Skip to main content

Insurance policy not voidable for misrepresentation if insurer had means of finding truth

In Oriental Insurance Company vs Mahendra Construction, the respondent / complainant obtained an insurance policy from the appellant in respect of a hydraulic excavator machine. The said machine having been set on fire by Naxalites, a claim was preferred before the appellant. The claim was rejected as the vehicle was earlier insured with M/s New India Assurance Co. Ltd., prior to obtaining insurance from Oriental Insurance, after the gap of approx. eleven months since the expiry of previous policy.

The State Forum allowed the complain and awarded compensation. Appeal was filed before NCDRC against said order.

The NCDRC partly allowed the appeal and referring to various judgments including the judgement of the NCDRC in United India Insurance Co. Ltd. Vs. M/s Jindal Poly Buttons Ltd., held that as per Section 18 & 19 of the Contract Act, particularly the exception under Section 19, even if the insurance policy is obtained by misrepresentation or silence, the contract of insurance is not voidable if the insurer had the means of discovering the truth with ordinary diligence.  Since admittedly the previous insurance policy had been annexed to the proposal submitted by the complainant, the appellant, on exercise of due diligence, could easily have verified from New India Assurance Co. Ltd.  that the complainant had submitted a claim with it under the previous policy which it had taken from the said insurer. Therefore, considering the exception to the Section 19 of the Indian Contract Act, the appellant cannot deny the benefit of insurance to the complainant on account of the information with respect to the previous claim lodged by the complainant having not been disclosed in the proposal form.

However, following the decision rendered by the Larger Bench and considering the fact that the complainant / respondent did not expressly disclose the previous claim lodged with New India Assurance Co. Ltd.  while responding to Clause 25(g) of the proposal form, the complainant, should be paid on non-standard basis by deducting 25% of the amount otherwise payable to it under the contract of insurance.

Comments

Post a Comment

Most viewed this month

Michigan House Approves 'Right-to-Work' Bill

Amid raucous protests, the Republican-led Michigan House approved a contentious right-to-work bill on  Dec 11 limiting unions' strength in the state where the (Union for American Auto Workers)  UAW was born. The chamber passed a measure dealing with public-sector workers 58-51 as protesters shouted "shame on you" from the gallery and huge crowds of union backers massed in the state Capitol halls and on the grounds. Backers said a right-to-work law would bring more jobs to Michigan and give workers freedom. Critics said it would drive down wages and benefits. The right-to-work movement has been growing in the country since Wisconsin fought a similar battle with unions over two years ago. Michigan would become the 24th state to enact right-to-work provisions, and passage of the legislation would deal a stunning blow to the power of organized labor in the United States. Wisconsin Republicans in 2011 passed laws severely restricting the power of public s...
Post a Comment
Read more

Power to re-assess by AO and disclosure of material facts

In AVTEC Limited v. DCIT, the division of the Delhi High Court held that AO is bound to look at the litigation history of the assessee and cannot expect the assessee to inform him.  In the instant case, the Petitioner, engaged in the business of manufacturing and selling of automobiles, power trains and power shift transmissions along with their components, approached the High Court challenging the re-assessment order passed against them. For the year 2006-07, the Petitioner entered into a Business Transfer Agreement with Hindustan Motors Ltd, as per which, the Petitioner took over the business from HML.  While filing income tax return for the said year, the petitioner claimed the expenses incurred in respect of professional and legal charges for the purpose of taking over of the business from HML as capital expenses and claimed depreciation. Article referred: http://www.taxscan.in/assessing-officer-bound-look-litigation-history-assessee-delhi-hc-read-order/8087/
Post a Comment
Read more

The recovery of vehicles by the financier not an offence - SC

Special Leave Petition (Crl.) No. 8907  of 2009 Anup Sarmah (Petitioner) Vs Bhola Nath Sharma & Ors.(Respondents) The petitioner submitted that  respondents-financer had forcibly taken away the vehicle financed by them and  illegally deprived the petitioner from its lawful possession  and  thus,  committed  a crime. The complaint filed by the petitioner had been  entertained  by  the Judicial Magistrate (Ist Class), Gauhati (Assam) in Complaint Case  No.  608 of 2009, even directing the interim custody of the vehicle (Maruti  Zen)  be given to the petitioner vide order dated  17.3.2009.  The respondent on approaching the Guwahati High  Court against this order, the hon'ble court squashed the criminal  proceedings  pending   before  the  learned Magistrate. After hearing both sides, the Hon'ble Supreme Court decided on 30th...
7 comments
Read more