National Insurance Co. Ltd. vs MUNNI LAL YADAV

THIS revision petition has been brought against the order of the State Consumer Disputes Redressal Commission, Uttar Pradesh, Lucknow. The respondent had purchased a jeep and such purchase was financed by one M/s. Century Finance Corporation. The jeep was got insured from National Insurance Co. Ltd., the petitioner in the petition. The insurance cover was from 6.7.1993 till 5.7.1994. On 20th January, 1994 at about 7.00 p.m. the jeep met with an accident in which it suffered serious damages. It is also alleged that driver Shri Shambhu Nath was driving the said vehicle at the time of accident. The said Mr. Shambhu Nath had valid driving licence to drive the vehicle. An FIR of this accident was duly lodged on 21.4.1994. The Insurance Company appointed the Surveyor who visited the site, took photographs and after completing all the formalities, assured the complainant that he would be paid damages of the jeep. The Insurance Company demanded certain documents which were duly supplied. The Surveyor had assessed the damages to the vehicle at Rs. 72,000/- and send this report. The respondent incurred an expenses of Rs. 75,000/- in getting the vehicle repaired. When the payment was not forthcoming from the Insurance Company, the respondent filed the complaint and in their written version before the District Forum, the Insurance Company took the plea that they have already repudiated the claim. In their written version they have said that after the Surveyor''s report an Investigator was also appointed who reported that the vehicle at the material time was being driven by Mr. Bhayya Lal, who was not having the valid driving licence. The Insurance Company neither produce the Investigator nor summoned that alleged Bhayya Lal. The District Forum awarded a sum of Rs. 50,000/- towards damages alongwith interest @ 12% thereof. On other hand, the complainant/respondent produced evidence wherein he has stated on oath that Mr. Shambhu Nath was the driver. The other question is that the vehicle was being used as a public vehicle while it was insured as a private vehicle. Therefore, no award should have been made because the lower rate of premium was charged. The State Commission has rightly relied upon the observations of the Hon''ble Supreme Court in the case of B.V. Nagaraju v. M/s. Oriental Insurance Co. Ltd., II (1996) CPJ 18 (SC). In that case, the Hon''ble Supreme Court has approved the observations in the case of M/s. Skandia which are read as under : "When the option is between opting for a view which will relieve the distress and misery of the victims of accidents or their dependents on the one hand and the equally plausible view which will reduce the profitability of the insurer in regard to the occupational hazard undertaken by him, by way of business activity, there is hardly any choice. The Court cannot but opt for the former view. Even if one were to make a strictly doctrinaire approach, the very same conclusion would emerge in obeisance to the doctrine of ''reading down'' the exclusion clause in the light of the ''main purpose'' of the provision so that the ''exclusion clause'' highlighted earlier. The effort must be to harmonize the two instead of allowing the exclusion clause to snipe successfully at the main purpose. The theory which needs no support is supported by Carter''s Breach of Contract" vide paragraph 251. To quote :

Notwithstanding the general ability of contacting parties to agree to exclusion clauses which operate to define obligations there exists a rule, usually referred to as the "main purpose rule", which may limit the application of wide exclusion clauses defining a promises'' contractual obligations. For example, in Glynn v. Margetson & Co., 1893 AC 351, 357, Lord Halsbury, L.C. stated : It seems to me that in constructing this document, which is a contract of carriage between the parties, one must in the first instance look at the whole instrument and not at one part of it only. Looking at the whole instrument, and seeing what one must regard....as its main purpose, one must reject words, indeed whole provisions, if they are inconsistent with what one assumes to be the main purpose of the contract. Although this rule played a role in the development of the doctrine of fundamental breach, the continued validity of the rule was acknowledged when the doctrine was rejected by the House of Lords in Suisee Atlantique Societed Armament Maritime S.A. v. N.V. Rotterdamsche Kolen Central, 1967 (1) AC 361. Accordingly, wide exclusion clauses will be read down to the extent to which they are inconsistent with the main purpose, or object of the contract."

The above view was reiterated by Hon''ble Supreme Court in the case of B.V. Nagaraju v. Oriental Insurance Co. Ltd., II (1996) CPJ 18 (SC).

APART from that, the State Commission was fully conscious of the guidelines for settling the claim where any of the terms of policy have not been adhered to. The said guideline provides for settlement of such claims as non-standard and the percentages are also duly indicated in Clause 10 of the Procedural Manual of Motor Claims (own damage and third party). After the judgment had been reserved, Counsel filed a written note of arguments virtually reiterating the grounds of revision. The said note has not brought out any ground which makes the guidelines inapplicable. We reproduce the relevant passage from the said Procedural Manual of Motor Claims which read as under : (10) Non-Standard Claims : Following types of claims shall be considered as non-standard and shall be settled as indicated below after recording the reason : SI. No. Description Percentage of settlement Under declaration of licensed carrying capacity Deduct 3 years'' difference in premium from the amount of claim of deduct 25% of claim amount, whichever is higher. Overloading of vehicles beyond licensed carrying capacity. Pay claims not exceeding 75% of admissible claim. Any other breach of warranty/condition of policy including limitation as to use. Pay upto 75% of admissible claim. (Emphasis supplied) The settlement of the claim has been ordered by the District Forum at less than 75%. For that reason, the State Commission has rightly declined the relief sought by the Insurance Company and dismissed its appeal. We find no merit in this revision petition. It is accordingly dismissed. Revision Petition dismissed.