Case: B.V. Nagaraju Vs. Oriental Insurance Co

2. The appellant herein was the registered owner of a Tata Truck bearing No. KA-13/438, duly insured with the Oriental Insurance Co. Ltd, the respondent herein, vide Policy dated 24-8-1990 covered for period uptil 23-8-1991. The policy was comprehensive in nature, covering risk to the limit of Rs. 2,09,000/-. During the subsistence of the policy, the vehicle of the appellant met with an accident on 5-8-1991 when, allegedly, a gas tanker came and dashed against the said vehicle. Apart from the other damage which occasioned due to the accident, the appellants vehicle sustained major damages on account of which repairs were necessitated. The appellant, therefore, incurred from his pocket repair charges/damages to the turn of Rs. 87,170/- in order to make the vehicle road-worthy. Pursuant to such expenditure, the appellant raised a claim with the respondent-Company inter alia for reimbursement of the repair charges/damages submitting therewith the claim-form and the bills for payment. The claim of the appellant was spurned. The appellant sent a legal notice calling upon the respondent-Company to make payment of the claim as per contractual conditions of the policy but in vain. The appellant then moved the Karnataka State Consumer Redressal Forum underthe Consumer Protection Act, 1986 raising a demand of Rs. 2,13,500/-, diversifying the claim as repair charges, loss of prospective income, interest, legal notice charges and other miscellaneous expenses.3. The respondent-Company denied their liability altogether stating that since the appellants goods vehicle was used for the purpose of carrying passengers, the appellant was disentitled to claim any compensation, and even otherwise those were nine in number. The amount of money spent by the appellant on repairs however was not seriously disputed as the respondents Official Surveyor himself had estimated the repair possibility at Rs. 75,700/-.4. The State Commission went into the matter thoroughly and by its order dated 19-7-1993 allowed the claim of the appellant to the extent of Rs. 75,700/-, the figure at which the Official Surveyor of the respondent Company had estimated the repair charges, along with interest at the rate of 18% per annum from the date of the accident i. e. 5-8-91 till the date of payment. A sum of Rs. 2,000/- also was awarded to the appellant as costs. This order, at the instance of the respondent Company, was however, upset on appeal on 30-11-1994 by the National Consumer Disputes Redressal Commission, New Delhi, relying upon the terms of the insurance policy in taking the view that the policy did not cover use for carrying passengers in the vehicles except employees (other than the Driver) not exceeding 6 in numbers, coming under the purview of the Workmens Compensation Act. This has culminated into this appeal.

Court's reasoning:
7. It is plain from the terms of the Insurance Policy that the insured vehicle was entitled to carry 6 workmen, excluding the driver. If those 6 workmen when travelling in the vehicle, are assumed not to have increased any risk from the point of view of the Insurance Company on occurring of an accident, how could those added persons be said to have contributed to the causing of it is poser, keeping apart the load it was carrying. Here, it is nobodys case that the driver of the insured vehicle was responsible for the accident. In fact, it was not disputed that the oncoming vehicle had collided head-on against the insured vehicle, which resulted in the damage. Merely by lifting a person or two, or even three, by the driver or the cleaner of the vehicle, without the knowledge of owner, cannot be said to be such a fundamental breach that the owner should, in all events, be denied indemnification. The misuse of the vehicle was somewhat irregular though, but not so fundamental in nature so as to put an end to the contract, unless some factors existed which, by themselves, had gone to contribute to the causing of the accident. In the instant case, however, we find no such contributory factor.The National Commission went for the strict construction of the exclusion clause. The reasoning that the extra passengers being carried in the goods vehicle could not have contributed, in any manner, to the occurring of the accident, was barely noticed and rejected sans any plausible account; even when the claim confining the damage to the vehicle only was limited in nature. We, thus, are of the view that in accord with the Skandias case (AIR 1987 SC 1184 ), the aforesaid exclusion term of the insurance policy must be read down so as to serve the main purpose of the policy that is indemnify the damage caused to the vehicle, which we hereby do.