The National Consumer Disputes Redressal Commission, led by Justice Ram Surat Maurya and Mr. Bharatkumar Pandya, ruled that insurers cannot unilaterally alter policy coverage during renewal without the complainant’s consent.
Case Summary
Aaditya International, a partnership firm involved in fabric dyeing and printing, had two insurance policies with New India Assurance: one for stock and fixtures and another for plant, machinery, and goods. A fire caused by an electric short circuit destroyed their premises, including machinery, stock, and items held in trust. The complainant sought Rs. 75,61,748 for damages. Despite reluctantly accepting a salvage value of Rs. 65,000, the insurer paid only Rs. 16,59,635 for the plant and machinery, leaving Rs. 15,21,825 unpaid. Additionally, the insurer denied coverage for stock held in trust due to an oversight in the policy renewal, resulting in a loss of Rs. 41,12,113. After failing to resolve the issue directly, the complainant filed a complaint with the State Commission of Haryana, which ruled in favor of the insurer, finding no deficiency in service. The complainant then appealed to the National Commission.
Opposite Party’s Contentions
The insurer argued that the renewed policy did not cover stock held in trust, thus excluding related losses from the claim. They had paid Rs. 16,59,635 of the remaining claim amount and contended that there was no service deficiency, seeking dismissal of the complaint.
National Commission’s Observations
The National Commission focused on whether the complainant was entitled to compensation for the loss of stock held in trust. The complainant argued that the renewed policy should have retained coverage for stock held in trust, as it was covered under the previous policy. The insurer claimed the settlement was in line with the policy terms and that the court could not modify these terms. However, the Commission noted that insurers cannot unilaterally change policy terms at renewal without the complainant’s consent. This principle has been affirmed by the Supreme Court in cases such as United India Insurance Company Limited vs. Manubhai Dharmasinhbhai Gajera and Jacob Punnen vs. United India Insurance Company Limited. Consequently, the National Commission allowed the appeal, overturned the State Commission’s dismissal, and ordered the insurer to pay Rs. 30,93,021 as assessed by the surveyor, with interest at 9% from the date the claim was approved.
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
YouTube Channel https://tinyurl.com/CitizensJusticeForum
NEW CHANNEL FOR STOCK MARKET https://tinyurl.com/GreenWa