No disowning of claim by insurance company merely on delay in informing of vehicle theft: Supreme Court

The Supreme Court on Friday declared that the insurance company cannot repudiate the claim merely on the ground that there was a delay in intimating it about theft of a vehicle.

A bench of Justices Sanjiv Khanna and Bela M Trivedi set aside an order by the National Consumer Disputes Redressal Commission passed on a plea by the Oriental Insurance Company Ltd against the direction to pay the insured sum to Jaina Construction Company Limited with regard to theft of Tata Aiwa Truck.

The top court held that the order by the NCDRC was "erroneous".

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"When the complainant lodged the FIR immediately after the theft, and when the police after the investigation arrested the accused and also filed challan before the concerned Court, and when the claim of the insured was not found to be not genuine, the insurance company could not have repudiated the claim merely on the ground that there was a delay in intimating it about the theft," the bench said.

In the case, the insurance company disowned the liability on the claim, saying there was a breach of condition number one of the policy which mandated immediate notice to the insurer of the accidental loss or damage, and that the complainant had intimated about the theft after the lapse of more than five months.

The district consumer forum allowed the plea by the complainant of the insured amount with Rs 10,000 compensation and Rs 5,000 litigation expenses. The State Commission dismissed the appeal by the insurance company, forcing it to approach the NCDRC.

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