National Commission's Rejection Of Fire-Damage Claim Quashed; Insurer Directed To Pay With 9% Interest Within 60 Days

A bench of Justices B. V. Nagarathna and Satish Chandra Sharma heard an appeal against an order of the National Consumer Disputes Redressal Commission which had set aside a State Commission decision that had directed the insurer to settle a truck fire claim. The appeal questioned whether a national permit was valid on the date of the loss and whether non-payment of an authorization fee entitled the insurer to repudiate the claim.

The Court allowed the appeal, held that the National Permit was valid when the truck caught fire and found the insurer's repudiation on the ground of non-payment of authorization fee to be unsustainable. The Court directed the respondent National Insurance Company to process and pay the claim within 60 days and awarded interest at 9% per annum from the date of the complaint before the State Commission until payment. The Court, in its reasoning, observed: "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. 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 and to pay the amount to the appellant within a period of 60 days from today. It is needless to mention that the claim became due in the year 2014 and it was repudiated by the respondent National Insurance Company in the year 2014 itself... 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. The appellant shall be entitled to interest @ 9% per annum and the same with the proposed amount be paid positively within 60 days from today."

Background The appellant owned a TATA truck insured by the National Insurance Company for the period 18.09.2013 to 17.09.2014. The truck caught fire on 08.06.2014 within Bihar allegedly due to a short-circuit. The appellant filed a complaint before the State Consumer Commission, which, relying on this Court's decision in National Insurance Co. v. Nitin Khandelwal, directed non-standard settlement of the claim if other requirements were met. The insurer appealed to the National Commission, which allowed the appeal on the ground that the State Commission's reliance on the theft case did not apply to a fire loss and, following Amrit Paul Singh v. TATA AIG (2018), held that in the absence of a valid permit the claim could not be allowed.

Before this Court the appellant produced the National Permit which, he argued, was valid from 14.10.2012 to 13.10.2017 and contended that the authorization fee was payable only when the vehicle moved out of Bihar. The insurer contended that the authorization fee had not been deposited beyond 14.10.2013 and therefore the National Permit was not valid. The Supreme Court examined the permit and its terms, concluded that the authorization fee applied only to movements out of the State and that the truck was within Bihar when the loss occurred. The Court set aside the National Commission's order, restored the State Commission's decision, directed the insurer to pay the claim with interest at 9% per annum from the date of the complaint until payment, to be disbursed within 60 days, and made no order as to costs.

Case Details: Case No.: 2025 INSC 154 Case Title: Shri Binod Kumar Singh v. National Insurance Company Ltd. Appearances: For the Petitioner(s): Not indicated in the judgment For the Respondent(s): Not indicated in the judgment