India’s Rajasthan State Consumer Disputes Redressal Commission has upheld an order directing The New India Assurance Company Limited to pay 75 per cent of the insured value of a tourist bus that was set on fire by an angry mob following a fatal road accident in June 2019.
The commission, based in Jodhpur, dismissed appeals filed by both the bus owner, Jairam, and the insurance company. Its decision leaves intact an earlier ruling by District Consumer Commission-II in Jodhpur, which directed the insurer to pay compensation equivalent to 75 per cent of the bus’s insured value of Rs 38 lakh.
The dispute arose after a motorcycle collided with the tourist bus near Phalsund in Rajasthan. The bus was travelling from Barmer to Haridwar when the accident occurred. The motorcyclist died, triggering anger among people at the scene. An agitated crowd subsequently set fire to the bus, causing extensive damage.
Following the incident, Jairam notified the insurance company and lodged a claim for the loss. An insurer-appointed surveyor inspected the vehicle and classified it as a total loss, indicating that the damage was sufficiently extensive for the bus to be treated as a complete loss for insurance purposes.
Despite the assessment, the insurer rejected the claim. It argued that the bus had been operated in breach of the conditions of its insurance policy, contending that the vehicle was being used as a stage carriage rather than a contract carriage.
The distinction was central to the dispute. A stage carriage generally transports passengers who may board and leave at different points along a designated route, whereas a contract carriage is engaged under an arrangement to transport a particular group or party. The insurer maintained that the bus’s alleged use as a stage carriage was inconsistent with the terms under which it had been insured.
Jairam challenged the rejection before the district consumer commission, which accepted his complaint and ordered the company to pay 75 per cent of the insured amount. The owner, however, considered the award insufficient and appealed for full compensation. The insurance company separately challenged the direction to make any payment, seeking to overturn the district commission’s decision.
During the proceedings, the Rajasthan State Consumer Disputes Redressal Commission considered the fact that Jairam held an All India Tourist Permit. The permit authorised him to transport a party or its members from one place to another, a point relevant to the insurer’s argument concerning the vehicle’s permitted use.
The district commission had also taken into account the driver’s decision to pick up passengers from the roadside. It treated this conduct as contributory negligence and considered it a reason to limit the compensation rather than award the entire insured value. Consequently, the owner was granted 75 per cent of the amount insured, rather than the full Rs 38 lakh.
The state commission, comprising president Devendra Kachhawaha and member Liaquat Ali, found no sufficient reason to disturb the earlier order. It dismissed both appeals, leaving the partial compensation award in place.
The outcome illustrates the difficulties that can arise when insurance claims involve questions about a vehicle’s authorised use, compliance with policy conditions and the circumstances surrounding its destruction. An insurer’s assessment of a policy breach may become a point of dispute before consumer adjudication bodies, which examine the relevant facts and arguments before deciding whether compensation is justified.
For the bus owner, the ruling means that the district commission’s award remains unchanged, despite his attempt to secure the full insured amount. For the insurer, the decision means that its challenge to the compensation order has failed.
The case also demonstrates how consumer commissions can examine competing claims without necessarily accepting either party’s position in full. In this instance, the owner’s entitlement to partial compensation was upheld, while his request for a larger payout and the insurer’s attempt to avoid payment altogether were both rejected.