GURSHINDER SINGH versus SHRIRAM GENERAL INSURANCE CO. LTD. & ANR.
[2020] 2 S.C.R. 564, Supreme Court of India, 2020
Outcome: Appeal(s) allowed (Granted)
Segment: Ratio
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SUPREME COURT REPORTS
[2020] 2 S.C.R.
   [2020] 2 S.C.R. 564
564
GURSHINDER SINGH
v.
SHRIRAM GENERAL INSURANCE CO. LTD. & ANR.
(Civil Appeal No. 653 of 2020)
JANUARY 24, 2020
[N. V. RAMANA, R. SUBHASH REDDY AND B.R. GAVAI, JJ.]
Consumer Protection – Insurance – Standard Form Contract
– Commercial Vehicles Package Policy – Appellant’s tractor was
insured with respondent(s) on 19.06.10 – Tractor stolen on 28.10.10
– FIR lodged on the same day – Claim submitted to the respondent(s)
on 15.12.10 – Rejected on the ground that intimation was given
belatedly – District Forum & State Commission allowed the
appellant’s complaint– National Commission dismissed it – Conflict
between two Judges’ Bench decisions of Supreme Court in Om
Prakash v. Reliance General Insurance & Anr. [2017] 11 SCR 893 &
Oriental Insurance Co. Ltd. v. Parvesh Chander Chadha (2018) 9 SCC
798, as to whether delay in informing about theft of vehicle to
insurance company, though the FIR was registered immediately,
would disentitle the insurance claim – In view thereof, present matter
referred by two Judges’ Bench – Held: Much would depend upon
the words ‘co-operate’ & ‘immediate’, in condition no.1 of the Policy
wherein immediate action is contemplated in case of accident of the
vehicle – Second part of aforesaid condition deals with ‘theft or
criminal act other than accident’ – While assessing the ‘duty to co-
operate’ for the insured, inter alia the Court should have regard to
those breaches
by the insured which are prejudicial to the insurance
company – Usually, mere delay in informing the theft to the insurer,
when the same was already informed to the law enforcement
authorities, cannot amount to breach of ‘duty to co-operate’ of the
insured – View taken in the case of Om Prakash is concurred with,
that in such a situation if the claimant is denied the claim merely on
the ground of delay, it would be taking hyper technical view – It
was also rightly held that Consumer Act being beneficial legislation
deserves pragmatic construction – When an insured has lodged the
FIR immediately after the theft of vehicle and when the police on
investigation lodged final report after the vehicle was not traced
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and when the surveyors appointed by the insurance company found
the claim of the theft to be genuine, then mere delay in intimating
the insurance company cannot be a ground to deny the claim of the
insured – In the present case, facts are undisputed – Impugned order
set aside – Order of District Forum, upheld by State Commission is
maintained – 75% of the claim amount deposited by respondents in
Registry be withdrawn by the appellant with interest accrued thereon
– Remainder be paid within six weeks from today with interest @
12% p.a. on entire amount of Rs.4,70,000/- from the date of order
of District Forum till its realisation.
Insurance – Contract of insurance – Rules of interpretation
– Discussed.
Allowing the appeal, the Court
HELD: 1.1 Much would depend upon the words ‘co-
operate’ and ‘immediate’, in condition No. 1 of the Standard Form
for Commercial Vehicles Package Policy. Generally, an insurance
contract is governed by the rules of interpretation applicable to
the general contracts. However, due to the specialized nature of
contract of insurance, certain rules are tailored to suit insurance
contracts. The contract being interpreted is a Commercial Vehicle
Package Policy. There is no gainsaying that in a contract, the
bargaining power is usually at equal footing. In this regard, the
joint intention of the parties is taken into consideration for
interpretation of a contract. However, in most standard form
contracts, that is not so. In this
regard, the Court in such
circumstances would consider the application of the rule of contra
preferatum, when ambiguity exists and an interpretation of the
contract is preferred which favors the party with lesser bargaining
power. The insurance policy is a contract between the insurer
and the insured and the parties would be strictly bound by the
terms and conditions as provided in the contract between the
parties. [Paras 10-12][571-B; 572-B-D]
Om Prakash  v. Reliance General Insurance & Anr.
[2017] 11 SCR 893 – affirmed.
Oriental Insurance Co. Ltd. v. Parvesh Chander Chadha
2018 (9) SCC 798 ; T.D.P. Gram Sewa Sahakari Samiti
Ltd. & Ors. v. Charanjit Kaur and Ors. 2011 (3) CPC
GURSHINDER SINGH v. SHRIRAM GENERAL INSURANCE
CO. LTD. & ANR.
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422 ; New India Assurance Co. Ltd. v.  Trilochan Jane
(2012) CPJ 441 (NC) – referred to.
Arnold v. Britton [2015] UKSC 36 – referred to.
1.2 The second part of Condition No.1 deals with the ‘theft
or criminal act other than the accident’. It provides, that in case
of theft or criminal act which may be the subject of a claim under
the policy, the insured shall give immediate notice to the police
and co-operate with the company in securing the conviction of
the offender. The object behind giving immediate notice to the
police appears to be that if the police is immediately informed
about the theft or any criminal act, the police machinery can be
set in motion and steps for recovery of the vehicle could be
expedited. It is only when the police are not in a position to trace
and recover the vehicle and the final report is lodged by the police
after the vehicle is not traced, the insured would be in a position
to lodge his claim for compensation. [Para 15][573-D-E]
1.3 The term ‘co-operate’ as used under the contract needs
to be assessed in facts and circumstances. While assessing the
‘duty to co-operate’ for the insured, inter alia the Court should
have regards to those breaches by the insured which are
prejudicial to the insurance company. Usually, mere delay in
informing the theft to the insurer, when the same was already
informed to the law enforcement authorities, cannot amount to a
breach of ‘duty to co-operate’ of
the insured. The view taken in
the case of Om Prakash is concurred with, that in such a situation
if the claimant is denied the claim merely on the ground that there
is some delay in intimating the insurance company about the
occurrence of the theft, it would be taking a hyper technical view.
This Court in Om Prakash rightly held that it would not be fair
and reasonable to reject genuine claims which had already
been verified and found to be correct by the investigator.
[Paras 17-18][574-C-E]
1.4 This Court in Om Prakash rightly held that the Consumer
Protection Act aims at protecting the interest of the consumers
and it being a beneficial legislation deserves pragmatic
construction. In Om Prakash this Court rightly held that mere
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delay in intimating the insurance company about the theft of the
vehicle should not be a shelter to repudiate the insurance claim
which has been otherwise proved to be genuine. Therefore, when
an insured has lodged the FIR immediately after the theft of a
vehicle occurred and when the police after investigation have
lodged a final report after the vehicle was not traced and when
the surveyors/investigators appointed by the insurance company
have found the claim of the theft to be genuine, then mere delay
in intimating the insurance company about the occurrence of the
theft cannot be a ground to deny the claim of the insured. In the
present case, the facts are undisputed. The police have admittedly
lodged the final report. The investigators appointed by the
insurance company have submitted their investigation report
finding the claim of the appellant to be genuine. In this
background, the National Commission was not justified in
reversing the concurrent orders of the District Forum and the
State Commission. The impugned judgment passed by the
National Commission is quashed and set aside.  The order of the
District Forum as maintained by the State Commission is
maintained. [Paras 19, 20 & 22][574-F-H; 575-A-C]
Case Law Reference
[2017] 11 SCR 893
affirmed
Para 2
2018 (9) SCC 798
referred to
Para 2
2011 (3) CPC 422
referred to
Para 3
(2012) CPJ 441 (NC)
referred to
Para 6
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 653 of
2020.
From the Judgment and
Order dated 17.03.2015 of the National
Consumer Disputes Redressal Commission, New Delhi in R. P.
No. 2463 of 2013.
Karan Dewan, Rahul Gupta, Advs. for the Appellant.
Naveen Kr. Chauhan, Abhik Kumar, R. S. Chauhan, Praveen
Swarup, Advs. for the Respondents.
GURSHINDER SINGH v. SHRIRAM GENERAL INSURANCE
CO. LTD. & ANR.
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The Judgment of the Court was delivered by
B. R. GAVAI, J.
1. Leave granted.
2. Noticing that there is a conflict between the decisions of the
Bench of the two Judges of this Court in Om Prakash  vs. Reliance
General Insurance & Anr.1 and in the case of Oriental Insurance
Co. Ltd. vs. Parvesh Chander Chadha2, on the question, as to whether
delay in informing the occurrence of the theft of the vehicle to the insurance
company, though the FIR was registered immediately, would disentitle
the claimant of the insurance claim. The Bench of two Judges of this
Court vide Order dated 09.01.2018 has referred the matter to a three-
Judge Bench.
3. The appellant had got his tractor insured with the respondent(s)
on 19.06.2010. On 28.10.2010, the tractor was stolen and an FIR was
lodged on the same day. However, the claim was submitted to the
respondent(s) on 15.12.2010.  It was rejected on the ground that intimation
was given belatedly after 52 days. The appellant herein, therefore,
approached the District Consumer Disputes Redressal Forum, Jalandhar,
Punjab, (hereinafter referred to as the “District Forum”) vide Complaint
No. 380 of 2011. The District Forum, relying on the decisions of the
National Consumer Disputes Redressal Commission (hereinafter referred
to as the ‘National Commission’) in the case of Parvesh Chander
Chadha (supra) and T.D.P. Gram Sewa Sahakari Samiti Ltd. & Ors.
vs. Charanjit Kaur and Ors.3.,  allowed the
complaint and directed the
respondents to pay a sum of Rs.4,70,000/- being the declared insured
value of the vehicle to the complainant within one month from the date
of receipt of copy of the order, failing which, the respondents were made
liable to pay interest  at the rate of 12% per annum from the date of
order till payment.
4. Being aggrieved thereby, the respondents preferred an appeal
before the State Consumer Disputes Redressal Commission, Punjab
(hereinafter referred to as the “State Commission”).  The State
Commission dismissed the appeal vide order dated 26.03.2013.
1 Civil Appeal No.15611/ 2017 decided on 04.10.2017
2 Civil Appeal No.6739/ 2010  decided on 17.08.2010; 2009 (1) CLT 552]
3 2011(3) CPC 422
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5. Being aggrieved by the dismissal of the appeal by the State
Commission, the respondents preferred a Revision Petition before the
National Commission. The National Commission relying on its earlier
judgment in the case of New India Assurance Co. Ltd. vs.  Trilochan
Jane4 allowed the revision petition thereby setting aside the orders of
the District Forum as well as the State Commission and dismissed the
complaint. Being aggrieved thereby, the appellant is before this Court.
6. When the matter was heard by the two-Judge bench of this
Court, it noticed that though in the case of Om Prakash (supra), the
theft of the vehicle was reported to the police on the day after the theft
occurred, the intimation was sent to the insurance company much later.
This Court took the view that delay in informing the insurance company
would not debar the insured to get the insurance claim. Per contra, it
noticed that in the case of Parvesh Chander Chadha (supra), this Court
accepted the contention of the insurance company that on account of
delay in intimating the insurance company about the theft, though the
FIR was lodged immediately, the insurance company was entitled to
repudiate the claim of the claimant. Hence, the present appeal.
7. It will be relevant to refer to Condition No.1 of the Standard
Form for Commercial Vehicles Package Policy, which reads as follows:
“1. Notice shall be given in writing to the Company immediately
upon the occurrence of any accidental 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 or copy thereof 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 or fatal inquiry in respect of any occurrence which may
give rise to a claim under this policy. In case of theft or criminal
act which may be the subject of a claim under this policy the
insured shall give immediate notice to the police and co-operate
with the company in securing the conviction of the offender.”
8. The condition which falls for consideration in the present case
is identical with the condition that fell for consideration in both the cases,
namely, Om Prakash (supra) and Parvesh Chander Chadha (supra).
GURSHINDER SINGH v. SHRIRAM GENERAL INSURANCE
CO. LTD. & ANR. [B. R. GAVAI, J.]
4 (2012) CPJ 441 (NC)
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In the case of Parvesh Chander Chadha (supra), the vehicle was
stolen between 18.01.1995 and 20.01.1995. The FIR for the alleged
theft of car was registered on 20.01.1995.  However, the intimation was
given to the insurer on 22.05.1995. On account of the delay, the claim
for compensation was repudiated by the insurance company for breach
of policy. In the said case, the District Forum had allowed the complaint
of the claimant, which order was maintained by the State Commission
as well as the National Commission. However, reversing the concurrent
orders, this Court held that though the theft had occurred between
18.01.1995 and 20.01.1995, the intimation to the insurance company was
given only on 22.05.1995. It observed that no explanation for such an
unusual delay in informing the insurer was given by the claimant. This
Court found that in terms of the policy issued by the insurer (appellant
therein), the respondent was duty bound to inform it about the theft of
the vehicle immediately after the incident. It further observed, that on
account of delay in intimation, the insurer was deprived of its legitimate
right to get an inquiry conducted into the alleged theft of the vehicle and
make an endeavour to recover the same.
9. Per contra, in the case of Om Prakash (supra), the vehicle
was stolen on 23.03.2010 at around 9.00 p.m. The claimant lodged an
FIR immediately on 24.03.2010. He lodged the insurance claim on
31.03.2010. Since the claim of the claimant was repudiated, he filed
complaint before the District Forum which was allowed. The State
Commission also maintained the order of the District Forum. However,
in the revision, the National Commission reversed the same. In an appeal,
this Court found that the claimant (the appellant therein) had assigned
cogent reasons for the delay of 8 days in lodging the complaint. It further
found that the word “immediately”’ cannot be construed narrowly so as
to deprive  claimant the benefit of the settlement of genuine claim,
particularly when the delay was explained. It further held, that rejection
of the claim on purely technical grounds and in a mechanical manner
will result in loss of confidence of policy holders in the insurance industry.
It further held, that if the reasons for delay in making a claim is
satisfactorily explained, such a claim cannot be rejected on the ground
of delay. This Court also held that it would not be fair and reasonable to
reject the genuine claims which have already been verified and found to
be correct by the investigator. It further held, that the condition regarding
the delay shall not be a shelter to repudiate the insurance claims which
have been otherwise proved to be genuine. This Court observed that the
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Consumer Protection Act aims at providing better protection of the interest
of the consumers. It is a beneficial legislation that deserves a liberal
construction.
10. We are of the view that much would depend upon the words
‘co-operate’ and ‘immediate’, in condition No. 1 of the Standard Form
for Commercial Vehicles Package Policy. Before we analyze this case
any further, we need to observe the rules of interpretation applicable to
a contract of insurance. Generally, an insurance contract is governed by
the rules of interpretation applicable to the general contracts. However,
due to the specialized nature of contract of insurance, certain rules are
tailored to suit insurance contracts. Under the English law, the
development of insurance jurisprudence is given credence to Lord
Mansfield, who developed the law from its infancy. Without going much
into the development of the interpretation rules, we may allude to Justice
Neuberger in Arnold v. Britton5,  which is simplified as under:
(1) reliance placed in some cases on commercial common sense
and surrounding circumstances was not to be invoked to undervalue
the importance of the language of the provision which is to be
construed.
(2) the less clear the words used were, the more ready the court
could properly be to depart from their natural meaning, but that
did not justify departing from the natural meaning.
(3) commercial common sense was not to be invoked
retrospectively, so that the mere fact that a
contractual arrangement
has worked out badly, or even disastrously, for one of the parties
was not a reason for departing from the natural language.
(4) a court should be very slow to reject the natural meaning of a
provision as correct simply because it appeared to be a very
imprudent term for one of the parties to have agreed.
(5) when interpreting a contractual provision, the court could only
take into account facts or circumstances which existed at the
time that the contract was made and which were known or
reasonably available to both parties.
(6) if an event subsequently occurred which was plainly not
intended or contemplated by the parties, if it was clear what the
GURSHINDER SINGH v. SHRIRAM GENERAL INSURANCE
CO. LTD. & ANR. [B. R. GAVAI, J.]
5 [2015] UKSC 36
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parties would have intended, the court would give effect to that
intention.6
11. A perusal of the aforesaid shows that this contract is to be
interpreted according to the context involved in the contract. The contract
we are interpreting is a Commercial Vehicle Package Policy. There is
no gainsaying that in a contract, the bargaining power is usually at equal
footing. In this regard, the joint intention of the parties is taken into
consideration for interpretation of a contract. However, in most standard
form contracts, that is not so. In this regard, the Court in such
circumstances would consider the application of the rule of contra
preferatum, when ambiguity exists and an interpretation of the contract
is preferred which favors the party with lesser bargaining power.
12. It is argued on behalf of the respondents and rightly so, that
the insurance policy is a contract between the insurer and the insured
and the parties would be strictly bound by the terms and conditions as
provided in the contract between the parties.
13. In our view, applying the aforesaid principles, Condition No. 1
of the Standard Form for Commercial Vehicles Package Policy will have
to be divided into two parts. The perusal of the first part of Condition
No. 1 would reveal, that it provides that ‘a notice shall be given in writing
to the company immediately upon the occurrence of any accidental loss
or damage’.  It further provides, that in the
event of any claim and
thereafter, the insured shall give all such information and assistance as
the company shall require. It provides, that every letter claim writ
summons and/or process or copy thereof shall be forwarded to the
insurance company immediately on receipt by the insured.  It further
provides, that a notice shall also be given in writing to the company
immediately by the insured if he shall have knowledge of any impending
prosecution inquest or fatal inquiry in respect of any occurrence, which
may give rise to a claim under this policy.
14. A perusal of the wordings used in this part would reveal, that
all the things which are required to be done under this part are related to
an occurrence of an accident. On occurrence of an accidental loss, the
insured is required to immediately give a notice in writing to the company.
This appears to be so that the company can assign a surveyor so as to
assess the damages suffered by the insured/vehicle. It further provides,
6 Robert Merkin QC et el., Colinvaux’s Law of Insurance (11th Eds.), p. 159.
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that any letter claim writ summons and/or process or copy thereof shall
be forwarded to the company immediately on receipt by the insured. As
such, the intention would be clear. The question of receipt of letter claim
writ summons and/or process or copy thereof by the insured, would only
arise in the event of the criminal proceedings being initiated with regard
to the occurrence of the accident. It further provides, that the insured
shall also give a notice in writing  to the company immediately if the
insured shall have the knowledge of any impending prosecution inquest
or fatal inquiry in respect of any occurrence which may give rise to a
claim under this policy. It will again make the intention clear that the
immediate action is contemplated in respect of an accident occurring to
the vehicle.
15. We find, that the second part of Condition No. 1 deals with
the ‘theft or criminal act other than the accident’. It provides, that in
case of theft or criminal act which may be the subject of a claim under
the policy, the insured shall give immediate notice to the police and co-
operate with the company in securing the conviction of the offender.
The object behind giving immediate notice to the police appears to be
that if the police is immediately informed about the theft or any criminal
act, the police machinery can be set in motion and steps for recovery of
the vehicle could be expedited.  In a case of theft, the insurance company
or a surveyor would have a
limited role. It is the police, who acting on
the FIR of the insured, will be required to take immediate steps for
tracing and recovering the vehicle.  Per contra, the surveyor of the
insurance company, at the most, could ascertain the factum regarding
the theft of the vehicle.
16. It is further to be noted that, in the event, after the registration
of an FIR, the police successfully recovering the vehicle and returning
the same to the insured, there would be no occasion to lodge a claim for
compensation on account of the policy. It is only when the police are not
in a position to trace and recover the vehicle and the final report is
lodged by the police after the vehicle is not traced, the insured would be
in a position to lodge his claim for compensation. As observed by the
bench of two learned Judges in the case of Om Prakash (supra), after
the vehicle is stolen,  a person, who lost his vehicle, would immediately
lodge an FIR and the immediate conduct that would be expected of such
a person would be to assist the police  in search of the vehicle. The
registration of the FIR regarding the theft of the vehicle and the final
GURSHINDER SINGH v. SHRIRAM GENERAL INSURANCE
CO. LTD. & ANR. [B. R. GAVAI, J.]
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report of the police after the vehicle is not traced would substantiate the
claim of the claimant that the vehicle is stolen. Not only that, but the
surveyors appointed by the insurance company are also required to
enquire whether the claim of the claimant regarding the theft is genuine
or not. If the surveyor appointed by the insurance company, upon inquiry,
finds that the claim of theft is genuine then coupled with the immediate
registration of the FIR, in our view, would be conclusive proof of the
vehicle being stolen.
17. That the term ‘co-operate’ as used under the contract needs
to be assessed in facts and circumstances. While assessing the ‘duty to
co-operate’ for the insured, inter alia the Court should have regards to
those breaches by the insured which are prejudicial to the insurance
company. Usually, mere delay in informing the theft to the insurer, when
the same was already informed to the law enforcement authorities, cannot
amount to a breach of ‘duty to co-operate’ of the insured.
18. We concur with the view taken in the case of Om Prakash
(supra), that in such a situation if the claimant is denied the claim merely
on the ground that there is some delay in intimating the insurance company
about the occurrence of the theft, it would be taking a hyper technical
view.  We find, that this Court in Om Prakash (supra) has rightly held
that it would not be fair and reasonable to reject genuine claims which
had
already been verified and found to be correct by the investigator.
19. We find, that this Court in Om Prakash (supra) has rightly
held that the Consumer Protection Act aims at protecting the interest of
the consumers and it being a beneficial legislation deserves pragmatic
construction. We find, that in Om Prakash (supra) this Court has rightly
held that mere delay in intimating the insurance company about the theft
of the vehicle should not be a shelter to repudiate the insurance claim
which has been otherwise proved to be genuine.
20. We, therefore, hold that when an insured has lodged the FIR
immediately after the theft of a vehicle occurred and when the police
after investigation have lodged a final report after the vehicle was not
traced and when the surveyors/investigators appointed by the insurance
company have found the claim of the theft to be genuine, then mere
delay in intimating the insurance company about the occurrence of the
theft cannot be a ground to deny the claim of the insured.
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21. We, therefore, answer the reference accordingly.
22. In the present case, the facts are undisputed. The theft had
occurred on 28.10.2010. The FIR was lodged at P.S. Nakodar, Jalandhar,
Punjab on the same day i.e. 28.10.2010. The police have admittedly
lodged the final report. The investigators appointed by the insurance
company have submitted their investigation report on 25.02.2011, finding
the claim of the appellant to be genuine. In this background, the National
Commission was not justified in reversing the concurrent orders of the
District Forum and the State Commission. The appeal is, therefore,
allowed. The impugned Judgment and order dated 17.03.2015 passed
by the National Commission is quashed and set aside.  The order of the
District Forum dated 09.05.2012 as maintained by the State Commission
vide order dated 26.03.2013 is maintained.
23.  The amount, i.e., 75% of the claim amount deposited by the
respondents, pursuant to the orders of this Court dated 09.01.2018, in
this Registry shall be permitted to be withdrawn by the appellant herein
along with interest accrued thereon.  The remainder shall be paid by the
respondents within a period of six weeks from today along with interest
at the rate of 12% per annum on the entire amount of Rs.4,70,000/-
from the date of the order of the District Forum till its realisation.
Divya Pandey
Appeal allowed.
GURSHINDER SINGH v. SHRIRAM GENERAL INSURANCE
CO. LTD. & ANR. [B. R. GAVAI, J.]