Insurance Claim Cannot Be Repudiated On Frivolous Ground; Non-Payment Of Authorisation Fee Does Not Invalidate Valid Permit: SC
The Supreme Court directed the Insurance company to process the insurance claim along with an interest on it.
The Supreme Court, while setting aside NCDRC’s Order, has held that an insurance claim cannot be repudiated on a frivolous ground that in the absence of non-depositing of authorisation fee, a National Permit cannot be said to be a valid permit.
The Court allowed the Appeal against the Order passed by the National Consumer Disputes Redressal Commission (NCDRC) which held that the insurance claim cannot be allowed in the absence of any valid permit. The Bench held that the Appellant was not only entitled to the entire claim amount right from the date it became due but was also entitled to the interest on it from the date of the complaint made before the State Consumer Disputes Redressal Commission (State Commission).
A Bench of Justice BV Nagarathna and Justice Satish Chandra Sharma held, “The authorization fee was required to be paid only when the truck was moving out of State of Bihar as it was registered in the State of Bihar and the truck caught fire on account of short-circuit in the State of Bihar itself and, therefore, the respondent company could not have repudiated the claim on such a frivolous ground. The permit in question was issued by the competent authority in Bihar and, therefore, there was no requirement of paying authorization fee when the truck was being used in the State of Bihar and as per the terms and conditions of the National Permit, authorization fee was required to be paid only when the truck was moving out of State of Bihar.”
AOR Neeraj Shekhar represented the Appellant, while AOR Amit Kumar Singh appeared for the Respondent.
Brief Facts
The Appellant, the owner of the truck, had insured the vehicle with National Insurance Company (Respondent/Insurance Company). The truck caught fire due to a short circuit within the insured period.
The Appellant’s claim for insurance was initially upheld by the State Commission, which directed the Respondent to settle the claim on a non-standard basis. However, the National Commission set aside this decision, stating that the claim could not be allowed due to the absence of a valid permit at the time of the incident.
Court’s Reasoning
The Court held that the permit on record and the National Permit for the Appellant’s truck was valid. The Bench explained that the authorisation fee was required to be paid only when the truck was moving out of the State of Bihar as it was registered in the State of Bihar and the truck caught fire on account of short-circuit in the State of Bihar itself.
Consequently, the Court held, “Thus, in the considered opinion of this Court, the appellant was certainly entitled for the insurance claim as held by the State Commission and, therefore, the order passed by the National Commission, dated 19.08.2020, deserves to be set aside and is accordingly set aside. The respondent National Insurance Company is directed to process the claim of the appellant.”
The Bench also ordered, “Therefore, in the considered opinion of this Court, the appellant was not only entitled for the entire claim amount right from the date it became due but he is also entitled for interest from the date of the complaint made before State Commission till the date, the amount is actually paid to him.”
Accordingly, the Supreme Court allowed the Appeal.
Cause Title: Binod Kumar Singh v. National Insurance Company Ltd. (Neutral Citation: 2025 INSC 154)
Appearance:
Appellant: AOR Neeraj Shekhar; Advocates Rajesh Kumar Maurya, Kshama Sharma, Anand Krishna, Amrendra Singh, Ram Bachan Choudhary and Ujjwal Ashutosh
Respondent: AOR Amit Kumar Singh; Advocates K Enatoli Sema, Chubalemla Chang and Prang Newmai
