Tamil Nadu

StateCommission

CC/5/2013

K.P. NATARAJAN - Complainant(s)

Versus

NATIONAL INSURANCE COMPANY LIMITED, DIVISIONAL MANAGER - Opp.Party(s)

V. BALAJI

22 Oct 2021

ORDER

IN THE STATE CONSUMER DISPUTES REDRESSAL COMMISSION, CHENNAI

              BEFORE                 Hon’ble Thiru Justice R. SUBBIAH         PRESIDENT

                                              Tmt. Dr. S.M.LATHA MAHESWARI            MEMBER

 

CC.NO. 5/2013

 DATED THIS THE 22^nd DAY OF OCTOBER 2021

 

K.P. Natarajan

S/o. Poomalai Gounder

277, Maraimalai Adigal Salai

Puducherry – 685 001                                                 ....Complainant

 

                                                  Vs 

1.       National Insurance Co. Ltd.,

Rep. by its Divisional Manager

II Floor, Balaji Tower

11, Ramakrishna Road,Salem – 636 007

 

2.       National Insurance Co. Ltd.,

Rep. by its Chairman cum Managing Director

No.3, Middleton Street

Kolkatta – 700 071                                          ....Opposite parties

 

Counsel for complainant                               :   M/s V. Balaji

Counsel for 1^st & 2^nd Opposite parties             :  M/s.A.S. Arunkumar

 

                This complaint coming before us for hearing finally on 27.9.2021 and on hearing the arguments of counsel appearing on bothsides, and upon perusing the material records this Commission made the following order:

ORDER

Justice R. SUBBIAH,  PRESIDENT   

1.       This complaint has been filed under Sec.17 of Consumer Protection Act 1986, against the opposite parties claiming a sum of Rs.29,90,500/- towards damage caused to the complainant’s vehicle in an accident that had occurred on 7.6.2011 as per surveyor’s assessment alongwith compensation of Rs.5 lakhs and cost.

 

2.       The case of the complainant in brief is as follows:

          The complainant is the owner of Ashok Leyland Bus bearing Regn.No.PY 01 BH 9919, which is a transport vehicle and on the relevant date it had valid permit No.201113987 issued by RTO Pondichery for the period from 29.5.2011 to 27.6.2011.  The said bus WAS authorized to ply in various places including within tamil nadu for carrying passengers for hire and being used as a commercial vehicle.  The said bus was insured with the opposite party under a Commercial Vehicle Package Policy No.650400/31/10/6300002005 for the period from 28.1.2011 to 27.1.2012 on payment of a huge premium of Rs.54603/-.  The opposite party had fixed the value   at Rs.31,39,000/- for the vehicle and its accessories on which the premium was calculated and collected from the complainant for cover damage to the vehicle due to various risks including accidental external means.  While so, on 7.6.2011, when the complainant was plying the vehicle from Chennai to Pollachi it had met with an accident on NH4 Chennai-Bangalore Highway, near Avalur.  The accident itself was caused due to rash driving of two lorries which were attempting to overtake each other and hit the bus, as a result of which the driver of the bus lost control and the bus fell into a ditch.  In the said accident, the complainant’s bus was totally burnt and became a complete wreck beyond repairs.  Several passengers were killed/ injured in the mishap.  The damage to the vehicle was thus caused by accidental external means as covered by the policy.  At the time of accident, the bus was having valid registration and fitness certification, and was authorized to ply under a valid route permit, and the driver who had driven the vehicle also had a valid driving license to drive the transport vehicle with badge.  The complainant was using the vehicle in accordance with the provisions of Motor Vehicles Act and in compliance with the terms and conditions of the policy.  FIR in Cr.No.200/2011 was registered by the Kaveripakkam Police in respect of the said accident.  The complainant also informed the 1^st opposite party over phone and followed up by written communication about the accident and the loss suffered by him.   The opposite party had appointed M/s. Libra Surveyors Pvt. Ltd., as surveyor who had inspected the vehicle and being satisfied that no repair was possible, and the damage was total, required the complainant to take over the wreck as salvage valuing it at Rs.1,50,000/-.  The complainant fully cooperated with the opposite parties and their surveyor by submitting all required documents such as RC, permit, Driving licence, FIR etc., The surveyor who was fully convinced with the papers had arrived at the final amount payable under the policy.  The complainant had also given consent letter dt.27.7.2011 accepting the value of Rs.150000/- for the wreck whereupon it was informed by them that the surveyor had assessed the net loss payable under the policy at Rs.2990500/- under survey report dt.22.8.2011.  The complainant had suffered heavy loss due to the destruction of the bus.   Whenever the first opposite party was contacted, it was represented that all paper are in order and recommended for settlement, and the approval of higher office was awaited.  The matter was getting dragged for more than one year even after receipt of surveyor report, due to which the complainant had suffered loss and mental hardship and ultimately contrary to the promise made by the 1^st opposite party, and to the shock of the complainant, the opposite party had rejected the claim totally by a letter dt.25.9.2012, alleging that the bus was used as a stage carriage whereas it was authorized to be used as a contract carriage.  The reason stated by the opposite party is baseless.  The complainant had submitted a representation on 30.9.2012 expecting the opposite party to review and arrive at a proper decision on the claim.  However the opposite party remained adamant in its attitude and reiterated the decision by its letter dt.7.12.2012.  Hence the complaint is filed by the complainant praying for refund of Rs.2990500/- alongwith  interest @18% p.a., from 7.6.2011 and compensation of Rs.5,00,000/-. 

 

3.       Resisting the claim made by the complainant, the opposite parties have filed their version as follows:

                   The complaint is not maintainable either on facts or on law.  The complaint had arisen out of the commercial activity engaged in fleet operation falling outside the purview of Consumer Protection Act.  While admitting the bus bearing No.PY-01-BH-9919 was insured with the opposite party company during the relevant period denies the allegation that it was used according to the permit issued.  The opposite party also denies that the value of the vehicle was fixed at Rs.31,39,000/- by them.  The vehicle was insured only based on the value declared by the complainant / insured and the premium was collected according to the tariff and guidance issued by IRDA.  The vehicle was used contrary to the permit issued by the authorities.  The insurance company had dealt with the claim of the complainant meticulously from the day one of the accident and till date of repudiation within the reasonable time fold.  The surveyors were appointed to ascertain the damage occurred to the vehicle and the value of the loss.  The report submitted by them is only pertaining to the damages, but it has no say with regard to the breach committed by the complainant and enforcement of the terms of contract by the opposite parties.  The allegation that the matter was dragged for more than one year is unreasonable and the complainant cannot find fault on the opposite parties for the willful violation committed on his part.  The complainant admittedly obtained “Contract Carriage Permit” from the State Transport Authority, Pondichery.  Whereas the trip-sheet maintained on the day of accident and submitted by the complainant would clearly display the fact that the passengers booked ticket at various places in the state of Tamil Nadu.  The complainant had picked up the passengers at Chennai and proceeded to drop them at Pollachi, Tiruppur and Udumalipet, which itself is a separate contract violating the permit conditions and consequently clause 3 (a) of the general exceptions mentioned in the policy issued by the opposite parties.   The vehicle was not given as a whole under a contract as required under Contract Carriage Permit.  In fact, public interest litigation was filed before the High Court questioning such usage of vehicle by the complainant contrary to the permit.  The Transport Department, Tamil Nadu has filed counter in the said writ petition stating that such sleeper coach buses are not granted permits by them and they operate from neighbouring states.  Thereafter it seems an additional counter was filed specifically stating that permits to the Omni bus are issued under Sec.74 of Motor Vehicles Act, 1988, and the operators should ply their vehicles only on contract basis.  The limitation as to the use specified in the policy expressly requires the insured to use the vehicle in accordance to the permit as mentioned under Sec.66 of the Motor Vehicles Act.  Hence the repudiation by this opposite party is only after proper understanding of the legal and factual position.  Admittedly, the vehicle plied from Chennai to Pollachi, the passengers purchased tickets individually at various places and the complainant had contracted with each of them collecting separate fares to alight them at Pollachi, Tiruppur and Udumalipet.  Since the accident had occurred before reaching the said places none of the passengers were dropped.  In fact, the vehicle should have been used as a whole under a contract.  Thus the complainant had violated Sec.66, Sec.74 and Sec.88(8) of the Motor Vehicles Act.  The policy issued by the opposite parties is passengers carrying commercial vehicle policy, and it can be enforced by the insured provided he operates the vehicle in accordance to the Motor Vehicles Act, particularly according to the type of permit and terms and conditions mentioned therein.    Any loss alleged by the complainant had occurred that is only due to his own act in not following the terms of contract of insurance.  There is no cause of action as alleged by the complainant to maintain the complaint, and there is no deficiency of service.  Thus they sought for dismissal of the complaint. 

4.       In order to prove their respective cases, proof affidavits were filed by both parties alongwith documents, which are marked as Ex.A1 to A19 on the side of the complainant and Ex.B1 to B7 on the side of the opposite parties.   Written arguments of bothsides filed. 

5.       The learned counsel for the complainant had submitted that at the time of accident the bus bearing Regn.No.PY 01 BH 9919, which is a commercial vehicle, had a commercial vehicle Package Policy for the period from 28.1.2011 to 27.1.2012 and a valid route permit.  The said vehicle met with an accident on 7.6.2011.  In the said accident the complainant bus was totally burnt and became a complete wreck beyond repairs.  Since the bus was covered under the valid policy, the claim was preferred with the opposite parties but the same was rejected solely on the ground that the bus was authorized to be used as a contract carriage, whereas the bus was used as a stage carriage. The learned counsel for the complainant further submitted that as per the policy condition, if the vehicle was used without valid permit, then the insurance company is having right to repudiate the whole claim.  In the instant case, according to the insurance company, though the vehicle was covered under the policy,  there is a violation of policy condition with regard to “limitation as to use”.  Under the limitation as to use, one of the classes says “the policy covers used only under the permit within the meaning of the Motor Vehicle At 1988 or such carriage falling under Sub Section (3) of Sec.66 of the MV Act 1988”.  In the instant case permit was issued only to ride the vehicle as contract carriage, but the vehicle was used as a stage carriage, and not as a contract carriage, there is a violation with regard to the condition “limitation as to use”.  In such a case as per the judgement of the Hon’ble Supreme Court, reported in II (2010) CPJ 9 (SC) in the case of Amalendu Sahoo Vs. Oriental Insurance Co. Ltd.,  it was held that claim can be settled on non-standard basis, relevant pararagh in the judgement reads as follows: “In this reference may be made to a decision of National Commission in the case of New India Assurance Company Limited Vs. Marayan Prasad Appaprasad Pathak, reported in II (2006) CPJ 144 (NC).  In that case also the question was, whether the insurance company can repudiate the claims in a case where the vehicle carrying passengers and the driver did not have a proper driving license and met with an accident.  While granting claim on non-standard basis the national Commission set out in its judgement the guidelines issued by the insurance company about settling all such non-standard claims.  The said guidelines are set out as  “Anyother breach of warranty/ condition of policy including limitation as to use – Pay upto 75% of admissible claim”.  Thus the counsel for the complainant submitted that if 75% of the claim was settled on non-standard basis, as per the above judgement, that would suffice. 

 6.      Countering the submissions, the learned counsel for the opposite parties/ insurance company submitted that the complainant had obtained permission only as a contract transport permit from the State Transport Authority, Pondichery,  whereas, the complainant had used the bus as a stage carriage.  In this regard the learned counsel for the opposite parties had also invited the attention of this court to Sec.7 “Contract Carriage”  of Motor Vehicles Act   and Sec.40 “Stage Carriage”, Sec.66 “Necessity for permits”,  which reads as

Sec.2 (7) of Motor Vehicles Act

(7) “contract carriage” means a motor vehicle which carries a passenger or passengers for hire or reward and is engaged under a contract, whether expressed or implied, for the use of such vehicle as a whole for the carriage of passengers mentioned therein and entered into by a person with a holder of a permit in relation to such vehicle or any person authorised by him in this behalf on a fixed or an agreed rate or sum—

1. on a time basis, whether or not with reference to any route or distance; or

(b)from one point to another,

 

Section 2(40) in The Motor Vehicles Act, 1988

(40) “stage carriage” means a motor vehicle constructed or adapted to carry more than six passengers excluding the driver for hire or reward at separate fares paid by or for individual passengers, either for the whole journey or for stages of the journey;

 

Section 66 in The Motor Vehicles Act, 1988

66. Necessity for permits.—

(1) No owner of a motor vehicle shall use or permit the use of the vehicle as a transport vehicle in any public place whether or not such vehicle is actually carrying any passengers or goods save in accordance with the conditions of a permit granted or countersigned by a Regional or State Transport Authority or any prescribed authority authorising him the use of the vehicle in that place in the manner in which the vehicle is being used:

 

Whereas the trip sheet maintained on the date of accident would clearly show the fact that the passengers had booked the tickets for various places at Tamil Nadu, and picked up from Chennai and proceeded to drop them at Pollachi, Tiruppur and Udumalipet, which itself is a separate contract violating the permit condition, and consequently clause 3 (a) of the general exceptions mentioned by the opposite party in the policy.  The vehicle was not given as a whole under a contract as required under Contract Carriage Permit.  The special permit granted to the said vehicle is from Pondichery to Pondichery enroute various places.  But admittedly the vehicle plied from Chennai to Pollachi, the passengers purchased tickets individually at various places and collected different rates from each of them.  Since accident had occurred before reaching the said places none of the passengers were dropped.  Infact the vehicle should have been used as a whole under a contract.  Thus the complainant had violated Sec.66, Sec.7 and Sec.40 of the Motor Vehicles Act.  The policy issued by the opposite parties is Passengers carrying commercial vehicle policy, and it could be enforced by the owner/ insured, provided he operates the vehicle in accordance with the Motor Vehicles Act.  Therefore it squarely falls within the definition of violation of the policy, and therefore the repudiation of the claim by the opposite parties is perfectly correct.    

7.       Point for consideration is

                   1.       Whether there is deficiency in service on the part of the opposite parties?

8.       POINT NO.1:

                    It is the submission made by the learned counsel for complainant that even if there is any violation of policy condition, it is only with regard to “limitation as to use” mentioned in the policy.  For such kind of violation, the claim can be settled at 75% on non-standard basis, based on the judgement  of the Hon’ble Supreme Court held in Amalendu Sahoo Vs. Oriental Insurance Co. Ltd., reported in II (2010) CPJ 9 (SC), wherein it was held that “Any other breach of warranty/ condition :Pay upto 75% of admissible claim”. 

                   But according to the counsel for the opposite party in the said judgement Hon’ble Supreme Court had not dealt with the issue of permit violation in commercial vehicle.  In the said judgement, the vehicle involved is private car, and it was let out for hire, and there was no question regarding ‘permit’.  As it is not a commercial vehicle, and the terms and conditions of the policy is that of ‘private car package policy’.  Whereas the policy involved in this case is commercial vehicle policy.

9.       Further the learned counsel for opposite party, by inviting the attention of the copy of the policy under Ex.A1 and B1, had submitted that in the policy under the heading “limitation as to use” it has been mentioned policy covers use under a permit within the meaning of the Motor Vehicle Act 1988, or such a carriage falling under Sub-section 3 of Sec.66 of the Motor Vehicles Act 1988. Whereas in the ‘limitation as to use’ column found in the private car package policy, does not contain the provision of Sec.66 of the Act.  Therefore, the said judgement which deals with private carrier package policy cannot be made applicable to the fact of this case. 

                    Further the learned counsel for the opposite party submitted that in case reported in CDJ 2018 (Cons.) Case No.001 in Shriram General Insurance Co. Ltd., Vs. Vinod the Hon’ble National Commission had examined the breach of policy pertaining to permit, wherein the passengers being carried in the vehicle plied in the state of Rajasthan with the permit issued by the State of Haryana in which it was held the repudiation of policy is valid, after considering the judgement rendered in Amalendu Sahoo case. 

                    Similarly in yet another case reported in CDJ 2016 (Cons.) Case No.960 in New India Assurance Co. Ltd., & Another Vs. B.D.Sharma the Hon’ble National Commission had dealt with the position of the claim for plying the vehicle without permit and held that the repudiation of the claim is valid.  The opposite party also had placed reliance upon the judgement reported in CDJ  2009 SC 690 held in Vikram Greenteck (I) Ltd., & Another Vs. New India Assurance Co. Ltd., wherein it was held that An insurance contract, is a species of commercial transactions and must be construed like any other contract to its own terms and by itself. In a contract of insurance, there is requirement of uberimma fides i.e. good faith on the part of the insured. Except that, in other respects, there is no difference between a contract of insurance and any other contract. The four essentials of a contract of insurance are, (i) the definition of the risk, (ii) the duration of the risk, (iii) the premium and (iv) the amount of insurance. Since upon issuance of insurance policy, the insurer undertakes to indemnify the loss suffered by the insured on account of risks covered by the insurance policy, its terms have to be strictly construed to determine the extent of liability of the insurer. The endeavour of the court must always be to interpret the words in which the contract is expressed by the parties. The court while construing the terms of policy is not expected to venture into extra liberalism that may result in re-writing the contract or substituting the terms which were not intended by the parties. The insured cannot claim anything more than what is covered by the insurance policy. [General Assurance Society Ltd. Vs. Chandumull Jain and another 1, Oriental Insurance Co. Ltd. Vs. Sony Cheriyan2 and United India Insurance Co. Ltd. Vs. Harchand Rai Chandan Lal3]

                   Thus relying upon the above judgements, the learned counsel for opposite party submitted that breach of policy condition is fundamental as per the terms of policy, and the opposite party has every right to repudiate the claim, as the bus was used in contrary to the policy issued.  Hence absolutely there is no deficiency in service of service on the part of the opposite party.  Thus prayed for dismissal of the complaint. 

10.      The main ground for repudiation is that the complainant had used the vehicle as a stage carriage, whereas it was authorized to be used as a Contract Carriage.  Hence according to the counsel for the opposite parties, since the breach of permit condition is fundamental, as per the terms of the policy, the opposite party has every right to repudiate the claim as admittedly the bus was used contrary to the permit issued, hence the opposite parties have no committed any deficiency of service enabling the complainant to seek any manner of relief much less under non-standard basis.  

11.      In view of the submission made on either side, the following points raised for consideration

1. Whether the complainant is entitled for compensation under non-standard basis in view of the dictum laid down by the Hon’ble Supreme Court in Amalendu Sahoo case?

 

2. Whether there is deficiency in service on the part of the opposite party in repudiating the claim?

12.     The fact is that the Ashok Leyland Bus bearing Regn.No.PY 01 BH 9919, belonging to the complainant had a commercial vehicle policy No.650400/31/10/6300002005 for the period from 28.1.2011 to 27.1.2012 is not in dispute.  Similarly the vehicle had valid permit issued by the competent authority viz. RTO Pondichery for the period 29.5.2011  to 27.6.2011 and authorized to ply in various places including Tamil Nadu is also not in dispute. 

 

13.     But it is the contention of the opposite party that the complainant had permit to ply the vehicle only as a contract carriage in the state of Tamil Nadu by fixing a rate to carry the passengers from one point to another.   But in the instant case, the complainant  took up the passengers from Chennai and agreed to drop them at Pollachi, Thirupur and Udumalpet.  Thus it is the contention of the opposite party that the complainant had used the vehicle as a stage carriage and not as a contract carriage, as per the permit issued by the competent authority.  Hence there is a violation of policy condition.  Therefore, the insurance company is not liable to compensate the loss suffered by the complainant due to the accident.  Hence according to the learned counsel for the opposite party the insurance company has correctly repudiated the claim made by the complainant, therefore there is no deficiency of service on the part of the opposite party. 

               

                    Whereas, according to the complainant, the bus had a valid permit at the time of accident to ply from Pondichery to inter other states, including Tamil Nadu. 

          14.     The only point raised by the learned counsel for the opposite party is that the complainant had deviated the policy condition such as “limitation as to use”.  With regard to the violation of limitation as to use, the complainant is entitled to compensation @75% of the admissible claim on non-standard basis as per the order of the Apex Court in Amalendu Sahoo case. 

                   The learned counsel for the opposite party would submit that the said judgement is not applicable to the fact of this case, since the Apex Court had not dealt with permit violation that occurred in commercial vehicle in this case.  But we are not inclined to accept the said statement of the learned counsel for the opposite parties.

                   In our considered opinion when there is no fundamental breach of policy condition, by applying the said judgement, the insurance company can be directed to settle the claim on non-standard basis.  In the instant case, there was a valid permit, but the complainant had taken the passengers from Chennai to Pollachi and issued tickets for passengers for dropping the passengers on the way viz. Tirupur, Udumalpet etc.  Thus used the vehicle as a stage carriage.  This breach cannot be considered as a fundamental breach of policy condition.  In the case in Shriram General Insurance Co. Ltd., Vs. Vinod relied upon by the opposite party, the bus was taken to Rajasthan but the vehicle was having permit only to ply in Haryana state.  Thus it could be considered that the vehicle was taken without valid permit in Rajasthan.   Therefore, the said judgement cannot be made applicable to the facts of the present case. 

                   In another case in New India Assurance Co. Ltd., & Another Vs. B.D.Sharma, a commercial vehicle was plied without permit.  Therefore, this case could be factually differentiate.  Therefore, the said judgement also cannot be made applicable to the facts of the present case. 

                   In view of the above, we are of the considered opinion that the usage of the vehicle as a stage carriage instead of contract carriage cannot be considered as a fundamental breach of policy.  Therefore by applying the dictum laid down the Amalendu Sahoo case, the opposite party can be directed to settle 75% of the claim on non-standard basis. 

15.      As per the Surveyor Report under Ex.A12 the total loss was valued @ Rs.29,90,500/-  Thereby 75% of the admissible claim works out to Rs.22,42,875/-.  Thus the complainant is entitled to a sum of Rs.22,42,875/-.  

                   The claim is of the year 2011.  Now almost 10 years have been completed, since the complainant is deprived of his benefits. Therefore, he has to be compensated for the mental agony he would have suffered.  Though the complainant had claimed a sum of Rs.5,00,000/- towards compensation, we are of the considered opinion that awarding a sum of Rs.50000/- towards compensation   apart from awarding cost of Rs.10000/- towards litigation expenses would meet the ends of justice.

 

16.      In the result, the complaint is allowed  in part.  The opposite parties 1 & 2 are jointly and severally directed to pay a sum of Rs.22,42,875/- towards 75% of the non-standard claim, alongwith compensation of Rs.50000/- and cost of Rs.10000/-.  Time for compliance two months from the date of receipt of the order, failing which the amount granted above shall carry interest @9% p.a., from the date of default, till realization. 

 

  S.M.LATHAMAHESWARI                                                                R SUBBIAH          

          MEMBER                                                                                      PRESIDENT

Exhibits filed on the side of complainant

A1                         Policy of Insurance

A2                         Certificate of Registration

A3      18.10.2011    Permit

A4                         Driving Licence

A6      08.06.2011    FIR with report

A7      08.06.2011    Claim form submitted by complainant

A8      13.06.2011    Letter from OP appointing surveyor

A9            “            Letter from OP seeking documents

A10           “            Letter fro  complainant enclosing documents

A11     27.07.2011    Consent letter

A12     22.08.2011    Survey Report

A13     01.05.2012    Reminder letter from complainant

A14     22.06.2012    Reminder email from complainant

A15     06.07.2012              -do-

A16     25.09.2012    Repudiation letter

A17     30.09.2012    Representation by complainant

A18     16.10.2012    Reply from OP

A19     07.12.2012              -do-   

 

 

Exhibits of the opposite parties     

B1                         Policy schedule and terms and conditions

B2                         Copy of trip sheet

B3                         Copy of ticket

B4      28.06.2011    Affidavit in WP.No.15941/2011

B5      19.07.2011    Counter in WP.No.15941/2011

B6      12.10.2011    Additional counter in WP.No.15941/2011

B7      28.02.2014    Letter by RTO Puduchery

 

 

 

  S.M.LATHAMAHESWARI                                                                 R SUBBIAH     

           MEMBER                                                                                        PRESIDENT

 

 

INDEX : YES / NO

Rsh/d/rsj/ Open court