Dinesh Kumar Shah vs NATIONAL INSURANCE CO LTD

THE complainant/petitioner purchased a Tipper bearing Registration No. OR -23A -4176 from one Mr. Paramjit Singh and got the same transferred in his name on 20.03.2010. The vehicle was got insured by the complainant/petitioner with the respondent company for the period from 20.07.2011 to 19.07.2012. However the permit issued by the transport authority in the name of Mr. Paramjit Singh was not got transferred by the petitioner/complainant in his name. During currency of the policy, the Tipper met with an accident on 03.08.2011. The Tipper got damaged on account of the said accident and the matter was reported to the concerned Police Station.

ON being informed of the accident, the Insurance Company deputed a surveyor to inspect the Tipper. He assessed the damages to the Tipper at Rs. 2,17,825/ -. A claim was then submitted by the petitioner to the Insurance Company. The claim was repudiated by the Insurance Company on the ground that since the permit had been issued in the name of Mr. Paramjit Singh and had not been got transferred in the name of the petitioner, it had become invalid and consequently, the vehicle was being plied without a valid permit. Being aggrieved from the rejection of his claim, the petitioner/complainant approached the concerned District Forum by way of a complaint. Vide order dated 15.11.2012, the District Forum directed the Insurance Company to pay an amount of Rs. 2,17,825/ - to the complainant/petitioner as expenditure incurred and cost of litigation amounting to Rs. 15,000/ -. Interest was also awarded in case the above referred amount was not paid within 45 days from the date of receiving the copy of the order.

BEING aggrieved from the order of the District Forum, the Insurance Company approached the concerned State Commission by way of an appeal. The State Commission agreed with the stand taken by the Insurance Company and allowed the appeal. Being aggrieved from the appeal being allowed and the complaint being dismissed, the complainant is before us, by way of this revision petition. The following facts are not in question: -

(1) The Tipper in question was purchased by the petitioner from Mr. Paramjit Singh on 20.03.2010.

(2) At the time the Tipper was purchased by the petitioner from the complainant, Mr. Paramjit Singh had a valid permit. The said permit was transferrable, but was not got transferred by the petitioner/complainant in his name.

(3) The Tipper was insured by the Insurance Company in favour of the petitioner/complainant, after it had been purchased by it from Mr. Paramjit Singh.

(4) At the time of insuring the vehicle in the name of the petitioner/complainant, the Insurance Company did not insist upon his producing a permit duly transferred in his name.

SECTION 66 of The Motor Vehicles Act, 1988, to the extent it is relevant for our purpose provides that no owner of a motor vehicle would use or permit the use of the vehicle as a transport vehicle in any place, save in accordance with the conditions of a permit granted or countersigned by a Regional or State Transport Authority or any prescribed authority, authorising him to use the vehicle in that place. It also provides that a goods carriage permit shall, subject to any conditions that may be specified in the permit, authorise the holder to use vehicle for the carriage of goods for or in connection with a trade or business carried on by him. It is thus evident that only the holder of the permit can use the vehicle in respect of which a permit has been issued by the concerned transport authority.

SECTION 82 of the Act, to the extent it is relevant provides for transfer of the permit from one person to another with the permission of the transport authority which granted the permit. No transfer of the permit is allowed without such permission. Section 86(1) of the Act provides in giving an opportunity to the holder of the permit to furnish his explanation, if the transport authority which had granted the permit seeks to cancel or suspend the same on the ground that the holder of the permit had ceased to own the vehicle covered by the permit.

A perusal of the Insurance Policy issued to the complainant/petitioner would show that the said vehicle could be used only under a permit within the meaning of Motor Vehicle Act.

IN the case before us, though there was a permit issued by the concerned transport authority in respect of the vehicle which the petitioner/complainant had purchased from Mr. Paramjit Singh, the said permit continued to be in the name of the transferor of the vehicle and was not got by the complainant/petitioner transferred in his name. Thus, this is not a case where a vehicle was being plied without any permit at all. Here, though a permit was issued, it continued to be in the name of the previous owner of the vehicle and was not got transferred in the name of the purchaser though such a transfer/permit was permissible under the provisions of the Act, with the permission of the concerned transport authority.

THOUGH it can hardly be disputed that the petitioner/complainant should have got the permit transferred in his name by applying to the concerned transport authority and technically, he was not the holder of the permit under which the vehicle was being plied at the time it met with an accident, we cannot be oblivious to the facts. Firstly, the permit issued to Mr. Paramjit Singh was transferable in the name of the complainant/petitioner and secondly, the Insurance Company did not insist upon the permit duly transferred in the name of the complainant being produced before it, at the time the Insurance policy in the name of the complainant was issued. Therefore this, in our view, is a case of contributory negligence on the part of both the parties, the complainant being negligent since he did not get the permit transferred in his name and the Insurance Company being negligent since it did not insist on the complainant getting the permit duly transferred in his name, despite there being statutory requirement to this effect laid down by The Motor Vehicle Act, 1988.

IN National Insurance Co. Ltd. Vs. Nitin Khandelwal, 2008 4 CPJ 1, the respondent, before the Apex Court, purchased a vehicle, which at the time it was stolen, was being used as a taxi, having been hired by four persons for going from Gwalior to Karoli. The vehicle had been insured for personal use. The claim was rejected by the Insurance Company on the ground that insured had committed a breach of the terms of the policy by using the vehicle for commercial use, though it had been misused for personal use. Being aggrieved from the rejection of the claim by the Insurance Company, the respondent filed a complaint before the District Forum at Gwalior. Upholding the plea taken by the Insurance Company, the District Forum dismissed the complaint. Being aggrieved from the dismissal of the complaint, he preferred an appeal before the M.P. State Consumer Disputes Redressal Commission. The State Commission relying upon the decision of this Commission in United India Insurance Co. Ltd. vs. Gian Singh, 2006 CTJ 221 , held that instead of altogether repudiating the claim, the Insurance Company should have settled it on non -standard basis and directed the said company to pay 75% of the sum insured to the complainant. Being aggrieved from the order passed by the State Commission, the Insurance Company approached this Commission, by way of a revision petition. This Commission did not find any justification for interfering with the orders passed by the State Commission, which resulted in the Insurance Company taking up the matter to the Hon''ble Supreme Court. It was contended on behalf of the complainant, that in a case of theft, the use of the vehicle is not germane. It was also pointed out that in the decision of the Hon''ble Apex Court in National Insurance Co. Ltd. vs. Kusum Rai, 2006 4 SCC 250, on which reliance placed by the Insurance Company, would not be applicable since that was the case of negligent driving at the time of the accident. The complainant also placed reliance upon the following view taken by the Hon''ble Apex Court in Jitendra Kumar vs. Oriental Insurance Co. Ltd., 2003 6 SCC 420: -

"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 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.

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."

The complainant further relied upon the following view taken by the Hon''ble Apex Court in National Insurance Company Ltd. vs. Swaran Singh, 2004 3 SCC 297: - "89 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."

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."

DISMISSING the appeal filed by the insurance Company, the Hon''ble Apex Court in Nitin Khandelwal , inter -alia, held as under: - "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 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".

IN Amalendu Sahoo vs. Oriental Insurance Co. Ltd., 2010 2 CPJ 9, the vehicle insured with the Oriental Insurance Company was stolen. The claim of the insurance was repudiated by the Insurance Company on the ground that the vehicle had been given on hire and such use was not used as per the terms of the policy. The District forum having dismissed the complaint, the complainant preferred an appeal before the State Commission which also took a similar view. The complainant, therefore, approached this Commission by way of a revision petition. However, this Commission also dismissed the petition filed by him, which led to the insured knocking at the door of the Hon''ble Apex Court. Allowing the appeal filed by the insured, the Hon''ble Apex court, inter -alia, observed and held as under: - "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.

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,2006 CPJ 144. 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. No. Description Percentage of settlement (i) Under declaration of licensed carrying capacity Deduct 3 years '' difference in premium from the amount of claim or deduct 25% of claim amount, whichever is higher. (ii) Overloading of vehicles beyond licensed carrying capacity Pay claims not exceeding 75% of admissible claim (iii) Any other breach of warranty / condition of policy including limitation as to use Pay upto 75% of admissible claim.

THE learned counsel for the Insurance Company relies upon the decision of the Hon''ble Supreme Court in Suraj Mal Ram Niwas Oil Mills Pvt. Ltd. Vs. United India Insurance Co. Ltd. and Anr., 2010 10 SCC 567 and Export Credit Guarantee Corpn. of India Ltd. Vs. M/s. Garg Sons International, 2013 1 Scale 410. However, neither of these judgments applies to the factual position prevailing in the case under our consideration and neither of them lays down a proposition of law contrary to the view being taken by us. The learned counsel also refers the decision of the Hon''ble Supreme Court in Brij Mohan Parihar vs. M. P. State Road Transport Corporation and Ors., 1987 AIR(SC) 29. We find that the case relied upon by the learned counsel does not pertain to the complaint under the provisions of Consumer Protection Act. In the aforesaid case, the State Road Transport Corporation had allowed certain unemployed graduate to ply the buses as the nominee of the Corporation on the routes in respect of which permit was issued to the corporation. This was found to be contrary to the provisions of The Motor Vehicle Act. As a legal proposition, no one can dispute that the permit issued by the concerned transport authority to Mr. Paramjit Singh ought to have been got transferred by the complainant/petitioner in his name, but considering that the Insurance Company did not insist upon production of the permit duly transferred in the name of the petitioner/complainant at the time of issuing the Insurance Policy, the breach in question, in the facts of the case cannot be said to be fundamental in nature and had no bearing on the extent of the risk covered by the Insurance Company, we are of the view that a claim of this nature be settled by the Insurance Company on non -standard basis and the decision of the Hon''ble Supreme Court in Amalendu Sahoo and Nitin Khandelwal clearly supports such a view.

ADMITTEDLY , the accident in which the vehicle got damaged had nothing to do with the ownership of the permit under which it was being plied. In other words, the Insurance Company was not in any manner prejudicially affected on account of the permit not having got transferred in his name, immediately after the vehicle was purchased by him. In our view, in the case before us, where there was a valid permit issued by the transport authority in the name of previous owner of the vehicle and this is not a case of the Insurance Company that the vehicle was being used for any purpose other than for which permit was issued in the name of the previous owner, the condition breached by the petitioner/complainant cannot be said to be so fundamental as to warrant altogether rejection of the claim lodged by him. In a case of this nature, the Insurance Company in our view should settle the claim on non -standard basis, instead of paying the entire claim assessed by the surveyor appointed by it. We, therefore, allow the revision petition and direct the Insurance Company to pay 75% of the assessed amount of Rs. 2,17,825/ - to the petitioner/complainant alongwith interest on that amount at the rate of 6% per annum w.e.f. 45 days after the order of the District Forum till the date of payment. However, in the facts and circumstances of the case, we find no justification to award any compensation or cost of litigation to the complainant/petitioner. The revision petition stands disposed of accordingly.