The National Consumer Commission has ordered a public sector general insurance company to pay Rs 2.20 crore to a construction company after a piling rig, a heavy construction machine used to create deep foundations for buildings, bridges and other structures, was badly damaged in a 2013 Odisha road accident.The National Consumer Disputes Redressal Commission presiding member AVM J Rajendra and member Justice Anoop Kumar Mendiratta were hearing a consumer complaint filed by the construction company over non-payment of its insurance claim.“Rejection of an insurance claim on the ground of fraud has serious civil consequences and therefore must rest upon clear, cogent and convincing evidence. Fraud cannot be inferred merely because certain circumstances create suspicion or because another inference may also be possible. Suspicion, however strong, cannot take the place of proof…Insurance contracts impose reciprocal duties of utmost good faith,” the court said on September 7.The commission noted that the insurance company could not withhold payment and reject the claim in the absence of convincing proof of fraud and that the rejection cannot be sustained amounting to deficiency in service.The commission found that the insurance company failed to establish that the company obtained approval of its claim through fraud, misrepresentation or suppression of material facts. It held that an insurer can reopen an approved claim if fraud is subsequently discovered, but such a step must be supported by clear and cogent evidence.Piling rig damaged in Odisha accidentThe construction company purchased a Soilmec SR-40 hydraulic piling rig on September 10, 2009, for Rs 3.18 crore, including customs duty. The purchase was partly financed through a Rs 2.47 crore bank loan.On March 2, 2013, while the machine was being transported from Odisha towards Delhi, it met with an accident at Bangriposi Ghat in Mayurbhanj district, Odisha. The insurer was immediately informed, and a spot survey was conducted the next day.Story continues below this adA technical report by the original equipment manufacturer dated March 8 recorded extensive damage to major components. A final survey assessed the net loss at Rs 2,20,84,178, which the company accepted on December 20, 2013.Insurer approved claim, then rejectedThe insurer approved settlement of Rs 2,20,84,178 on September 15, 2014 and sent the discharge voucher and subrogation documents. A reminder followed on September 24, but the amount was not released.The insurer later received allegations that the machine had not actually suffered a total loss. It then appointed an investigator. Its March 20, 2016 report claimed that a Soilmec SR-40 bearing serial number 3680 was operational at the Sevaliya Thermal Power Project in Gujarat and was being commercially used on lease.The insurer withdrew its earlier approval and, on March 21, 2016, rejected the claim, alleging fraud, misrepresentation and suppression of material facts. Its case was that the damaged machine had instead been repaired and put back into commercial use.Story continues below this adThe commission found that the investigator of the insurance company lacked sufficient independent documentary evidence to establish that the machine allegedly found operating in Gujarat was the same machine damaged in the Odisha accident. It said the report did not adequately establish the machine’s identity, ownership or use.The commission gave greater weight to contemporaneous evidence, including the survey reports and the original equipment manufacturer’s assessment, which recorded extensive damage and found repairs technically and economically unviable.It held that a later contrary opinion or suspicion could not, by itself, justify reopening an approved claim, particularly after the insurance company had accepted the survey assessment and formally approved the settlement. The rejection could not therefore be sustained and amounted to deficiency in service.The commission directed the insurer to pay Rs 2,20,84,178 with simple interest at 8 per cent per annum from September 2, 2013 until final payment. The amount is to be paid within two months of the order. In case of default, interest for the delayed period will be 12 per cent per annum. The insurer was also directed to pay Rs 50,000 as litigation costs.Story continues below this adTakeawayAn insurer may reopen an approved claim if fraud is subsequently established, but suspicion alone cannot replace clear, cogent and convincing proof.For consumer-related grievances, individuals may contact consumer helpline in their respective states or call the National Consumer Helpline at 1915 for assistance.Do not miss out on these storiesPromised 18.5 km mileage per litre yet car gave only 8-10 km, buyer wins Rs 75,000Consumer body orders insurance firm to pay Rs 25.6 lakh to power company over ‘theft’Story continues below this adNew electric SUV breaks down repeatedly, Hyderabad firm wins Rs 24.6 lakh payout