National Insurance Company Ltd. vs Binod Kumar Singh

This appeal has been filed by the National Insurance Co. Ltd. against the order dated 07.07.2017 of the State Consumer Disputes Redressal Commission, Bihar, (in short 'the State Commission') passed in Complaint Case No.44 of 2014.

Brief facts of the case are that the respondent/complainant had purchased a truck from Tata Motor. It was engaged in lifting soil for making four lane Mohnia-Arra Road. On 08.06.2014 near Narayanpur village due to short circuit fire was broken in truck and the truck was burnt. The local police as well as the appellant/ Insurance Company were informed. The vehicle was taken to workshop which is lying there since 15.6.2014. The cost of repairing was estimated to be Rs.23,74,142/- which was more than the cost of a new truck. The claim for the total loss was submitted by the complainant but it was not settled by the Insurance Company. Aggrieved, the complainant filed a consumer complaint before the State Commission. The complaint was resisted by the opposite party stating that the vehicle did not have any permit and therefore the claim was not payable. The State Commission, however, allowed the complaint and directed Insurance Company to settle the claim on non-standard basis.

Hence the present appeal.

Heard the learned counsel for both the parties and perused record.

Learned counsel for the appellant stated that non-availability of the permit is a fundamental breach of provisions of the Motor Vehicles Act, 1988, therefore, also a fundamental breach of terms and conditions of the policy. It was argued that the State Commission has relied upon the judgment of the Hon'ble Supreme Court in National Insurance Company Limited Vs. Nitin Khandelwal, IV (2008) CPJ 1 (SC). It was argued that the facts of that case are totally different from the present case. In National Insurance Co. Ltd. Vs. Nitin Khandelwal, (supra), the vehicle was stolen and therefore, the Hon'ble Supreme Court has held that violation of a condition of the policy is not germane in case of theft of the vehicle. The instant case is not a case of theft.

It was argued that against fundamental breach of terms and conditions of the policy, claim cannot be approved even on non-standard basis. Approval on non-standard basis is generally resorted to in cases where either the vehicle has been found over weight or the driver may not be having licence of the required category. The truck cannot ply on any road without the relevant permit. Thus, if the truck is not supposed to be at the site of the accident, how the accident claim can be entertained?

In support of his arguments, learned counsel referred to the following judgments:-

Narinder Singh Vs. New India Assurance Company Ltd. and others, Civil Appeal No.8463 of 2014, decided on September 04, 2014 (SC).

Lalaram Vs. Oriental Insurance Company Ltd. & others, RP No.1433 of 2016, decided on 25.5.2016 (NC).

New India Assurance Co. Ltd. Vs. Birbal Singh Jhakhar, RP No.2476 of 2012, decided on 06.02.2014 (NC).

On the other hand learned counsel for the respondent/complainant stated that Hon'ble Supreme Court in Amalendu Sahoo Vs. Oriental Insurance Company Limited, (2010) 4 SCC 536 has observed that if certain conditions of the Motor Vehicles Act and consequently of the policy are violated, the claim can be settled on non-standard basis as per the following table:-

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.

It was argued by the learned counsel that the decision of the Hon'ble Supreme Court in National Insurance Company Limited Vs. Nitin Khandelwal (supra) is equally applicable in the present case as well. The State Commission has rightly relied on this judgment. The learned counsel for the respondent further referred to the judgment in RP 2341 of 2014, United India Insurance Company Ltd. Vs. Diwan Chand, decided on 16.07.2014 (NC) wherein this Commission has allowed the claim on non-standard basis in absence of a route permit on the basis of the judgment of the Hon'ble Supreme Court in Amalendu Sahoo Vs. Oriental Insurance Company Limited (supra). This Commission has taken note of the fact that Hon'ble Supreme Court has allowed the insurance claim on non-standard basis in Amalendu Sahoo Vs. Oriental Insurance Company Limited (supra) where the car was being used as taxi without any permit. Thus, it is clear that non-existence of a permit is not fundamental breach of the policy condition and the claim can be allowed on non-standard basis.

Registry has reported the delay of 8 days in filing the present appeal. As the delay is marginal, the delay is condoned on the ground mentioned in the application for condonation of delay.

Coming to the merits of the case, it is seen that the Insurance Company had not finalised the claim as the bills of repairs and the permit of the truck was not submitted by the complainant. The surveyor appointed by the Insurance Company submitted a report of Rs.23,74,142/- as requirement for repairs. The second surveyor submitted the report on the repair basis for Rs.13,55,438/-. The Insurance Company has pleaded that the truck had no valid permit at the time of accident. The State Commission partly allowed the complaint by allowing the claim on non-standard basis.

In the present case, the main question for consideration is whether an insurance claim should be allowed either fully or on non-standard basis even when there is no permit with the truck. Clearly, absence of permit is a fundamental breach of terms and conditions of the policy. We are not convinced by the reliance placed by the State Commission on the decision of the Hon'ble Supreme Court in National Insurance Company Limited Vs. Nitin Khandelwal (supra) because the present case relates to damage by fire and in Nitin Khandelwal case, the vehicle was stolen. Moreover, the Hon'ble Supreme Court in a recent judgment in Amrit Paul Singh & anr. Vs. TATA AIG General Insurance Co. Ltd. & Ors., Civil Appeal No.2253 of 2018, decided on 17.05.2018 has observed that the breach in respect of permit cannot be treated similar to breach due to a fake licence or overloading etc. The Hon'ble Supreme Court in Amrit Paul Singh & anr. Vs. TATA AIG General Insurance Co. Ltd. & Ors. (supra) has observed as under:-

"23. In the case at hand, it is clearly demonstrable from the materials brought on record that the vehicle at the time of the accident did not have a permit. The appellants had taken the stand that the vehicle was not involved in the accident. That apart, they had not stated whether the vehicle had temporary permit or any other kind of permit. The exceptions that have been carved out under Section 66 of the Act, needless to emphasise, are to be pleaded and proved. The exceptions cannot be taken aid of in the course of an argument to seek absolution from liability. Use of a vehicle in a public place without a permit is a fundamental statutory infraction. We are disposed to think so in view of the series of exceptions carved out in Section 66. The said situations cannot be equated with absence of licence or a fake licence or a licence for different kind of vehicle, or, for that matter, violation of a condition of carrying more number of passengers. Therefore, the principles laid down in Swaran Singh (supra) and Lakhmi Chand (supra) in that regard would not be applicable to the case at hand. That apart, the insurer had taken the plea that the vehicle in question had no permit. It does not require the wisdom of the "Tripitaka", that the existence of a permit of any nature is a matter of documentary evidence. Nothing has been brought on record by the insured to prove that he had a permit of the vehicle. In such a situation, the onus cannot be cast on the insurer. Therefore, the tribunal as well as the High Court had directed the insurer was required to pay the compensation amount to the claimants with interest with the stipulation that the insurer shall be entitled to recover the same from the owner and the driver. The said directions are in consonance with the principles stated in Swaran Singh (supra) and other cases pertaining to pay and recover principle."

The above judgment of the Hon'ble Supreme Court has put at rest the issue of insurance claim of a vehicle without a permit. Being judgment of the Hon'ble Supreme Court, it has to be followed and the reliance on judgment of this Commission in United India Insurance Company Ltd. Vs. Diwan Chand (supra) cannot be sustained. Thus relying on the judgment of the Hon'ble Supreme Court in Amrit Paul Singh & anr. Vs. TATA AIG General Insurance Co. Ltd. & Ors. (supra), we are of the view that the insurance claim of the respondent/complainant cannot be allowed in the absence of any permit for the truck which got burnt in the fire while plying on the road. Accordingly, we find merit in the First Appeal No.1778 of 2017 and the same is allowed. The order dated 7.7.2017 of the State Commission passed in Consumer Complaint no.44 of 2014 is set aside.