Mumbai State Commission Holds Royal Sundaram General Insurance Liable For Wrongful Repudiation Of Claim

Brief facts:

The complainant is a registered owner of a Mitsubishi Pajero Sport vehicle ('vehicle') which was insured with Royal Sundaram General Insurance Co. Ltd. ('insurer') under a policy valid from 13.05.2016 to 12.05.2017 with Insured Declared Value of Rs. 24,84,250/-. It was submitted that full premium was paid and the policy covered all risks in respect of the vehicle.

On 25/03/2017, during a municipal corporation meeting, a disturbance led the police to detain certain persons and vehicles, including the complainant's car, which was kept outside a police station and out of his custody thereafter.

On the intervening night of 28.03.2017, at about 03:15 am, the vehicle of the complainant caught fire due to an electric short circuit and sustained total damage. The police authorities and the fire brigade officials also confirmed that the fire occurred due to an electric short circuit and not due to the negligence of the complainant.

The insurer was informed about the damage and the necessary claim form was also lodged by the complainant. A surveyor was then appointed by the insurer. However, the claim was repudiated by the insurer on the ground that the vehicle was used for unlawful purpose on the date of incident. Hence, a complaint was filed by the complainant praying for appropriate compensation.

Submissions of the insurer:

It was submitted that the complainant is not a 'consumer' under the Consumer Protection Act, 1986 and that claim is hit by Clause No. 6 of the insurance policy as per which , any loss arising out of unlawful use or unlawful purpose is excluded from coverage. It was submitted that the vehicle was seized on account of various allegations under the IPC and the Arms Act and was parked outside the police station when the fire accident occurred. Thus, the damage was on account of unlawful assembly.

Observations of the commission:

Issue 1: Whether the complainant is 'consumer' under the Consumer Protection Act, 1986?

It was observed that the insurer has merely pleaded that the complainant is not a consumer without placing on record any evidence to show that the vehicle was purchased for commercial activity or commercial gain. It was further observed that the complainant being a corporator used the vehicle for his daily duties and no element of trade was involved. Thus, the complaint was held to be maintainable.

Issue 2: Whether the complaint is within the Limitation period?

It was observed that Section 24-A of the 1986 Act provides for a limitation of 2 years for filing a complaint from the date of cause of action. It was further observed that the cause of action in the present case arose on 31.07.2017 and the complaint was lodged within five months thus making the complaint within the limitation period. Hence, the complaint was held to be not barred by limitation.

Issue 3:

Whether there is deficiency of service by the insurer?

The bench examined the statement of independent witness, records of police authorities and the fire brigade department including panchnama dated 28.03.2017, accidental fire register entry, fire brigade report dated 01.04.2017 which demonstrated that the fire occurred due to sparking of overhead electric wire. It was observed that no contrary evidence has been produced to rebut the findings of the authorities which carry a presumption of correctness unless rebutted.

It was further observed that no affidavit of the surveyor has been filed to affirm his conclusion that the vehicle was burnt intentionally. The commission relied on the settled position of law that official records override the surveyor's report which is not binding. It was observed that there is no nexus between the fire accident and any unlawful act in relation to FIR No. 77/2017.

Thus, the insurer was held liable for deficiency in service for failure to indemnify the complainant despite payment of full premium and the loss being squarely covered under the policy.

Hence, the complaint was allowed with the following reliefs:

1. Payment of Insured Declared Value (IDV) of Rs. 24,84,250/-
2. Rs. 2,00,000 as compensation for mental agony
3. Rs. 50,000 as litigation costs

Case Title: Mahesh Dashrath Gaikwad vs Royal Sundaram General Insurance Co. Ltd

Case Number: Consumer Complaint No. 18/2019

Date of Decision: 16.09.2025

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