United India Insurance Co. Ltd. Vs. Sushil Kumar Godara - (Supreme Court) (30 Sep 2021)

Insurance claim can be rejected, if vehicle was used without valid registration

MANU/SC/0743/2021

Insurance

The Appellant (“insurer”) questions the judgment and order of the National Consumer Disputes Redressal Commission, New Delhi ("NCDRC"). In facts of present case, the insurer's position before the District Forum was that till the incidence of theft, the complainant’s vehicle was not registered which was in violation of conditions of insurance policy; the insurer therefore requested for dismissal of the complaint. The District Forum dismissed the complaint against the insurer while observing that, on 28th July, 2011 (date of the incident) the vehicle’s temporary registration had expired and relying upon two previous orders of the NCDRC had concluded that if at the time of theft, the vehicle was not registered then the claim was not payable to the complainant. It was held that, repudiation of the claim by the insurer did not amount to deficiency in service on its part. Aggrieved by the dismissal of his complaint, the respondent/complainant approached the State Commission.

The State Commission set aside the order of the District Forum and allowed the appeal, and held that as the insurer had covered the complainant's vehicle with particular engine and chassis number, and issued a policy during the currency of which, the vehicle was stolen, it could not repudiate the insured’s genuine claim on technical, petty and frivolous grounds of absence of permanent registration certificate from the competent authority and thus, escape its liability to indemnify the insured for the loss of the vehicle. The insurer preferred a revision petition before the NCDRC which was dismissed, affirming the State Commission’s reasoning.

In Naveen Kumar Vs. National Insurance Company Ltd, it is held that, if a vehicle without a valid registration is or has been used/driven on a public place or any other place that would constitute a fundamental breach of the terms and conditions of the contract of insurance even if the vehicle is not being driven at the time it is stolen or is damaged.

In the present case, the temporary registration of the Respondent’s vehicle had expired on 28th July, 2011. Not only was the vehicle driven, but also taken to another city, where it was stationed overnight in a place other than the Respondent’s premises. There is nothing on record to suggest that, the Respondent had applied for registration or that he was awaiting registration. The Respondent plied his vehicle and took it to Jodhpur, where the theft took place.

When an insurable incident that potentially results in liability occurs, there should be no fundamental breach of the conditions contained in the contract of insurance. Therefore, on the date of theft, the vehicle had been driven/used without a valid registration, amounting to a clear violation of Sections 39 and 192 of the Motor Vehicles Act, 1986. This results in a fundamental breach of the terms and conditions of the policy, as held by this Court in Narinder Singh vs. New India Assurance Co. Ltd, entitling the insurer to repudiate the policy.

This Court is of the opinion that the NCDRC’s order cannot be sustained. Furthermore, the NCDRC should not have overlooked and disregarded a clear binding judgment of this Court – it also should not have disregarded its ruling in Naveen Kumar. The impugned order and the order of the State Commission are set aside; the Respondent’s complaint is dismissed. Appeal allowed.

Tags : BREACH CONDITIONS POLICY