DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION (CENTRAL)ISBT KASHMERE GATE DELHI

COMPLAINT CASE NO. 269/2018

No. DC/ Central/2021/

vs.

Coram:       Ms. Rekha Rani, President

                    Shri Vyas Muni Rai, Member

                   Ms. Shahina, Member (Female)

ORDER

Ms. Rekha Rani, President

1. Smt. Marg Shree (in short the complainant) filed the instant complaint under section 12 of the Consumer Protection Act, 1986 against M/s National Insurance Company Limited (in short OP) pleading therein that late husband of the complainant was the registered owner of the vehicle bearing no. DL-10CB-6395 make Tevera Neo 3 LT-7(C)-BS4, Chassis No. MA6AB CBDCBH00310 and Engine No. G2408512B00930, which was duly insured with the OP vide Insurance Policy no. 360400311710001297 valid from 19.05.2017 to 18.05.2018. Husband of the complainant, namely, Sh. Chhavi Nath Singh expired on 28.10.2013. She got the insurance policy transferred in her name. On 10.02.2018, the vehicle was parked outside residence of complainants son.  It was found missing at 02:10 AM on 11.02.2018. A call was made at No. 100 and Police was informed about theft of the vehicle, An e-FIR bearing no. 04559/18 dated 11.02.2018 was registered at Police Station Sagarpur.  The vehicle is duly insured with OP and it was never recovered.  Complainant sent legal notice dated by 22.08.2018 to OP to pay insured value of Rs. 6,75,000/- to the complainant but OP rejected the claim.
2. OP filed Written Statement.  It is stated that the complainant obtained Private Car Package policy from the OP in her favour vide Insurance Policy bearing No. 360400311710001297 valid for the period from 19.05.2017 to 18.05.2018 for the vehicle bearing No. DL-10-CB-6395 for a total IDV of Rs. 6,75,000/- but has not got the RC of the said vehicle transferred in her name and the same is still in the name of late Chhavinath Singh.  Hence, the complainant has no insurable interest in the said vehicle and also has no locus standi to file the present complaint which is liable to be dismissed.
3. Complainant filed rejoinder.  It is not denied that the vehicle was registered in the name of her late husband.  It is stated that Insurance Policy was assigned in the name of the complainant by the OP and therefore a valid contract of insurance exit between the parties.
4. We have perused file and heard Adv. Pradeep Kumar, Counsel for the complainant and Adv. Sanjay Kumar, Counsel for the OP.
5. It is not disputed that the vehicle was registered in the name of late husband of the complainant at the time of accident of the vehicle and it continues to be in his name.
6. In Kiran Banerjee & Ors. Vs National Insurance Company & Ors.MAC. APP. 700/2019 & CM Nos. 33715-17/2019 it was the case of the insurance that Insurance policy in respect of the vehicle was obtained by legal heirs of Anil Banerjee by concealing the fact that owner of the vehicle was no more alive and said concealment on their part absolved the insurance company from its liability to pay the compensation amount as the insurance policy was void-ab-initio and there was no valid contract between insured and insurer.

Facts of the said cited case were that the policy holder had passed away on 24.05.2012 and the accident happened on 19.10.2014.  In the interim, the Insurance Company was never informed about this very crucial information that the policy holder had passed away.  In the circumstances, it was observed by Hon. Delhi High Court vide Order dated 29.02.2019 that policy itself would have ended on the expiry of its tenure or could not have otherwise been issued against a dead person and that the claim could be repudiated but the statutory liability of the insurer to pay compensation to the third party and to recover the said amount from the owner of the offending vehicle has logical and statutory corollary.

7. Hon. Supreme Court in Reliance Insurance Company Limited & Anr. Vs. Rekhaben Nareshbhai Rathod, (2019) 6 SSC 175, had held that concealment of any vital information would be a breach of the fundamental principle of uberrimae fidei, on which all insurance is based.  Where the insured has breached utmost good faith, it would render the policy revocable and/or make the claim repudiable by the insurer.  It was held.

29. Contracts of insurance are governed by the principle of utmost good faith.  The duty of mutual fair dealing requires all parties to a contract to be fair and open with each other to create and maintain trust between them.  In a contract of insurance, the insured can be expected to have information of which she/he has knowledge.  This justifies a duty of good faith, leading to a positive duty of disclosure.  The duty of disclosure in insurance contracts was established in a Kings Bench decision in Carter v Boehm (1766) 3 Burr 1905, where Lord Mansfield held thus: Insurance is a contract upon speculation.  The special facts, upon which the contingent chance is to be computed, lie most commonly in the knowledge of the insured only; the underwriter trusts to his representation, and proceeds upon confidence that he does not keep back any circumstance in his knowledge, to mislead the under-writer into a belief that the circumstance does not exist, and to induce him to estimate the risque, as if it did not exist.

8. Karnataka High Court in United India Fire & General vs Chennamma and Ors.1983 53 CompCas 789 Kar, observed that it is well settled that the policy of insurance forms a contract of indemnity.  When the insured is no longer the owner of the vehicle, the contract fails and lapses [Vide Gulab Bai Damodar Tapse v. Peter K. Sunder [1975] ACJ 100 (Bom).
9. In Surendra Kumar Bhilawe vs The New India Assurance Company, Civil Appeal No. 2632/2020, Order dated 18.06.2020 before the Apex Court.  Facts of the case were that Surendra Kumar Bhilawe (in short appellant) had already sold the vehicle, namely, truck to Mohammad Iliyas Ansari.  It was not in dispute that appellant continued to be the registered owner of the said truck on the date of accident.  It was the case of the appellant that the said truck had been purchased with finance from ICICI Bank, stood hypothecated to ICICI Bank, and the same could not be transferred without the consent of ICICI Bank. ICICI Bank had not issued No Objection to the Appellant for transfer of the said truck, as the dues of ICICI Bank had not been repaid in full till the date of the accident. Admittedly, however, the Appellant had entered into a sale agreement with the said Mohammed Iliyas Ansari.

Aggrieved by the action of the Insurer company in not releasing the claim of the Appellant, towards reimbursement of losses on account of the accident, the Appellant approached the District Forum with the complaint numbered case No. 404 of 2012. By a judgment and order dated 9.1.2014, the District Forum allowed the complaint filed by the Appellant and directed the Insurer to pay Rs.4,93,500/- to the Appellant within a month along with interest @ 6% per annum from the date of filing of the complaint, that is, 6.10.2012 till the date of payment and further directed the Insurer to pay the Appellant a sum of Rs.5,000/- towards compensation for mental agony and Rs.2,000/- towards cost of litigation. The Insurer appealed to the State Commission. The said appeal, being Appeal No.FA/14/85, was dismissed by the State Commission by an order dated 22.7.2014, which was challenged by the Insurer before the National Commission by filing the Revision Petition No. 4126 of 2014. The National Commission allowed the Revision Petition, set aside the orders of the District Forum and the State Commission respectively, and dismissed the complaint of the Appellant by observing.

A perusal of the sale agreement dated 11.4.2008 executed by the complainant with Shri Mohd. Iliyas An

sari would show that the complainant handed over the possession of the aforesaid vehicle to Shri Ansari on payment of Rs.1,40,000/- Since the vehicle had been got financed from ICICI Bank the remaining payment was to be made by the purchaser directly to the said bank. The aforesaid document also shows that a sum of Rs.1,40,000/- was received by the complainant from Shri Ansari on 11.4.2008. Thus, it stands duly proved that not only had the complainant received the sale consideration agreed with Shri Ansari he had also delivered the possession of the vehicle to him on 11.4.2008. Though the vehicle was not got registered in the name of Shri Ansari by the time it met with an accident, that in our opinion, would be of no consequence in view of the sale having been already completed on 11.4.2008.

Hon. Apex Court set aside the judgement of the National Commission and observed that

The finding of the National Commission that the fact of registration of the said truck in the name of the Appellant was inconsequential is also not sustainable in law. Section 2(30) of the Motor Vehicles Act, 1988 defines owner to mean the person in whose name the motor vehicle stands registered. The definition of owner has been overlooked and ignored by the National Commission. Had ownership of the said truck intended to be transferred forthwith, the registration would have been transferred in the name of the transferee, as also the permit to operate the said truck for carriage of goods.

It was held that since as per Section 2(30) of the Motor Vehicle Act, 1988, Owner means a person in whose name motor vehicle stands registered and since ownership of the vehicle had not been transferred in the name of the complainant insurer was entitled to repudiate her claim.

10. In  United India Insurance Co. Ltd. vs. Sushil Kumar Godara Civil Appeal No. 5887 of 2021 vide dated 30.09.2021 before the Hon. Supreme Court. The complainant obtained an insurance policy from the insurer. The vehicle had a temporary registration No. the vehicle was stolen on 28.07.2011. the FIR was registered u/s 379 IPC on 29.07.2011, on 30.09.2011 appellant lodged a final report stating that the vehicle was untraceable. The insurer repudiated the insurance claim, inter alia, on the ground that temporary registration of the vehicle expired on 19.07.2011 and insured did not get the vehicle permanently registered. District Forum dismissed the complaint observing that on the date of incident the vehicle temporary registration has expired and since the vehicle was not registered at the time of theft. The claim was not payable. Complainant appealed to the State Commission. Hon. State Commission set aside the order of the District Forum and allowed the appeal observing that as the insurer had covered the complainants 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 insureds 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.

Insurer challenged the order of NCDRC before the Hon. Apex Court. Hon. Apex Court observed that:-

12. In Naveen Kumar (supra), NCDRC decided a reference, to its bench, and held that:

9. For the reasons stated hereinabove, the reference is answered in following terms:

(i) 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:

(ii) If a vehicle without a valid registration is used/driven on a public place or any other place, it would constitute a fundamental breach of terms and conditions of the policy even if the owner of the vehicle has applied for the issuance of a registration in terms of S.41 of the Act before expiry of the temporary registration, but the regular registration has not been issued.

(emphasis supplied)

13. In the present case, the temporary registration of the respondents vehicle had expired on 28-07-2011. Not only was the vehicle driven, but also taken to another city, where it was stationed overnight in a place other than the respondents premises. There is nothing on record to suggest that the respondent had applied for registration or that he was awaiting registration. In these circumstances, the ratio of Narinder Singh (supra) applies, in the opinion of this court. That Narinder Singh (supra) was in the context of an accident, is immaterial. Despite this, the respondent plied his vehicle and took it to Jodhpur, where the theft took place. It is of no consequence, that the car was not plying on the road, when it was stolen; the material fact is that concededly, it was driven to the place from where it was stolen, after the expiry of temporary registration. But for its theft, the respondent would have driven back the vehicle. What is important is this Courts opinion of the law, that 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 (supra), entitling the insurer to repudiate the policy.

14. This Court is of the opinion that the NCDRCs 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

39. Necessity for registration. - No person shall drive any motor vehicle and no owner of a motor vehicle shall cause or permit the vehicle to be driven in any public place or in any other place unless the vehicle is registered in accordance with this Chapter and the certificate of registration of the vehicle has not been suspended or cancelled and the vehicle carries a registration mark displayed in the prescribed manner: Provided that nothing in this section shall apply to a motor vehicle in possession of a dealer subject to such conditions as may be prescribed by the Central Government.

192. Using vehicle without registration. (1) Whoever drives a motor vehicle or causes or allows a motor vehicle to be used in contravention of the provisions of section 39 shall be punishable for the first offence with a fine which may extend to five thousand rupees but shall not be less than two thousand rupees for a second or subsequent offence with imprisonment which may extend to one year or with fine which may extend to ten thousand rupees but shall not be less than five thousand rupees or with both:

Provided that the court may, for reasons to be recorded, impose a lesser punishment. (2) Nothing in this section shall apply to the use of a motor vehicle in an emergency for the conveyance of persons suffering from sickness or injuries or for the transport of food or materials to relieve distress or of medical supplies for a like purpose:

Provided that the persons using the vehicle reports about the same to the Regional Transport Authority within seven days from the date of such use.

(3) The court to which an appeal lies from any conviction in respect of an offence of the nature specified in sub-section (1), may set aside or vary any order made by the court below notwithstanding that no appeal lies against the conviction in connection with which such order was made.

Explanation. Use of a motor vehicle in contravention of the provisions of section 56 shall be deemed to be a contravention of the provisions of section 39 and shall be punishable in the same manner as provided in sub-section (1). Naveen Kumar (supra), as well before parting, this Court expresses its appreciation for the assistance rendered by the learned amicus, Ms. Gauri Puri.

15. For these reasons, the impugned order and the order of the State Commission are hereby set aside; the respondents complaint is dismissed. The appeal is allowed in these terms, without order on costs.

11. In this case the policy holder was not the registered owner of the vehicle nor registration of the vehicle was got transferred from the name of the deceased to the name of the complainant.  It was submitted on behalf of the complainant that by insuring the vehicle in the name of the complainant, OP insurer had consented to vesting of insurable interest in the vehicle with the complainant, who is legal heir of the deceased owner. Ld. Counsel for the complainant has, however, not shown any judgement in support of his contention.
12. Vehicle registered in the name of deceased is as bad as no registration at all. In Narinder Singh vs The New India Assurance Company Ltd., Civil Appeal No. 8463/2014, Order dated 04.09.2014 before the Apex Court.  Vehicle had not been registered after expiry of temporary registration.  In Para 14, Hon. Supreme Court observed that

in our view, therefore, using a vehicle on the public road without any registration is not only an offence punishable under Section 192 of the Motor Vehicles Act but also a fundamental breach of the terms and conditions of policy contract.

13. In Naveen Kumar vs. Vijay Kumar and Others 4(2018)3 SCC1 Apex Court held that in view of the definition of the expression owner in Section 2(30) of the Motor Vehicles Act, 1988, it is the person in whose name the motor vehicle stands registered, who, for the purposes of the said Act, would be treated as the owner of the vehicle. Where the registered owner purports to transfer the vehicle, but continues to be reflected in the records of the Registering Authority as the owner of the vehicle, he would not stand absolved of his liability as owner to a third party suffering loss on account of use of the vehicle.
14. In the instant case, complainant had been driving the vehicle without valid registration. Had an accident taken place in which the vehicle had caused death or injury to a third party, complainant would have tried to escape her liability by saying that she is not the registered owner of the vehicle.  It is quite dangerous situation from the point of view of a third party who suffered loss on account of user of such vehicle. By the same logic, complainant should not be allowed to claim her own loss caused on account of use of such vehicle without valid registration if she cannot be held liable to pay compensation to a third party/ victim simply because she is not the registered owner. Complaint is accordingly dismissed.
15. Copy of this order be sent to the parties as per rules. File be consigned to record room.

Announced on this 11th July of 2022.