Supreme Court directs insurance claim settlement despite missing registration certificate: Gurmel Singh vs. National Insurance Co. Ltd. (2022) INSC 500

Date of the Judgment: May 20, 2022

Citation: (2022) INSC 500

Judges: M.R. Shah, J., B.V. Nagarathna, J.

Can an insurance company refuse to settle a claim for a stolen vehicle simply because the vehicle’s original registration certificate is missing, even when the insured has taken all possible steps to obtain a duplicate? The Supreme Court of India recently addressed this critical question in a consumer dispute case, highlighting the need for insurance companies to act reasonably and not rely on technicalities to deny legitimate claims. The bench, comprising Justices M.R. Shah and B.V. Nagarathna, delivered the judgment, with Justice M.R. Shah authoring the opinion.

Case Background

The appellant, Gurmel Singh, owned a truck which was insured with the National Insurance Co. Ltd. The insurance policy was valid from August 22, 2012, to August 21, 2013. Mr. Singh had paid a premium of Rs. 28,880. The truck was stolen on the night of March 23-24, 2013. An FIR was immediately lodged at the Kumhari Police Station, and the insurance company and the Regional Transport Office (RTO) were informed about the theft on the same day. Mr. Singh submitted all required documents to the insurance company. However, the insurance company did not settle the claim, citing the non-submission of the original or duplicate registration certificate.

Initially, Mr. Singh filed a consumer complaint with the District Consumer Disputes Redressal Commission, which directed him to furnish a duplicate certified copy of the registration certificate. Despite his efforts, the RTO refused to issue a duplicate certificate, stating that the registration details were locked due to the theft report. Subsequently, Mr. Singh provided a photocopy of the registration certificate and registration particulars obtained from the RTO to the insurance company, but the claim was still not settled. He then filed a fresh consumer complaint, which was dismissed by the District Commission, a decision upheld by the State Commission and the National Consumer Disputes Redressal Commission.

Timeline

Course of Proceedings

The District Consumer Disputes Redressal Commission initially directed the appellant to furnish a duplicate certified copy of the registration certificate. When the RTO refused to issue the duplicate certificate, the appellant filed a fresh consumer complaint, which was dismissed by the District Commission. This decision was upheld by the State Commission and the National Consumer Disputes Redressal Commission. The National Commission also dismissed the complaint on the ground that the appellant had not filed the relevant documents for settlement of claim.

Legal Framework

The judgment primarily revolves around the interpretation of the terms and conditions of the insurance policy and whether the insurance company was justified in denying the claim based on the non-submission of the original or duplicate registration certificate. The court examined whether the insurance company’s actions constituted a deficiency in service under the Consumer Protection Act.

Arguments

Appellant’s Arguments:

• The appellant argued that he had fulfilled all necessary conditions by informing the insurance company and the RTO about the theft immediately.
• He submitted that he had paid the premium and the insurance policy was valid.
• He contended that he had taken all possible steps to obtain a duplicate registration certificate but was unable to do so due to the RTO locking the registration details following the theft report.
• The appellant submitted that he had provided a photocopy of the registration certificate and registration particulars as provided by the RTO.
• The appellant argued that the insurance company was being overly technical and that the non-submission of the original or duplicate registration certificate was due to circumstances beyond his control.

Respondent’s Arguments:

• The insurance company contended that the claim was not settled due to the non-submission of the original or duplicate certified copy of the registration certificate of the truck.
• The insurance company argued that the submission of the original registration certificate or a duplicate certified copy was a necessary condition for settling the claim.
• The insurance company did not provide any other specific arguments in the judgment.

[TABLE] of Submissions by Parties:

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame any issues. However, the core issue was whether the insurance company was justified in denying the claim based on the non-submission of the original or duplicate registration certificate, given the circumstances of the case.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The judgment does not cite any specific cases or legal provisions. The court’s reasoning is based on the principles of fairness and reasonableness in consumer law and insurance contracts.

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

There were no authorities cited by the court.

What weighed in the mind of the Court?

The Supreme Court emphasized that insurance companies should not be overly technical and should act reasonably when settling claims. The Court noted that the appellant had taken all possible steps to obtain the necessary documents, and the inability to produce the duplicate registration certificate was due to circumstances beyond his control. The Court highlighted that the insurance company must have had a copy of the certificate of registration at the time of issuing the policy, and therefore, denying the claim solely on this ground was not justified.

Sentiment Analysis of Reasons Given by the Supreme Court:

Fact:Law Ratio Table:

Logical Reasoning:

The Court noted that the insurance company was being too technical and should have considered the circumstances under which the appellant could not produce the duplicate certificate. The Court observed, “In many cases, it is found that the insurance companies are refusing the claim on flimsy grounds and/or technical grounds. While settling the claims, the insurance company should not be too technical and ask for the documents, which the insured is not in a position to produce due to circumstances beyond his control.” The Court also stated, “Once, there was a valid insurance on payment of huge sum by way of premium and the Truck was stolen, the insurance company ought not to have become too technical and ought not to have refused to settle the claim on non-submission of the duplicate certified copy of certificate of registration, which the appellant could not produce due to the circumstances beyond his control.” Furthermore, the Court emphasized that, “the insurance company has become too technical while settling the claim and has acted arbitrarily. The appellant has been asked to furnish the documents which were beyond the control of the appellant to procure and furnish.”

Key Takeaways

• Insurance companies should not deny claims on flimsy or technical grounds, especially when the insured has taken all reasonable steps to comply with the requirements.
• Insurance companies should act fairly and reasonably when settling claims and should not insist on documents that are impossible for the insured to produce due to circumstances beyond their control.
• The Consumer Protection Act aims to protect consumers from unfair practices by service providers, including insurance companies.

Directions

The Supreme Court set aside the orders of the District Consumer Disputes Redressal Commission, the State Commission, and the National Consumer Disputes Redressal Commission. The Court allowed the original complaint and directed the insurance company to pay the appellant the insurance amount of Rs. 12 lakhs, along with interest at 7% from the date of submitting the claim. The insurance company was also directed to pay litigation costs of Rs. 25,000 to the appellant within four weeks.

Development of Law

The ratio decidendi of this case is that an insurance company cannot deny a claim for a stolen vehicle solely on the ground that the insured could not produce the original or duplicate registration certificate, especially when the insured had taken all necessary steps to obtain it and the inability was due to circumstances beyond their control. This judgment reinforces the principle that insurance companies should not be overly technical and should act reasonably when settling claims, particularly in consumer disputes.

Conclusion

The Supreme Court’s judgment in Gurmel Singh vs. National Insurance Co. Ltd. emphasizes the principle that insurance companies must act reasonably and not deny legitimate claims on technicalities. The Court directed the insurance company to settle the claim, highlighting the importance of fairness and reasonableness in consumer disputes. The judgment serves as a reminder that insurance companies should not be overly technical and should consider the circumstances when an insured is unable to produce certain documents due to reasons beyond their control.