Amalendu Sahu vs Oriental Insurance Co.Ltd

2. This appeal has been filed challenging the

judgment and order dated 13.10.2008 of the

National Consumer Disputes Redressal Commission

(hereinafter, `National Commission') which

upheld the concurrent finding of the District

and State Consumer Forums that the car at the

1 time of the accident was being driven on hire

and was outside the scope of the insurance

policy.

3. The appellant who is the original complainant

had taken a comprehensive insurance policy in

respect of his private car being No. WB-34C/1919

vide policy No.311701/3/99/7172 of 1999 and the

complainant paid the insurance premium duly.

4. As per the complainant, United Bank of India's

regional office is his tenant and many of its

employees are known to him. One of its

employees had approached the complainant to hand

over the aforesaid vehicle for a few hours for

urgent use by the employees of the Bank. The

complainant handed the aforesaid vehicle by way

of a good gesture and did not take any rent from

the Bank in this regard. The vehicle met with

an accident during the subsistence of the

policy.

5. The complainant had lodged a claim before the

respondent but it refused to allow the claim

2 inter alia on the ground that the vehicle was

given on hire and as per the policy terms such

use was not permitted and the insured was not

entitled to any compensation for such

unauthorised use.

6. The District Forum vide its order dated

19.06.2003 dismissed the claim of the

complainant after going through the policy. The

Forum held that there is a clear condition as to

the mode of use of the insured vehicle. The

policy was not applicable in case of use of the

vehicle for hire, reward or organized racing

speed testing and carriage of goods in

connection with any trade or business by any

third party. Reliance was placed on the report

of the office-in-charge of the police station

according to which the accident occurred because

of the negligence of the driver who had a valid

driving licence. Even though no payment was

proved, the Forum held that the use of private

car without payment of charges could not be

imagined. It was coupled with the fact that the

Bank Manager of the aforesaid Bank was not

3 examined as a witness by the complainant. The

report of the surveyor was that the vehicle was

given on a hire basis. However, that report was

apparently prepared ex-parte.

7. Aggrieved by the aforesaid order, the

complainant preferred an appeal to the State

Consumer Disputes Redressal Commission which

vide its order dated 16.01.2004 dismissed the

appeal as devoid of any merits. It was held

that from the documents and circumstances it was

established that the car was given on a hire.

According to the State Commission, the

surveyor's report was not challenged by the

complainant.

8. Against the order of the State Commission, a

revision was preferred before the National

Commission and the same was dismissed vide order

dated 13.10.2008. According to the National

Commission there was concurrent finding on the

fact that at the time of the accident the car

was used for hire and it was not given as a

4 gesture of goodwill. As such repudiation by the

insurance company was upheld.

9. This Court cannot, however, uphold the aforesaid

stand taken by the insurance company, which has

been affirmed by all the fora below.

10. It is not in dispute that the appellant has

taken a comprehensive insurance policy nor is it

in dispute that the accident took place during

the subsistence of the policy. The policy was,

therefore, valid on the date of the accident.

11. What is disputed by the insurance company is

that the vehicle was not used for personal use

but was used by way of being hired, though no

payment for hiring charges was proved. However,

according to the insurance company, by using the

vehicle on hire, the appellant had violated the

terms of the insurance policy and on that basis

the insurance company was within its right to

repudiate the claim.

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12. Reference in this case may be made to the

decision of National Commission rendered in the

case of United India Insurance Company Limited

v. Gian Singh reported in 2006 CTJ 221 (CP)

(NCDRC). In that decision of the National

Consumer Disputes Redressal Commission (NCDRC)

it has been held that in a case of violation of

condition of the policy as to the nature of use

of the vehicle, the claim ought to be settled on

a non-standard basis. The said decision of the

National Commission has been referred to by this

Court in the case of National Insurance Company

Limited v. Nitin Khandelwal reported in 2008 (7)

SCALE 351. In paragraph 13 of the judgment, in

the case of Nitin Khandelwal (supra) this Court

held:-

"..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."

6 13. In the case of Nitin Khandelwal (supra) the

State Commission allowed 75% of the claim of the

claimant on non-standard basis. The said order

was upheld by the National Commission and this

Court refused to interfere with the decision of

the National Commission.

14. In this connection reference may be made to a

decision of National Commission in the case of

New India Assurance Company Limited v. Narayan

Prasad Appaprasad Pathak reported in (2006) CPJ

144 (NC). In that case also the question was,

whether the insurance company can repudiate the

claims in a case where the vehicle carrying

passengers and the driver did not have a proper

driving licence and met with an accident. While

granting claim on non-standard basis the

National Commission set out in its judgment the

guidelines issued by the insurance company about

settling all such non-standard claims. The said

guidelines are set out below:-

Sr. Description Percentage of No. settlement

7 (i) Under declaration Deduct 3 years' of licensed differene in carrying capacity premium from the amount of claim or deduct 25% of claim amount, whichever is higher.

(ii) Overloading of Pay claims not vehicles beyond exceeding 75% of licensed carrying admissible claim. capacity

(iii) Any other breach Pay upto 75% of of warranty/ admissible claim. condition of policy including limitation as to use

15. From a perusal of the aforesaid guidelines it is

clear that one of the cases where 75% claim of

the admissible claim was settled was where

condition of policy including limitation as to

use was breached.

16. In the instant case the entire stand of the

insurance company is that claimant has used the

vehicle for hire and in the course of that there

has been an accident. Following the aforesaid

guidelines, this Court is of the opinion that

8 the insurance company cannot repudiate the claim

in toto.

17. For the reasons stated, we cannot affirm the

order of the fora below. We direct the

respondent insurance company to pay a

consolidated sum of Rs.2,50,000/- even though

compensation claimed is Rs.5,00,000/-.

18. In the facts and circumstances of this case, the

said sum is to be paid to the appellant by the

insurance company without any interest within a

period of six weeks from date. However, if the

insurance company delays the aforesaid payment

beyond six weeks, then this amount will carry an

interest of 9% from the date of the expiry of

the period of six weeks till the date of actual

payment.

19. The appeal is thus allowed to the extent

indicated above.

.......................J. (G.S.SINGHVI)

9 .......................J. (ASOK KUMAR GANGULY)

New Delhi March 25, 2010

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