Supreme Court Rules on Insurance Claim Delay: Acme Cleantech vs. United India Insurance image for SC Judgment dated 08-12-2021 in the case of M/s Acme Cleantech Solutions P vs M/s United India Insurance Co.
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Supreme Court Rules on Insurance Claim Delay: Acme Cleantech vs. United India Insurance

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The Supreme Court of India recently ruled in the case of M/s Acme Cleantech Solutions Pvt. Ltd. vs. M/s United India Insurance Co. Ltd. & Anr., which dealt with delays in settling insurance claims and the rights of consumers under the Consumer Protection Act, 1986. The ruling clarifies the legal position on insurers’ obligations, procedural delays, and consumer rights in cases where claims are either delayed or repudiated.

Background of the Case

The appellant, Acme Cleantech Solutions Pvt. Ltd., filed a complaint before the National Consumer Disputes Redressal Commission (NCDRC) on September 28, 2019, alleging that the insurer, United India Insurance Co. Ltd., had failed to settle its insurance claim related to storm damage to its solar power plants. The company sought compensation for:

  • Material damage amounting to Rs. 13.91 crore
  • Business interruption losses of Rs. 6 crore
  • Interest at 18% per annum for delay in payment
  • Compensation of Rs. 1 crore for mental agony and unfair trade practices
  • Litigation expenses of Rs. 5 lakh

Proceedings Before the NCDRC

The NCDRC admitted the complaint and issued a notice to the insurer on October 17, 2019. The insurer was required to file a written statement within 30 days as per Section 13(2) of the Consumer Protection Act, 1986, failing which the right to file the statement would be closed.

Read also: https://judgmentlibrary.com/supreme-court-upholds-insurance-claim-no-fraud-in-hydrology-data-disclosure/

Despite being served on November 5, 2019, United India Insurance did not file its written statement within the stipulated time. Instead, on March 6, 2020, it filed an application (IA 3463 of 2020) seeking dismissal of the complaint on the ground that it was premature. The insurer claimed that the claim was still under scrutiny and verification, and thus the complaint should be dismissed.

Interestingly, on the same day, the insurer issued a letter repudiating the claim, citing policy exclusions and procedural issues.

Arguments Before the Supreme Court

Petitioner’s (Acme Cleantech) Arguments:

  • The insurer failed to file its written statement within the statutory period, as per the Supreme Court’s ruling in New India Assurance Co. Ltd. v. Hilli Multipurpose Cold Storage Pvt. Ltd.
  • The complaint was filed before the claim was repudiated, but the insurer deliberately delayed processing to frustrate the complainant.
  • The NCDRC’s decision to allow the insurer to file a written statement after repudiation was against the law.
  • As the complaint sought both settlement and payment, it had not become infructuous even after the repudiation.

Respondent’s (United India Insurance) Arguments:

  • The complaint was premature as the claim was under process when it was filed.
  • Once the claim was repudiated, the original complaint seeking “settlement” was no longer maintainable.
  • The complainant should have been asked to file a fresh complaint challenging the repudiation.

Supreme Court’s Observations

The Supreme Court made the following key observations:

  • The insurer failed to file its written statement within the statutory deadline. The ruling in Hilli Multipurpose Cold Storage makes the deadline mandatory.
  • The insurer deliberately delayed processing the claim and then filed for dismissal to avoid liability.
  • The complainant should not be forced to amend the complaint; it has the right to continue or withdraw and file afresh.

Final Judgment

The Supreme Court ruled:

  • The NCDRC’s decision directing the complainant to amend the complaint was set aside.
  • The complainant has three options:
    • Proceed with the complaint as it stands
    • Amend the complaint to challenge the repudiation
    • Withdraw the complaint and file a fresh one
  • If the complainant amends or files a fresh complaint, the insurer will have the right to file a written statement.

Key Takeaways

  • Strict Deadlines for Insurers: The ruling affirms that insurers must adhere to statutory timelines for filing responses.
  • Consumer Rights Strengthened: The decision ensures that claimants are not forced to amend complaints unnecessarily.
  • Judicial Oversight on Insurance Companies: The judgment discourages delaying tactics by insurers.

This landmark ruling upholds consumer rights and prevents procedural delays from being used against policyholders.


Petitioner Name: M/s Acme Cleantech Solutions Pvt. Ltd..
Respondent Name: M/s United India Insurance Co. Ltd. & Anr..
Judgment By: Justice D.Y. Chandrachud, Justice Surya Kant, Justice Vikram Nath.
Place Of Incident: India.
Judgment Date: 08-12-2021.

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