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Public sector insurance firms defeating govt's objectives

National Consumer Disputes Redressal Commission bench, presided by Justice V B Gupta, imposed the fine on New India Assurance Company Ltd which had entered into an MoU with the Haryana government relating to a scheme 'Devi Rakshak'.

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The apex consumer commission has imposed a punitive cost of Rs 10 lakh on a public sector insurance company for wrongly denying claims of several people, saying such firms "are always at their best in defeating noble objectives of any welfare scheme".

National Consumer Disputes Redressal Commission bench, presided by Justice V B Gupta, imposed the fine on New India Assurance Company Ltd which had entered into an MoU with the Haryana government relating to a scheme 'Devi Rakshak'.

The scheme insured economically weaker sections of the state to the tune of Rs 1 lakh following death or permanent disability of the bread-earner.

The NCDRC passed the order while setting aside an order of Haryana State Consumer Commission which had absolved the insurance company from paying money to the insured persons.

The state commission's order had come while setting aside a district consumer forum's order.

In its order, the apex commission noted that "in entire 'MoU', it is nowhere mentioned, that beneficiaries have to submit their claims within the period of 12 months."

"This plea of respondent company (firm) that claims were to be submitted within 12 months from the date of the accident is not sustainable at all, since no time limit has been prescribed in the 'MOU'," the apex commission said, while setting aside state commission's order.

"We must express our deep anguish at manner in which respondent (being a public sector undertaking) had been conducting this litigation.

It is our common experience, that public sector insurance companies try to defeat genuine claims of the insured, by raising frivolous and non-existence objections. They are always at their best, in defeating the noble objectives of any welfare scheme, which are introduced by the government," it said.

According to the plea, the only bread earner of family of petitioners died in accident/unnatural death, during subsistence of the insurance policy.

The petitioners had applied for compensation. However, the company returned the claim files on ground that claims were not submitted within a year from the date of accident.

Despite service of legal notice by petitioners, respondent failed to respond. 

After refusal of the insurance amount by the company, the petitioners filed consumer complaints before District Consumer Disputes Redressal Forum, Panchkula.

The forum directed the company to release sum of Rs 1 lakh to each of the petitioners, and Rs 2,000 as litigation cost in each case.

Thereafter, the company filed appeals before the Haryana State Consumer Disputes Redressal Commission, which set aside the forum's order.

In its order, the apex noted that the object of 'Devi Rakshak' Policy for which the insurance firm entered into 'MOU' with government of Haryana, was to provide little solace to dependents of their only bread earner, who dies an unnatural death.

"But respondent company (insurance firm) is bent upon, not to provide any relief to those dependents whose only bread earner dies in harness. Admittedly, as per 'MOU', respondent company had received a hefty sum of Rs 6 crore.

But there is nothing on record to show, as to how much amount till date respondent has paid to the beneficiaries under this scheme," it said.

It imposed the cost on the firm saying that public sector undertakings spent more money on contesting cases than amount they might have to pay to the claimant.

"It is a well-known fact that courts across country are saddled with large number of cases. Public sector undertakings indulgences further burden them. Time and again, courts have been expressing their displeasure at the government/public sector undertakings compulsive litigation habit but a solution to this alarming trend is a distant dream.

"The judiciary is now imposing costs upon government/ public sector undertaking not only when it pursue cases which can be avoided but also when it forces the public to do so.

Public sector undertakings spend more money on contesting cases than the amount they might have to pay to the claimant.

In addition thereto, precious time, effort and other resources go down the drain in vain," it said.

The commission added that "Public sector undertakings are possibly an apt example of being penny wise, pound-foolish".

"Rise in frivolous litigation is also due to the fact that public sector undertakings though having large number of legal personnel under their employment, do not examine the cases properly and force poor litigants to approach the court," it said. 

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