E.A. Murali vs New India Assurance Company Ltd

The petitioner is the owner of a stage carriage with registration No.KL-42- C-4080. It was having Ext.P2 insurance policy issued by the

respondent, which was valid for the period from 22.8.2019 to 21.8.2020. It is stated that the vehicle could not be operated from 24.3.2020 to

24.5.2020. It is stated that considering the difficulties faced on account of the outbreak of Covid 19 pandemic, the insurance companies had taken a

decision to extend the validity of all the insurance policies for the lock down period from the respective date of expiry of the insurance policy. The

petitioner submits that Ext.P2 policy was extended for a period of 60 days from 21.8.2020 to 22.10.2020 as per Ext.P3. The petitioner submits that his

vehicle continued to be off the road even thereafter for a further period of 82 days from 01.07.2020 to 22.09.2020, as certified by the RTO in Ext.P4.

The petitioner therefore submitted Ext.P5 application before the respondent requesting for a further extension of the insurance policy for a period of

82 days, on the strength of Ext P4. This Writ Petition is filed alleging that the respondent did not respond to the same.

The petitioner points out that as per GR.31 of India Motor Tariff published by the Tariff Committee under the provisions contained in Part II(b) of

the Insurance Act, 1938, the vehicles laid up in garage and not used for not less than 2 consecutive months are entitled for extension of expiry date of

the current period of insurance under the policy for a period equal to the period the policy remained suspended on account of the layup. Therefore,

according to the petitioner, in view of Ext.P4 certificate the respondent ought to have extended the policy for a period of 82 days more from

22.10.2020.

The respondent has filed a counter affidavit. It is stated that the period prescribed for an insurance policy is twelve months. The validity period of

the policy in this case was from 22.8.2019 to 21.8.2020. It was extended from 21.8.2020 to 22.10.2020 invoking the provisions contained in GR.31 of

India Motor Tariff (Ext.P6). It is stated that the respondent, taking note of the fact that the vehicles were off the road during the lock down period,

decided to grant extension of the policies for a period of 60 days. However, it is stated that in order to grant extension of the period of policy, the lay

up should occur within the original tenure of the policy i.e it should have been during the period from 22.8.2019 to 21.8.2020. In the present case the

lay up was for the period from 1.7.2020 to 22.9.2020. The number of days for the period upto the date of expiry of the policy was only 52 days;

whereas under GR.31, there should be a minimum of 60 days within the original period of policy and it was short by 8 days. The petitioner is claiming

extension of policy on the basis of the period of lay up which occurred during the original tenure of the policy and also beyond it. The further

contention of the respondent is that since the concession granted is an exception to the general terms of the policy it has to be given a strict

interpretation. In order to grant the benefit, certain criteria were fixed and going by the same the petitioner is not entitled for extension of the policy. It

is stated that the insurance company can act only in accordance with law. It is stated that in view of Section 64 V(b) of the Insurance Act the

Insurance company is obligated to provide coverage of policy only if it receives premium at the rates prescribed. The respondent has not collected any

premium for the period for which it is sought to be extended. It is also stated that the issue being a purely contractual matter a Writ Petition is not

maintainable.

I heard Sri Deepu Thankan, the learned counsel for the petitioner, and Sri Ziyad Rehman, the learned counsel for the respondents.

The claim raised by the petitioner is on the basis of GR.31 of India Motor Tariff. As pointed out by Sri Ziyad Rehman, GR.11 is also relevant for

considering the claim of the petitioner under GR.31. GR.11, which provides for the period of insurance read as follows:

“GR.11. Period of Insurance

Unless specifically stated otherwise, premiums quoted in the Schedules under various Sections of the India Motor Tariff are the premiums

payable on policies issued or renewed for a period of twelve months. No policy is permitted to be issued or renewed for any period longer

than twelve months. It shall, however, be permissible to extend the period of insurance under the policy for any period less than twelve

months, for the purpose of arriving at a particular renewal date or for any other reasons convenient to the insured, by payment of extra

premium calculated on pro-rata basis, provided such policies are renewed with the same insurer immediately after the expiry of such an

extension. All such extensions will require attachment of the following Warranty to the policy.â€​

Therefore, GR.11 restricts the period of a policy to 12 months, either for issuing a policy or for renewal. GR.31 relates to concession for laid up

vehicles and the same reads as follows:

“GR.31. Concession for Laid-Up Vehicles

Vehicles laid up in garage and not in use for a period of not less than two consecutive months will be entitled to:

I. For Liability Only Policy:--

a) A pro-rata return of premium for the period during which the vehicle is so laid up, which return will be credited to the insured in

consideration of suspension of the insurer's liability under the policy during the period of lay-up.

The credited return of premium will be deducted from the next renewal premium. This cannot be given as cash refund even if the policy is

not renewed with the same insurer.

The calculation of the amount of the return premium is to be made on the net premium on the date of issue of the policy or the date of

renewal of the policy preceding the laying-up of the vehicle.

OR

b) The expiry date of the current period of insurance under the policy may be extended for a period equal to the period the policy remained

suspended on account of the lay-up.

The adoption of alternatives (a) or (b) above will be at the option of the insured. In either case, the insured will be required to pay Rs.15/-

towards administrative costs.

II. For Package Policy

The liability of the insurer under the policy will remain restricted for loss or damage of the insured vehicle by Fire and/or Theft as

applicable during the period of such lay-up. In consideration of this restriction of cover under the policy:-

a) a pro rata return of premium for the period during which the vehicle is so laid up will be credited to the insured after retention of pro

rata premium for the lay-up period in the tariff rate for Fire and/or Theft Risks as applicable for the class of vehicle concerned.

The credited return of premium will be deducted from the next renewal premium. This cannot be given as cash refund even if the policy is

not renewed with the same insurer.

The calculation of the amount of the return of premium is to be made on the net premium on the date of issue of the policy or the date of

renewal of the policy preceding the laying-up of the vehicle

OR

b) the expiry date of the current period of insurance under the policy may be extended for a period equal to the period the policy remained

suspended on account of the lay-up.

The adoption of alternatives (a) or (b) above will be at the option of the insured. In either case, the insured will be required to pay Rs.15/-

towards administrative costs.

Return of premium or extension of policy period in lieu thereof, on account of lay-up of vehicles, both in respect of Liability Only Policies

and Package Policies, will be available provided.

i) the vehicle is not undergoing repairs during lay-up as a result of an event giving rise to a claim under the policy ;

ii) previous notice in writing has been given to the insurer by recorded delivery ; iii)the certificate of insurance has been returned to the

insurer ; and

iv)the period of lay-up / suspension of policy shall not extend beyond twelve months from the expiry date of the policy period in which the

lay-up has commenced.

Endorsement IMT 11-A is to be used where the entire period of lay-up and suspension/restriction of cover has been intimated to the insurer.

Endorsements IMT 11-B/11-C is to be used where the entire period of lay-up and suspension/ restriction of cover is “until further

noticeâ€​.

No return of premium or extension of policy period in lieu thereof is to be allowed for lay-up of trailers and vehicles used for hire or

reward or for Motor Trade purpose, except when the permits for vehicles are temporarily withheld or suspended by the Government.â€​

It is seen that extension envisaged under GR.31. I(b) as well as II (b), is only with respect to the “current period†of insurance for a period equal

to the period the policy remained suspended on account of lay up and the lay up should have been for a period of not less than two consecutive

months. Therefore, the policy can remain suspended only within the 12 months and in this case within the period from 22.08.2019 to 21.08.2020.

Ext.P4 certificate, based on which the petitioner claims further extension is for the period from 01.07.2020 to 22.09.2020. The said 60 days' period of

lay up, extends beyond the 12 months' period of the policy, as the policy was only upto 21.08.2020. Any further extension would enlarge the period of

insurance coverage to more than 12 months. The extension is envisaged only for the period during which the policy could remain suspended. Such a

suspension can only be with reference to the original policy and the same has to be confined to a period of 12 months.

The petitioner cannot have a case that the period beyond 21.08.2020 was within the currency of Ext.P2 policy. In the absence of a lay up for a

consecutive period of two months within the currency of Ext.P2 policy, the petitioner cannot have any claim for further extension when the period

from 01.07.2020 to 21.08.2020-the date of expiry of Ext.P2 policy was only 52 days. The concession under GR.31, is subject to fulfillment of the

conditions stipulated therein. As rightly contended by Sri. Ziyad Rahman, provisions granting concession under GR.31 have to be construed with

reference to the provisions contained in GR.11 also and it requires strict interpretation. Current period of policy envisaged in GR.31 (I)(b) or (II(b) can

only be the 12 months' period of the policy as mentioned in Ext.P2 and a policy is not envisaged for a period over and above 12 months.

In this view of the matter, I do not find any illegality on the part of respondent in not granting any further extension to the policy. The Writ Petition is

accordingly dismissed.