Delhi HC Stays NCDRC Order Directing ICICI Lombard To Pay Hefty Compensation

The Delhi High Court bench comprising Justice Tushar Rao Gadela stayed the orders of the national and state consumer forum directing ICICI Lombard to pay Rs.75,00,000 with an interest of 6% p.a. from the date of repudiation of the claim to the wife of the insured. The bench was hearing a plea filed by the insurance company against the said orders.

Facts of the case:

The complainant/ respondent is the wife and legal heir of the late Dharambir Saini and the petitioner herein is a general insurance company. The husband took a loan from the ICICI Bank against a property which amounted to rs.75,00,000/-. The husband was insisted to take an insurance policy by the bank in order to secure the loan taken. The insurance policy assured that in case something wrong happens to the husband, the insurance company would be liable to pay the loan amount.

In 2015 the husband expired in the hospital due to a septic shock but the insurance claim filed by the complainant was repudiated on the grounds that it did not fall under the terms and conditions of the said policy. The bank did not do anything about it when the complainant informed them about the same and hence the complainant reached the Delhi state consumer forum.

Decision of the Delhi State Consumer Forum:

The Delhi State Consumer Forum partly allowed the complaint and directed ICICI Lombard General Insurance Company Ltd. to pay Rs.75,00,000 with an interest of 6% p.a. from the date of repudiation of the claim. The commission further directed to pay Rs.3,00,000 towards mental agony and Rs.50,000 towards the cost of litigation and if the amount was not paid by 16.11.2021, an interest of 9% was directed to be imposed from the date of repudiation of claim.

Aggrieved by the order the insurance company approached the National Consumer Commission.

Decision of the National Consumer Dispute Redressal Commission:

The national commission observed that the order of the Delhi state forum to pay the insured a sum of Rs.75,00,000/- with interest was completely justified. But the bench further noted that the direction to pay Rs.3,00,000 towards mental agony was not warranted as the compensation with interest has already been granted can cannot be given under multiple heads.

Proceedings before the Delhi High Court:

Aggrieved by the decision of the national commission, the insurance company reached the Delhi High Court. It was submitted on behalf of the insurance company that the directions passed by the state and national forums are beyond the concerned insurance policy. It was also submitted that there was a material concealment in the medical status of the husband and further put forth that the commissions ignored one of the covenants of the policy whereby the insurance coverage given under such policies decreases on pro- rata basis.

In the light of the aforementioned the Delhi HC issued notice to the respondent and a period of 6 weeks was given to file replies. More importantly the high court stayed the orders of the state and national commission.

CASE: ICICI LOMBARD GENERAL INSURANCE CO. LTD V. NEEMA SAINI