Compensation for unfair rejection

Santosh Umakant Jawadkar had taken an Accident Guard Policy from Tata AIG by paying a premium of Rs 17,110. The policy, which was valid from February 27, 2004, to February 26, 2005, covered him for Rs 1 crore, his wife for Rs 50 lakh and his daughter Mansi for Rs 10 lakh.

On February 2, 2005, Jawadkar went to drop his daughter to her maternal aunt’s place. His wife Kalpana was at home, as she was 8 months pregnant. When he returned at night, he found smoke coming out of the kitchen window of his flat. Since Kalpana didn’t open the door, he informed the police and the fire brigade.

When the door was broken open, his wife was found dead on the kitchen floor with severe burn injuries. The police initially treated it as a case of accidental death. However, Kalpana’s brother lodged a complaint, and a criminal case was registered against Jawadkar, and he was immediately arrested. He was released on bail a month later.

Jawadkar lodged a claim with Tata AIG, but was unable to pursue it actively as he was busy defending the criminal case. The Session Judge at Nanded finally acquitted him, holding it to be a case of accidental death. Jawadkar then followed up with the insurer for the claim, but the company repudiated it on the ground of delay in giving intimation and late submission of documents. The company also alleged that the death was not an accident but a suicide.

Jawadkar filed a complaint before the Maharashtra State Commission, which was contested by the insurer. It defended the repudiation as that intimation of the claim was belatedly given after an inordinate delay of seven months. The company also pointed out that the sessions judge had observed that 100 per cent burns could have been caused due to suicide but had acquitted Jawadkar by granting him the benefit of the doubt.

The State Commission noted that the insurer had not adduced any evidence to prove that Kalpana had committed suicide. And there were valid reasons for the delay in notifying the claim. It held the insurer liable to pay Rs 55 lakh for Kalpana’s death and a further Rs 5 lakh towards educational benefit to the daughter. The amount had to be paid within 60 days, and if delayed, it would carry 6 per cent interest.

Both parties appealed against the decision. In its order dated May 22, 2019, delivered by M Shreesha for the Bench headed by Justice R K Agrawal, the National Commission observed that the reason for the delay had been satisfactorily explained. It pointed out that the Insurance Regulatory and Development Authority of India (IRDAI) has issued a circular directing insurers not to reject legitimate claims when a delay in intimation is due to legitimate reasons.

The National Commission held that the insurer had rightly been held liable to settle the claim. Jawadkar’s appeal was allowed, observing that when the claim has been wrongly repudiated, interest should be awarded from the date of repudiation. In addition, litigation costs of Rs 25,000 was given. It granted time of four weeks for compliance of the order. If payment was delayed, the entire amount would carry 9 per cent interest for the period of delay.

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