Featured image for Supreme Court Judgment dated 08-01-2020 in case of petitioner name Shyam Lal Jayaswal vs Branch Manager, Oriental Insur
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Insurance Claim Dispute Resolution: Shyam Lal Jayaswal vs. Oriental Insurance Company

The case of Shyam Lal Jayaswal vs. Oriental Insurance Company is a critical legal dispute concerning the rightful compensation under an insurance policy. The Supreme Court was tasked with determining whether the National Consumer Disputes Redressal Commission (NCDRC) was justified in reducing the compensation awarded by the State Consumer Disputes Redressal Commission (SCDRC). This case highlights the responsibilities of insurance providers, the rights of policyholders, and the legal framework governing consumer protection.

Background of the Case

The appellant, Shyam Lal Jayaswal, owned a Tata Safari vehicle (Registration No. CG-15C-7777), which was insured under a policy issued by Oriental Insurance Company. The insurance policy covered the period from March 29, 2012, to March 28, 2013. During the coverage period, on June 2, 2012, the vehicle met with an accident. The appellant informed the insurance company about the accident on June 4, 2012, and officially submitted a claim on June 5, 2012.

Following the accident, a repair estimate for the vehicle was provided, amounting to ₹5,66,769. The insurance company appointed a surveyor who, after assessment, estimated the Insured Declared Value (IDV) at ₹5,00,000. However, the appellant argued that the IDV specified in the insurance contract was actually ₹6,00,000. The dispute over the IDV and the claim amount led to a legal battle between the policyholder and the insurer.

Legal Proceedings

The dispute was first presented before the District Consumer Disputes Redressal Forum, Ambikapur, Sarguja, Chhattisgarh. The forum ruled in favor of the appellant and awarded him ₹5,38,000, along with interest at the rate of 6% per annum, starting from March 21, 2013.

Both parties appealed the decision before the State Consumer Disputes Redressal Commission (SCDRC). The SCDRC issued an order on July 22, 2015, reducing the awarded amount to ₹4,99,000 with the same interest rate of 6% per annum.

The appellant, dissatisfied with the reduced claim, moved to the National Consumer Disputes Redressal Commission (NCDRC). In a surprising turn, the NCDRC further reduced the claim from ₹4,99,000 to ₹3,81,031, leading the appellant to challenge this ruling before the Supreme Court.

Arguments of the Appellant (Shyam Lal Jayaswal)

The appellant presented the following key arguments before the Supreme Court:

  • The insurance company unfairly reduced the claim amount by applying a lower IDV than what was specified in the insurance contract.
  • He had provided all necessary documentation, including repair estimates, yet the insurer delayed and arbitrarily lowered the compensation.
  • The SCDRC had already ruled in his favor, awarding him ₹4,99,000. Since the insurance company did not challenge this order, the NCDRC had no reason to reduce the amount further.
  • The NCDRC committed an error by modifying the compensation when no appeal was filed by the insurer.

Arguments of the Respondents (Oriental Insurance Company)

The insurance company countered the appellant’s claims with the following points:

  • The IDV assessment by the surveyor was accurate and in line with policy guidelines.
  • The reduction in the claim amount was based on a proper assessment of the damages sustained by the vehicle.
  • The appellant’s contention that the IDV should have been ₹6,00,000 was incorrect as per the agreed terms of the policy.
  • They had already complied with the SCDRC’s order but had to adjust the payout following the NCDRC’s ruling.

Key Observations of the Supreme Court

The Supreme Court examined the case based on the following considerations:

  • Was the reduction of the claim amount by the NCDRC legally justified?
  • Did the insurance company have the right to contest the SCDRC’s order?
  • Was the appellant entitled to the originally awarded amount?

The Court made the following findings:

  • The SCDRC’s order was not challenged by the insurance company before the NCDRC.
  • The NCDRC had no justification for reducing the claim from ₹4,99,000 to ₹3,81,031.
  • The appellant’s grievance regarding the arbitrary reduction of the claim amount was valid.
  • The most appropriate resolution was to restore the original order of the SCDRC.

Verbatim Court Findings

The Supreme Court, while ruling in favor of the appellant, stated:

“It is not in dispute that the order of the SCDRC was not challenged before the NCDRC by the respondents. It was only the appellant who had contested the reduction of the claim by the SCDRC. In this view of the matter, we find merit in the grievance of the appellant.”

Additionally, the Court observed:

“The order passed by the SCDRC is restored, and no recovery shall be made from the appellant.”

Final Judgment

The Supreme Court ruled in favor of the appellant and restored the order of the SCDRC. The key takeaways from the judgment are:

  • The NCDRC’s decision to further reduce the compensation was set aside.
  • The appellant was entitled to receive ₹4,99,000 as awarded by the SCDRC.
  • The insurance company was prohibited from recovering any excess amount from the appellant.

Final Verdict: Appeal allowed, SCDRC order restored.


Petitioner Name: Shyam Lal Jayaswal.
Respondent Name: Branch Manager, Oriental Insurance Company Limited & Another.
Judgment By: Justice D.Y. Chandrachud, Justice Hrishikesh Roy.
Place Of Incident: Chhattisgarh.
Judgment Date: 08-01-2020.

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