JUSTICE SUDIP AHLUWALIA, MEMBER

 

which the Appeal filed by the Complainant was allowed and the Order of the Ld. District Forum dismissing the complaint was set-aside.

2. The factual background, in brief, is that the Complainant purchased a Bolero vehicle from United Automobiles, Allahabad on 12.06.2009 for Rs. 6,20,000/- and obtained insurance from the Petitioner by paying a premium of Rs. 18,098/-. The Insured Declared Value (IDV) of the vehicle was assessed at Rs. 5,89,000/-. The insurance Policy was valid from 12.06.2009 to 11.06.2010. However, on the night of 17.08.2009, the vehicle was stolen from Dali Bagh, Lucknow, and an FIR was lodged on 18.08.2009. Subsequently, a Surveyor was appointed, and all necessary documents were submitted. However, the registration of the vehicle could not be completed due to difficulties in obtaining a VIP number from the RTO Office. Despite the Complainant's efforts, including sending a Notice to the Petitioner regarding the claim, no response was received. Eventually, the Petitioner repudiated the claim via a letter dated 19.12.2011 citing non-registration of the vehicle as the reason. Discontented with the repudiation of the claim, the Complainant filed his complaint before the Ld. District Forum, Allahabad.

 3. The District Forum vide its Order dated 27.01.2016 dismissed the complaint. The Complainant then filed his Appeal before the Ld. State Commission, which  partially  allowed the same vide the impugned Order dated 12.05.2017, and directed the Petitioner to pay to the Complainant Rs. 4,35,000/- along with interest @7% p.a. from the date of complaint till the date of realization subject to the condition that the Opposite Party No. 3 shall be at liberty to claim payment of the amount for repayment of loan advanced to Complainant in terms of hypothecation Agreement, if any. The relevant extracts of the impugned Order are set out as below -

“…In view of provisions of Sections 39 and 192 of the Motor Vehicles Act 1988 it is clear that driving of motor vehicle without registration or permitting anyone to drive a motor vehicle without registration is an offence under Section-192 IPC and the driver as well as the owner of the vehicle shall be punished under Section-192 of the Motor Vehicles Act for the breach of Section-39 of the Motor Vehicles Act.

In the case of Narinder Singh V/s New India Assurance Company Limited and others (supra) the vehicle was being driven on road withoutproper registration at the time of accident but in the present case the vehicle was parked at Dalibag, Lucknow at the time of incident of theft and non registration of vehicle is not germane to theft. As such we are of the view that the facts of present case are distinguishable from the facts of Narinder Singh's case and respondent Insurance Company cannot get benefit of this case of Narinder Singh on the facts of present case. We find support from judgment of Honourable National Commission rendered in the case of Nidhes Sharma V/s Bharti Axa General Insurance Company Limited and others 2016 N.C.J. 194 NC.

Insurance policy of vehicle has not been denied by respondent Insurance Company. Incident of theft is alleged to have taken place in intervening night of 17/18 August, 2009 at 8.40 p.m. and F.I.R. has been lodged in local police station on 18-08-2009 at 12.55 A.M. Intimation of theft has been given to Insurance Company on 19-08-2009. Thus immediate intimation of theft has been given to police as well as to Insurance Company.

In view of discussion made above considering all facts and circumstances of the case as well as evidence on record we are of the view that claim of appellant/complainant should be allowed on sub-standard basis at 75% of insured value of vehicle. Insurance policy shows that insured value of vehicle is Rs.5,80,000/-. As such complainant/appellant is entitled to get Rs.4,35,000/- insured amount on non-standard basis.

In view of above we are of the view that repudiation of complainant's claim in toto by Insurance Company for violation of provision of Section 39 of the Motor Vehicles Act is not justified. As such Insurance Company has committed deficiency in service by making repudiation of complainant's claim in toto.

In view of above we are of the view that the District Consumer Forum has committed error in dismissing complaint. As such, we are of the view that the appeal should be allowed partly and after having set aside judgment and order passed by the District consumer Forum the complaint should be allowed for Rs.4,35,000/- on non-standard basis.

We are of the view that the appellant/complainant should be given interest on above amount at the rate of 7% per annum from the date of complaint till date of payment.

In view of above appeal is allowed partially and Impugned judgment and order passed by the District Consumer Forum is set aside. The complaint is allowed partially and opposite party Insurance Company is ordered to pay Rs.4,35,000/- to appellant/complainant within two months with interest at the rate of 7% per annum from the date of complaint till date of payment subject to condition that the respondent/opposite party no.3 shall be at liberty to claim payment of this amount for repayment of loan advanced by him to appellant/complainant in terms of hypothecation agreement if any. Parties shall bear their own costs of litigation.

Let copy of this order be made available to the parties within 15 days positively as per rules.”

 

4. Ld. Counsel for Petitioner has argued that the claim was rightly repudiated after appreciating the facts and circumstances of the case, especially considering that the vehicle was not registered at the time of the theft; That the District Forum rightly dismissed the complaint after considering all the peculiar laws surrounding the same; That the State Commission failed to appreciate that the vehicle was being used in contravention of the provisions of the Motor Vehicle Act, 1988; That the State Commission ignored the settled law that non registration of the insured vehicle takes the same beyond the protection of any insurance Policy violating Section 39 of the MV Act, 1988 as per the Order of this Commission in “HDFC Ergo Insurance Company Ltd. v. Rajiv Kumar Agarwal, RP/453/2018”. 

5. Ld. Counsel for Respondent has argued that the Insurance Company provided insurance coverage to the subject vehicle without requiring registration, whether temporary or permanent, prior to accepting the insurance proposal; That they issued an Insurance Policy covering the vehicle for a full year and charged the premium accordingly, without explicitly informing the Respondent that failure to register the vehicle would result in the withdrawal of insurance coverage; That there is no provision in the Policy stating that any violation of Section 39 of the Motor Vehicle Act would lead to the loss of insurance coverage if loss or damage to the vehicle occurs subsequent to the commission of the violation.  Section 39 of the Act deals with the necessity for registration of motor vehicles, and Section 192 pertains to the penalty for using vehicles without registration; That the Insurance Company repudiated the claim solely on the basis that the insured vehicle was not registered, without any explicit Policy Clause linking registration to the insurance coverage withdrawal.

6. This Commission has heard both the Ld. Counsel for Petitioner and Respondent, and perused the material available on record.

7. In seeking to challenge the decision of the Ld. State Commission, the Petitioner/Insurance Company has relied on certain decisions of this Commission, which are taken up for consideration hereafter.

8. In “Kaushalendra Kumar Mishra v. Oriental Insurance Co. Ltd” (supra), this Commission had dismissed the Revision Petition filed by the concerned Complainant against the Orders of lower Fora in a similar situation.  The relevant extracts from the order passed in the concerned judgment are set out as below –

“7. In our view, these arguments are neither legally correct nor acceptable. Registration of the vehicle is mandatory requirement of the law. The relevant provision, Section 39 of the Motor Vehicles Act 1988, reads:

“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.” 

8. Clearly therefore, till the vehicle receives this certification of registration from the competent authority, it is not legally useable on roads. Averments in the complaint petition itself show that the Motorcycle was used by the Complainant for dropping his uncle to the Railway Station, Satna and that the incident had happened on its return journey. This use of the motorcycle was in clear violation of the statutory requirement of registration. 

9. In view of the above, we find ourselves in complete agreement with the State Commission that use of the vehicle in violation of the law itself will take it beyond the protection of the policy. We accordingly, uphold the view of the State Commission that under the circumstances of the case, the Insurance Company was justified in repudiating the claim of the revision petitioner/complainant. The revision petition is, therefore considered to be devoid of any merit. It is accordingly dismissed on the ground of limitation as well as on merits…..”

9. Similarly, in the case of “The Manager, Bharti AXA General Insurance Co. Ltd. through its Area Manager (Legal)  Vs. B.A. Lokesh Kumar, RP No. 1834 of 2012”,  this Commission had set aside the Order of the Ld. State Commission, Karnataka, which had affirmed the Order of the District Forum allowing the complaint in a similar situation. The relevant extracts from the Order passed by this Commission are re-produced as below-

“3. Having considered the submissions of the parties, the short point that has arisen for our decision is as to whether the two Fora below were right in returning their concurrent finding in favour of the respondent in spite of the undisputed fact that the vehicle in dispute did not have a valid registration number on the date of the accident and hence was being used in violation of the law and condition of the insurance policy.  In this context, we may note that the registration of the vehicle is a mandatory requirement of the law and the relevant provisions as contained in Section 39 of the Motor Vehicles Act, 1988 may be reproduced as under:-

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 to such conditions as may be prescribed by the Central Government. 

4. In view of the aforesaid requirement of law, it is clear that both the fora below gravely erred in ignoring and rejecting the plea taken by the petitioner while returning their concurrent finding accepting the complaint. They should have appreciated that the use of the vehicle in question was in violation of the law itself and hence would take it beyond the protection of the insurance policy. We have therefore no hesitation in setting aside the impugned order and accepting the revision petition. The present case is squarely covered by the ratio of the two judgments relied upon by the counsel for the petitioner. We, therefore, allow the revision petition and set aside the impugned order leaving the parties to bear their own cost.”

10. Again, in “HDFC Ergo Insurance Company Ltd.  Vs. Rajiv Kumar Agarwal & Anr., RP No. 453 of 2018”, where the complaint filed in a similar situation by the Complainant Insured had been allowed, this Commission had set aside the Orders of the lower Fora by relying on the earlier decision in “Kaushalendra Kumar Mishra” (supra) and certain other decisions being “Classic Bakery & Anr.  Vs. Tata AIG General Insurance Co. Ltd. & Anr., FA No. 362 of 2015 decided on 26.4.2019”,  “Narinder Singh Vs. New India Assurance Co. Ltd. & Ors. (2014) 9 SCC 324”, “The Manager, Bharti AXA GIC Ltd.  Vs. B.A. Lokesh Kumar, MANU/CF/0488/2013”, “Oriental Insurance Co. Ltd. & Anr.  Vs. Vikram Kanada (RP No. 1264 of 2014)”, “Lokesh Kumar  Vs. Bharti AXA GIC Ltd., SLP (C ) 9053 of 2014”. The Revision Petition was finally allowed with the following observations –

“12. We have carefully gone through the entire facts and circumstances of the case, rival contentions of the parties, the relevant provisions of the Motor Vehicles Act / Rules and related case laws cited by the parties and are of the view that action of respondent no.1 / complainant in taking the vehicle on public road without valid registration, either temporary or permanent, is in clear violation of the provisions of Motor Vehicle Act / Rules and as per the case laws laid down by Hon’ble Supreme Court in various cases. This will take the vehicle beyond the protection of the insurance policy. Further, we agree that insurance is a pre requisite for registration in view of Rule 47 of the Central Motor Vehicle Rules, 1989. It is a normal practice that for any new vehicle to be delivered to the purchaser and to allow the vehicle to come on the road, insurance, which is mandatory requirement, is issued based on chasis and engine number. Generally registration number is added later on either in the form of endorsement or by way of issuing revised policy document. Merely holding of a valid insurance policy but plying the vehicle in violation of Motor Vehicle Rules / Act will make the claim under insurance policy, which is valid otherwise, non admissible. Hence we find that action of the petitioner Insurance Company in repudiating the claim on the ground that on the date of incident vehicle was not registered, is justified and is a lawful action and both the Fora below committed a material irregularity, District Forum in allowing the complaint of the complainant and State Commission in dismissing the First Appeal of the Petitioner herein. Accordingly, both the orders of District Forum and State Commission are, hereby, set aside. The Revision Petition is allowed. The repudiation order dated 11.01.2008 of the Petitioner is upheld.”

11. The facts and circumstances of the present case are squarely covered by the ratio of all the decisions cited on behalf of the Petitioner Insurance Company.  In this case also, the theft had occurred on the night of 17.08.2009 when the Insured vehicle had itself not been registered.  The failure to have the same registered and driven through a public place in taking the same to his own premises from that of Authorised Dealer certainly was an act which took the matter beyond the protection of the Insurance Policy, and that at the most, the contributory negligence could have been on the part of the Authorised Dealer himself in having delivered custody of the unregistered vehicle to the Complainant for which he could have been liable for proportionate compensation in view of the decision of this Commission in the case of “Ramesh Patel  Vs. Manager, Bajaj Allianz GIC Ltd., RP No. 1161 of 2015”.  But, clearly no liability could have been fastened upon the Petitioner Insurance Company as driving of the vehicle and moving away the same before its registration which was not effected in accordance with law, took it outside the protection of the Insurance Policy.

12. For the aforesaid reasons, this Commission is of the opinion that  the State Commission had acted with material irregularity in allowing the Appeal by setting aside the well-reasoned order of the District Forum which dismissed the Complaint. In view of all the earlier decisions of this Commission which have already been referred to in the preceding paragraphs, protection of the Insurance Policy cover was not in existence at the time of its theft, since the vehicle itself had not been registered as required by law, and had also been unlawfully driven through a public place by the Complainant. 

13. Consequently, the present Revision Petition is allowed after setting aside the impugned Order of the Ld. State Commission and the original complaint filed by the Respondent/Complainant accordingly stands dismissed.  Parties to bear their own costs. 

14. Pending application(s), if any, also stand disposed off as having been rendered infructuous