UNITED INDIA INS. CO. LTD. vs DEEPAKKUMAR MANUBHAI PATEL

THIS appeal arises from order dated 24.7.2001 rendered by the learned Consumer Disputes Redressal Forum, Kheda at Nadiad in Complaint Application No. 254 of 1993 directing the opponent Insurance Company to pay to the complainant Rs. 1,08,000/- with interest @ 8% from 8.10.1992 (date of repudiation) till payment and Rs. 2,000/- by way of compensation on the head of mental agony and expenses. It was the complainant''s case that complainant''s Maruti car in question which was insured with the opponent Insurance Company for the period in question was stolen during night time on 24.9.1990. The opponent Insurance Company repudiated the claim vide letter dated 8.10.1992 on the ground that the car was used for commercial purpose by giving the same for hire. Upon consideration of the material placed on record, the learned Forum came to the conclusion that, although the complainant admitted in the cross-examination that he was giving the car on hire and using it for such purposes and such use of the car was admitted in the FIR, the fact that it was stolen would hardly be disputed by the opponent Insurance Company. The learned Forum considered the decision of the Apex Court in the case of B.V. Nagaraju v. The Oriental Insurance Company Limited, reported in II (1996) CPJ 28 (SC)=1996 (4) Supreme 557, and came to the conclusion that the loss of car by theft cannot be disputed and that such theft could not be correlated with giving of the vehicle in question on hire. The learned Forum, therefore, came to the conclusion that the main contract of insurance could not be terminated in the manner in which the opponent Insurance Company has done. It, therefore, proceeded to pass the impugned order as stated above.

IN this appeal, the respondent being the original complainant has been served with the notice. The opponent INsurance Company has placed on record purshis Exh. 6 saying that the process of this Commission was served to the original complainant and the amount of Rs. 1,00,000/- which the appellant was directed to deposit as condition to have interim stay of the execution of the impugned order has been deposited. The opponent INsurance Company has also placed on record with Purshis Exh. 7 the acknowledgement of the complainant of the having received the notice of this matter. Thereafter also the matter was adjourned from time-to-time but the complainant has opted to keep away from the proceeding of this appeal. Under such circumstances, this Commission had no alternative expect to hear the learned Advocate for the opponent INsurance Company to consider the submissions made on behalf of the complainant before the learned Forum from the impugned order and to proceed with this order. It would appear from the impugned order that the car in question was insured with the opponent Insurance Company as a private car. The policy of insurance which was issued in favour of the complainant was never a commercial policy or a policy of a car proposed to be used for hire. In that background, the opponent Insurance Company proceeded to investigate the case and found that the car in fact was used for hire. Even before the lerarned Forum, it remained admitted that the car in question was used for hire. This defence of the opponent Insurance Company on facts remained undisputed. With a view to appreciate the legal position, it would be appropriate to note that the policy of insurance in question speaks on the face of it. Unlike in the exclusion clause, limitation as to use on the face of the policy indicated that the car could be used only for social, domestic and pleasure purposes and insured''s own business purpose and the policy would not cover use for hire/reward or for organised racing, pace making, reliability trials, speed testing, carriage of goods (other than samples) in connection with any trade or business or use for any purpose in connection with Motor Trade. It is in this light that the decision of the Apex Court in the case of B.V. Nagaraju v. Oriental Insurance Company Limited (supra), might be considered. The policy of insurance before the Supreme Court contained an exclusion clause with regard to use of the vehicle that was involved in the accident. That vehicle was a Tata Truck and a goods vehicle in which, along with carrying of goods, carrying of passengers being employees to the extent of six persons was permitted. The facts before the Apex Court indicated that there were 9 persons instead of 6 persons. In that light considering the earlier decision in the case of Skandia Insurance Company Limited v. Kokilaben Chandravadan & Ors., reported in I (1987) ACC 413 (SC)=1987 (2) SCC P. 654, the Apex Court observed that such an exclusion clause would have to be read down for the purpose of finding out whether the breach of that clause was fundamental in nature or not. In our considered opinion, this decision will not apply, firstly for the reason that in the present case, the policy of insurance is for the vehicle which was meant for private use unlike a policy of insurance of a vehicle meant for being used for hire. Both these policies are entirely different in nature and substance. The premium is much higher in case of a policy of insurance of a vehicle (car) meant for being used for hire. The requirements of permit under the Motor Vehicles Act for use of such vehicle for hire are also different under the Motor Vehicles Act. The requirements of driving licence of driver of a such a vehicle are also different under the Motor Vehicles Act. In the present case the policy of insurance also speaks on the face of it the nature of use of the vehicle as stated above. Therefore, the decision in the case of B.V. Nagaraju (supra), will not have application to the policy in question in the first place and breach of the condition in the second place inasmuch as even if the limitation as to use in the policy in question is considered, it is nothing but fundamental breach on the face of it. It can be visualised that if a private vehicle is given for hire purpose, the vehicle is apparently exposed to the risk of being stolen where unknown passengers are taken for hire in the vehicle. That exactly happened in the present case. The driver of the vehicle was carrying such unknown passengers for hire and they had stolen away the car. In our considered opinion, in the background of such facts, it has got to be held that the breach of basic condition of policy of insurance in question is fundamental in nature on the face of it. It is undisputed that the car was taken for hire as aforesaid with the consent of the insured (owner of the vehicle). Besides there was no direct nexus between the damage to vehicle in B.V. Nagaraju''s case whereas in the present case there appears to be nexus between the loss of the vehicle and the use thereof. Bearing in mind all these circumstances, the decision in the case of B.V. Nagaraju (supra), will not have any application to the present case.

The learned Advocate apprearing for the Insurance Company has also referred to a decision of the Honourable National Commission in the case of Hemant Kumar Chhabra v. The Oriental Insurance Company Limited, 2002 (1) CPR 8 (NC). In that case the car was registered for private use. It met with an accident. The Insurance Company repudiated the claim inter alia on the ground that it carried fare paying passengers in violation of the terms of the policy. The Honourable National Commission observed that carrying of fare paying passengers would tantamount to violation of the terms of policy and the Insurance Company had valid and enough reason for the repudiation of the claim since policy of insurance is a contract based on trust and the violation thereof would make it invalid. In our considered opinion this decision will apply to the present case both in facts as well as on principle.

IN above view of the matter, the appellant would succeed in this appeal. Following order is, therefore, passed. ORDER Impugned order dated 24.7.2001 rendered by the learned Consumer Disputes Redressal Forum, Kheda at Nadiad in Complaint Application No. 254 of 1993 is hereby set aside. Complaint Application No. 254 of 1993 filed by the complainant will stand dismissed. This appeal is accordingly allowed, with no order as to costs throughout. The amount of Rs. 1,00,000/- stated to have been deposited by the INsurance Company in this Commission shall be returned by account payee cheque after due verification. Appeal allowed.