Not Business Of Insurance Company To See If Claimant Has Received Compensation From Any Other Source: J&K&L High Court
The Jammu and Kashmir High Court ruled that an insurance company cannot diminish the amount payable to an insured claimant simply because the claimant has received monetary assistance from the government for their losses.
In this case, the claimant had taken out an insurance policy with Oriental Insurance for his wine shop, which covered losses up to ₹22 lakh. In 2013, the shop suffered significant damage during riots and violence in Kishtwar, Jammu and Kashmir. As part of the government’s relief efforts, he was granted ₹3.5 lakh to help mitigate his losses.
After assessing the damage, which was estimated to total ₹29.24 lakh, he filed a claim with Oriental Insurance. The company's survey determined that the claim should be approximately ₹19.11 lakh. However, Oriental Insurance proposed to pay only ₹15.61 lakh, citing the ₹3.5 lakh government relief as a reason for the reduction.
Dissatisfied with this outcome, he appealed to the Jammu and Kashmir Consumer Disputes Redressal Commission, which ruled in his favor. The Commission ordered Oriental Insurance to pay the full assessed amount of ₹19.11 lakh along with litigation costs of ₹10,000.
Challenging this ruling, Oriental Insurance brought the matter before the High Court.
A Division Bench of Chief Justice Tashi Rabstan and Justice MA Chowdhary emphasized that it is not within the insurance company's purview to investigate whether the insured claimant has received compensation from other sources.
The Court said, “The Insurance Company is bound to pay the claim against the sum insured. It is not the business of Insurance Company to see whether the person suffering damages has been paid some sort of relief from other source or not."
Advocate DS Chouhan appeared for Appellant, while Advocate Rajesh Kumar appeared for Respondent.
The Court upheld the Consumer Commission's decision, stating that the actual damages incurred by the wine shop exceeded the insured amount of ₹22 lakh. Thus, the Court said that Oriental Insurance could not refuse to pay the full claim of ₹19.11 lakh simply because the government had provided ₹3.5 lakh in ex gratia relief.
The Court said, "It does not lie in the mouth of the Insurance Company to deny the claim to the insured up to the sum insured once it has taken the premium."
Consequently, the High Court dismissed the appeal from Oriental Insurance and reaffirmed the award given by the Jammu and Kashmir State Consumer Disputes Redressal Commission.
Cause Title: Oriental Insurance Company v. M/S Shalimar Wine Shop