Punjab State Commission: Insurers Cannot Repudiate Accident Claims Solely for Overloading
Pranav B Prem
The Punjab State Consumer Disputes Redressal Commission, Chandigarh, has held that an insurer cannot outright repudiate an accident claim merely on the ground of vehicle overloading. Instead, such claims must be settled on a non-standard basis at 75% of the admissible loss, in line with the Supreme Court’s ruling in Ashok Kumar v. New India Assurance Co. Ltd. The Bench of Justice Daya Chaudhary (President) and Ms. Simarjot Kaur (Member) partly allowed an appeal filed by truck owner Baldev Singh Bhatti against United India Insurance Company Limited, setting aside the order of the District Commission, Malerkotla, which had dismissed his complaint.
Background
The appellant owned a Tata Prima LX 3125 K8X4 BS-IV truck insured with the respondent insurer for an IDV of ₹35,00,000 under a comprehensive policy valid from 04.03.2020 to 03.03.2021, for which a premium of ₹61,984 was paid. On 02.10.2020, the truck met with an accident when a stray animal suddenly appeared on the road, causing it to collide with another truck. A police report was lodged, and both drivers compromised the matter. The claim was duly intimated to the insurer. However, by letter dated 16.04.2021, United India Insurance repudiated the claim, citing that the truck was overloaded by 21.9% at the time of accident, in breach of policy conditions.
Before the District Commission, the complainant argued that the truck was carrying only 300 CFT of goods as per a tax invoice dated 02.10.2020, which was within permissible limits. He sought a payout of ₹13,00,000 with compensation and costs. The insurer relied on another invoice showing 500 CFT of material, alleging that the complainant had fabricated documents and that violation of policy terms justified complete repudiation. The District Commission, by a 2:1 majority, dismissed the complaint, holding that the vehicle was overloaded, the complainant was not a “consumer,” and the matter required adjudication before another forum.
Submissions on Appeal
On appeal, counsel for the appellant relied on B.V. Nagaraju v. Oriental Insurance Co. Ltd. (AIR 1996 SC 2054) and National Insurance Co. Ltd. v. Swaran Singh ((2004) 3 SCC 297), arguing that overloading was not the cause of the accident, which occurred due to a stray animal, and that genuine claims cannot be defeated on technical breaches unrelated to the accident. The insurer, however, maintained that the claim was rightly rejected because of the load discrepancy and alleged forgery of documents.
Also Read: NCDRC Rules, 10% Forfeiture Of Earnest Money Reasonable In Default Of Payment Cases
Commission’s Findings
The Commission examined the pleadings, invoices, and the surveyor’s report which assessed the net loss at ₹5,15,000. Referring to the Supreme Court’s ruling in Ashok Kumar v. New India Assurance Co. Ltd. (Civil Appeal No. 4758 of 2023), it noted that insurance companies cannot repudiate claims entirely on the basis of overloading. Instead, they are bound to apply the established guidelines and pay 75% of the assessed claim on a non-standard basis. The Bench observed that even if overloading were accepted, the insurer was not justified in denying the entire claim. The District Commission had erred in dismissing the complaint outright. Allowing the appeal partly, the Commission directed United India Insurance to pay 75% of ₹5,15,000, as assessed by the surveyor, to the complainant. The order of the District Commission dated 13.06.2024 was set aside.
Appearance
For the appellant: Sh.Sparsh Chhibber, Advocate
For the respondent: Sh.Ravinder Arora, Advocate for Sh.Neeraj Khanna, Advocate
Cause Title: Baldev Singh Bhatti v. United India Insurance Company Limited
Case No: First Appeal No.667 of 2024
Coram: Hon’ble Mrs. Justice Daya Chaudhary, President, and Ms. Simarjot Kaur, Member
