New Delhi, Feb 11 (IANS): The Supreme Court on Friday held that an insurance company cannot reject a claim on the basis that there was a delay in communicating the theft of a vehicle to it.

A bench of Justices Sanjiv Khanna and Bela M. Trivedi said: "When the complainant had lodged the FIR immediately after the theft of the vehicle, and when the police after the investigation had arrested the accused and also filed challan before the concerned court, and when the claim of the insured was not found to be not genuine, the insurance company could not have repudiated the claim merely on the ground that there was a delay in intimating the insurance company about the occurrence of the theft."

The bench said the accused were also arrested and charge sheeted, however, the vehicle could not be traced out. "Of course, it is true that there was a delay of about five months on the part of the complainant in informing and lodging its claim before the insurance company, nonetheless, it is pertinent to note that the insurance company has not repudiated the claim on the ground that it was not genuine," it noted.

The top court set aside an order by the National Consumer Disputes Redressal Commission (NCDRC), which was passed on a petition by Oriental Insurance Company Ltd challenging the direction to pay the insured sum to Jaina Construction Company Ltd in connection with the theft of Tata Aiwa Truck.

The bench said: "In that view of the matter, the court is of the opinion that the NCDRC should not have set aside the orders of the District Forum and the State Commission by holding that the repudiation of the insurance claim by the insurance company was justified. The impugned order being erroneous and against the settled position of law, deserves to be set aside, and is set aside, accordingly."

The insurance company disowned the liability on the claim, saying there was a breach of condition number one of the policy, which mandated immediate notice to the insurer of the accidental loss or damage. The company said the theft was intimated to it after the lapse of more than five months.

Rejecting this contention of the insurance company, the top court said in the instant case also, the FIR was lodged immediately on the next day of the occurrence of theft of the vehicle by the complainant.

The district consumer awarded Rs 10,000 compensation and Rs 5,000 litigation expenses to the complainant. This order was challenged by the insurance company in the state commission, which dismissed its appeal. Later the insurance company moved the NCDRC, which ruled in its favout. Jaina Construction Company moved the top court challenging the NCDRC order.