When there is a doubt over admissibility of insurance claim, benefit should be given to the insured: NCDRC

In the matter of Mavji Kanji Jungi & Another vs. Oriental Insurance Company the National Consumer Disputes Redressal Commission (NCDRC) passed an order while dealing with an insurance claim in relation to a shipping vessel that sank on its way to Sharjah. The subject matter for consideration was whether the vessel had been maintained as per the required standards and thereby to determine the amount of compensation to be awarded to the complainant.

The case of the complainant was such that, the vessel which was seaworthy and certified to be so by the authorities and had come from Dubai and upon obtaining all port clearances, sailed to Sharjah. However, it sank upon some unidentified object hitting it from below and causing a breach in the hull, resulting in huge ingress of water which, despite over three hours of pumping, could not be controlled, and ultimately caused the vessel to sink.

Additionally, the opposite party Insurer gave a conflicting view, arguing that it was a case of a poorly maintained vessel. To arrive at such a conclusion, the investigator of the Insurer relied upon cash invoices for maintenance.

Upon a perusal of the record, the Commission established that a poorly maintained vessel would not have led the surveyors to reach the opinion that the vessel was in fit condition, nor would the vessel have been permitted to sail by the relevant authorities on the fateful voyage.

Taking note of the submissions, NCRDC took a considered view that it was reasonable to say that nobody involved in the sailing of the vessel really knew as to what precisely was the cause of the accident. It further propounded that the law is established that in a case where it is not clear whether there is doubt over the admissibility of a claim in terms of the insurance policy, benefit of doubt should go to the insured. On the basis of this reasoning, it culminated the repudiation of claim by the insurance company to be incorrect.

In light of the above, it stated that the insurance company accepted the findings of the investigator in toto and proceeded to repudiate the claim by placing reliance on the fact that since the insured could only provide maintenance invoices towards maintenance expenditure some of which being in cash were found to be questionable, it therefore concluded the vessel to be poorly maintained. This inter alia shows that the conclusions arrived at were erroneous in nature.

Whilst dealing with the aspect regarding the rate at which interest should be awarded to the complainant, NCDRC took cognizance of the fact that since the complainant remained deprived of the vessel as well as any insurance amount, interest of 6% p.a. would meet the ends of justice in addition to the cost of Rs.50,000/-.