JUSTICE V.K. JAIN, PRESIDING MEMBER

The petitioner before this Commission who is Assistant Commissioner in the Commercial Tax Department in Uttarakhand had taken a group insurance policy from respondent No.1 in respect of the dealers registered with the Commissioner of Tax, Uttarakhand. Under the said group insurance cover, in the event of death of a registered dealer in an accident, a sum of Rs.5 lakhs was payable to his family. Late Sh. Radhey Shyam, who was a registered dealer in the Commercial Tax Department of Uttarakhand at Rurkee died in a road accident on 26.10.2010. Vide letter dated 29.11.2010, the petitioner was informed of the death of Shri Radhey Shyam in a road accident and was requested that the insurance amount may be paid to his widow Smt. Rekha who is respondent No.2/complainant in this petition.

2.      As per the MOU executed between the petitioner and respondent No.1 on 18.11.2009, the claim was to be forwarded to the insurer within 30 days of the accident after it had been duly verified by the Joint Commissioner. On receipt of all the documents, the insurer in its option, could get the claim verified and make the payment. The case of the petitioner is that though the application dated 29.11.2010 was received by them, it was returned since it was not accompanied by the requisite documents. Another intimation of death was given to the petitioner on 18.6.2012. It was allegedly forwarded to the insurer on 19.6.2012. The claim, however, was rejected vide letter dated 6.7.2012 which, to the extent it is relevant, reads as under:-

“With reference to above subject your letter received to me on 5.7.2012 whereby you have sent documents relating to death of Late Radhey Shyam in accident. In this regard we went to inform you that death of Radhey Shyam happened on 26.10.2010 and the information of the same received to us after about 21 months. According to memo of understanding entered between you and our company in case of accidental death the information should have been received to us within 30 days whereas this information received to us after about 21 months in such situation according to conditions mentioned in MOU the claim is not payable. Copy of MOU is enclosed. This is also to inform you that the letter dated 20.5.2011 of the Commissioner Tax Uttarakhand received to us on 23.5.2011 wherein he had told name of 06 claimants, the name of late Radhey Shyam is not included in above list. The copy of letter is enclosed.”

3.      Being aggrieved from the rejection of the claim, the complainant approached the concerned District forum by way of a complaint impleading both the petitioner as well as the insurer as the opposite parties in the complaint.

4.      The complaint was resisted by the petitioner on the ground that the first intimation received by them was returned being unaccompanied by documents and the second application was forwarded by them to the insurer. The claim was resisted by the insurer primarily on the ground on which the claim had been repudiated. The District Forum vide its order dated 3.6.2015 allowed the complaint against both the petitioner as well as the insurer and directed both the opposite parties in the consumer complaint to pay Rs.5 lakhs to the complainant along with compensation quantified at Rs.10,000/-.

5.      The order passed by the District Forum was not challenged by the petitioner but was challenged by the insurer. Vide impugned order dated 20.7.2016, the State Commission allowed the appeal filed by the insurer and set aside the order of the District Forum to the extent it was directed against the insurer. However, the petitioner was directed to pay the amount awarded by the District Forum to the complainant. Being aggrieved from the order passed by the State Commission, the petitioner is before this Commission.       

6.      Vide Circular dated IRDA/HLTH/MISC.CIR/216/09/2011 dated 20.9.2011 Insurance Regulatory and Development Authority (IRDA) directed the insurer as under:

          “The Authority has been receiving several complaint that claims are being rejected on the ground of delayed submission of intimation and documents.

          The current contractual obligation imposing the condition that the claims shall be intimated to the insurer with prescribed documents within a specified number of days is necessary for insurers for effecting various post claim activities like investigation, loss assessment, provisioning, claim settlement etc.  However, this condition should not prevent settlement of genuine claims, particularly when there is delay in intimation or in submission of documents due to unavoidable circumstances.

          The insurers’ decision to reject a claim shall be based on sound logic and valid grounds.  It may be noted that such limitation clause does not work in isolation and is not absolute.  One needs to see the merits and good spirit of the clause, without compromising on bad claims.  Rejection of claims on purely technical grounds in a mechanical fashion will result in policy holders losing confidence in the insurance industry, giving rise to excessive litigation.

          Therefore, it is advised that all insurers needs to develop a sound mechanism of their own to handle such claims with utmost care and caution.  It is also advised that the insurers must not repudiate such claims unless and until the reasons of delay are specifically ascertained, recorded and the insurers should satisfy themselves that the delayed claims would have otherwise been rejected even if reported in time.”

7.      Vide Circular No. IRDA/NL/CIR/MISC/149/06/2017 dated 28.6.2017 IRDA advised the insurers to scrupulously comply with the aforesaid Circular dated 20.9.2011, which had been followed by a direction Under Section 34(1) of the Insurance Act, 1938, clarifying that the Circular was binding on the insurers.

8.      In Om Prakash Vs. Reliance General Insurance & Anr. (2017) 9 SCC 724, there was delay in lodging FIR as well as in intimating the theft of a vehicle to the insurer and the claim was repudiated on account of the said delay.  Allowing the claim, the Hon’ble Supreme Court inter-alia held as under:

          “10.   ……….It is true that the owner has to intimate the insurer immediately after the theft of the vehicle.  However, this condition should not bar settlement of genuine claims, particularly when the delay in intimation or submission of documents is due to unavoidable circumstances.  The decision of the insurer to reject the claim has to be based on valid grounds.  Rejection of the claims on purely 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 ground of delay.  It is also necessary to state here that it would not be fair and reasonable to reject genuine claim which had already been verified and found to be correct by the investigator.  The condition regarding the delay shall not be a shelter to repudiate the insurance claims which have been otherwise proved to be genuine.  It needs no emphasis that the Consumer Protection Act aims at providing better protection of the interest of consumers.  It is a beneficial legislation that deserves liberal construction. This laudable object should not be forgotten while considering the claims made under the Act.”

9.      In the present case, it is not in dispute that the deceased Radhey Shyam had died in a road accident on 26.10.2010.  Therefore, his family was entitled to the benefit of the Group Insurance Policy taken by the petitioner from respondent No.1.  The said benefit which was otherwise available under the insurance policy has been denied solely on account of delay in intimating the death to the insurer.  It is however, an admitted position that the intimation of the death was duly given to the petitioner, who represents the Commercial Tax Department of Government of Uttarakhand on 29.11.2010 itself.  Thus, there was hardly any delay in intimating the death of the deceased Radhey Shyam in a road accident.  It was for the petitioner to pass on the said information to the insurer after verifying the documents in terms of the Group Insurance Policy taken by the petitioner from the respondent No.1. 

10.    It has to be kept in mind that under the Scheme, the intimation of the death of the beneficiary was not to be given directly to the insurer but was to be given to the petitioner herein, who, in turn, was to verify the documents and transmit the intimation to the insurer.  Having intimated the death to the petitioner, the complainant had discharged the obligation placed upon her under the scheme in which her deceased husband was cover.  Therefore, the beneficiary of the scheme cannot be made to suffer on account of the delay on the party of the petitioner in transmitting the intimation to the insurer.

11.    Though, the case of the petitioner is that the intimation dated 29.11.2010 received vide Diary No.60390 dated 29.11.2010 was incomplete since it was not accompanied by required documents such as death certificate, FIR, Post-mortem report etc, there is no material on record to prove that the complainant was asked by the petitioner to submit the said documents in order to enable it to verify the same and forward the claim to the insurer in terms of the Group Insurance Policy taken by the petitioner.  It was required not only to verify the documents but also to assist the claimants in claim reporting and documentation.  Therefore, if the documents were required to be submitted with the application, the least the petitioner ought to have done to send a letter to the claimant asking her to submit the requisite documents.  Had that been done, the complainant / claimant would have been in a position to submit the required documents soon after receiving intimation from the petitioner and the claim may not even have been rejected by the insurer.  Therefore, lapse on the part of the petitioner in the matter, cannot be denied.

12.    The next question which arises for consideration is as to from whom the claimant should get the claim.   The primary responsibility to pay the benefit available under the Group Insurance Policy was of the insurer.  Had the intimation of the death been transmitted by the petitioner to the insurer soon after it was received, the claim in all probability would not have been dishonoured.  Therefore, though, the insurer remains primarily liable to pay the benefit available under the Group Insurance Policy, considering that there was delay on the part of the petitioner, it having not immediately transmitted the intimation to the insurer, having not assisted the complainant in terms of the insurance policy and having not asked her to submit the requisite documents, it should also share the burden of the claim payable to the complainant.

13.    Though, the contention of the learned counsel for the insurer was that the claim having been received much after expiry of thirty days from the date of accident, they are entitled altogether to repudiate the claim and liability if any, should be borne only by the petitioner, considering the Circular dated 28.6.2017 by IRDA.  I feel that the burden should be shared by both, the petitioner as well as the respondent No.1.  Since it is not in dispute that the deceased died in a road accident, 75% of the claim, in my view, should be paid by the insurer whereas the remaining 25% should be paid by the petitioner. This is so, because had the intimation received by the petitioner from the complainant on 29.11.2010, been forwarded to the insurer immediately after it was received, the claim was not likely to be rejected since the documents, such as FIR, death certificate etc., which were required for verification of the claim, could always have been sought and submitted at a later date.

 Since no interest on the claim amount has been awarded either by the District Forum or by the State Commission, the amount payable by the insurer is likely to be modest since it will also be saving interest for more than eight years, which it would otherwise have been liable to pay had there been no delay in intimating the death to the insurer.

14.    For the reasons stated hereinabove, the revision petition is disposed of in terms of the following directions:

(i)      75% of the claim amount, without any interest on that amount shall be paid by respondent No.1 and the balance 25% of the claim amount shall be paid by the petitioner to the complainant, without any interest, within six weeks from today;

(ii)      In case of default in compliance of this order, the awarded amount shall carry interest @ 9% per annum, from the date of this order.

(iii)     In the facts and circumstances of the case, the compensation of Rs.10,000/- awarded by the District Forum shall not be payable.