Page 37 - The Insurance Times February 2025

Landmark Legal Case

United India Insurance Co. Ltd. v. Manubhai

Dharmasinhbhai Gajera & Ors.

Introduction 1. Non-Disclosure and Misrepresentation:
The case of United India Insurance Co. Ltd. v. Manubhai o Whether the insured had failed to disclose mate-
Dharmasinhbhai Gajera & Ors. (2008) is a landmark judg- rial facts that could affect the underwriting of the
ment by the Supreme Court of India that significantly im- policy.
pacted the insurance industry. This case addressed critical o Whether the insurer had adequately communi-
issues of policyholder rights, transparency, and the obliga- cated its underwriting requirements to the insured.
tions of insurance companies. The decision set a precedent 2. Good Faith and Fair Dealing:
in handling disputes regarding the repudiation of claims,
reinforcing the principle of fairness and good faith in the o Whether the insurer acted in bad faith by repudi-
insurance industry. ating the claim.
o The extent to which the doctrine of uberrima fides
This article delves into the details of the case, analyzing its
(utmost good faith) applies to both parties.
background, legal principles, judgment, and the profound
influence it has had on the insurance sector. 3. Consumer Rights:
o The insured's rights as a consumer under the Con-
Background of the Case sumer Protection Act, 1986.
The dispute arose from the denial of an insurance claim by o The insurer's obligations to provide clarity and
United India Insurance Co. Ltd. for damages caused by a fire transparency in the policy terms.
at the respondent's property. The insured, Manubhai
Dharmasinhbhai Gajera, had purchased a fire insurance Arguments Presented
policy covering his industrial premises. The policy was ac-
tive at the time of the incident, and the claim was filed By the Insurance Company:
within the stipulated period. The company argued that the insured violated the prin-
ciple of utmost good faith by failing to disclose the stor-
The insurance company repudiated the claim on the age of hazardous chemicals on the premises.
grounds of alleged misrepresentation and non-disclosure by It claimed that the non-disclosure materially impacted
the insured regarding the actual use of the property. It was the risk assessment and premium calculation.
claimed that the insured had failed to disclose that hazard-
The company further argued that the policy became
ous chemicals were stored on the premises, which increased
void due to the breach of the duty of disclosure, as stipu-
the risk factor and rendered the policy voidable.
lated in the contract.
The insured contested the repudiation, arguing that the By the Insured:
company had acted in bad faith by denying a legitimate The insured contended that he had fully disclosed the
claim. He filed a complaint with the District Consumer Fo- nature and use of the property at the time of obtain-
rum, which ruled in his favor, directing the insurer to settle ing the policy.
the claim. United India Insurance challenged this decision,
and the matter escalated to the Supreme Court. He argued that the insurer had inspected the premises
and was aware of the storage of chemicals.
Key Legal Issues The repudiation was alleged to be an act of bad faith,

The case centered on the following issues: intending to avoid settling a valid claim.

34 February 2025 The Insurance Times