Friday, January 9, 2015

Insurer rightly rejected claim for damages as complainant didn’t intimate to it transfer of interest in property

Where complainant in terms of insurance policy failed to intimate insurer about transfer of interest of insured property in favour of bank, insurer was not guilty of unfair trade practice in rejecting complainant's claim for damages as a result of fire


a) The complainant-company obtained Standard Fire and Special Perils Policy (‘The Policy’) from the Insurer in respect of the plant, machinery and stocks.

b) The Policy provided for cessation of insurer's liability on failure of insured to intimate if property remained unoccupied or if interest of property passed from insured otherwise than by will or operation of law.

c) The complainant had taken loan from bank, but failed to repay the same and as a result of recovery proceedings its property was attached. While the property was lying sealed, a fire broke out resulting in damages and, accordingly, the complainant informed the insurer about the fire incident.

d) The Insurer rejected complainant’s claim for damages. The complainant filed petition under section 36B of the Monopolies And Restrictive Trade Practices Act, 1969 declaring that decision of insurer amounted to unfair trade practice.

The Competition Appellate Tribunal held as under:

1) As complainant had not informed insurer about sealing of property and that custody of property was with bank and not with insured, the complainant had violated general conditions of policy and, therefore, the insurer was not guilty of unfair trade practice and complainant was not entitled to any compensation or damages-- Anu Texchem Products (P.) Ltd. V. New India Assurance Co. Ltd. [2014] 52 463 (CAT)