Mumbai: Upholding the state commission's decision, the national consumer commission has ordered Reliance General Insurance Co. Ltd. to pay ₹68.60 lakhs with 12 per cent interest from 2008 to a shipping firm. Reliance General had appealed against the state's ruling, arguing that the shipping firm had withheld information when applying for an insurance policy for its vessel. Reliance had sought information about past accidents involving vessels owned by the firm.
The commission noted that the incident cited by Reliance to deny the claim did not qualify as an 'accident,' and that this fact had been concealed when the policy was taken. The commission classified the damage to the 'main engine turbocharger' as an 'incident,' differentiating it from an accident, which would require external force rather than normal wear and tear, which is typically covered by insurance policies. It further clarified that for the second instance, the incident occurred after the policy was already in effect. The national commission also upheld additional compensation for mental distress and litigation costs, totalling ₹1.25 lakh.
The order, dated July 31, was issued by Justice Ram Surat Ram Maurya, presiding member, and Justice Karuna Nand Bajyapee, member of the National Consumer Disputes Redressal Commission (NCDRC). It was made in response to an appeal by Mumbai-based Reliance General Insurance Co. Ltd. against Seven Islands Shipping Ltd. & another and Athena Insurance and Reinsurance Brokers P. Ltd.
Marine Hull Insurance Policy
Seven Islands, a cargo and tanker shipping company, had acquired an insurance policy from Reliance General through Athena. The policy, titled 'Marine Hull Insurance Policy,' covered all risks for its tanker vessel 'MT Crystal' from November 8, 2006, to November 7, 2007. The insurance coverage amounted to ₹14.78 crore, for which Seven paid ₹6.72 lakhs in premiums and stamp duty in four installments. During a journey to Kandla, Crystal's main engine bearing was damaged in September 2007 due to the presence of white metal inside the engine. Athena and Reliance were promptly informed.
Rejection reasons cited by Reliance
Reliance rejected Seven's claim in September 2007, citing that in the preceding two years, Seven had filed two insurance claims for 'M.T.Twinkle,' a sister vessel of the Seven Islands Shipping Limited fleet, with a different insurance firm. Reliance contended that accidents encompassed various incidents. Reliance even refunded the premium Seven had paid, which Seven later cashed. Seven Islands protested and served a legal notice to Reliance.
During the hearing, Reliance asserted that 'MT Twinkle' had been insured with IFFCO Tokio General Insurance Company Limited and had filed two insurance claims. Reliance argued that due to the nondisclosure of these claims, the policy for Crystal had become void and was thus repudiated.
However, the commission overturned the rejection of the Crystal claim, highlighting that the Crystal policy form had been completed in November 2006, while the IFFCO claims were submitted later. The commission concluded that the concealment of material facts was not substantiated, thereby upholding the state consumer commission's ruling that Reliance General should honor the claim payment.
