The NCDRC dismissed an appeal against New India Assurance Co., emphasizing policyholders' responsibility to protect insured property.

June 13, 2024

In a recent ruling, the New Delhi bench of the National Consumer Disputes Redressal
Commission, headed by Mr. Subhash Chandra (Presiding Member), dismissed an appeal against
New India Assurance Company. The dismissal was based on the appellant’s failure to fulfill their
obligation to take reasonable care in safeguarding the insured property against accidents, losses,
and damages. This highlights the significance of adhering to policy terms and exercising due
diligence in protecting insured assets.

BREIF FACTS

M/s Shah Vadilal Jethalal, operating as a distributor for TISCO, secured a ‘Burglary and House
Breaking Policy’ from New India Assurance Co. Ltd. The policy, effective from 14.11.2000 to
13.11.2001, aimed to safeguard the Complainant’s inventory, including Agro buckets, tools, and
other goods valued at Rs. 1,00,53,000/-. The premium for this coverage amounted to Rs.12,535/-. These insured items were housed in a godown situated within the steel yard complex
allotted by Steel Chambers.

On 08.09.2001, authorities intercepted a truck transporting burgled goods from the insured
Godown, prompting the registration of a First Information Report (FIR). The Insurance Company
was promptly informed, and a surveyor was appointed to assess the extent of the loss. Despite
the submission of a claim for the material’s loss valued at Rs. 89,29,703.65/-, the Insurance
Company opted to repudiate the claim.

Disheartened by the dismissal, the Complainant pursued justice by lodging a consumer
complaint with the State Consumer Disputes Redressal Commission, Maharashtra (“State
Commission”). However, the complaint was dismissed due to alleged non-disclosure of material
facts and failure to implement adequate security measures. Unwilling to accept defeat, the
Complainant escalated the matter by appealing to the National Consumer Disputes Redressal
Commission (“NCDRC”) against the State Commission’s ruling.

The Insurance Company argued that the Complainant breached the terms and conditions of the
insurance policy by neglecting to implement sufficient security measures, as mandated.
Specifically, the policy stipulated the necessity of a separate security arrangement for the
godown. Additionally, despite multiple notices, the Complainant allegedly withheld crucial
details from the surveyor, impeding a comprehensive assessment of the situation.

OBSERVATION OF NCDRC

Initially, the NCDRC highlighted that Condition No. 12 of the insurance policy emphasized the
importance of adhering to the terms and conditions for validating the Insurance Company’s
liability. Notably, Condition No. 3 obligated the Complainant to undertake ‘reasonable steps’ to
protect the insured property against loss or damage. Moreover, General Condition No. 4(c)
specifically required the Complainant to furnish the insurer with all pertinent information, aid,
and evidence concerning any claim.

Upon examination, the NCDRC noted the Complainant’s failure to meet its obligation of
exercising reasonable care to protect the insured property, as mandated by General Condition 3.
Specifically, the Complainant’s sole reliance on the security provided by the Association was
deemed insufficient. Additionally, the Complainant was required to furnish details to the
surveyor to facilitate the finalization of the claim, a responsibility it purportedly did not fulfill
adequately.

Concerning the appointment of a surveyor, the NCDRC emphasized that while the involvement
of a surveyor is vital for claim resolution, the Insurance Company holds the prerogative to accept
or dismiss the surveyor’s findings. However, such dismissal must be reasoned and not arbitrary.
Notably, the NCDRC acknowledged the Insurance Company’s provision of legitimate
justifications for appointing a second surveyor and rejecting the joint surveyor’s report. It
affirmed that if the rejection of the report were arbitrary, judicial or other remedial measures
could intervene to rectify the discrepancy.

Upon scrutinizing the evidence, the NCDRC concluded that the Complainant did not substantiate
the claim that the surveyor’s report was arbitrary or unreasonable. Additionally, the Complainant
neglected to rebut the Insurance Company’s argument regarding the extent of the burglary and
the value of the loss with evidence from audited stock records. The State Commission’s
determinations were grounded in the evidence before it, and the Complainant did not furnish
documentary evidence to challenge these findings.

As a result, the NCDRC determined that there were insufficient grounds to overturn the State
Commission’s decision. Therefore, the appeal was dismissed due to its lack of merit, with each
party instructed to bear its own costs.

Posted and reproduced in Public Interest by

Adv. Sulaiman Bhimani Legal Consultant

Expert in RERA & Consumer Matters, Co-operative Scty Matters,

Deem Conveyance, Family Matters, and Property Disputes.

Human and Civil Rights Campaigner

President Citizens Justice Forum https://citizensjusticeforum.in