Manjeet Singh vs National Insurance Company Ltd.

REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(S). 21552 OF 2017 (@SPECIAL LEAVE PETITION (C) NO. 34605 OF 2015)

MANJEET SINGH …APPELLANT (S)

Versus

NATIONAL INSURANCE COMPANY LTD. & ANR. …RESPONDENT(S)

JUDGMENT

Deepak Gupta, J.

Leave granted.

2. None has put in appearance on behalf of the respondent

no. 2 despite service. Hence, the matter has been heard in the

absence of the learned counsel for the respondent no. 2.

3. Briefly stated the facts of the case are that the appellant

Manjeet Singh purchased a second-hand Tata open truck

under a Hire Purchase agreement dated 13.10.2003 for a sum Signature Not Verified Digitally signed by MEENAKSHI KOHLI Date: 2017.12.08

of Rs. 8,57,000/- from Respondent No.2. The vehicle was 16:00:17 IST Reason:

hypothecated in favour of Respondent No.2. It was insured for 2

a value of Rs.7,28,000/- and the insurance policy was valid

from 25.09.2004 to 24.09.2005. On 12.12.2004, the vehicle

was being driven by Sanjay Kumar on the National Highway

near Karnal. Some persons gave a signal to the driver to stop

the vehicle. After he stopped, they requested the driver to give

them lift up to Yamuna Nagar since no other mode of transport

was available. Since it was a cold wintery night, the driver

gave a lift to these persons. After a little while, one of the

passengers requested the driver to stop the truck on the

pretext that he had to answer the call of nature. When the

truck driver stopped the truck, the three passengers assaulted

the driver, tied his hands and legs with a rope and threw him

in a nearby field and fled away with the vehicle.

4. An FIR was lodged at Police Station, Ladwa on

13.12.2004 and the respondent no. 2, finance company was

intimated about the theft. The complainant had also given a

letter of authority to the finance company to negotiate and

settle the claim with the insurance company. However, no

settlement was arrived at and the claim was not settled and

repudiated vide letter dated 11.11.2005 on the ground of

breach of terms of the policy. The owner-complainant filed a 3

claim petition before the District Consumer Disputes Redressal

Forum (for short ‘the District Forum’) alleging that the

insurance company was liable to compensate him for the loss

caused to him by the theft of the truck. The main defence

taken by the respondent no. 2, insurance company was that

the driver of the vehicle, by giving a lift to the passengers, had

violated the terms of the policy and, as such, there was breach

of policy and the insurance company was not liable. This

ground found favour with the District Forum. The appeal filed

by the claimant before the State Consumer Disputes Redressal

Commission (for short ‘the State Commission’) was rejected

and so was the revision filed before the National Consumer

Disputes Redressal Commission (for short ‘the National

Commission’). The District Forum also rejected the claim on

the ground that the arbitration proceedings had been initiated

by the Respondent No. 2, finance company against the

complainant and they were at the final stage.

5. As far as the first ground is concerned, we are of the

considered opinion, that the District Forum had not properly

appreciated the scope and ambit of the policy. The violation of

the condition should be such a fundamental breach so that 4

the claimant cannot claim any amount whatsoever. As far as

the violation in carrying passengers is concerned, this has

consistently been held not to be a fundamental breach and, in

this behalf, we may make reference to the judgments of this

Court in the case of National Insurance Co. Ltd. v. Swaran

Singh, (2004) 3 SCC 297, National Insurance Co. Ltd. v.

Nitin Khandelwal, (2008) 11 SCC 259, Lakhmi Chand v.

Reliance General Insurance, (2016) 3 SCC 100 and B.V.

Nagaraju v. Oriental Insurance Co. Ltd., (1996) 4 SCC 647.

6. In Lakhmi Chand case (supra), this Court held that to

avoid its liability, the insurance company must not only

establish the defence that the policy has been breached, but

must also show that the breach of the policy is so fundamental

in nature that it brings the contract to an end.

7. In the present case, the appellant who is the owner, was

not at fault. His driver gave a lift to some passengers.

Carrying such passengers may be a breach of the policy, but it

cannot be said to be such a fundamental breach as to bring

the insurance policy to an end and to terminate the insurance

policy. The driver, on a cold wintery night, gave lift to some

persons standing on the road. It was a humanitarian gesture. 5

It cannot be said to be such a breach that it nullifies the

policy. No doubt, these passengers turned against the driver

and stole the truck, but this, the driver could not have

foreseen. In the cases cited above, such claims where there is

breach of policy, have been treated to be non-standard claims

and have been directed to be settled at 75%.

8. As far as the second ground is concerned, we fail to

understand how the arbitration proceedings between the

financer and the insurer, relating to recovery of the loan

amount, can in any way, negate the rights of the insured

against the insurance company.

9. In view of the above discussion, we allow the appeal, set

aside the orders of the courts below and direct the respondent

no.1-insurance company to pay 75% of the insured amount of

Rs.7,28,000/- along with interest at the rate of 9% per annum

from the date of filing the claim petition till the deposit of the

amount. In addition, the insurance company shall also pay

another sum of Rs.1,00,000/- as compensation. Since the

financer is also a party to the petition, the amount shall be

deposited before the District Forum, and in case the claim of

the financer has not been settled in terms of the arbitration 6

award, then the deposited amount shall first be used to pay

the awarded amount and the balance, if any, shall be paid to

the appellant. The appeal is disposed of in the aforesaid

terms. Pending application(s), if any, also stand(s) disposed of.

….……………………..J. (MADAN B. LOKUR)

.….…………………….J. (DEEPAK GUPTA) New Delhi December 08, 2017