National Insurance Co. Ltd. vs R.RAGHUNATH

THE complainant''s case is as follows : He is the registered owner of the vehicle bearing Registration No. TN-43-4663, Maruti Omni van. THE vehicle is covered under a comprehensive insurance policy by the opposite party. THE vehicle met with an accident resulting in its extensive damage, whereupon the complainant preferred a claim to the opposite party for the damages sustained. THE same was erroneously repudiated by the opposite party. THErefore, the present complaint has been laid for a sum of Rs. 32,577/- with compensation of Rs. 10,000/- for mental agony and sufferings, and for costs of Rs. 1,000/-.

THE opposite party Insurance Company repudiated the damage claim stating that there was a breach of condition by the complainant and that the complainant had used the car as a tourist taxi and this was not informed to the opposite party and since the vehicle was used as a tourist taxi for hire and reward, there was a fundamental breach of the contract and, therefore, they are not liable. The lower Forum accepted the complaint on the ground that the policy being a comprehensive one, the accident is well covered and, therefore, it directed the opposite party to pay a sum of Rs. 32, 577/- together with interest at 12% p.a. from the date of accident till realization and Rs. 10,000/- as compensation for the pain and sufferings, with a cost of Rs. 1,000/-.

The one and the only contention of the Insurance Company is that the vehicle was used for hire and reward without notice to the opposite party and, therefore, the very purpose of the contract has been rendered void by the reason of such user and hence the Insurance Company is not liable to make good the loss sustained by the complainant as a result of the accident. It is not in controversy that the complainant had used the vehicle for hire. It is also not disputed that on the date when the vehicle was involved in accident, it was plied as a vehicle for hire and reward and in the course of such usage alone the accident had taken place. In the very proposal form produced and marked on the side of the complainant, we find that it is a "Proposal Form for Private Car Insurance". The contention of the learned Counsel for the complainant that he purchased it as a private car and later made use of it as a vehicle for hire and, therefore, it does not alter the nature and character of the contract, cannot be accepted at all. The Insurance Policy makes it clear that it is a Private Car Insurance B-Policy IXI. It contains a condition regarding the limitation as to its use. The use shall be only for social, domestic and pleasure purposes and Insured''s own business. The policy does not cover use for the hire or reward or for organized racing, pacemaking, reliability trials, speed testing, carriage of goods (other than samples) in connection with any trade or business of use for any purpose in connection with Motor Trade. Thus we find that the vehicle has been used as a private car and has been insured with the Insurance Company and the policy prevents its use for hire or reward and it also makes it clear that it should be used only for social, domestic and pleasure purpose and Insured''s own business. It is not the complainant''s case that he has not any business and for that purpose he used the vehicle at the time of the accident. On the other hand, it is the accepted case that on the date of the accident and at the time of the accident, the vehicle was plied only as a taxi for hire or reward. Therefore, when the essential condition is breached, when there is a prohibition and limitation for the user of the vehicle for hire or reward, then it follows that it being a fundamental condition upon which the insurance of the vehicle has been accepted by the Company and there being a clear violation of such fundamental condition, it amounts to breach of the essential and important condition of the policy and, therefore, it follows that the repudiation of the same by the appellant is well maintained one.

LEARNED Counsel for the respondent drew our attention to the decision of the Kerala State Consumer Disputes Redressal Commission reported in Divisional Manager, New India Assurance Company, Alwaye v. D.B. Mathew, I (1997) CPJ 481, to contend that it is the cardinal principle of interpretation that if there is ambiguity in a policy, an interpretation which is favourable to the insured has to be adopted. But in this case on hand, there is no ambiguity at all either in the terms and condititions of the policy or in the nature of the policy. That the vehicle was used as a vehicle for hire is the admitted case of both parties. That being the case, this ruling cited by the learned Counsel for responent will have no application at all. Learned Counsel for the respondent again referred to the decision of the Supreme Court in B.V. Nagaraju v. Oriental Insurance Co. Ltd., II (1996) CPJ 28 (SC) to contend that misuse of the vehicle for hire or for different use than for which it was insured cannot absolve the Insurance Company of its liability. That was a case where as per the policy the insured vehicle can carry only six persons excluding the driver. But on the date when the accident took place, nine persons were carried. Therefore, the Insurance Company contended that since nine persons were carried contrary to the terms of the policy which allowed only six persons to be carried, there is violation of the conditions and, therefore, the claim has to be repudiated. Adverting to this, Their Lordships have stated that it was nobody'' case that the driver of the insured vehicle was responsible for the accident and that it was an on-coming vehicle that had collided head on against the insured vehicle. Merely by lifting a person or two, or even three, by the driver or the cleaner of the vehicle without the knowledge of owner, cannot be said to be such a fundamental breach that the owner should, in all events, be denied indemnification. Their Lordships further observed that the misuse of the vehicle was somewhat irregular but not so fundamental in nature so 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. Their Lordships of the Supreme Court have also referred to the decision reported in Sikand''s case.

IN our opinion, the above decision relied upon by the learned Counsel for the respondent would not apply for the simple reason that here the breach is fundamental and it goes to the root of the contract between the parties. That was a case where more number of persons were carried than the permissible. So, it was rightly observed by Their Lordships that it was only irregular use. But here, the car was purchased for private use and when the policy prohibits that it cannot be and should be used as a carriage for hire or reward, yet it has been put to such user and in the course of such user it met with an accident. Therefore, it is a user which can, by no stretch of imagination, be brushed aside as an irregular one, but it has to be stated as an illegal one for, it not only goes against the spirit of the conditions but also the letter of the conditions as well. In this connection, it would be pertinent to refer to the observations of the Supreme Court in Sikand''s case, where it has been laid down as follows : "......When the option is between opting for a view which will relieve the distress and misery of the victims of accidents or their depedants 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. "

As observed by Their Lordships, it is an occupational hazard undertaken by the insured by way of business activity viz., plying and hiring out his vehicle for hire or reward. When the accident takes place in such a context, we have to only say that it is not a case where we can apply the parameters laid down by the Supreme Court to relieve the distress and misery of the victims. On the other hand, since the accident had occurred owing to the misuse of the vehicle and prohibited use of the vehicle, it amounts to, in our opinion, a fundamental breach of the condition of the contract of insurance thereby estopping the complainant from making any claim. Consequently, we are of the view that the order passed by the District Forum, Udhagamandalam cannot be sustained and deserves to be set aside.

IN the result, the appeal is allowed with costs. The order of the District Forum, Udhagamandalam will stand set aside. The complaint will stand dismissed with cost of Rs. 250/-. Time six weeks. Appeal allowed.