Man paid premium a day before his Bolero was stolen, but insurer rejected claim citing policy issuance date; consumer court orders full Rs 3.5 lakh insurance payout, 9% interest and Rs 25,000 compensation

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NEW DELHI: A district consumer commission in Punjab has directed an insurance company to pay Rs 3.5 lakh to a man whose Mahindra Bolero pickup was stolen. It held that the insurer could not reject the claim on the ground that the policy was issued after the theft, since the premium had been paid a day earlier through the financier.

Case background

As per the commission order, Jatinder Kumar, the complainant, owned a Mahindra Bolero pickup, financed through Cholamandalam Investment and Finance Company. He insured it with Cholamandalam MS General Insurance Company for September 8, 2021, to September 7, 2022, paying a premium of Rs 21,103. The insured declared value (IDV) was Rs 3.5 lakh.The vehicle was stolen from outside his house on the intervening night of September 7 and 8, 2021.

An FIR was registered at Sadar police station, Hoshiarpur, on September 8. The police could not trace the vehicle, and later the court also accepted their untraced report.Kumar then lodged a claim with the insurer. He alleged that he was informed orally that the claim had been rejected because he reported the theft 21 days late, but he received no formal letter of the same.However, the insurer’s written repudiation, dated February 17, 2022, told a different story. It alleged “deliberate and wilful misrepresentation” about the date of theft and the cause of loss, though the commission would later find no evidence of any such misrepresentation.Kumar approached the commission, alleging deficiency in service and unfair trade practice. He named the finance company only as a necessary party and sought no relief against it.In its written statement before the commission, the insurer argued that the vehicle was not insured at the time of theft. It said the theft occurred around 2 am on September 8, 2021, while the policy period began at 1.58pm that day.

Commission’s findings

The bench of president Naveen Puri and member Harvimal Dogra found that the insurer had led no evidence of any misrepresentation, and that the FIR was registered on the day of the theft. It set aside the repudiation letter.It also held that the “policy issued after theft” argument was not in the repudiation letter. Citing the Supreme Court’s rulings in Saurashtra Chemicals v. National Insurance Co. and JSK Industries v. Oriental Insurance Co., it said an insurer cannot go beyond the grounds stated in its repudiation.Anil Kumar Patial, branch manager of the finance company, testified that the comp;lainant completed formalities on September 6, 2021, and the vehicle was physically inspected on September 7. He added that the premium was collected in cash that day and the policy was punched with the insurer. The finance company’s file, produced as evidence, carried photographs and time-stamped inspection records.“Thus, after perusing the evidence of Anil Kumar Patial and the copy of the complete file Ex. CX, it becomes crystal clear that the insurance premium was paid by the complainant prior to the theft only,” the bench said.The commission noted that the finance company was named as an “intermediary” on the policy and that the two companies are sister concerns. It held the next-day issuance resulted from dealings between them and that the insurer led no evidence that the premium was received after the theft.It relied on the Supreme Court’s 2024 ruling in National Insurance Co. v. Maya Devi, which held that an insurer cannot escape liability once the premium is paid before the incident. It rejected the insurer’s reliance on Reliance Life Insurance v. Jaya Wadhwani, saying that case involved a life policy and a cheque premium not yet realised, whereas Kumar paid in cash.

Final order

Announced on October 28, 2026, the order partly allowed the complaint. The commission directed the insurer to pay:

Payment must be made within 45 days, failing which an additional 2 percent penal interest per annum from February 17, 2022, will apply over and above the 9 percent.