Consumer Law Update: January -April 2016

1. Burden of Proof of breach of Insurance Policy is on Insurer: In Lakshmi Chand vs. Reliance General Insurance [SLP (C) 37534-535 of 2013] the appellant was the owner of the TATA Motor goods carrying vehicle which was insured with the Respondent and met with an accident, which met with the accident due to rash and negligent act of the offending vehicle for which FIR was registered. The Respondent company appointed M/s Auto Risk Claim Manager for investigation on the basis of whose report that at the time of incident more number of passengers were on board the claim was denied and hence the complaint before the Forum. The District Forum on the basis of judgment in National Insurance Company Ltd. vs. Pravin Bhai D. Prajapati [IV 2010 CPJ 315 (NC)] held that if the number of persons travelling in the vehicle at the time of accident didn’t have bearing on the cause of accident then the mere factum of presence of more persons in the vehicle would have no bearing on the settlement of claim. Aggrieved by the order of the District Forum respondent preferred the appeal before State Commission who relied on Suraj Mal Ram Niwas Oil Mills P. Ltd. vs. United India Insurance Company Ltd. [(2010) 10 SCC 567] according to which the terms and conditions of the contract has to be strictly construed and no exception is to be made and hence the complaint was dismissed and National Commission also upheld the same. The apex court held that in view of the judgment of the court in National Insurance Company Ltd. vs. Swaran Singh [(2004) 3 SCC 297] that the “the insurance company is required to establish the said breech by cogent reasons” which was subsequently followed by judgment in Oriental Insurance Company Ltd. vs. Meena Variyal [(2007) 5 SCC 428] wherein it was held that “breech of the policy condition has to be proved to have been committed by the insured to avoid the liability of insurer”. Considering these judgments and B.V. Nagraju vs. Oriental Insurance Company Ltd. Divisional Officer, Hassan [(1996) 4 SCC 647] the court has held that for insurer to avoid liability breach of the policy must be so fundamental in nature that it brings the contract to end. In view of above, in the instant case the Hon’ble Court restored the judgment of district forum as the burden proof of breach of policy is on insurer, which has not been duly discharged despite the settled view of law.

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