Om Prakash v. Reliance General Insurance

Citation: CIVIL APPEAL NO. 15611 OF 2017 

Bench: Mr. Justice R.K. Agrawal; Hon’ble Mr. Justice S. Abdul Nazeer

The Supreme Court held that the Insurance Company cannot reject a claim on Technical ground.

Facts

• The appellant in this case got his truck insured with the respondent. 
• The truck was stolen and the appellant filed for the claim,
• The claim was rejected by the insurance company on the ground that information was not provided immediately.
• On the non-payment of claim by the insurance company on the ground that information of theft was not given immediately, the appellant tried to approach all the three Commissions and his complaint was dismissed. 
• He then approached the Supreme Court. 

Issue 

      Whether the Insurance Company can reject the claim on technical grounds

Argument

• The respondent argued that the Insurance Policy clearly states that notice shall be given in writing to the company immediately upon the occurrence of any accidental loss or damage for a claim to be successful and hence the insured has to give all such information and assistance as the company may require.

Decision

The court while deciding the case held that the insurance companies should reject the claims only on valid grounds and not on technical grounds as the same can result in loss of faith in the insurance companies. Hence, it is concluded that Rejection of the claims on technical grounds in a mechanical manner will result in loss of confidence of policy-holders in the insurance industry. If the reason for delay in making a claim is satisfactorily explained, such a claim cannot be rejected on the Technical grounds. It is would not be fair and reasonable to reject genuine claims which had already been verified and found to be correct by the Investigator. 

The court further held that the Consumer Act is a beneficial legislation and should be given liberal interpretation. This laudable object should not be forgotten while considering the claims made under the Act.