NATIONAL INSURANCE COMPANY LTD vs Hardeep Pal Singh

NATIONAL Insurance Company Ltd., Petitioner herein which was the opposite party before the District Forum has filed this revision petition against the order and judgment dated 11.4.2007 passed by the State Consumer Disputes Redressal Commission, Punjab (in short, ''the State Commission'') in appeal No. 41/02 whereby the State Commission upholding the order of the District Forum has directed the petitioner to pay the insured declared value of vehicle, i.e., Rs. 3,87,828 to the complainant with interest @ 6% p.a. from four months after the date of lodging of the claim till realization. Rs. 2,000 were awarded as costs.

COMPLAINANT/Respondent purchased a Tata Sumo vehicle from M/s. Cargo Motors Ltd. on 29.1.2000 for a sum of Rs. 3,87,828 Respondent got the vehicle insured comprehensively from the petitioner Insurance Company for the period from 31.1.2000 to 30.1.2001. The said vehicle was stolen on 28.6.2000 from Ludhiana as the driver of the complainant went missing along with the vehicle. FIR was lodged. Intimation regarding the theft was given to the petitioner. Police could not trace the vehicle and gave non-traceable certificate/report. Respondent lodged the claim with the petitioner but the petitioner did not settle the same on the ground that certain documents were made made available to it by the Respondent. Aggrieved by this, Respondent filed the complaint before the District Forum. During the pendency of the complaint, Petitioner repudiated the claim on 16.1.2001 on the ground that the vehicle was being used as a ''Taxi''.

DISTRICT Forum allowed the complaint and directed the petitioner to pay the Insured Declared Value of the Vehicle, i.e. Rs. 3,87,828 to the Respondent along with interest @ 6% p.a. from four months after the date of lodging of the claim till realization. Rs. 2,000 were awarded as costs.

PETITIONER being aggrieved, filed the appeal before the State Commission. During the pendency of the appeal before the State Commission, an Interim Application was filed to bring on record the Motor and General Finance Ltd. which had financed the vehicle to the tune of Rs. 3,75,000 which was to be re-paid in 24 equated monthly instalments. Admittedly, there was a default in payment of instalments by the Complainant. Matter was referred to the Arbitrator where an agreement (Annexure A-1) was entered into between the parties under which the complainant agreed to substitute the Motor and General Finance Ltd. in his place and authorized them to receive the amount awarded by the District Forum. The Application was allowed by the State Commission and the Motor and General Finance Ltd was impleaded as Respondent No. 2 in the appeal.

PLEA raised by the Petitioner that the Petitioner was not liable to reimburse the loss of the stolen vehicle as the same was being used as ''Taxi'' was rejected by the State Commission by observing that theft of the vehicle had nothing to do with the user of the vehicle. The appeal was dismissed and the awarded amount was ordered to be released to the Motor and General Insurance Company Ltd. Petitioner being aggrieved, has filed the present Revision Petition.

HEARED the learned Counsel for the parties.

HON''ble Supreme Court in the case of National Insurance Company Ltd. v. Nitin Khandelwal, IV (2008) CPJ 1 (SC)=(2008) 11 SCC 259, has held that in a case where the vehicle has been snatched or stolen, the breach of condition is not germane and the Insurance Company is liable to indemnify the owner of the vehicle where the insurer has obtained comprehensive policy for the loss caused to the insurer. That the Insurance Company could not repudiate the claim in toto in case of loss of vehicle due to theft.

IN view of the aforesaid judgment of the Supreme Court, Counsel for the Petitioner does not press the point that the Petitioner was not liable to reimburse for the stolen vehicle because it was being used as Taxi.

IN the said case, the Supreme Court has upheld the order of the State Commission allowing 75% of the claim on non-standard basis. It is contended by the learned Counsel for the Petitioner that the Fora below have erred in directing the Petitioner to pay the Insured Declared Value of the Vehicle and not the 75% on non-standard basis as the vehicle was being used for a purpose other than the purpose for which it was registered in breach of the condition of the policy. We do not find any substance in this submission. Paras 12 and 13 of the judgment read as under: "12. In the case in hand, the vehicle has been snatched or stolen. In the case of theft of vehicle breach of condition is not germane. The appellant Insurance Company is liable to indemnify the owner of the vehicle when the insurer has obtained comprehensive policy for the loss caused to the insurer. The Respondent submitted that even assuming that there was a breach of condition of the insurance policy, the appellant Insurance Company ought to have settled the claim on non-standard basis. The Insurance Company cannot repudiate the claim in toto in case of loss of vehicle due to theft. 13. In the instant case, the State Commission allowed the claim only on non-standard basis, which has been upheld by the National Commission. On consideration of the totality of the facts and circumstances in the case, the law seems to be well settled that in case of theft of vehicle, nature of use of the vehicle cannot be looked into and the Insurance Company cannot repudiate the claim on this basis."

[Emphasis supplied]

SINCE in the said case, the State Commission had allowed only 75% of the claim on non-standard basis, the Supreme Court upheld the order of the State Commission as the Complainant had not filed any appeal against the said order. In the said case, Supreme Court left the question "whether the State Commission was justified in allowing the claim of the Respondent on the non-standard basis" open as the claimant had not filed any appeal against said order. Supreme Court further held that where the vehicle is snatched or stolen, the breach of condition of policy is not germane; that the Insurance Company is liable to indemnify the owner of the vehicle when the insurer has obtained comprehensive policy for the loss caused to the insurer.

IN the present case, the Insurance Company had repudiated the claim of the Respondent on the ground that the vehicle which was registered as a private vehicle, was being used as ''Taxi''. In view of the law laid down by the Supreme Court in the aforesaid case (supra) that in the case of the vehicle which is snatched/stolen, neither the breach of condition is germane nor the nature of use of the vehicle can be looked into, the Insurance Company was not justified in repudiating the claim of the Respondent on the ground that the vehicle was being used for a purpose other than the purpose for which it was registered. Respondent had got the vehicle insured comprehensively from the Petitioner. In view of the law laid down by the Supreme Court that neither the breach of condition nor the use to which the vehicle was being put are relevant considerations for entertaining the claim of the person whose vehicle has been stolen or snatched; therefore, the Insurance Company would be bound to pay the Insured Declared Value of the Vehicle and not 75% on non-standard basis taking the ground of use of vehicle for a purpose other than the purpose for which it was registered as a breach of condition of the policy, the Fora below have rightly directed the Petitioner to pay the Insured Declared Value of the vehicle.

FOR the reasons stated above, we do not find any merit in this Revision Petition and the same is ordered to be dismissed.

IT is an admitted case of the parties that under the interim directions issued by this Commission, the sum of Rs. 2 lakh had already been paid by the Petitioner to the Respondent. Petitioner is directed to pay the balance amount with interest as directed by the District Forum along with interest on the sum of Rs. 2 lakh already paid to the Respondent from four months after the date of lodging of the complaint till the same was paid. Revision Petition dismissed.