Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): Justice V.K. Jain (Presiding Member) dismissed an appeal filed by a jeweller, assailing repudiation of his claim for insurance.

The complainant/appellant obtained a Jewellers Block Policy from the respondent company for Rs 48 lakhs. During the period of the policy, some burglars entered their jewellery shop and took away ornaments kept in a safe. Respondent was intimated and a surveyor was appointed to visit the site and assess the loss. Surveyor submitted a report recommending repudiation of the claim on the ground that there was no sign of breaking the safe or its locks. Aggrieved appellant approached the State Commission by way of a consumer complaint. State Commission dismissed the complaint on the ground that the insured had failed to take all reasonable steps for safety of the property.

NCDRC noted an exception clause in the policy which stated that if it is established that the safe had been opened by the intruders, using either the original or a duplicate key of the safe belonging to the complainant, the loss would not be covered unless it is shown that the key, or duplicate key, as the case may be, had been obtained by threat or by violence. In the present case, the alleged use of key belonging to the insured was based upon the fact that one key of the safe was found in a glass showcase underneath a weighing scale. It was opined that in the normal course of human conduct, burglars would either take away the key or just throw it somewhere in the shop, instead of making efforts of keeping it under a weighing scale inside the glass showcase.

The Commission further noted that it was a condition of the policy that the premises where the jewellery was kept were to be protected by employing a watchman. But the said condition had not been met by the appellant.  Lastly, the appellant was not maintaining proper books of accounts and had failed to prove the actual loss suffered by him.

For the aforesaid reasons, it was held that the order of State Commission, dismissing the complaint filed by the appellant, did not call for any interference by this Commission.[S.B. Jewellers v. United India Insurance Co. Ltd., First Appeal No. 154 of 2013, Order dated 04-04-2019]

Case BriefsHigh Courts

Kerala High Court: A Full bench comprising of V. Chitambaresh, P.B. Suresh Kumar and Sathish Ninan, JJ. while answering a reference ruled that the burden to prove non-receipt of insurer’s letter of cancellation of insurance lies on the insured.

The liability of an insurer to indemnify third parties subsists unless the insurance coverage is cancelled by him (for reason such as dishonour of cheque given by insured towards premium) and intimation of cancellation has reached the insured and the registering authority.

The sole question referred to the Full Bench for determination was as to on whom does the burden lie to prove that the insurer has intimated about cancellation of insurance. Is it sufficient if it is proved that the insurer has sent intimation about cancellation of insurance coverage to the insured and the registering authority; or is it necessary to prove that the addressees have received the same?

The Court remarked that the fundamental difference between speed post and registered post was that while the former was address specific and time bound, the latter was addressee specific. Thus, the surest way to prove that intimation about cancellation of insurance had been sent by the insurer was to dispatch it by registered post with or without postal acknowledgment. Since Section 27 of the General Clauses Act, 1897 raises a presumption in favour of the sender for a properly addressed and prepaid post, therefore production of the receipt evidencing dispatch by registered post raises a presumption in favour of the insurer that the intimation has been sent to the addressee for secured delivery.

In view of the above, the reference was answered holding that the burden to rebut the presumption in favour of insured by conclusive evidence lay on the addressee. It was for the addressee/ insured to prove that he did not receive insured’s letter of cancellation and that the same was not a case of deliberate avoidance.[Prasanna B. v. Kabeer P.K.,2018 SCC OnLine Ker 4929, Order dated 31-10-2018]

Case BriefsHigh Courts

Chhattisgarh High Court: The petition filed by the National Insurance Co. seeking to evade its liability to indemnify the petitioner, was dismissed by a Single Judge Bench comprising of Sanjay Agrawal, J.

Undisputed facts of the case were that the claimant’s motorcycle was dashed vehemently by the jeep of the respondents which was being driven in a rash and negligent manner. The claimant claimed compensation under Section 166 of the Motor Vehicles Act 1988 subsequent to which the Claims Tribunal fastened liability upon the petitioner Insurance Co. Being aggrieved, the Insurance Company filed the instant petition.

The High Court noted that the main contention raised by the Insurance Company was that at the concerned time, the premium was not paid to the Company and the Development Officer who collected the premium amount was not authorized for the same. However, such contention was rejected by the Court. It was held that on a bare perusal of the record, it was evident that at the relevant time, the premium had already been collected by the petitioner by issuing a ‘Deposit Challan’ in its printed form. Therefore the Insurance Company could not run away from its liability to pay the assured. In accordance, the petition was dismissed. [National Insurance Co. Ltd. v. Jitendra Kumar Jain, 2018 SCC OnLine Chh 487, dated 24-4-2018]

Business NewsNews

The government is considering a nationwide single GST registration process for the aviation, banking and insurance sectors. A single registration will potentially solve a majority of the compliance problems that services companies have been complaining about. They now have to register themselves and file GST returns in every state or union territory (UT) they operate in. But the change will require the approval of the GST Council, the top decision-making body under the new tax system, where states are expected to oppose it fearing revenue loss as they have done when the proposal had come up before.

While goods-producing industries were used to making multiple state-wise returns for value-added tax under the previous regime, this is a new requirement for services companies, which complain it as a cumbersome process involving lot of paperwork and manpower. For instance, since most airlines have pan-India operations and sales offices, they have to make about 30 registrations. In each territory, they have to file two returns every month: GSTR1 on outward supply or sale and GSTR 3B, which is a summary of all transactions and credits. With two more being added — GSTR 2 on inward supply or purchase and GSTR 3on reconciliation or credits to be claimed from the government — the number of returns that an airline has to file is set to increase to 120 a month, or 1,440 a year.

There are other fears as well. Inter-company transactions in some sectors could attract transfer pricing issues. In such cases, the company will have to pay tax. There could be problems also over tax assessment due to reassignment of work within the tax authorities. The government has assigned GST assessing officers from a combined pool of officials who previously dealt with sales tax, excise or VAT. Some of them, especially those working in state governments, may not be familiar with the way services industries operate. Earlier, state officials dealt primarily with manufacturing companies, collecting VAT. The central government collected excise tax as well as services tax from industries like aviation and financial services. Service providers, which were previously assessed only at the central level, are also assessed by state officials under GST. A common registration system, with a centralized filing of returns, will significantly cut compliance costs and complexities, a key issue that almost all of corporate India has raised about the tax structure that combines several indirect taxes into one.

[Source: The Economic Times]

Case BriefsHigh Courts

Hyderabad High Court: The Single Bench partly allowed an insurance claim petition reducing the quantum of compensation granted to the respondents.

The claims related to the insurance in the case of a motor accident between an auto and a lorry resulting in the death of two individuals. The claimant was related to both the deceased as husband and father respectively. As to the question of negligence, the Additional District judge had passed the order that the auto driver had primarily caused the accident after which the liability shifted on to the lorry driver. This decision remains unchanged by the High Court.

The primary question being considered by the High Court was the quantum of compensation amount. The Court followed the guidelines set previously by the Supreme Court in a similar matter. It was stated that if the deceased is a bachelor then 50% of the income is to be deducted as living expenses and the remaining 50% is to be considered as expenses towards family. The father of the deceased or his siblings are not considered as dependants as the father is assumed to be earning and the sibling are either earning or dependent on the father. Only the mother is considered to be a dependant for the bachelor. In cases where the family is large and totally dependent on the income of the deceased, the widowed mother shall be a dependant along with the siblings who are not earning, the personal expenses of the bachelor is to be limited to 1/3rd of the total income and 2/3rd towards family expenses.

In this case the Court accepted this rule and reduced the quantum of compensation from Rs. 2,60,500 to Rs. 1,92,000. [The New India Assurance Company Limited v. Datla Verma,  2017 SCC OnLine Hyd 244, decided on 14.07.2017]

Case BriefsHigh Courts

Punjab and Haryana High Court: An appeal was filed by the Oriental Insurance Company challenging the order of the lower court which had allowed a patient’s family to claim insurance for the death of the patient who had denied taking treatment against medical advice. The patient had met with an accident and he was in a serious condition, said doctors. But he got himself discharged against medical advice and succumbed to his injuries on the day of his discharge itself.

The appellant argued that the insured was already a TB patient with cirrhosis of liver and it could not be predicted that the death was only on account of head injury suffered in the accident and not his pre-existing condition. The doctor testifying for the Insurance Company stated in court that the chances of the recovery couldn’t be ruled out if the patient had stayed on for treatment. The doctor however, not able to assess the prospect of recovery.

The Court examined that between the date of accident and death, there were no other intervening incident that could have affected the medical conditions except that the patient himself denied the treatment which perhaps was available. The cause for death could also be easily discerned from the fact that when he was readmitted, the diagnosis was that there were internal bleeding within the skull and when there was a reference about the general poor condition. Seen in the context of such diagnosis with no reference to the condition of cirrhosis of liver or the tuberculosis which the deceased was said to have already contacted the precipitating factor for the poor condition was only the head injury with internal bleeding within the skull in the brain area. A decision to get discharged even against medical advice at the terminal stage of life shall not be likened to an invitation to assisted suicide. It is embracing dignity in death.

Thus, the High Court dismissing the appeal, approved the payment of the claim. [Oriental Insurance Company Limited v. R.K. Dogra, 2016 SCC OnLine P&H 3397, decided on 18-05-2016]

Case BriefsSupreme Court

Supreme Court: The questions that came before the bench of H.L. Dattu, CJ and Arun Mishra, J were whether in the wake of lease agreement entered into by registered owner with Karnataka State Road Transport Corporation (KSRTC), the registered owner and insurer along with KSRTC can be fastened with the liability to make payment to the claimants and that whether KSRTC can recover the amount from registered owner and its entitlement to seek indemnification from insurer.

Taking note of the definition of the term ‘owner’ as defined under Section 2(30) of the Motor Vehicle Act, 1988, the Court said that under the MV Act, the owner means a registered owner and where the agreement on hire-purchase or an agreement of hypothecation has been entered into or lease agreement, the person in possession of the vehicle is treated as an owner. It was held that the KSRTC being in actual control of the vehicle would also be liable to make the compensation, however, it can recover the amount from the registered owner or insurer, as the case may be. Regarding the liability of the insurer, it was held that the insurer cannot escape the liability, when ownership changes due to the hypothecation agreement It was further held that In the case of hire also, it cannot escape the liability, even if the ownership changes. Even though, KSRTC is treated as owner under Section 2(30) of the MV Act, the registered owner continues to remain liable as per terms and conditions of lease agreement lawfully entered into with KSRTC.

The Court, after referring to many decisions of this court, held that registered owner, insurer as well as KSRTC would be liable to make the payment of compensation jointly and severally to the claimants and the KSRTC in terms of the lease agreement entered into with the registered owner would be entitled to recover the amount paid to the claimants from the owner as stipulated in the agreement or from the insurer.[ Managing Director, K.S.R.T.C. v. New India Assurance Co.Ltd.,2015 SCC OnLine SC 1044, decided on 27.10.2015]

Legislation UpdatesStatutes/Bills/Ordinances

The Insurance Laws (Amendment) Bill, 2015 was passed by the Parliament on 12.03.2015. Earlier, the Bill was passed by Lok Sabha on 04.03.2015. The objective of the Bill is to remove archaic and redundant provisions in the legislations and incorporate certain provisions to provide Insurance Regulatory and Development Authority of India (IRDAI) with the flexibility to discharge its functions more effectively and efficiently. The Bill provides as follows:

 

  • enhancement of the foreign investment cap in an Indian Insurance Company from 26% to an explicitly composite limit of 49% with the safeguard of Indian ownership and control.
  • enable capital raising through new and innovative instruments under the regulatory supervision of IRDAI, which would  lead to greater distribution reach to under / un-served areas in order to meet diverse insurance needs of citizens, efficient service delivery through improved distribution technology and enhanced customer service standards.
  • enable the interests of consumers to be better served through provisions like penalties on intermediaries / insurance companies for misconduct, practice of mis-selling, misrepresentation by agents / insurance companies etc.
  • easier process for payment to the nominee of the policy holder, as the insurer would be discharged of its legal liabilities once the payment is made to the nominee.
  • obligation on insurance companies to underwrite third party motor vehicle insurance as per IRDAI regulations.
  • IRDAI to regulate the eligibility, qualifications and other aspects of the appointments of insurance agents to insurers.
  • IRDAI to regulate key aspects of Insurance Company operations in areas like solvency, investments, expenses and commissions and to formulate regulations for payment of commission and control of management expenses.
  • empowers the Authority to regulate the functions, code of conduct etc., of surveyors and loss assessors.
  • expands the scope of insurance intermediaries to include insurance brokers, re- insurance brokers, insurance consultants, corporate agents, third party administrators, surveyors and loss assessors etc.
  • properties in India can now be insured with a foreign insurer with prior permission of IRDAI; which was earlier to be done with the approval of the Central Government.
  • enables foreign reinsurers to set up branches in India and defines ‘re-insurance’ to mean “the insurance of part of one insurer’s risk by another insurer who accepts the risk for a mutually acceptable premium”, and thereby excludes the possibility of 100% ceding of risk to a re-insurer.any insurer or insurance intermediary aggrieved by any order made by IRDAI may prefer an appeal to the Securities Appellate Tribunal (SAT).

-Ministry of Finance

Tribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): NCDRC has dismissed an appeal filed by a woman who failed to submit reasonable explanation for delay of more than three years in filing the said appeal. The case relates to the insurance claim of deceased husband of the appellant who had taken policy of Rs. 25 Lakh from Bajaj Allianz General Insurance Co. Ltd. The husband of appellant died due to the injuries received after slipping from stairs but the insurance company repudiated the insurance claim on the ground that death of insured was not on account of accident as there was no post-mortem report and no intimation to Police. The appellant approached NCDRC claiming the insurance amount after an inordinate delay of 1163 days and sought condonation of delay on the ground that she was residing in remote areas and was also having financial constraints. While rejecting the contention of the appellant, NCDRC referred to various judgments of the Supreme Court and held that as there is no sufficient cause or explanation for condonation of inordinate delay of 1163 days, it cannot be condoned. NCDRC further added that as application for condonation of delay has been dismissed, appeal being barred by limitation is also liable to be dismissed. (Bonda Kasi Annapurna v. Bajaj Allianz General Insurance Co. Ltd., First Appeal No. 160 of 2013, decided on May 29, 2014)

To read the full judgment, refer to SCCOnLine