Pranav B Prem

The State Consumer Disputes Redressal Commission, Mumbai Bench, comprising Mukesh V. Sharma (Presiding Member) and Poonam V. Maharshi (Member), has held Royal Sundaram General Insurance Co. Ltd. liable for wrongful repudiation of a motor insurance claim, observing that the insurer failed to justify its refusal despite clear evidence that the vehicle was destroyed in an accidental fire and not due to any unlawful activity.

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Background

The complainant, Mr. Mahesh Dashrath Gaikwad, an elected Corporator of the Kalyan–Dombivli Municipal Corporation, owned a Mitsubishi Pajero Sport insured with Royal Sundaram General Insurance under a Private Car Package Policy (No. VPC0741805000100) valid from 13 May 2016 to 12 May 2017, with an Insured Declared Value (IDV) of ₹24,84,250. On 25 March 2017, while attending an annual general meeting of the Municipal Corporation at Savarkar Hall, a disturbance broke out among supporters, leading to police intervention. The complainant’s vehicle was among those detained by the police and was parked outside Bazar Peth Police Station, Kalyan (West).

In the early hours of 28 March 2017, at about 3:15 a.m., the vehicle caught fire after sparking from an overhead electric wire near a transformer pole. The fire brigade and police reports confirmed that the fire was caused by an electric short circuit, and there was no negligence or unlawful act by the complainant. Despite this, the insurer repudiated the claim on 31 July 2017, alleging that the vehicle was used for an “unlawful purpose” and therefore excluded under Clause 6 of the insurance policy. Aggrieved by the repudiation, the complainant approached the State Commission, seeking payment of the insured amount along with compensation and costs.

Defence by the Insurer

Royal Sundaram argued that the complainant was not a “consumer” under Section 2(1)(d) of the Consumer Protection Act, 1986, and that the claim was barred by policy exclusions. It contended that the vehicle was seized by police in connection with FIR No. 77/2017, registered under the IPC and Arms Act, and was therefore being used for unlawful purposes. Relying on the surveyor’s report, the insurer suggested that the vehicle “appeared to have been intentionally burnt by unknown persons.”

Findings of the Commission

The Commission framed three key issues:

1. Whether the complainant is a ‘consumer’ under the Act?
   The Bench held that the complainant was a consumer since the vehicle was insured for personal use and not for any commercial purpose. The insurer had failed to produce any evidence suggesting commercial activity.

2. Whether the complaint was within limitation?
   The Commission noted that the cause of action arose from the repudiation letter dated 31 July 2017, and the complaint was filed on 28 December 2017—within the two-year limitation period under Section 24-A of the Consumer Protection Act.

3. Whether the insurer was guilty of deficiency in service?
   Examining the police panchnama, fire brigade report, and independent witness statements, the Bench found that the fire was accidental and caused by sparking of an electric wire. It observed that no evidence was produced by the insurer to rebut these official findings, which carry a presumption of correctness. The Bench further noted that no affidavit from the surveyor was filed to substantiate his conclusion that the fire was intentional. It reiterated that surveyor reports are not binding, especially when contradicted by official records.

   Importantly, the Commission held that the insurer’s attempt to link the loss with the earlier FIR relating to the disturbance at Savarkar Hall was misplaced since the fire incident occurred three days later when the vehicle was under police custody. There was no nexus between the alleged unlawful assembly and the accidental fire. Concluding that the insurer’s repudiation was arbitrary, unjustified, and contrary to evidence, the Bench held Royal Sundaram liable for deficiency in service.

Order and Reliefs

Allowing the complaint partly, the Commission directed Royal Sundaram General Insurance to pay:

• The Insured Declared Value (IDV) of ₹24,84,250 with interest at 9% per annum from 31 July 2017 (date of repudiation) till realization;

• ₹2,00,000 as compensation for mental agony and harassment;

• ₹50,000 towards litigation costs.

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The insurer was further directed to comply within 60 days, failing which the decretal amount would carry enhanced interest at 12% per annum until realization.

Appearance

For the Complainant: Advocate Avinash More

For Opposite Party: Advocate Nikhil Mehta

Cause Title: Mahesh Dashrath Gaikwad V. Royal Sundaram General Insurance Co. Ltd

Case No: Consumer Complaint No. 18/2019

Coram: Mukesh V. Sharma (Presiding Member), Poonam V. Maharshi (Member)