court. The Apex Court passed an Order dated 31.07.2023 and made the following observations:

(i) That firstly, the original Complaint bearing No. 515 of 2009 was filed on 11.06.2009 when the Insurance Company had not taken any decision on the Claim. In fact, the Complainant had alleged that the Insurance Company was lingering on with the issue and had complained of not rendering “sufficient service”;

(ii) That secondly, pending first Complaint, the Insurance Company, on 15.10.2009, issued a Repudiation Letter on purported breach of Condition Nos. 1 & 5 of the Policy to the Complainant;

(iii) Thirdly, a separate proceeding has been drawn up before the Ld. District Forum recording the statement of the Counsel of the Complainant alone. The statement of the Counsel stated that “I, Surender Kumar Gulia, Advocate, stated that I do not want to proceed with my case. It may be dismissed”.

(iv) Fourthly, in the second Complaint filed on 06.03.2012, the Complainant avers that as the lawyer of the Opposite Party – Insurance Company was taking numerous dates for arguments in the first Complaint proceedings, the Complainant’s Counsel got annoyed with such attitude and thereby, withdrew the first Complaint by mistake.

(v) Fifthly, the Complainant-Appellant further averred that the withdrawal was unfortunate and he ought not to have been prejudiced for the deeds of his lawyer.

(vi) That the first Complaint was filed after theft due to non-settlement of Claim by the Insurance Company. The repudiation of the Claim was made during the pendency of the said Complaint, purportedly due to breach of Condition no. 1 and 5 of the Insurance Policy. The said Complaint was withdrawn by the advocate of the Complainant on the pretext of the case being prolonged by the advocate of the Insurance Company, without having express instructions for withdrawal of the said Complaint. However, the Bench held that for the fault of the Advocate, the Complainant cannot be made to suffer. Finally, the dismissal of the Complaint was made by the National Commission under the wrong pretext that the earlier Complaint had challenged the order of repudiation.

(vii) That the Supreme Court observed that after the incident of theft on 26.06.2008, FIR was registered on 27.06.2008. The intimation was also given to the Insurance Company admittedly on 02.07.2008. The Police have also reported the Vehicle as untraced as the records indicated.

(viii) The Apex Court held that it is an admitted fact in the Repudiation Letter and the Survey Report that the theft did happen. However, what is alleged is that the Claimant was negligent in leaving the Vehicle unattended with the key in the ignition. The facts of the case make it evident that there was little time between the driver getting out of the Vehicle and discovering the theft. Hence, the Bench held that the Complainant was, to some extent, entitled to the Claim amount.

(ix) That in Amalendu Sahoo vs. Oriental Insurance Company Limited, [(2010) 4 SCC 536], the Supreme Court observed the guidelines issued by the New India Assurance Co. Ltd. in settling claims on non-standard basis. The guidelines read as under:-

Sl.No. Description Percentage of settlement
(i) Under declaration of licensed carrying capacity. Deduct 3 years’ difference in premium from the amount of Claim or deduct 25% of Claim amount, whichever is higher.
(ii) Overloading of Vehicles beyond licensed carrying capacity. Pay Claims not exceeding 75% of admissible Claim
(iii) Any other breach of warranty/condition of policy including limitation as to use. Pay up to 75% of admissible Claim.



Thus, based on the aforesaid observations, the Supreme Court held that District Forum was justified in awarding the entire 75% of the admissible Claim in favor of the Appellant and set aside the National Commission Order dated 24.01.2018 and thereby, restored the Orders of the District Commission and State Commission dated 06.03.2012 and 08.08.2016 respectively.

Suneel Kumar


The Indian Lawyer

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