The National Consumer Disputes Redressal Commission has ruled that when there is a doubt over the admissibility of an insurance claim, the benefit of the doubt should be given to the insured (Mavji Kanji Jungi vs Oriental Insurance Company).
The order was passed by member, Anup K Thakur while dealing with an insurance claim in relation to a vessel that sank on its way to Sharjah.
The owner of the vessel (complainant) had moved the NCDRC after the insurance claim was repudiated by the insurance company, Oriental Insurance (OP).
Relying on the report submitted by its investigator, the OP argued that it was a case of a poorly maintained vessel which suffered vibrations over a period and ultimately resulted in a breach in the hull.
OP’s claim was rebutted by the complainant on the ground that vessel, when it set sail, was seaworthy and was certified to be so by the authorities.
It was claimed that the vessel sank upon some unidentified object hitting it from below and causing a breach in the hull.
NCDRC was informed that the breach was so huge that despite the crew pumping water for over three hours, the ingress of water could not be controlled.
The first surveyor also supported the complainant’s case. Based on the enquiry of the owner, the master of the vessel, the navigator, Indian Coast Guard, the Customs Authority etc, the first surveyor opined that the incident of the sinking was an accident that “would have been caused” due to an unidentified object hitting the vessel from below.
This report was disregarded by the OP, which had appointed it on investigator.
As per OP’s investigator’s opinion, an unidentified object could not have been the cause of the accident. The investigator, relying upon cash invoices for maintenance, stated that vessel was poorly maintained.
In view of the arguments made by the parties and the reports before it, the NCDRC concluded that it did not agree with the opinion of the OP’s investigator.
“I am of the considered view that in the facts of the case, it is reasonable to say that nobody involved in the sailing of the vessel really knew as to what precisely the cause of the accident was… record reveals they preferred to simply state what they did know which was they did not know. This cannot be held against the complainants,” it said.
The NCRDC observed that the vessel had all the documents necessary for sailing and there was no reason to believe that it was not seaworthy at the time of sail.
It noted that a poorly maintained vessel could not had led the first surveyor to conclude that the vessel was in fit condition. The vessel would not have been permitted to sail by the relevant authorities, it added.
NCDRC stated that the payment of over Rs. 20,000 in cash could have been a violation a banking laws but did not mean that the vessel was not being maintained by the complainant.
NCDRC opined that while the OP indeed had the right to appoint a second investigator, it was mistaken in accepting the investigator’s report in toto and making it the basis for repudiation of the claim.
“Law is established that in a case where it is not clear whether there is doubt over the admissibility of a claim in terms of the insurance policy, benefit of doubt should go to the insured.“, it said.
Since the final letter of repudiation was received in June 2012, the NCDRC also held the complaint to be within the period of limitation.
Accordingly, a direction was passed by the NCDRC to OP to pay an amount of Rs. 1,75,00,000 with 6% interest.
In view of the interest on the insurance amount, the NCDRC stated that there could not be a separate award towards mental agony and loss of business.
It nonetheless awarded costs of Rs. 50,000 to the complainant.
Advocates Vipin Nair and Karthik Jayashankar appeared for the complainant.
Advocate Vishnu Mehra appeared for OP.