Gurmel Singh vs. Branch Manager, National Insurance Co. Ltd.
Background
The appellant's insured truck was stolen, and he promptly reported it to the police and the insurance company. When he later tried to get a duplicate certified copy of the vehicle's registration certificate from the RTO (as the insurer demanded), the RTO refused because its records had been locked after the theft report. Despite the appellant supplying a photocopy of the registration certificate and other particulars provided by the RTO, the insurer refused to settle the claim, and the District, State and National Consumer Commissions all ruled against him.
Decision Breakdown
The Supreme Court held that the insurance company had become "too technical" and acted arbitrarily by insisting on a document (the original or duplicate certified registration certificate) that the appellant was genuinely unable to procure through no fault of his own. Since he had done everything reasonably possible, reporting the theft immediately and furnishing the photocopy and RTO-provided particulars, denying the claim on this technical ground amounted to a deficiency in service. It set aside all the lower forums' orders, allowed the original complaint, and directed the insurer to pay the full insured sum of Rs. 12 lakh with 7% interest from the date of the claim, plus Rs. 25,000 in litigation costs.
Lesson Learnt
Insurance companies cannot deny a genuine claim by hiding behind hyper-technical documentation requirements when the policyholder has done everything within their power to comply, especially when circumstances beyond their control (like an RTO's own record-locking practice) make full compliance impossible.