National Insurance Co. Ltd vs Nitin Khandelwal

National Insurance Co. Ltd. .. Appellant

Versus

Nitin Khandelwal .. Respondent

JUDGMENT

Dalveer Bhandari, J.

1. Leave granted.

2. This appeal is preferred against the order dated 21st

September, 2006 passed by the National Consumer Disputes

Redressal Commission, New Delhi (hereinafter referred to as

the National Commission) in R. P. No. 2638 of 2006. 2

3. Brief facts of the case which are necessary to dispose of

the matter are recapitulated as under:-

4. The respondent Nitin Khandelwal had purchased the

vehicle Mahindra Scorpio bearing No.HR-18-8743 on

28.5.2003. On 27.9.2003, he had sent his vehicle to bring his

children from Jaipur. On the way, some unknown people

stopped the vehicle, tied the driver and dumped him on the

way and snatched away the vehicle. The report was lodged by

the driver at the police station and the appellant Insurance

Company was informed of the same. Thereafter, on

2.10.2003, the respondent filed an insurance claim, which

was rejected by the Insurance Company.

5. The appellant's version was that the vehicle was being

used as a taxi and the four passengers had hired the vehicle

for going from Gwalior to Karoli and those passengers, on the

way, snatched the vehicle from the driver. The vehicle was

insured for personal use and it was being used by the

respondent as a taxi. According to the appellant, the

respondent had violated the terms of the insurance policy and, 3

therefore, rejected the claim. The respondent filed a complaint

before the District Consumer Disputes Redressal Forum,

District Gwalior, M.P. (hereinafter referred to as "the District

Forum").

6. According to the District Forum, the respondent had

violated the terms and conditions of the insurance policy and

that the appellant Insurance Company was justified in

rejecting the claim of the respondent. The respondent,

aggrieved by the said order of the District Forum, filed an

appeal before the M.P. State Consumer Disputes Redressal

Commission (hereinafter referred to as "the State

Commission").

7. The State Commission observed that the theft of the

vehicle has not been denied by the Insurance Company.

However, the claim of the respondent under the policy was

repudiated by the Insurance Company solely on the ground

that the vehicle though registered and insured as a private

vehicle, at the time of theft, was being used as a taxi for

carrying passengers on payment. So, the said vehicle was 4

being used contrary to the terms and conditions of the

insurance policy.

8. The State Commission placed reliance on the decision of

United India Insurance Co. Ltd. v. Gian Singh [2006 CTJ

221 (CP) (NCDRC)] wherein it was held by the National

Commission 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 non-standard basis. Similar view was taken by

the State Commission in Appeal No.1463 of 2004 (Track Way

Securities & Finance Pvt. Ltd. v. National Insurance Co.

& Others) decided on 23.3.2006. Relying on the said

judgment, the State Commission observed that the claim of

the respondent herein ought to be settled on non-standard

basis and the complainant respondent was thus entitled to

the 75% of the sum insured. Consequently, the State

Commission directed the appellant herein to pay 75% of the

amount i.e. Rs.4,83,000/- with interest @ 6% from the date of

the complaint till payment.

9. The appellant, aggrieved by the said order of the State

Commission, preferred a revision petition before the National 5

Consumer Disputes Redressal Commission (hereinafter

referred to as "the National Commission"). The National

Commission, after considering the fact that the vehicle was

used for commercial purpose, granted reimbursement on the

non-standard basis as per the policy of the insurance

company and observed that the order of the State Commission

did not call for any interference.

10. The appellant, aggrieved by the impugned order of the

National Commission, preferred this appeal before this court.

11. Pursuant to the notice issued by this court, the

respondent has filed a comprehensive counter affidavit. The

appellant relied upon the judgment of this court in the case of

National Insurance Co. Ltd. v. Kusum Rai & Others (2006)

4 SCC 250. According to the respondent, this case has no

application so far as the instant case is concerned. The

aforesaid case relates to the accident where the main or

contributory cause of accident was negligent driving at the

relevant time of the accident. The instant case relates to the

theft of the car. It is not a case of third party risk. In the 6

instant case, the vehicle has not been recovered. It is also

incorporated in the counter affidavit that it is not disputed

that the vehicle was comprehensively insured. Since the

vehicle in question had been stolen, therefore, in the case of

theft of vehicle, the breach of condition is not germane. In

Kusum Rai's case (supra), the cases of Jitendra Kumar v.

Oriental Insurance Co. Ltd. & Another (2003) 6 SCC 420

and National Insurance Co. Ltd. v. Swaran Singh &

Others (2004) 3 SCC 297 were also considered. This court in

Jitendra Kumar's case, in paras 9 and 10, observed as

under:-

"9. The question then is; can the Insurance Company repudiate a claim made by the owner of the vehicle which is duly insured with the company, solely on the ground that the driver of the vehicle who had nothing to do with the accident did not hold a valid licence? The answer to this question, in our opinion, should be in the negative. Section 149 of the Motor Vehicles Act, 1988 on which reliance was placed by the State Commission, in our opinion, does not come to the aid of the Insurance Company in repudiating a claim where the driver of the vehicle had not contributed in any manner to the accident. Section 149(2)(1)(ii) of the Motor Vehicle Act empowers the Insurance Company to repudiate a claim wherein the vehicle in question is damaged due to an accident to which driver of the vehicle who does not hold a valid driving licence is responsible in any manner. It does not empower the Insurance Company to repudiate a claim for damages which has occurred 7

due to acts to which the driver has not, in any manner, contributed i.e. damages incurred due to reasons other than the act of the driver.

10. It is the case of the parties that the fire in question which caused damage to the vehicle occurred due to mechanical failure and not due to any fault or act, or omission of the driver. Therefore, in our considered opinion, the Insurance Company could not have repudiated the claim of the appellant."

12. Similarly, in Swaran Singh's case (supra), this court

has held as under:

"If on facts, it is found that the accident was caused solely because of some other unforeseen or intervening causes like mechanical failures and similar other causes having no nexus with the driver not possessing requisite type of licence, the insurer will not be allowed to avoid its liability merely for technical breach of conditions concerning driving licence."

13. 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 8

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.

14. 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 circumstance 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 that basis.

15. In the facts and circumstances of the case, the real

question is whether, according to the contract between the

respondent and the appellant, the respondent is required to

be indemnified by the appellant. On the basis of the settled

legal position, the view taken by the State Commission cannot

be faulted and the National Commission has correctly upheld

the said order of the State Commission.

9

16. The State Commission has allowed only 75% claim of the

respondent on non-standard basis. We are not deciding

whether the State Commission was justified in allowing the

claim of the respondent on non-standard basis because the

respondent has not filed any appeal against the said order.

The said order of the State Commission was upheld by the

National Commission.

17. In our considered view, no interference is called for. This

appeal is accordingly disposed of. In the facts and

circumstances of the case, the parties are directed to bear

their own costs.

...............................J. (Tarun Chatterjee)

...............................J. (Dalveer Bhandari) New Delhi;

May 8, 2008.