CWP No.4279 of 2010 1 IN THE HIGH COURT OF PUNJAB & HARYANA, CHANDIGARH CWP No.4279 of 2010 Date of decision March 11, 2010 IFFCO TOKIO GENERAL Insurance Company, Sector 29, Gurgaon District Gurgaon. ....... Petitioner Versus Chairman, Permanent Lok Adalat, Public Utility Services, Gurgaon, District Gurgaon, Haryana and another. ........ Respondents CORAM: HON'BLE MR. JUSTICE K. KANNAN Present:- Mr. Hari Om Sharma, Advocate for the petitioner. **** 1. Whether reporters of local papers may be allowed to see the judgment ? Yes 2. To be referred to the reporters or not? Yes 3. Whether the judgment should be reported in the digest? Yes K. Kannan, J (oral). 1. The petitioner seeks for a writ of certiorari to quash the order passed by the Permanent Lok Adalat and directing the Insurance Company to make the payment under the Policy of Insurance where there was a cover for contract of vehicle for the insured. There was complaint of theft of the vehicle of the insured on 20.2.2008 with the police The FIR had also been registered. The insured is reported to have lodged a claim with the insurance company on 27.9.2008 and the Investigator/Surveyor of the Insurer had given a report on 18.10.2008 that the theft of the vehicle was true and it was not traceable at that time. The letter of subrogation had also been taken from the insured, reserving to the insurer a right to exercise acts of ownership of the property if the vehicle was recovered. It appears that the vehicle was later found recovered and the insurer did not offer to the insured the amount of alleged loss assessed on the ground that there was a liability for insurer to take back the vehicle. CWP No.4279 of 2010 2 2. The Permanent Lok Adalat found that the Insurance Company had taken their own time in considering the claims and by causing delay in disbursal, for a subsequent event of the recovery of the vehicle, the Insurer cannot deny the payment and then compel the insured to take back the vehicle by relying on clause of subrogation letter which also stated that in the event of recovery of the vehicle, the insured shall refund the amount to the Company with such sum of money which he had received by the reason of the loss. The Permanent Lok Adalat reasoned that after taking a letter of subrogation with a right to recover the value of the property as an owner thereof, there could not have been an inconsistent clause compelling the insured to refund the money and take back the vehicle. 3. There are two sets of clauses in the subrogation letter which are inconsistent. The first portion in the letter of subrogation gives to the insurer a right of ownership on the right of recovery. The clause reads as follows: “We (insured) hereby assign ownership of the subject matter in your name (insurer) and further agree that if and when the said stolen vehicle is recovered it will be deemed to be the property of the IFFCO-TOKIO General Insurance Co. Ltd, and I/We hereby declare and agree that you are subrogated to all rights and remedies in all and in respect of subject matter in accordance with the laws governing the contract of insurance.” In yet another portion of the subrogation letter, it obligates the insured to refund the money and take the vehicle if it was found. The clause reads as follows: I/We (insured) further undertake to take over the stolen vehicle if recovered I shall reimburse you (the insurer) with the aforesaid amount of Rs. ______ or any part thereof as the case may be to the extent of recovery CWP No.4279 of 2010 3 made. 4. A letter of subrogation creates a right to an insurer after the incident of theft is reported and when the terms of the contract and insurance comes into play. It is seen that the complaint was lodged on 27.9.2008 when the insurer of the investigator reported that the complaint of theft was true. On 18.10.2008 itself the documents had been secured by the Insurance Company and on 23.12.2008, the papers had been made ready. The R.C., had also been transferred to the insurer, but still the money had not been paid. The insurer was delaying the payment and in the meanwhile, the vehicle is reported to have been recovered and insurer was not prepared to make the payment under the terms of the policy, the Insurance-Company is bound to indemnify the insured for the loss occasioned and insurer could have mitigated itself the loss by selling the recovered vehicle and setting off a portion of loss by the cost of recovery. The insurer could not take its own laxity to its advantage and deny to the consumer what he was entitled to, especially after the R.C.,had been transferred and the recovery of the vehicle had been made only after the transfer of R.C. The order of the Permanent Lok Adalat is perfectly justified and there is no scope for intervention in the writ petition. The same is accordingly dismissed. (K. KANNAN) JUDGE March 11, 2010 archana