National Insurance Co. Ltd vs Ram Prakash Srivastava & 2 Ors

M. Shreesha, J

Challenge in this Revision Petition under Section 21(b) of the Consumer Protection Act, 1986 (for short the "Act") is to the order dated 23.07.2018 passed by the Uttar Pradesh State Consumer Disputes Redressal Commission, in First Appeal bearing No. 608 of 2018. By the impugned order, the State Commission has partly allowed the Appeal preferred by the National Insurance Company Ltd. (for short "the Insurance Company") by modifying the order of the District Consumer Disputes Redressal Forum, Lucknow First (for short "the District Forum") by way of setting aside the order of payment of ₹1,00,000/- awarded by the District Forum towards compensation.

The facts in brief as stated in the Complaint are that the Complainant purchased a Tavera car on 16.01.2015 at around 8.20 p.m. from the third Opposite Party namely Megha Auto Dealers (I) Pvt. Ltd. (hereinafter referred to as "the Dealer). It was stated that at the time of purchasing the vehicle an amount of ₹18,000/- was deposited in cash towards registration fee through his wife Smt. Lila Srivastan and obtained receipt No. S.R. 2802 dated 16.01.2015. It was averred that the vehicle was insured from the Insurance Company after depositing ₹28,370/- and the Insurance Company issued a Cover Note to the Complainant on 16.01.2015. It was stated that the risk began from the date the cover note was issued. It was stated that the car was purchased by taking a loan from Bank of India and immediately after purchase a Pooja was performed at Hanuman Setu Mandir on 16.01.2015 and the said vehicle was taken to his house by the Complainant. While so, on 16.01.2015, the vehicle was parked at the Complainant's house and it was stolen between 2 to 3 a.m. in the intervening night of 16/17.01.2015. An FIR was registered at Police Station Gajipur and intimation was also given about the theft to the Insurance Company. The signatures of the Complainant was taken on blank papers by the owner of M/s Agile Associate during the course of investigation with the assurance that he would get the statement recorded based on which the claim would be awarded. The final report in the said FIR was forwarded by the Police Station Gajipur to Special Chief Judicial Magistrate, Lucknow on 28.06.2015. The original papers and the key were handed over to the Insurance Company on 17.07.2015.

It was averred that the Insurance Company repudiated the claim of the Complainant on 16.09.2015 citing the order passed by the Hon'ble Supreme Court in Civil Appeal No. 8463/2014 - Narinder Singh Vs. The New India Insurance Co. Ltd. The Complainant replied vide letter dated 21.09.2015 stating that the facts of the claim are different from the observations made by the Hon'ble Supreme Court in the case of Narinder Singh (supra) and this is not applicable to his claim. In Narinder Singh's case (supra), the vehicle met with an accident while running at a public place even after 21 days of the expiry of the temporary registration. That Form 20 i.e. application for registration must be submitted within 7 days of the delivery of the vehicle as per Section 47(1) of Central Motor Vehicles Rules 1989. Section 39 of the Act cannot be said to be not complied with, till the period provided in the rules are expired. The Complainant has also averred that there was a Circular dated 20.03.2015 of the Head Office of the Insurance Company wherein provisions have been made for the disposal of non-registered vehicles but the same were not considered by the Insurance Company and the claim was repudiated ignoring all the provisions vide letter dated 12.02.2015. Hence the Complaint before the District Forum, seeking the following reliefs:-

Claim amount of ₹9,28,906/- along with interest @ 18% p.a.

₹25,000/- towards mental and physical agony.

₹11,000/- towards costs.

Appropriate order be passed for taking penal action against the guilty officers and officials for repudiating the claim in arbitrary and erroneous manner. & Any other relief which is deemed to be just and proper.

The Insurance Company filed their Written Statement admitting the receipt of ₹28,370/- towards premium; that the IDV of the insured vehicle was ₹9,28,906/-; the period meant to be covered was from 16.01.2015 to 15.01.2016; It was averred that the Dealer, aware of the provisions of Rule 42 of the Motor Vehicle Rules, 1989 violated Sections 29, 192 and 207 of the Motor Vehicle Act, 1988 and delivered an unregistered vehicle to the buyer; that the Complainant had erred in taking delivery of an unregistered vehicle; that their repudiation is justified keeping in view the judgement of the Hon'ble Supreme Court in Civil Appeal No. 8463/2014 - Narinder Singh Vs. The New India Insurance Co. Ltd. in which the Hon'ble Supreme Court has observed that if any unregistered vehicle is brought or used at any public place in violations of Section 39, 192 and 207 of Central Motor Vehicle, Act 1988 and Rule 42 of Central Motor Vehicle Rules, 1989, the stand of the Insurance Company that the basic rules and conditions of the Insurance Policy has been violated would be justified. A Circular was issued by the Head Office on 26.09.2014 that the Insurance Claims related to vehicles which could not be registered or whose registration had expired are contrary to the basic rules and, therefore, are not payable. It was averred that the unregistered vehicle of the Complainant was stolen after the issuance of Circular dated 29.06.2014 and prior to the issuance of Circular dated 20.03.2015. Therefore Circular dated 29.04.2014 was applicable with respect to the claim of the Complainant and, therefore, the Complainant cannot avail the benefit of the subsequent circular. However, thereafter it was decided that the Complainant could avail the benefit of the Circular dated 20.03.2015, but the Complainant expressed his inability to provide a copy of the Registration Certificate and, therefore, he was deprived of receiving the claim amount under the first part of the Circular dated 20.03.2015. The Complainant submitted receipt No. 2802 for an amount of ₹18,000/- before the Insurance Company but the investigator appointed by the Insurance Company had submitted information that the said vehicle was to be taken to Lucknow to the R.T.O. Office for fitness as the registration was taken for a 'Taxi'. As the Complainant had not deposited any fee towards registration of the vehicle at the date and time of taking the delivery he could not take benefit of the third part of the Circular and, therefore, the Claim was dismissed.

The District Forum based on the evidence adduced allowed the Complaint in part directing the Insurance Company to pay an insured amount of ₹9,28,906/- along with interest @ 9% p.a. from the date of the filing of the Complaint till the date of realization together with costs of ₹5,000/- and compensation of ₹1,00,000/-. Aggrieved by the said Order, the Insurance Company preferred Appeal bearing No. 608 of 2018. The State Commission while concurring with the findings of the District Forum only modified the order by setting aside the compensation of ₹1,00,000/-. The State Commission observed as follows:-

"After perusing the case laws submitted by the parties, this Bench is also of the view that the principles laid down in Revision Petition No. 449 of 2018, National Insurance Co. Ltd. Vs. M/s Shyam Indus will be applicable in the instant case because the vehicle owner after purchasing the vehicle had got insured the vehicle on the very same day from the appellant Insurance Company and the cheque of premium amount was paid to the Insurance Company by cheque. The registration fee of ₹18,000/- was also deposited for the registration of the vehicle and the receipt thereof was also issued. Thereafter, the Complainant took the said vehicle and parked at his house but the vehicle was stolen on the very same night from his house. This averment of the Insurance Company is not liable to be accepted that the payment of the cheque issued by the insurance holder had not yet been en-cashed. Therefore, the insurance company is not liable for payment of compensation of the stolen vehicle. The insurance was in effect from 16.01.2015 and it is recorded in cover note. After receiving cheque and issuing cover note by the insurance company, it is the liability of the insurance company to pay compensation of the insured amount. If the cheque was dishonoured by the bank, the insurance company would not have been liable for payment of compensation but it is not so in this case.

On considering the facts and circumstances mentioned above, this bench is of the view that the District Forum has rightly awarded insured amount with nine percent interest per annum to the Complainant from the appellant/opposite party but the interest from the date of insurance which has been awarded that is modified and it is appropriate from the date of filing of Complaint till the date of payment."

Learned Counsel for the Revision Petitioner vehemently argued that both the Fora below have failed to consider the observations made by the Hon'ble Supreme Court in Narinder Singh Vs. New India Assurance Co. Ltd. (2014) 9 SCC 324. He further contended that Courts have also held that where a contract, which was valid at the inception, was performed by one party violating some statutory prohibition, the party violating the law will not be able to enforce the claim based on his own illegal performance and National Commission in Niranjan Kumar Yadav Vs. National Insurance Co. Ltd. II (2011) CPJ 64 (NC) has taken a similar view and, therefore, the provisions of law cannot be defeated and the Court cannot unforce such a decision. Learned Counsel further argued that the State Commission tried to make a distinction between a 'vehicle in use' and a 'parked vehicle', which is based on assumption only. The law, as it is, does not make any distinction since breach of law will remain a breach whether a vehicle is parked or is being plied on the road. Learned Counsel further argued that the Fora below wrongly relied upon the receipt of ₹18,000/- given by the vehicle dealer in favour of the Complainant and that it establishes beyond doubt that it was falsely procured.

Learned Counsel appearing for the Respondent/Complainant contended that vehicle was stolen on the same night that it was purchased; that a cover note was issued by the Insurance Company; that after the Supreme Court Judgement the Insurance Company had issued several Circulars which are applicable to the facts of this case.

The Hon'ble Supreme Court in Narinder Singh's case (supra) has held that using a vehicle on the public road without any registration is not only an offence punishable under Section 192 of M.V. Act but also a fundamental breach of the terms and conditions of the policy contract.

It is an admitted fact that the Complainant purchased Tavera car on 16.01.2015; a cover note was issued on 16.01.2015 and the receipt for ₹18,000/- has been filed by way of evidence before the District Forum. This receipt shows that an amount of ₹18,000/- was paid in cash at the time of delivery on 16.01.2015 at 8.20 p.m. and that vehicle registration paper, sale bill, Form 21 and Form 22 were handed over to the Complainant. It is pertinent to mention that the cover note clearly depicts that it was issued on 16.01.2015 at 4.35 p.m. for an insured valued of ₹9,28,906/- for the subject vehicle, 'the effect date of commencement of the insurance was 16.01.2015' and the date of the expiry of the insurance was clearly stated to be 15.01.2016. The receipt and the cover note evidence that the risk indeed commenced on 16.01.2015. The only contention of the Insurance Company is that the vehicle was not registered as on the date of the theft. The State Commission has rightly distinguished that the vehicle was not in a running condition and was parked in the front of the Complainant's residence on the day it was purchased and on the very same day it was stolen and has rightly placed reliance on the observations of this Commission in RP No. 449 of 2018, National Insurance Company Ltd. Vs. M/s Shyam Indus. At the cost of repetition it is stated that the vehicle was parked and was not being driven in any public place. Keeping in view the Affidavit filed by the Dealer that they had received an amount of ₹18,000/- for facilitating the registration of Tavera car and a receipt S.R. 2802, was issued by them, it is clearly established that the Complainant had paid for the registration and, therefore, the Circular dated 20.03.2015 which the Complainant is relying upon squarely applies, as it specifies the following:-

"At the same time, requirement of registration of the vehicle before its use at a public place being statutory in nature, it cannot be altogether ignored while considering an insurance claim on such a vehicle.

Keeping in view the totality of situation and striking a fair balance between the interest of various stake holders, in the spirit of the afore-said judgement of the Hon'ble Supreme Court, therefore, the GMs (Motor) decided to treat claims on Motor Vehicles meeting with accident at a time when there was no valid registration on the vehicle in the following manner:-

In cases where the material on record available show that the insured had deposited the requisite registration fee on the vehicle either with the RTO or with the dealer/sub-dealer, from where the vehicle was purchased, before the vehicle meets with an accident, while the registration is still in process/pending after such deposit of registration fee, claims arising out of such an accident may be settled on standard basis.

In cases where the insured had not deposited the requisite registration fee on the vehicle either with the RTO or with the dealer/sub-dealer from where the vehicle was purchased, before the vehicle meets with an accident, but the facts and circumstances of the case do point out that there were genuine reasons for his failure to even deposit the registration fee before the accident taking place, such cases should be settled on non-standard basis (not exceeding 75% of the normally admissible amount of the subject claim) by the Competent Authority as provided under the Financial Standing Orders of the Company for the time being in force, taking into account the overall facts and circumstances of the case.

In cases where the insured had neither deposited the requisite registration fee on the vehicle either with the RTO or with the dealer/sub-dealer, from where the vehicle was purchased, before the vehicle meets with an accident, nor there were genuine reasons for his failure to event deposit the registration fee before the accident taking place, such claims should be repudiated in the normal course by the usual Competent Authority." (Emphasis supplied).

At the cost of repetition in the instant case, the Insured deposited the requisite registration fee and the cover note was also issued and, therefore, I agree with the findings of both the Fora below that the Circular dated 20.03.2015 is applicable to this case and the repudiation by the Insurance Company is totally unjustified.

11 In view of the afore-going discussion, I do not find any illegality or infirmity in the concurrent findings of both the Fora below to exercise our limited revisional jurisdiction as envisaged by the Hon'ble Apex Court in Rubi (Chandra) Dutta Vs. M/s United India Insurance Company Ltd. (2011) 11 SCC 269 and hence this Revision Petition is dismissed. No order as to costs.

Needless to add, the amount, if any, deposited by the Insurance Company, shall stand adjusted from the decretal amount.