TORRENT SECURITIES PVT. LTD. vs National Insurance Co. Ltd.

THE issue to be decided in this case falls within a narrow compass. If at the time of commencement of insurance, the Insurance Company chose to give only the policy schedule and around ten months later gave the details of the policy terms and conditions and that too after the accident has taken place, can these terms and conditions be construed as a valid contract? THE simple answer to the question is : No. Facts of the case in brief :

THE complainant No. 1 - M/s. Torrent Securities Pvt. Ltd., gave brand new Trekker to one Suresh Ram under hire purchase agreement. This was insured with the National Insurance Company on a valuation of Rs. 2,34,000 for a period from 17.2.1999 to 16.2.2000, covering the risk against theft and damage to the vehicle. On 15.9.1999 when the trekker was going towards Dharampur village in Garwa Jungle it was stopped by extremists and set on fire. In addition they assaulted the driver and the occupants of the vehicle. As the vehicle was used for election purpose, the President of Bishnugarh Block, Congress Party lodged an FIR with Bishnugarh Police Station which was registered as PS case No. 62/99 under different sections of the IPC on 13.10.1999. District Election Officer-cum-Deputy Commissioner, Hazaribagh was also requested to direct the Insurance Company to pay the insurance amount to the insured. As these efforts did not bear any fruit, the complainant No.1 sent an application through registered post on 31.7.2000 to the Divisional Manager of the Insurance Company for deputing a Surveyor which was followed up by a communication on 1.12.2000. Surveyor Mr. Ashok Kumar was deputed to assess the damages. He submitted his report on 5.12.2000. The Insurance Company did not settle the claim on the ground that intimation of the accident was given to them after a lapse of 13 months. Therefore, a complaint was filed before the District Forum.

The District Forum held that the "terms of policy of insurance need not be construed strictly but be read down to advance the main purpose of the contract. The main purpose of the contract entered into between the parties was to insure the loss caused to the vehicle due to theft and damage. Therefore, we find and hold that the complainants are entitled to payment of insured amount after deduction of salvage value". It further held that the vehicle was insured for a sum of Rs. 2,34,000 and it is an admitted fact that the vehicle in question was totally damaged by the extremists within the jurisdiction of Bishnugarh Police Station. Hence, the District Forum came to the conclusion that the complainant is entitled to this amount along with interest at the current statutory rate of interest.

THE State Commission held that since the complainants/ respondents did not report the matter of burning of the vehicle for more than a year without any plausible explanation, it clearly violates the terms and conditions of the Clauses 1 and 4 of the policy. That apart, the complainants did not cooperate and hence allowed the appeal of the Insurance Company. Aggrieved and dissatisfied by the order of the State Commission, the complainant filed this revision petition. Findings: The repudiation letter reads as follows: "On perusal of the claim papers we observe the followmgs: 1. That on 14.9.2001 you have given intimation of the claim to our Ranchi Divisional Office. 2. As per preliminary survey report it appears that you have given intimation to our Hazaribagh Div. Office on 1.12.2000. 3. Accident took place on 15.9.1999 but you have given intimation on 1.12.2000 to our Hazaribagh Div. Office that too after a gap of 13 and half months. Further we would like to invite your kind attention towards condition No. 1. 5 and also general exception No. 3 (a) which is applicable to all section of the policy and reads as under: Condition No. 1. : Notice shall be given in writing to the company immediately upon the occurrence of any accident or loss or damage and in the event of any claim and, thereafter, the insured shall give all such information and assistance as the company shall require. Every letter claim writ summons and/or process shall be forwarded to the company immediately on receipt by the insured. Notice shall also be given in writing to the company immediately the insured shall have knowledge of any impending prosecution inquest fatal injury in respect of any occurrence which may give rise to a claim under the policy. In case of theft or other criminal act which may be subject or claim under this policy the insured shall give immediate notice to the police and to cooperate with the company in securing the conviction of the offender. Condition No. 5: The insured shall take all reasonable steps to safeguard the motor vehicle from loss or damage and to maintain it in efficient condition and the company shall have at all time free and full access to examine the motor vehicle or any part thereof or any driver of employee of the insured. In the event of any accident or breakdown the motor vehicle shall not be left unattended without proper precaution being taken to prevent further damage or loss and if the motor vehicle be driven before the necessary repairs are effected any extension of the damage or further damage to the motor vehicle shall be entirely at the insured''s cost. General Exception No. 3 (a): The Company shall not be liable under this policy in respect of any accident, loss damage and/or liability caused, sustained or incurred whilst the vehicle is being used otherwise than in accordance with the limitations as to use. In view of the above the claim lodged upon us is not tenable."

IT is clear from the records that the accident had taken place on 15.9.1999 and soon after that an FIR was filed on 15.9.1999 giving the detailed description about the burning of the vehicle by the miscreants as mentioned above. As the vehicle was used for election work and the complainant No.2 was not a highly literate person approached the District Election Officer-cum-Deputy Commissioner of the District on 13.10.1999 with a request to enable them to get the relief and direct the Insurance Company to give them the insured amount. He also reported about the accident to the Motor Vehicle Inspector who has certified that the vehicle was fully damaged as per his accident report dated 29.9.1999. The police have investigated the case and have mentioned that extremists have burnt the vehicle and the vehicle has been damaged fully but they could not trace the culprits as they did not have any clue. Insurance Company was intimated by registered post on 31.7.2000 which followed up with further letters. Though the letter dated 31.7.2000 has been received without prejudice by the Insurance Company the repudiation letter mentions that this was received only in December. This shows that the complainants have shown diligence in following up the case. Their only fault appears to be that they did not intimate the Insurance Company in time. The insurance policy is a contract binding equally on both the parties. A perusal of the documents shows that one page policy schedule was signed on 18.2.1999 by the Insurance Company and delivered to the insured indicating the insured''s name, registration number, policy number, vehicle number etc., and the premium amount. Detailed policy with terms and conditions was not issued on that day. Only after the insured made the claim with the Insurance Company they have signed the policy document with the conditions on 14.12.2000. This policy document stipulates the condition relating to prompt intimation about the accident to the Insurance Company. As this document was not given to the insured, while the premium was paid by the insured for the vehicle these conditions are not binding on the insured. The Insurance Company does not dispute the fact of the insurance of the vehicle on payment of the premium and damage caused to the vehicle due to arson by extremists which is also clear from the motor vehicle inspector''s report and the investigation report of the police. The surveyor''s report notices that "the vehicle has been inspected in front of Bishnugarh PS where it is shifted". He has given the details of the damages caused to the front show cowl assly, instruments, electricals, cooling system, engine units, steering assly and linkages, wheel and tyres, transmission and exhaust, suspension, paddles and body etc., etc. He has also filed six numbers of photographs with negatives. In view of the above analyses, we hereby allow the revision petition and set aside the order of the State Commission. The Insurance Company shall pay Rs. 2,34,000 with 9% interest p.a. from the date of complaint till the date of payment. They shall also pay Rs. 10,000 as costs. Revision Petition allowed.