Insurance - Discharge voucher signed under duress does not bar the insured from claiming the balance amount

NCDRC Rules in Favor of Ecofuel Systems, Orders National Insurance to Pay Deducted Claim Amount with Interest National Consumer Disputes Redressal Commission finds insurer guilty of economic duress and undue delay, mandates payment of Rs. 47.6 lakhs with interest to Ecofuel Systems.

In a landmark decision, the National Consumer Disputes Redressal Commission (NCDRC) has ruled in favor of Ecofuel Systems India Private Limited, directing the National Insurance Company Limited to pay Rs. 47,60,560/- along with interest, which was unjustifiably deducted from the insurance claim. The judgment was delivered by Mr. Justice Sudip Ahluwalia, Presiding Member, and AVM J. Rajendra AVSM VSM Retd., Member, on September 26, 2025.

The case revolves around an insurance claim under a Standard Fire and Special Perils Policy that Ecofuel Systems held with National Insurance. Following a devastating fire at Ecofuel's premises in April 2013, the insurer paid Rs. 7,75,60,980/- against a surveyor-assessed loss of Rs. 8,23,21,540/-, obtaining a discharge voucher from the complainant. The deduction of Rs. 47,60,560/- was later contested by Ecofuel, claiming it was unjustified and made under economic duress.

The NCDRC found that the insurer acted insensitively and caused undue delays in settling the claim, which resulted in significant financial distress for Ecofuel. The Commission noted that the discharge voucher was signed under economic coercion, thereby not barring Ecofuel from claiming the deducted amount. The judgment highlighted the insurer's failure to comply with the IRDA regulations on timely claim settlements and the adverse consequences faced by the complainant, including the freezing of their bank accounts and loss of business credibility.

The Commission further directed the insurer to pay the deducted amount with an interest rate of 8% per annum, effective from February 28, 2014, two months after the surveyor's final report submission. In case of non-compliance within six weeks, the interest rate would increase to 12% per annum until the final realization of the amount. Additionally, Ecofuel was awarded Rs. 50,000/- towards litigation charges.

The ruling underscores the NCDRC's stance on consumer protection against undue practices by insurers and sets a precedent for similar cases of economic duress and unjustified claim deductions.

Bottom Line:

Discharge voucher signed under economic duress or coercion does not bar the insured from claiming the balance amount deducted by the insurer unjustifiably. Insurer's insensitivity and undue delay in settlement caused extreme distress to the complainant leading to economic coercion.

Statutory provision(s):  IRDA (Protection of Policyholders' Interests) Regulations, 2002

Ecofuel Systems India Private Limited v. National Insurance Company Limited, (NCDRC)(New Delhi) : Law Finder Doc Id # 2785480