It was on May 31, 1995, that Narayan Singh bought a Maruti car from the original owner. Unfortunately, within just five days of its purchase, the car met with an accident. The original owner from whom he had purchased the car had insured it for Rs 1,40,00, which was valid till August 2, 1995. However, the insurance company refused to indemnify the loss on the ground that the insurance policy had not been transferred to the new owner.
In order to decide the case, the National Consumer Disputes Redressal Commission referred to two important documents. One was the India Motor Tariff Regulation, along with the circular issued by the General Insurance Company in 1994 with regard to the transfer of the vehicles and the transfer of insurance benefits automatically in favour of the transferee.
The other document was the judgement of the Chattisgarh State Commission in the case of Ajimuddin vs The New India Assurance Company Ltd wherein the commission had said: “… It appears that the Tariff Advisory Committee issued a circular regarding automatic transfer of the policy to the new owner/purchaser of the vehicle. In the said circular, it is stated that for policies issued as per the revised motor tariff, own damage claim which falls within the purview of GR 10, provisions may be settled in full, subject to the other terms and conditions of the policy.”
On the basis of these facts, the apex consumer court said the insurance company ought not to have rejected the claim on the ground that the vehicle was not transferred in favour of the complainant. Even otherwise, under Section 157 of the Motor Vehicle Act, a transfer application is to be made within a period of 14 days and those 14 days were not yet over in the present case. The commission said: Hence in our view, it is highly improper and unjustified on the part of the insurance company to reject the claim of the vehicle owner.
Warning insurance companies against taking a stand that was contrary to the regulations framed under the India Motor Tariff and also the Insurance Regulatory and Development Authority, the apex consumer court said they would have to face serious consequences for such violations. And in this case, the commission directed the company to pay a punitive damage of Rs 1 lakh, in addition to paying the consumer, Rs 1,40,000, along with interest at the rate of 12 per cent per anum calculated six months from the date of the accident. The commission said: We hope that in future, the insurance company would be fair and not exploit the ignorance of consumers while dealing with their claims (Sri Narayan Singh vs New India Assurance Company, RP No 556 of 2002).
