SUPREME COURT HOLDS THAT DELAY MAY BE CONDONED IF IT IS PROPERLY EXPLAINED

A two-Judge Bench of the Supreme Court comprising of Justice Pamidighantam Sri Narasimha and Justice Sandeep Mehta passed a Judgement dated 17-12-2024 in the matter of Rajesh Kumar vs. National Insurance Co. Ltd, Criminal Appeal Nos. 14615-14616/2024 and held that the State Commission correctly concluded that Condition No. 4 of the Policy[i] was not applicable given the facts and circumstances of the case. Moreover, the Respondent failed to demonstrate how the Appellant’s absence during the relevant period contributed to further damage to the vehicle. The burden of proving this lay heavily on the Respondent, and it was not fulfilled.

FACTS:

• That the Appeal mentioned above was filed before the Supreme Court by one, Rajesh Kumar (Appellant) against the National Insurance Co. Ltd (Respondent), challenging the Order dated 16.07.2019 in Revision Petition Nos. 878-879/2019, the National Consumer Disputes Redressal Commission (NCDRC) allowed the Respondent’s Appeal and reduced the payable insurance amount. As the consumer, the Appellant sought full release of the insurance amount from the Respondent/Insurer. The District Consumer Disputes Redressal Commission (DCDRC) had partially allowed the Complaint, while the State Consumer Disputes Redressal Commission (SCDRC) modified the Order and granted the full claim. The Respondent then challenged this decision before the NCDRC, leading to the impugned order.
• The Appellant purchased a Private Car Insurance Policy from National Insurance Co. Ltd. for the period 02.07.2012 to 01.07.2013, with an Insured Declared Value (IDV) of Rs. 5,02,285/-. On 25.03.2013, the Appellant’s car overturned and fell into a ditch when he attempted to avoid a cow on the road.
• The Appellant prioritized taking his injured co-passenger to the hospital and left the car in the ditch. The car subsequently caught fire due to a short circuit and sustained significant damage. The Appellant reported the incident to the Police on 25.03.2013 but informed the Insurer on 28.03.2013.
• National Insurance Co. Ltd. denied the claim, citing delay in intimation and negligence in leaving the vehicle unattended, which allegedly caused further damage. The Appellant filed a claim for the full insured value of Rs. 5,02,285/- with the DCDRC. The DCDRC awarded the Appellant 75% of the insured value, amounting to Rs. 3,76,713/-.
• Both parties appealed to the SCDRC, which directed the Respondent/Insurer to pay the full IDV of Rs. 5,02,285/- with 9% interest. National Insurance Co. Ltd. filed a Revision Petition before the NCDRC, which reduced the payable amount to Rs. 53,543/-, citing Condition No. 4 of the policy. The Appellant appealed to the Supreme Court, challenging the National Commission’s decision.

 

DCDRC OBSERVATION:

The delay in intimation to the Insurer was justified, as the Appellant was occupied with taking his injured co-passenger to the hospital. The delay in reporting the incident to the Insurer could not be considered fatal to the insurance claim. The claim was genuine, as evidenced by prompt reporting to the Police on the day of the incident.

While the short-circuiting and resulting fire damage could have been mitigated had the vehicle not been left unattended, the circumstances justified the Appellant’s actions. The DCDRC concluded that the Appellant was entitled to a claim on a non-standard basis, directing the Insurer to release 75% of the insured value (Rs. 3,76,713/-).

 

SCDRC OBSERVATION:

The delay in reporting the incident to the Insurer was justified due to the Appellant’s urgent need to attend to the injured co-passenger. The claim was genuine and supported by evidence, including prompt reporting to the Police.

The Insurer’s reliance on the surveyor’s report was misplaced, as the report lacked evidence to substantiate the claim that the Appellant’s actions caused further damage to the vehicle.

The fire damage caused by the short circuit was directly related to the accident and could not be excluded under Condition No. 4 of the policy, given the circumstances.

The SCDRC allowed the Appellant’s Complaint in full, directing the Insurer to release the entire Insured Declared Value (IDV) of Rs. 5,02,285/- with 9% interest from the date of filing the Complaint until realization.

 

NCDRC OBSERVATION:

As both the District and State Commissions had accepted the justification provided by the Appellant. The NCDRC relied on Condition No. 4 of the insurance policy, which mandates that the insured must not leave the vehicle unattended without taking proper precautions to prevent further damage.

The commission classified the fire damage caused by the short circuit as “damage following the accident” and attributed it to the Appellant leaving the vehicle unattended. The NCDRC ruled that the insurance coverage did not extend to the fire damage and only the initial accident-related damage was payable. Based on these findings, the NCDRC reduced the insurance claim to Rs. 53,543/-, aligning with the damage solely attributed to the initial accident.

 

SUPREME COURT OBSERVATION:

The NCDRC exceeded its revisional jurisdiction by interfering with the concurrent findings of fact made by the District and State Commissions. The delay in intimation to the Insurer was justified due to the Appellant’s efforts to prioritize the injured co-passenger medical treatment.

Both the District and State Commissions had correctly determined that the claim was genuine, as evidenced by the prompt reporting of the incident to the police. The NCDRC improperly relied on Condition No. 4 of the insurance policy. The Supreme Court held that the Appellant’s actions, under the compelling circumstances of an emergency, were reasonable and did not violate the policy terms.

The Insurer failed to prove that leaving the vehicle unattended caused additional damage or that the Appellant had not taken reasonable precautions under the circumstances.

The Supreme Court found no miscarriage of justice in the decisions of the District and State Commissions and restored the State Commission’s Order. The court directed the Insurer to pay the full insured amount of Rs. 5,02,285/- with 9% interest from the date of the Complaint till realization.

 

CONCLUSION:

The Supreme Court set aside the NCDRC’s order and directed the Insurer to comply with the State Commission’s ruling. The State Commission’s decision to award the full insured amount of Rs. 5,02,285/- with 9% interest from the date of the consumer complaint was correct and restored.

 

Sakshi Raghuvanshi

Legal Associate

The Indian Lawyer

[i] As per Condition No.4, the vehicle could not have been left unattended by an insured and if further damage is done because the vehicle is unattended and proper precaution is not taken, then claim is beyond the insurance cover.