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Bajaj Allianz General Insurance Co. Ltd. vs. Mukul Aggarwal & Ors.

Civil Appeal · 2023 INSC 1005Decided 20 Nov 2023
Civil Appeal No. 1544 of 2023
Abhay S. Oka · Rajesh Bindal · Pankaj Mithal

Background

The owner of a BMW car held both a standard motor insurance policy from Bajaj Allianz and a separate "BMW Secure" policy from BMW India promising a replacement car if damage exceeded 75% of the vehicle's declared value. After a 2012 accident left the car damaged beyond repair, the insurer repudiated the claim citing delay, inconsistencies between the claim form and police report, and alleged suppression of facts (blood stains found in the car), without properly recording its reasons. Consumer forums directed replacement of the car, leading to appeals by both the insurer and BMW.

Decision Breakdown

The Supreme Court held that the insurer's repudiation lacked properly recorded reasons and found both the insurer and BMW guilty of deficiency in service under the Consumer Protection Act. However, it held that the consumer forums' direction to physically replace the car was not sustainable because the owner had not proven the actual price of an equivalent new car on the relevant date, and since BMW, who had special knowledge of this fact, stayed silent, an adverse inference was drawn against it. In place of replacement, the Court ordered monetary compensation: the insurer to pay the assessed loss value (a total of about Rs. 25.83 lakh, already largely deposited, with 6% interest) and BMW to pay Rs. 7 lakh (already deposited) as a reasonable estimate under the BMW Secure policy, with interest from the date of the original complaint.

Lesson Learnt

Insurers must give clearly reasoned decisions when rejecting a claim, and consumer courts should ground remedies in what is actually proven: a "replace the product" order requires evidence of replacement cost, and where that evidence is missing, proportionate monetary compensation is the appropriate substitute.

Official source (sci.gov.in)View Judgment (PDF)

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