Delay in intimation of occurrence of theft is not a valid ground to deny insurance claim, Supreme Court

The Supreme Court, in its judgment on Friday, has put to rest an earlier controversy of whether belated intimation of a stolen vehicle to the Insurance Company can be a justifiable ground for denying the insurance claim. Court held that denying a claim on the basis of delay in intimation would be unjust and unreasonable..The judgment was rendered by the Bench of Justices NV Ramana, R Subhash reddy, and BR Gavai after the question was referred to a larger Bench on account of conflicting judgments on the issue..While a two judge bench of the Supreme court in Om Prakash vs. Reliance general Insurance & Anr. had held that delay in informing the insurance company would not debar the claim of the insured, a e same strength took a different view in another case..The contention that delay in intimation would entitle the Insurance company to repudiate the claim was accepted by a Division Bench of the Apex Court in Oriental Insurance Co. Ltd. vs. Pravesh Chander Chadha. It was this conflict on the central issue that has now been put quitus to by the three-Judge Bench..In the instant case, the appellant got his tractor insured in June 2010 with the Respondent. This tractor was stolen in October 2010 and an FIR for the same was lodged on the very same day. The appellant submitted his claim with the insurance company 52 days after the date of occurrence of theft..Citing belated intimation, the Respondent Insurance Company rejected the insurance claim. Aggrieved by the decision of the insurance company, the appellant approached the District Consumer Disputes Redressal Forum at Jalandhar where the Commission allowed the complaint. The Insurance Company was directed to pay the declared insured value of the vehicle within one month..This order was challenged before the State consumer Disputes Redressal Commission of Punjab where it was dismissed. A Revision petition preferred by the Respondent before the National Consumer Disputes Commission was allowed in light of its earlier judgment in the case of New India Assurance Co. Ltd. vs. Trilochan Jane. Aggrieved, the Appellant approached the Supreme Court in Civil Appeal..The Respondents contended that since the Insurance Policy was a contract between the insurer and insured, the parties would be strictly bound by the terms and conditions which clearly laid down that “On occurrence of an accidental loss, the insured is required to immediately give a notice in writing to the company”..The Court held that the second part of the contract which dealt with theft or criminal act other than accident stipulated that in case of theft or criminal acts, the insured would inform the police immediately and cooperate with the insurance company..In light of the above, the Court held that the word “co-operate” will have to be construed in facts and circumstances..Usually, mere delay in informing the theft to the insurer, when the same was already informed to the law enforcement authorities, cannot amount to a breach of ‘duty to cooperate’ of the insuredSupreme Court.While concurring with Om Prakash, the Court went on to hold that denying a claim on the basis of delay in intimation to the insurer company would be taking a hyper technical view and would be unjust and unreasonable..The Court also observed that the Consumer Protection Act was a beneficial legislation aiming at securing the interest of the consumers and must be interpreted pragmatically. Allowing the appeal, the Supreme Court directed the respondent(s) to deposit the entire sum of Rs. 4,70,000/- along with interest at the rate of 12% per annum from the date of order of the District forum.[Read Judgment]