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Benefit of doubt to be given to the insured if there is uncertainty as to the admissibility of an insurance claim: NCDRC

Dated: December 30, 2020

                                                                                                                                                           - By Megha Bhatia

The National Consumer Disputes Redressal Commission(NCDRC) has held that if there is uncertainty as to the admissibility of an insurance claim, the insured should get benefit of doubt (Mavji Kanji Jungi vs Oriental Insurance Company). 

When dealing with an insurance claim in relation to a vessel that sunk on its way to Sharjah, this order was passed by the member, Anup K Thakur.

The NCDRC was approached by the owner of the vessel (complainant) after the insurance claim was rejected by the insurance firm, Oriental Insurance (OP). 

The OP argued that it was a case of a poorly maintained vessel that experienced vibrations over a period of time and eventually resulted in a breach in the hull, based on the report submitted by its investigator.

The plaintiff rebutted the OP’s assertion on the ground that the vessel was seaworthy when it set sail and was approved by the authorities to be so. 

It was believed that some unidentified object was struck by the vessel from below and created a break in the hull. 

NCDRC was told that the breach was so immense that the water inlet could not be managed despite the crew pumping water for over three hours.

The argument of the claimant was also supported by the first surveyor. On the basis of an investigation by the owner, the master of the vessel, the navigator, the Indian Coast Guard, the Customs Authority, etc., the first investigator was of the opinion that the sinking incident “would have been caused” by an unidentified object hitting the vessel from below. 

The OP, who had named its investigator, disregarded this report. “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 was the cause of the accident.. 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 noted that the vessel had all the paperwork required for sailing and that there was no reason to assume that, at the time of sailing, it was not seaworthy. 

It noted that the first surveyor could not have led a poorly maintained vessel to believe that the vessel was in good shape. The vessel would not have been approved by the competent authorities to sail, it added.

NCDRC claimed that the payment in cash of over Rs. 20,000 may have been a breach of banking laws, but it did not indicate that the claimant was not maintaining the vessel. 

NCDRC was of the opinion that while the OP was still entitled to name a second investigator, it was incorrect to accept the investigator's report in its entirety and make it the basis for the claim’s repudiation.

“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 repudiation letter was received in June 2012, the case was also considered by the NCDRC to be within the limitation period. 

A direction was then transferred by the NCDRC to OP to pay a sum of Rs. 1,75,00,000 with interest of 6 percent(6%). 

The NCDRC claimed that, in view of the interest on the insurance sum, there should not be a separate reward for emotional anguish and loss of business.

It nevertheless awarded costs to the claimant of Rs. 50,000. 

The plaintiff was represented by lawyers Vipin Nair and Karthik Jayashankar. For OP, Advocate Vishnu Mehra appeared.