MALKHAN SINGH vs NEW INDIA ASSURANCE CO.LTD

MALKHAN Singh, complainant No. 1, purchased truck bearing registration number DDN 3447, 1989 model with the financial assistance of complainant No. 2. The truck was insured with New India Assurance Company Limited for the period 16.2.90 to 15.2.91 for a sum of Rs. 2,20,000/- with inter-purchase endorsement in favour of complainant No. 2. The truck met with an accident between Mainpuri and Dannahar on 25.12.90. It was badly damaged. The Insurance Company appointed Mr. A.K. Shankdhar, Surveyor who carried out spot survey on 28.12.90 and submitted his report-dated 12.1.91. In addition to complainant No. 1, complainant No. 2 also continued to follow up with the Insurance Company and the Insurance Company informed complainant No. 2 that assessment was regarding total loss being accepted and the final approval was being awaited. There was a lot of correspondence between the Regional Office, Kanpur and its counter-part in New Delhi. One of the facts which came to light was that four persons besides the driver were travelling in the truck at the time of the accident. Out of them three persons had died in the accident. According to the complainant, the 4th person, who survived was the conductor of the truck and the three persons namely Anand Swaroop Chaturvedi, Ghanshyam and Rajinder, who had died were persons who had to carry a consignment of garlic in the said truck. Further, according to the complainant, me registration certificate permitted carrying of six persons besides the driver. The Insurance Company entertained serious doubts whether the claim could be accepted and settled in view of the contravention of the condition of the policy prescribing carrying of passengers for hire or reward. The complainant was paying instalments @ 7,300/- per month to complainant No. 2 and was having a net income of Rs. 7,500/- per month by the use of the truck. The amount due to the financier had amounted to Rs. 3,75,688/- as on 16.9.94. The complainant claimed the full amount insured under the policy besides Rs. 5,00,000/- as compensation along with interest and costs.

THE complaint was contested. It was stated that four unauthorised persons were travelling in the truck at the time of the accident and out of them three had died, as a result of the accident. THE opposite party had received legal opinion that the claim can be approved on substandard basis and not on total loss basis. With regard to the delay, the stand of the opposite party is that the complainant failed to furnish his changed address with the result that letters addressed to him to secure his consent to settle the claim on sub-standard basis could not be processed further. Further plea raised by the opposite party is that the information furnished by the complainant in the claim form was mutually inconsistent. For instance in the column whether the vehicle was plying for hire, the reply was in the negative. THE spot inspection, however, revealed that the vehicle was empty at the time of accident and three unauthorised passengers, who were travelling in the truck, had died in the accident. THE complainant had failed to produce satisfactory evidence to prove that the three occupants, who died, were covered in the category of persons falling within the purview of the Workman''s Compensation Act. THE exclusion clause, therefore, operated and Insurance Company was not liable to pay the claim. Reliance was placed by the Insurance Company on the decision of the National Commission in Oriental Insurance Company Ltd. v. Nagaraju first appeal No. 439 of 1993. Further according to the Insurance Company the offer to settle on substandard basis had been made after obtaining legal opinion, due application of mind and without any delay attributable to the Insurance Company and the complaint was liable to be dismissed. We have heard Mr. G.N. Rathi, Advocate for the complainants and Mr. Karnail Singh, Advocate for the opposite party. We have also perused the record of the case as also affidavit of Smt. Kamlesh Vashisht, Dy. Manager of the respondent company by way of written submissions.

The contentions of Mr. G.N. Rathi, Advocate for me complainants, may be summarised as follows: The decision of the National Commission relied on by the opposite party has since been set aside by me Supreme Court in A.V. Nagaraju v. M/s. Oriental Insurance Co. Ltd., 1996 (2) CCC 676 (NC). The complainant had filed the affidavit that the persons, who were travelling in the truck, were traders, who had hired the truck in order to transport a consignment of garlic which was to be loaded in the truck and in order to do so, the truck was on its way when it met with the accident. No material had been placed on record to contradict the said affidavit and, therefore, it must be accepted that the persons travelling in the truck were traders, who were to load their goods in the truck. As an ancilliary argument, it was contended by Mr. Rathi that there was no material available on record that the aforesaid persons had been charged any hire for carrying them in the truck. The report of the final survey had not been placed on record by the Insurance Company. It was otherwise not disputed that according to the final report, the recommendation of the Surveyor was to settle the claim on total loss basis. Reference in this connection was made by Mr. Rathi to letter dated 18.11.81 by the Insurance Company to the complainant in which it was stated that the Surveyor Mr. Mohd Yayah had recommended settlement on total loss basis. In the absence of the report submitted by the Surveyor, it should be presumed that the market value of the truck at the time of loss was more than the sum assured under the policy.

AFTER careful consideration of the respective submissions i.e. the contentions raised by Mr. Rathi on the one hand and the submissions made in the aforesaid affidavit of Smt. Kamlesh Vashisht, Dy. Manager, which were high-lighted by Mr. Karnail Singh at the time of hearing on the other hand, we are clearly of the view that the complaint deserves to be allowed. In B.V. Nagaraju''s case (supra) their Lordships of the Supreme Court formulated the question whether the alleged breach of carrying humans in a goods vehicle more than the number permitted in terms of the insurance policy is such a breach as to afford ground to the insurer to eschew liability altogether. In other words, the question for consideration before the Supreme Court was whether the terms of the policy of insurance need to be strictly construed or be read down to advance the main purpose of the contract as viewed by the Apex Court in Insurance Company Limited v. Kokila Ben Chandravadan & Ors. (1987) 2 SCC 654. It was held by their Lordships that merely by lifting a person or two or even three by the driver or the cleaner of the vehicle, without the knowledge of the owner, cannot be said to be such a fundamental breach that the owner should in all events be denied indemnification. It was observed that the misuse of the vehicle was somewhat irregular though but not was fundamental in nature as to put an end to the contract, unless some factors existed which, by themselves, had gone to contribute to the causing of the accident. Accordingly, the Supreme Court allowed the appeal and set aside the judgment to the contrary rendered by the National Commission. The decision of the Supreme Court completely covers the present case.

WE also find that there is no material on record to show that the assertion of the complainant that the persons travelling had to pickup a consignment of garlic and they were not travelling in the truck for hire or reward. The accident took place on 25.12.90. Final survey was carried out on 2.4.91. The plea that the Insurance Company deferred the decision regarding the claim as it was not able to secure the consent of the complainant to settle the claim on substandard basis is altogether hollow and unconvincing. Nothing prevented the Insurance Company to take a decision for itself and to offer the amount on whatever basis it found to be just and due according to law. All along complainant No. 2 was in the picture and was corresponding with the Insurance Company and it has not been shown that complainant No. 2 was not available to settle the matter. It may be pointed out that complainant No. 2 is the financer in whose favour there existed an endorsement in the policy itself. The irresistible conclusion is that there was delay in settling the claim, which constituted deficiency on the part of the Insurance Company. WE may also add that the Insurance Company has failed to produce the final survey report though the material on record clearly shows that the surveyor had recommended settlement of the claim on total loss basis. WE have, in the earlier part of this order, referred to company''s own letter dated 18.11.91 addressed to the complainant. It follows that the Surveyor as well as Insurance Company never doubted that the market value of the truck was equal to the sum assured, if not more. With regard to interest, the Supreme Act. Court in United India Insurance Co. Ltd. v. MKJ Corporation, III (1996) CPJ 8 (SC) has laid down that the interest should be allowed @ 12% p.a. for the period after two months from the report of the Surveyor. In this case, the final report is dated 2.4.91. We, therefore, allow the complaint in the following terms: (1) The Insurance Company shall pay the sum assured under the policy namely Rs. 2,20,000/-. (2) The above amount shall carry interest @ 12% p.a. w.e.f. 3.6.91 till date of realisation. (3) The Insurance Company shall further pay Rs. 5,000/- as costs.

As the total amount assured together with substantial amount of the interest thereon has been allowed, we do not think that any case for further compensation is made out. We do not think that any deduction be made on account of salvage for the reasons (a) that the claim was settled on total loss basis implying extensive damage to the truck, and (b) complainant No. 1 and after some time complainant No. 2 had to keep the accidental truck and the charges on account of its being kept would to a large extent offset the deduction to be made on account of value of the salvage. However, the complainants shall, in writing, offer to hand over the salvage to the Insurance Company. The Insurance Company shall arrange to collect the salvage within one week of the receipt of written intimation and within four weeks of the collection of the salvage in terms of the above order, the amount referred to above shall be paid to the complainants. In case complainant Nos. 1 and 2 dispute the amount due to complainant No. 2 from complainant No. 1 and are not willing to give joint discharge to the Insurance Company in respect of the above mentioned payment, the amount shall be deposited by way of bank draft with the Registry of this Commission within one week of the expiry of the period indicated above. In case of default, the Insurance Company shall be liable to be proceeded against under Section 27 of the Consumer Protection Act. A copy of this order be conveyed to the parties. Complaint allowed with costs.