Case: Lakhmi Chand Vs. Reliance General Insurance

3. The brief facts of the case which are required to appreciate the rival legal contentions advanced by the learned counsel appearing on behalf of the parties are stated in brief asThe appellant was the owner of a Tata Motors goods carrying vehicle bearing registration No.The vehicle was insured with thevide policy No. 15019923334104992 with effect from 31.07.2009, valid upto 30.07.2010. The risk covered in this policy was to the tune of Rs.The said vehicle met with an accident on 11.02.2010 on account of rash and negligent driving of the offending vehicle bearing registration no.9860. In this regard, an FIR No.66 of 2010 dated 11.02.2010 was registered with the jurisdictional Police Station, Sadar, Fatehabad, for the offence punishable under Sections 279, 337, 304A and 427 of the Indian Penal Code (hereinafter referred to ase appellant incurred expenses amounting to Rs.1,64,033/for the repair of his vehicle and also informed the respondentCompany about the accident and damage caused to his vehicle. In this connection, theappointed one Mr. Atam Prakash Chawla, as the Surveyor to assess the damage caused to the said vehicle. After inspecting the vehicle, the Surveyor assessed the damage caused to the vehicle atwhereas the appellant had preferred a claim for a sum of Rs.1,64,033/with supporting bills. In addition to above, theappointed M/s Innovation Auto Risk Claim Manager for the purpose of investigation. According to the report of the investigator, five passengers were travelling in thevehicle, though the seating capacity of the vehicle as per the registration certificate was only 1+1. On the basis of findings of the said report, thevide letter dated 26.07.2010 rejected the claim of the appellant for the reason that the loss did not fall within the scope and purview of the insurance policy.6. Aggrieved of the letter of rejection of the claim of the appellant by thehe filed Complaint No.517 of 2010 against thedated 17.09.2010 before the District Consumer Disputes Redressal Forum, Sonepat (hereinafter referred to as the) under Section 12 of the Consumer Protection Act, 1986 for the claim of Rs.1,64,033/ny filed a detailed written statement before the District Forum disputing the claim of the appellant. It took the plea that the complainant had violated the terms and conditions of the policy, as five passengers were travelling in thevehicle at the time of accident, whereas the permitted seating capacity of the motor vehicle of the appellant was only 1+1.8. The District Forum on the basis of the pleadings of the parties and the materials on record considered the judgment of the National Commission in the case of National Insurance Co. Ltd. v. Pravinbhai D. Prajapati (IV 2010 CPJ 315 (NC)), wherein it was held that if the number of persons travelling in the vehicle at the time of the accident did not have a bearing on the cause of accident, then the mere factum of the presence of more persons in the vehicle would not disentitle the insured claimant from claiming compensation under the policy towards the repair charges of the vehicle paid by the appellant. The District Forum accordingly directed theto settle the claim of the appellant onbasis upto 75% of the amount spent for effecting repairs to the damaged vehicle after taking into consideration the claim amount of Rs.The District Forum further directed theto settle the amount to be paid to the appellant along with interest at the rate of 9% per annum from the date of lodging of the claim by the appellant with theny was further directed to pay Rs.2,000/for rendering deficient service, causing mental agony and harassment and towards litigation expenses incurred by the appellant.9. Aggrieved of the order of the District Forum, the respondent Company preferred an appeal before the State Commission urging various grounds. The State Commission placed reliance upon the judgment of this Court in the case of Suraj Mal Ram Niwas Oil Mills (P) Ltd. v. United India Insurance Co. Ltd. & Anr. ((2010) 10 SCC 567 ), wherein it was held asembarking on an examination of the correctness of the grounds of repudiation of the policy, it would be apposite to examine the nature of a contract of insurance. It is trite that in a contract of insurance, the rights and obligations are governed by the terms of the said contract. Therefore, the terms of a contract of insurance law have to be strictly construed and no exception can be made on the ground of equity. Thus, it needs little emphasis that in construing the terms of a contract of insurance important, and it is not open for the court to add, delete or substitute any words. It is also well settled that since upon issuance of an insurance policy, the insurer undertakes to indemnify the loss suffered by the insured on account of risk covered by the policy, its terms have to be strictly construed to determine the extent of liability of the insurer. Therefore, the endeavour of the court should always be to interpret the words in which the contract is expressed by the parties.The State Commission applied the observation made in the above said case by this Court to the case on hand and held that the District Forum has committed a serious error in allowing the complaint filed by the appellant herein against theThe State Commission accepted the appeal filed by theand dismissed the complaint of the appellant, vide its order dated 29.02.2012 by setting aside the judgment and order of the District Forum.11. The said judgment passed by the State Commission was challenged by the appellant before the National Commission by way of filing Revision Petition No.2032 of 2012 under Section 21(b) of the Consumer Protection Act, 1986 questioning the correctness of the same by urging various tenable grounds.12. After examining the material evidence on record, the National Commission has arrived at the conclusion and held that the factum of the vehicle in question carrying six passengers at the time of the occurrence of the accident was an undisputed fact. Thus, there had been a violation of the terms and conditions of the insurance policy covered to the vehicle by the appellant, as he had allowed six passengers to travel in the vehicle when the permitted load was only 1+1. The National Commission upheld the order passed by the State Commission and dismissed the Revision Petition filed by the appellant by recording its reasons. The Review Petition filed against the dismissal of the Revision Petition by the appellant was also dismissed without considering the grounds urged for reviewing its order.13. The present appeals have been filed challenging the orders passed by the National Commission in dismissing the Revision and Review petitions.

Court's reasoning:
14. It is an admitted fact that the accident of the vehicle of the appellant was caused on account of rash and negligent driving of the offending vehicle bearing registration no.An FIR No. 66 of 2010 dated 11.02.2010 was registered under Sections 279, 337, 338,304A and 427 of the Indian Penal Codeagainst the driver of the said vehicle for the offences referred to supra. The vehicle of the appellant was badly damaged in the accident and it is an undisputed fact that the report of Surveyor assessed the loss atbut the actual amount incurred by the appellant on the repair of his vehicle was Rs.The said claim was arbitrarily rejected by theon the ground that the damage caused to the vehicle did not fall within the scope and purview of the insurance policy, as there was a contravention of terms and conditions of the policy of the vehicle.15. The National Commission upheld the order of dismissal of the complaint of the appellant passed by the State Commission. The National Commission however, did not consider the judgment of this Court in the case of B.V. Nagaraju v. Oriental Insurance Co. Ltd Divisional Officer, Hassan ((1996) 4 SCC 647 ). In that case, the insurance company had taken the defence that the vehicle in question was carrying more passengers than the permitted capacity in terms of the policy at the time of the accident. The said plea of the insurance company was rejected. This Court held that the mere factum of carrying more passengers than the permitted seating capacity in the goods carrying vehicle by the insured does not amount to a fundamental breach of the terms and conditions of the policy so as to allow the insurer to eschew its liability towards the damage caused to the vehicle.This Court in the said case has held asis plain from the terms of the Insurance Policy that the insured vehicle was entitled to carry six workmen, excluding the driver. If those six workmen when travelling in the vehicle, are assumed not to have increased 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 the pose, keeping apart the load it was carrying. In the present case the driver of the vehicle was not responsible for the accident. Merely by lifting a person or two, or even three, by the driver or the cleaner of the vehicle, without the knowledge of the 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 thelaid by thisIt becomes very clear from a perusal of the above mentioned case law of this Court that the insurance company, in order to avoid liability must not only establish the defence claimed in the proceeding concerned, but also establish breach on the part of the owner/insured of the vehicle for which the burden of proof would rest with the insurance company. In the instant case, thehas not produced any evidence on record to prove that the accident occurred on account of the overloading of passengers in the goods carrying vehicle. Further, as has been held in the case of B.V. Nagaraju (supra) that for the insurer to avoid his liability, the breach of the policy must be so fundamental in nature that it brings the contract to an end. In the instant case, it is undisputed that the accident was infact caused on account of the rash and negligent driving of the offending vehicle by its driver, against whom a criminal case vide FIR no. 66 of 2010 was registered for the offences referred to supra under the provisions of the IPC. These facts have not been taken into consideration by either the State Commission or National Commission while exercising their jurisdiction and setting aside the order of the District Forum. Therefore, the judgment and order of the National Commission dated 26.04.2013 passed in the Revision Petition No. 2032 of 2012 is liable to be set aside, as the said findings recorded in the judgment are erroneous in law.