DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II, U.T. CHANDIGARH

Devinder Kaur, Prop. M/s EMM DEE Enterprises, Plot No.7, Indl. Area, Phase-7, SAS Nagar, Mohali (Punjab).

                                                                   ---Complainant

Vs

Oriental Insurance company Limited, SCO No. 109-110, Sector 17-D, Chandigarh, through its Manager/ Authorized Signatory.

---- Opposite Party

BEFORE:          SH.LAKSHMAN SHARMA                PRESIDENT

MRS.MADHU MUTNEJA              MEMBER

                    SH.JASWINDER SINGH SIDHU                    MEMBER

Argued By:       Sh. K.S. Arya, Advocate for the Complainant.

Ms. Anamika Mehra, Advocate for the Opposite Party.

PER MADHU MUTNEJA, MEMBER

1.                 The Complainant was the owner of a Mahindra & Mahindra Jeep/Gypsy bearing Registration No. PB-65-H-2491, insured with the Opposite Party for the period 24.8.2008 to 23.8.2009. The said vehicle was stolen from Bathinda and an F.I.R. No. 23, dated 18.04.2009 under Section 379 IPC was lodged with the Police Station Raman, District Bathinda, Punjab (Annexure C-3). The untraced report dated 25.05.2010 has been placed on record at Annexure C-4.

                    After theft of the vehicle, the Complainant informed the Opposite Party and lodged her claim as per policy. The Opposite Party vide letter dated 15.06.2009 (Annexure C-6) asked the Complainant to comply with all the formalities of the claim. The Complainant has alleged that despite fulfilling all formalities, the claim has not yet been paid. In fact, the Complainant has received a rejection letter dated 30.11.2010 (Annexure C-9) that the claim has been rejected as the vehicle was being used for commercial purpose. 

                    The Complainant thus, served a legal notice dated 14.12.2010 (Annexure C-10) on the Opposite Party. After issuance of the legal notice, the Complainant has stated that the Opposite Party offered to pay 30% of the claim amount. The Complainant has thus, filed this complaint with a prayer that the Opposite Party be directed to release the claim, as well as to pay compensation for mental agony, harassment and unfair trade practice, besides costs of litigation.  The Complainant has attached registration certificate, cover note, F.I.R., untraced report, as well as entire correspondence exchanged between the parties for the claim along with her complaint.

2.                 After admission of the complaint, notices were sent to the Opposite Party.

3.                 Opposite Party in its reply has taken the preliminary objection that the theft took place on 13.4.2009, but the Complainant informed the Opposite Party only on 20.4.2009. The F.I.R. was lodged on 18.4.2010. Also there is no entry of data of the lost vehicle No. PB-65-H-2491 at the NCRB Delhi.

                    Opposite Party has further stated that the claim was repudiated on the following grounds: -

(a)         The vehicle was insured as a private vehicle, but was being used to carry labour to the site of refinery.

(b)         The driver Sh. Kewal Singh was missing from the site on 14.4.2009, which means that there were no steps taken for the safety of the vehicle.

(c)          The vehicle was being used for commercial purpose for carrying labourers.

                    On merits, Opposite Party has admitted that the vehicle was insured with them as a private vehicle. The insured was using the vehicle in question for carrying labourers to the refinery. Further, there was a delay of 7 days in lodging the claim with the insurance company. Opposite Party has submitted that the claim was repudiated after giving justified reasons vide letter dated 30.11.2010.

                    Opposite Party has also replied to the legal notice issued by the Complainant vide letter dated 01.06.2011. In the reply they have stated that the vehicle was registered and insured as a private vehicle but was being used for commercial purpose, as it was attached with the refinery for carrying labourers to the work place not by the Owner but by the transporter and mechanical contractor. Opposite Party has denied that they had offered to pay a claim of 30% to the Complainant.  Opposite Party has attached the surveyor report as well as the affidavit of the Surveyor (Sh. D.S. Chadha) on record.  Opposite Party has, therefore, prayed for dismissal of the complaint.   

4.                 Parties led evidence in support of their contentions.

5.                 We have heard the learned counsel for the parties and have perused the record.

6.                 The case of the Complainant is that despite having made payment for the policy to the Opposite Party, the Opposite Party has repudiated her claim on the pretext that the vehicle was being used for commercial purpose. The Complainant has stated that all formalities required by the Opposite Party had been adequately fulfilled by her and despite submission of all relevant documents, the Opposite Party has repudiated her claim. In repudiating the claim of the Complainant, the Opposite Party has relied upon the surveyor’s report dated 15.3.2009. A perusal of the surveyor report shows that the vehicle in question was stolen by unidentified persons from outside the gate of the refinery near Gupta Colony Rama Mandi, District Bathinda, on the intervening night of 13/14.04.2009. During the course of investigation, the surveyor has recorded the statement of the Complainant and her husband, as well as various employees of the refinery. After checking the records, the surveyor has come to the conclusion that the said vehicle had been provided by the Complainant to a Contractor at the refinery along with driver and the vehicle was being used to transport the labourers to the refinery.  The vehicle was parked near the gat of the refinery and was found missing the next morning when the driver came to wash the vehicle. Despite search by the owner, the vehicle was not recovered and an F.I.R. was lodged with the Police Station Bathinda on 18.04.2009. After detailed investigation, the Surveyor has come to the following conclusion:-

“8. Conclusion: -  Keeping in view the scrutiny of evidence brought on record, visit to the place of occurrence, examination of persons connected with the lost property, I find the claim of the insured as genuine, liable to be decided as per the terms of the policy, subject to the outcome of Police investigation in case F.I.R. registered at PS Rama, District Bathinda under No. 23 dated 184.2009.

The above findings to made is without prejudice to anyone and is subject to the terms and conditions of the policy issued in favour of the insured covering his vehicle at the time of above loss.”

7.                 The surveyor has recommended that even though the claim of the Complainant is genuine, but it is subject to terms & conditions of the policy. Neither party has placed on record the actual policy on which reliance has been placed for repudiation of claim. But it is clear from para 3 of the complaint that the Complainant is well aware of the terms and conditions of the Policy. Relying on the report of the Surveyor and placing reliance on the Policy, the Opposite Party has repudiated the claim of the Complainant. The Complainant has not filed any objections or contested the report of the Surveyor. The Hon’ble National Consumer Disputes Redressal Commission in case New India Assurance Company Ltd. Vs. Rabindra Narayan, I(2010) CPJ 80 (NC) has held :-

“….Surveyor’s report being important piece of evidence, to be given weight and relied upon, unless proved unreliable..”

                    In an another case Dabirudin Cold Storage Vs. New India Assurance Company Ltd. & Ors., I(2010) CPJ 141 (NC), the Hon’ble National Consumer Disputes Redressal Commission has held that:-

“…….Surveyor’s report being important document, cannot be easily brushed aside.”

                    The Opposite Party has placed on record the report of the Surveyor in support of repudiation of claim by them.

8.                 The rulings of the Hon’ble Apex Court in cases of such kind also need to be adhered to while deciding such disputes.

                    In case NATIONAL INSURANCE COMPANY LIMITED VS. MEENA AGGARWAL, (2009) 2 Supreme Court Cases 523, the Hon’ble Supreme Court has held as under:-

Consumer Protection – Services – Insurance – Insurer’s liability – Motor Vehicle Insurance – Vehicle damaged by accident – Driver not holding valid driver’s licence and plying vehicle for commercial use – Vehicle insured for personal use – Availability of defence to insurer against its liability – State and National Consumer Disputes Redressal Commission held insurer liable opining no fundamental breach of the terms of the policy occurred – Sustainability – Setting aside both orders, held, State Commission and National Commission indicated no reason for concluding there was no fundamental breach of the terms of the policy, even though both had observed that vehicle was driven by a person who did not have a valid driving licence and that the vehicle insured for personal use was used for commercial purpose – Consumer Protection Act, 1986 – Ss. 12, 15 and 19 – Contract and Specific Relief – Termination/ Discharge of contract – Termination / Repudiation for Breach of contract – Breach of condition – Motor Vehicles Act, 1988 – Ss. 149 and 147 – Contract Act, 1872 – S.73.

Allowed the appeal, the Supreme Court

Held:

The State commission and the National Commission have not practically indicated any reason for coming to the conclusion that there was no fundamental breach of the terms of the policy. Both the State Commission and the National Commission observed that the vehicle was being driven by a person who did not have a valid driving licence. In addition to that the vehicle which was insured for personal use was used for commercial use.

Orders of the State Commission and the National Commission are unsustainable and set-aside.

                    Hence, as per the cited case, the Hon’ble Supreme Court had upheld the decision of the District Forum in refusing to accept the contentions of the Complainant and upholding the repudiation of claim.

9.                 However, in a later judgment in case AMALENDU SAHOO VS. ORIENTAL INSURANCE COMPANY LIMITED, (2010) 4 Supreme Court Cases 536, the Hon’ble Supreme Court has held as under:-

Consumer Protection – Services – Insurance – Motor insurance – Breach of terms of comprehensive policy – Amount payable by insurer – Breach of term as to restrictions on use of vehicle – Vehicle allegedly hired out in breach of policy and meeting with accident when on hire – Supreme court applying guidelines laid down in Appaprasad Pathak case, (2006) 2 CPJ 144 (NC) [set out in para 14 herein], holding that insurer could not repudiate the claim in toto and thus awarding 50% of claimed amount to Complainant assured – Interest of 9% to be payable if there was delay in payment  - Consumer Protection Act, 1986 – Ss. 2(1) (o) & (g) – Motor Vehicles Act, 1988 – Ss. 147 and 149 – Contract and Specific Relief – Termination / Repudiation for breach of contract – Right to repudiate contract in entirety – When arises – Modification of obligation of promisor due to breach by promisee, instead.

What is disputed by the Insurance Company is that the vehicle was not used for personal use but was used by way of being hired, though no payment for hiring charges was proved. However, according to the Insurance Company, by using the vehicle on hire, the appellant had violated the terms of the insurance policy and on that basis the Insurance Company was within its right to repudiate the claim. (para 10)

Reference in this case may be made to the decision of the National Commission rendered in United India Insurance Co. Limited Vs. Gian Singh. In that decision of the National Consumer Disputes Redressal Commission (Hon’ble National Consumer Disputes Redressal Commission) it has been held that in a case of violation of condition of the policy as to the nature of use of the vehicle, the claim ought to be settled on a non-standard basis. The said decision of the National Commission has been referred to by this Court in National Insurance Co. Limited Vs. Nitin Khandelwal.  (para 11)

In Para 12 of the judgment in Nitin Khandelwal this Court held: (SCC P.262)

“12…………The Appellant Insurance Company is liable to indemnify the owner of the vehicle when the insurer has obtained comprehensive policy for the loss caused to the insurer. The Respondent submitted that even assuming that there was a breach of condition of the insurance policy, the Appellant Insurance Company ought to have settled the claim on non-standard basis.”  (para 12)

                    The appeal was thus allowed by the Hon’ble Apex Court, but only to the extent stated above.

10.               We must also keep in mind that the Consumer Protection Act, 1986, is a beneficial legislation for the benefit of the consumer. The Hon’ble Apex Court in Lucknow Development Authority Vs. M.K. Gupta, 1994(1) CLT 1 (SC) , had held that the provisions of the Consumer Protection Act have to be construed in favour of the consumer to achieve the purpose of the enactment as it is a social benefit oriented legislation.  Further, in case Kulwinder Kaur Vs. Life Insurance Corporation of India, 2007(1) CLT 303 (Pb.), it has also been held that if two view are possible, the one which helps the consumer should be taken.

11.               Hence taking a lenient view as also relying on the mandate of the Hon’ble Supreme Court in AMALENDU SAHOO VS. ORIENTAL INSURANCE COMPANY LIMITED, (2010) 4 Supreme Court Cases 536 that 50% amount be paid against the claimed amount without any interest within a period of six weeks from the date of order; we also in  accordance with the above ruling,  allow the present complaint and direct the insurance company to pay Rs.2,09,000/- being 50% of the amount as per the Insured Declared Value (IDV) of the car on the cover note dated 24.8.2008, within six weeks of receipt of this order.

                    As the Hon’ble Apex Court has also held that if the insurance co. delayed making the payment beyond six weeks then an interest of 9% from the date of expiry of six weeks till the date of actual payment be also paid to the Complainant along with the decreed amount, we also pass similar directions that In case the insurance company fails to pay the amount within the stipulated time, then it shall also pay an additional amount as interest, which shall be 9% on the decreed amount from the date of expiry of six weeks till the actual date of payment.  No costs. 

12.               Certified copy of this order be communicated to the parties, free of charge. After compliance file be consigned to record room.

Announced

12^th March, 2012.                                                          Sd/-

(LAKSHMAN SHARMA)

PRESIDENT

Sd/-

(MADHU MUTNEJA)

MEMBER

Sd/-

 (JASWINDER SINGH SIDHU)

MEMBER