Mumbai, Jan 02: The Bombay High Court has held that an insurance company cannot deny coverage or penalise a consumer for its own negligence in handling a premium cheque.
Dismissing a petition filed by New India Assurance Co Ltd, the court underscored that operational lapses by insurers cannot be exploited to repudiate genuine claims arising from natural disasters, such as the 2005 Mumbai deluge.
Challenge to consumer forum orders dismissed
Justice Somasekhar Sunderesan recently dismissed New India’s petition challenging orders passed by the State Consumer Disputes Redressal Commission in 2016 and the National Consumer Disputes Redressal Commission (NCDRC) in 2024, which had directed the insurer to honour a flood damage claim arising from the July 26 deluge.
Policy renewal and flood damage
The dispute concerned a Standard Fire and Special Perils Policy issued by New India to Gayatridham Phase Co-operative Housing Society, Titwala. The policy, originally valid from July 25, 2004, to July 24, 2005, was renewed after the society paid the renewal premium by cheque on July 17, 2005. New India issued the renewed policy on July 22, 2005, effective from July 25, 2005.
Just a day later, on July 26, 2005, torrential rains battered Mumbai and its surrounding areas, causing extensive damage to the society’s property. A claim was filed on August 7, 2005.
Cheque dishonour claim questioned
New India subsequently claimed that the premium cheque had been dishonoured due to insufficient funds and asserted that the policy had been cancelled on August 4, 2005.
However, the Thane District Central Co-operative Bank, on which the cheque was drawn, confirmed that the society had sufficient funds and clarified that the cheque was not processed due to an infrastructure breakdown during the floods. Importantly, New India had deposited the cheque only on July 30, 2005, after the renewed policy had taken effect.
Court finds repudiation claim unreliable
The High Court noted that despite claiming cancellation, New India continued to process the claim and even followed up with its surveyor months later.
“All of this leads to a reasonable preponderance of probability that New India’s claim of repudiation having taken place on August 4, 2005, does not inspire confidence,” the court observed.
Limitation plea rejected
Rejecting New India’s limitation argument, the court held it was “wholly unfair and inappropriate” to raise such a plea at a belated stage, particularly when the insurer had neither appealed against the State Commission’s order nor raised the issue before the NCDRC.
Deficiency in service established
“If an insurer’s manner of handling the premium cheque is negligent, it would be self-serving for the insurer to seek to exploit the same to repudiate the claim,” Justice Sunderesan said, holding New India guilty of deficiency in service.
Also Watch:
Compensation upheld
Upholding the NCDRC’s direction to pay Rs 34.78 lakh as compensation, the High Court reiterated that the Consumer Protection Act exists to shield consumers from such conduct. The petition was dismissed with costs of Rs 25,000 payable to the society.
To get details on exclusive and budget-friendly property deals in Mumbai & surrounding regions, do visit: https://budgetproperties.in/
