The Punjab State Consumer Disputes Redressal Commission has ordered United India Insurance Company to settle an insurance claim of over Rs 2.04 lakh filed by a Ludhiana manufacturer following a factory burglary, ruling that an insurer cannot automatically disown liability simply because a suspect was deputed by a third-party security contractor.
The state commission bench, comprising judicial member Harinderpal Singh Mahal and member Kiran Sibal, dismissed an appeal filed by the insurer against a November 3, 2023 decision of the Ludhiana District Consumer Commission. In its ruling delivered on September 2, the commission observed that insurance providers routinely present attractive prospects during policy issuance, only to raise sequential objections when the time comes to honour claims.
Commission Dismisses Insurer Objections Over Guard Involvement
The underlying dispute stemmed from the insurer’s refusal to honour the claim under a policy exclusion clause. The company argued that the burglary involved an individual assigned by a security agency to act as a substitute guard, contending that policy protections do not apply when individuals lawfully on the premises or connected to the business are implicated. The insurer further maintained that forcible entry was absent because keys were used to gain access, while also pointing to a one-day delay in lodging the police report and the omission of itemised stolen quantities in the initial complaint.
The state commission rejected these arguments, finding that the incident satisfied the criteria for forcible burglary. The bench determined that the substitute guard had physically overpowered on-duty security guard Nan Bahadur Singh and forcibly taken the keys before carrying out the theft.
Addressing procedural objections, the commission held that the single-day interval between the break-in and the formal registration of the First Information Report was immaterial under the circumstances, given that the police control room had been alerted and an investigation initiated.
Details Of The Break-In And Claim Dispute
The case originated from an incident on March 21, 2018, at the Ludhiana premises of M/s G K Traders, an enterprise manufacturing, marketing, and exporting bicycle and rickshaw components. The firm held an active insurance policy spanning January 1 to December 31, 2018, covering its trade stock and goods held in custody against burglary through forcible means.
According to the firm’s complaint, perpetrators entered the facility after subduing security personnel, stealing merchandise valued at Rs 2.04 lakh. Following an alert to the Ludhiana Police Control Room, an FIR was registered on March 23, 2018.
Although the insurer was notified and its designated surveyor assessed the physical loss at Rs 2.04 lakh in a report dated August 8, 2018, the insurer formally repudiated the claim on September 27, 2018. While the insurance company did not contest that the theft occurred on March 21, 2018, it sought exemption from liability by invoking the exclusion clause.
Terms Of Compensation And Financial Directions
Upholding the district commission’s original directive, the state commission ordered United India Insurance Company to pay the trader the assessed loss of Rs 2,04,290 alongside Rs 10,000 in compensation.
The insurer was directed to complete the payment within 30 days, failing which the awarded amount will incur annual interest at 8 per cent. The commission additionally instructed that the statutory deposit of Rs 1,08,800 submitted by the insurer during the appeal, along with any interest accrued on it, be released to the complainant within 45 days of the dispatch of certified copies of the order.
