Chandigarh

StateCommission

A/65/2022

Parveen Malik - Complainant(s)

Versus

Universal Sompo General Insurance Company Ltd. - Opp.Party(s)

Abhimanyu Sharma Adv.

28 Dec 2022

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

 

Appeal No.	:	65 of 2022
Date of Institution	:	26.05.2022
Date of Decision	:	28.12.2022

 

 

 

 

 

Parveen Malik aged about 40 years, son of Sh.Rohtas Malik, resident of House No.100/1, Subhash Nagar, Manimajra, Chandigarh-160101.

…Appellant/complainant

V e r s u s

1. Universal Sompo General Insurance Company Limited, SCO 9, First Floor, Above Central Bank of India, Sector 10, Panchkula through its Branch Manager.
2. HDFC Bank Limited, Plot No.28, Phase-1, Industrial Area, Chandigarh through its Branch Manager.

….Respondents/opposite parties

 BEFORE:   JUSTICE RAJ SHEKHAR ATTRI, PRESIDENT.

                   MR.RAJESH K. ARYA, MEMBER.

 

Present:-    Sh.Abhimanyu Sharma, Advocate for the appellant.

                   Sh. Rohit Goswami, Advocate for the respondent no.1

                   Sh.Bhawan Deep Jindal, Advocate for respondent no.2 (on VC)

 

PER JUSTICE RAJ SHEKHAR ATTRI, PRESIDENT

 

                   This appeal has been filed by the appellant/complainant-Parveen Malik, as he is aggrieved of the order dated 21.04.2022 passed by the District Consumer Disputes Redressal Commission-I, U.T., Chandigarh, whereby consumer complaint bearing no.881 of 2019 filed by him was dismissed.

2.           Following facts of the case of the complainant have been noted down by the District Commission in the order impugned:-

“……  the complainant got insured one Maruti Alto car bearing registration No.CH-02-AA-8510. Insured policy was effective from 10.12.2018 to 09.12.2019 with the Opposite Party as Taxi. Copy of the insurance policy and registration certificate is annexed as Annexure C-1 & C-2. As per complaint, on 21.03.2019 aforesaid Alto Car met with an accident over the flyover Panipat, Haryana and resulting to which the car was badly damaged. The Copy of driving license is annexed as Annexure C-3. At the time of accident there is no passenger in the vehicle and it was brought to Chandigarh. At the time of accident it was not used for any commercial purpose. Copy of GDR No.28 is annexed as Annexure C-4. As per complainant, due information with regard to the accident was given to Opposite Party and under the direction of the Opposite Party car was taken to the authorized repairer M/s Harison Automobiles, G.T. Road Panipat-132 103. The loss of estimate was prepared by the aforesaid Authorized repairer for a sum of Rs.4,96,329/- (Annexure C-5). The complainant approached the Opposite Party No.1to know about the status of his claim and requested the Opposite Party to release the claim amount. Instead of paying the genuine claim of the complainant, the Opposite Party No.1 with mala fide intention repudiated the claim vide repudiation letter dated 23.05.2019 (Annexure C-6). At the time of accident complainant was having effective National Route Permit and as per the National Route permit complainant can drive the vehicle all over India Annexure (C-7). As per complainant, vehicle is financed with the Opposite Party No.2, due to reason of accident vehicle is now off the road and complainant could not utilize the same. Further due to non-release of the claim amount to the complainant. The Opposite Party No.2 is pressuring the complainant for installment of loan amount.  The complainant issued legal notice dated 06.08.2019 to the Opposite Parties (Annexure C-8) Colly. Alleging that the aforesaid act amount to deficiency in service and unfair trade practice on the part of Opposite Parties, complainant has filed the instant complaint..………”

3.           The contents of reply filed by the opposite parties no.1 and 2 was noted down by the District Commission as under: -          

“……OP No.1= the insurance policy is a contract in itself and the parties are bound by the terms and conditions of the policy. Copy of insurance policy alongwith terms and conditions of the insurance policy is annexed as Annexure OP/1-1. As per surveyor and loss assessor who had personally inspected the vehicle, took the photographs and other documents, driving Lic/Fitness Cert/Road permit etc. The insured vehicle was plying in Haryana State and the route permit is valid for Chandigarh only. The material fact was brought to the knowledge of the complainant, and also as verbally conveyed to the complainant. The permit is not valid in the state in which it was driven at the time of accident. The copy of survey report is annexed as Annexure OP/1-2. The claim of the complainant was repudiated as no claim vide letter dated 23.05.2019 on the ground that the claimant/vehicle was not having valid permit at the time of loss as authorization permit was not effective in the area where the vehicle was plying at the time of the accident which is a violation of Section 66 of the Motor Vehicle Act.…..”.

OP No.2= the said vehicle is financed by Opposite Party No.2. The complainant was provided the loan facility of Rs.4,10,156/- which was repayable by the complainant in 63 monthly installments of Rs.8564/- each. The installment start date was 07.01.2019 and the loan end date was 07.03.2024. The complainant or insurance company may be directed to pay the loan amount directly to the Opposite Party No.2 …….”

4.           The complainant filed rejoinder to the written reply of the opposite parties no.1 and 2 controverting their stand and reiterating his own version.
5.           The District Commission after hearing counsel for the parties and on going through the documents on record, dismissed the consumer complaint while  holding as under:-

“…….On perusal of insurance policy it is observed that the policy covers use of vehicle only under a permit within the meaning of MV Act. As per permit which is annexed as Annexure C-7 and OP1/3 and OP 1/4 the owner is permitted to drive the vehicle only within territory of Chandigarh. No permit is issued or produced on record by the complainant to show that the complainant was authorized to drive the vehicle in state of Haryana where the accident took place i.e. (Panipat). Thus, we are of the concerted view that complainant was not having any valid permit on date of loss as per requirement of law and policy. It is an admitted case of complainant that Taxi in question met with an accident at Haryana (Panipat) and his claim was repudiated as no claim on ground that authorized permit was not effective in the area where vehicle was playing at time of accident which is a violation of Section 66 of Motor Vehicle Act. The said violation of law amounts to fundamental breach of law and policy terms and conditions…..”

6.           Hence this appeal.
7.           We have heard the contesting parties and scanned the material available on the record, very carefully.
8.           Following facts are not in dispute:-
   1. Maruti Alto car bearing registration No.CH-02-AA-8510 was insured with respondent no.1 as taxi, vide insurance policy which was valid for the  period from 10.12.2018 to 09.12.2019 for an IDV of Rs.4,02,225/-
   2. On 21.03.2019, the said car met with an accident over the flyover Panipat, Haryana;
   3. Surveyor was appointed by the respondent no.1 who assessed the loss to the tune of Rs.5,61,601/- on repair basis, vide Surveyor Report dated 02.04.2019, Annexure OP-1/2.
   4. Claim filed by the appellant was repudiated by respondent no.1 vide letter dated 23.05.2019 (Annexure C-6) holding that at the time of accident complainant was not holding  valid and effective permit for the route where the accident took place.

 

9.           It may be stated here that a bare perusal of contents of the repudiation letter dated 23.05.2019, Annexure OP-1/5 reveals that the claim of the appellant was repudiated by respondent no.1 on the ground that  the permit held by him  was not effective in the area, where the vehicle was being plied at the time of accident. Under these circumstances,  the moot question which falls for consideration is, as to whether, the mere fact that the vehicle in question was being plied in a State, other than mentioned in the  permit, is such a violation of condition of permit, which entitles the insurance company to repudiate the claim arising out of accident of the said vehicle in that area or not?  It may be stated here that a similar controversy came for adjudication before the Hon’ble Punjab and Haryana High Court, at Chandigarh in the case titled as ICICI Lombard General Motor Insurance Company Limited Vs. Vijaya Chhabra and others, FAO No.4744 of 2013 decided on 28.03.2016, wherein it was held that even if the vehicle strays route mentioned in the permit, will not amount to violation of terms and conditions of the insurance policy  and the insurance company cannot escape from its liability of making accident claim, on this ground. Relevant part of the said order is reproduced hereunder:-

 

“……The question for consideration is as to whether if the vehicle strays route mentioned in the permit, whether it will amount to violation of terms and conditions of the insurance policy and will be available as a defence to the Insurance Company. This Court in case Hans Raj Chaudhary Vs. Smt. Nanhi Devi and others 2013 (7) RCR (Civil) 2574 has laid down as under:-

'The counsel appearing on behalf of the insurance company still insist that Sections 66 and 69 of the Motor Vehicles Act set out the various terms of permit and one of the terms is that be that the vehicle could traverse only within the area allowed in the permit. The language used in Section 149 that sets out the permissible defences employs the expression of user of a vehicle "for a purpose not allowed by the permit". The purpose of the permit is not the same thing as condition in the permit. The legislature has employed a language restricting it only to violation of purpose of permit. The MV Act, being a beneficial legislation, the issue of liability should be interpreted to the benefit of claimant and to the extent to which the owner obtains indemnity, it makes possible the prospect of recovery so much easier.'

7. Similarly in case Future General Insurance Co. Ltd. Vs. Smt. Surjo Devi and others 2013(2) RCR (Civil) 564 this Court has laid down that a violation of any other term than the purpose for which the permit was to operate will not be a defence which will be available in the scheme of the Motor Vehicles Act.

8. In case National Insurance Company Ltd. Vs. Rajinder Giri and others 2012(2) RCR (Civil) 183 the vehicle had a valid route permit for being plied in State of Rajasthan. The accident took place when the vehicle was being operated in the State of Haryana. This Court laid down as under:-

'It would be said that the vehicle had a valid route permit for being plied in the State of Rajasthan but not in Haryana State. The Transport Authority of Rajasthan State had found the vehicle fit for being plied as goods carriage. Therefore, it cannot be said that the vehicle was being plied without a route permit. The violation of bringing the vehicle to the area of State of Haryana without a valid route permit for plying the same in the said State would not amount to violation of the conditions of the insurance policy and would not give the insurer a defence under Section 149(2) of the Act. The case before me is not a case where there is no route permit at all. Therefore, the ratio of the decision in National Insurance Co. Ltd.'s case (supra) would not stand attracted to the facts of this case.'

9. The same ratio of law has been laid down by this Court in Anju Bala and others Vs. Mohmmad Ahmed and others (supra).

10. In view of the consistent ratio of law laid down in the cases referred above, mere this fact that the truck in question was being operated in U.T. Chandigarh, though it has route permit only for the State of Haryana will not constitute the violation of the condition of the permit as the insurance Company has not been able to establish that the vehicle in question was being used for a purpose not allowed by the permit….”

 

10.           Similar view was taken by the Hon’ble Karnataka High Court in the case titled as Divisional Manager, United India Insurance Co. Ltd. Vs. Jayamma and others. 2020 ACJ 267, relevant part of which is reproduced hereunder:-

“……The legislature in its wisdom thought it fit to restrict the defence available under Section 149[2][a][i][c] of the Act 'for a purpose not allowed by the permit' and not for 'violation of any terms and conditions of the permit'. For example, if a vehicle holding goods carriage permit is carrying passengers or vice-versa. Then, it can be held that the vehicle holding goods carriage permit is being used for a purpose not allowed by the permit. The breach of conditions of the permit would by itself can not be characterised as the purpose not allowed in the permit. In CHALLA BHARATHAMMA's case [supra], the Hon'ble Apex Court has held thus:

"12. High Court was of the view that since there was no permit, the question of violation of any condition thereof does not arise. The view is clearly fallacious. A person without permit to ply a vehicle cannot be placed at a better pedestal vis-a-vis one who has a permit, but has violated any condition thereof. Plying of a vehicle without a permit is an infraction. Therefore, in terms of Section 149(2) defence is available to the insurer on that aspect. The acceptability of the stand is a matter of adjudication. The question of policy being operative had no relevance for the issue regarding liability of insurer. High Court was, therefore, not justified in holding the insurer liable."

The said judgment is rendered in the context of 'no permit'. The motor vehicle not possessing a permit means the vehicle was not permitted to ply in the public place or in other words, there is infraction of law which clearly establishes the use of the vehicle for a purpose not allowed in law. Hence, the said Judgment of CHALLA BHARATHAMMA's case [supra] is not applicable to the facts of the present case.

19. In CHALLA BHARATHAMMA's case [supra], their Lordships have referred to the Judgment of the Hon'ble Apex Court in the case of 'NEW INDIA ASSURANCE CO., LTD., vs. ASHA RANI AND OTHERS' reported in [2003 [2] SCC 223] wherein it was observed as follows:

"We may consider the matter from another angle. Section 149[2] of the 1988 Act enables the insurers to raise defences against the claim of the claimants. In terms of clause [c] of sub-section [2] of section 149 of the Act one of the defences which is available to the insurer is that the vehicle in question has been used for a purpose not allowed by the permit under which the vehicle was used. Such a statutory defence available to the insurer would be obliterated in view of the decision of this Court in Satpal Singh's case [2000] 1 SCC 237."

20. In ASHA RANI's case [supra], the Hon'ble Apex Court was considering a case of unauthorized passengers travelling in a goods vehicle. In that context, it was held that it is one of the defence which is available to the insurer under section 149[2][a][i][c] of the Act, whether the vehicle has been used for a purpose not allowed by the permit under which the vehicle was used. Hence, the case on hand is distinguishable from ASHA RANI's case [supra]."

Further in the case of the Branch Manager, United India Insurance Co. Ltd., vs. Paramanand, s/o Laxman Sunagar in MFA No.23978 of 2011 c/w MFa Crob 746 of 202 dated 03.02.2012, co-ordinate bench of this Court by referring the decision in the case of National Insurance Company Limited vs. Challa Bharathamma quoted supra has held that violation of permit condition is not a valid defence unless the insurer has incorporated in the insurance policy as one of the conditions. Thereafter, has come to the conclusion that there is no breach of policy condition, insurer is liable.

15. Be that as it may. Even as could be seen from the written statement filed by the insurer, at paragraph 9, he has specifically contended that permit given to the autorickshaw bearing registration No.KA.27/A.1891 is to ply within 10 kms from the city limits of Ranebennur. But the owner of autorickshaw had taken away the said autorickshaw 22 kms away from Ranebennur limits. There is difference between two aspect. First one, there is no permit at all to ply the vehicle and the second one is, there is permit but has gone beyond the limit. In the first one, it is a fundamental breach and on proof, the insurer can avoid the liability. With respect to the second, City permit to a particular distance is fixed because large number of such vehicles are operated in the State to the detriment of public interest. Another aspect is that the State has to see that the ownership and control of the material resources are so distributed as best serve the common good and there should not be concentration. In that light, a breach only invites criminal penalty, as such, it is not so fundamental to say there is breach of policy condition. It is well established principle of law that the insurer has to establish that the breach of policy is so fundamental that it ended the contract which has been entered into between the insurer and the insured. In other words violation must be of such a nature that it is the primary cause of the accident and not otherwise. With this object, the legislature has spelled out grounds on which the insurance company can avoid its liability. The defence provided to the insurance company is a statutory right. We cannot import or read any other grounds than what are spelled out in sub-Section(2) of Section 149 of the Act.

16. From the above said facts and circumstances, plying the autorickshaw a few kilometers beyond the permit limits doesn't amount to fundamental breach of the terms of the policy. The said alleged violation finds no place in Section 149(2) of the Act. Therefore, the defence of the counsel that the vehicle in question had been driven beyond the territorial limits of Ranebennur amounts to violation of the permit condition, is not acceptable and the same is hereby rejected.…..”

         

11.           Admittedly, in the present case also, the appellant was having a permit to ply the vehicle in question all over India, as is evident from the Permit, Annexure A-7 having been issued by the State Transport Authority, Chandigarh on 30.04.2019, under Motor Vehicles Act, 1988 [(Rule 88 (9)], wherein it has been clearly verified by the said authority that “Permit Authorization of Vehicle No. CH02 AA 8510 is valid upto 24.01.2020 for all India”. The policy in question was valid for the period from 10.12.2018 to 09.12.2019 and the accident of the said vehicle took place on 21.03.2019 at Panipat, Haryana i.e. during the subsistence of the policy in question and also during the subsistence of validity date (24.01.2020) of the permit, Annexure A-7. Thus, in our considered opinion, if the appellant had not paid the Haryana entry fees in respect of the vehicle in question, the same has no connection with the terms and conditions of the insurance policy and did not amount to violation of the same (terms and conditions), as has been also held in ICICI Lombard General Motor Insurance Company Limited  and Divisional Manager, United India Insurance Co. Ltd. cases (supra). Even otherwise, it is not a case that the appellant was plying the vehicle without any permit.
12.           Furthermore, in the instant case, there is nothing on record to suggest that the accident had direct nexus with the fact that the insured did not have a valid and effective route permit. Thus, the absence of effective route permit was not the main or contributory cause of accident. It is also not the case of respondent no.1 that the claim filed by the appellant with regard to the said accident is not genuine. On the other hand, the surveyor appointed by respondent no.1 has vide Surveyor Report dated 02.04.2019, Annexure OP-1/2 has assessed the net claim amount to the tune of Rs.5,61,601/-, though he has also opined that the appellant was not having valid route permit. The Hon’ble Supreme Court of India in Om Prakash v. Reliance General Insurance and Anr. [Civil Appeal No. 15611 of 2017] decided on 4th October, 2017, has held that the decision of the insurer to reject a claim has to be based on valid grounds. Rejection of the claims on purely technical grounds in a mechanical manner will result in loss of confidence of policy-holders in the insurance industry. It is therefore held that by repudiating the claim of the appellant, respondent no.1 is deficient in providing service and adopted unfair trade practice.  
13.           As far as reliance placed by respondent no.1 on Amrit Paul Singh and anr. Vs. TATA AIG General Insurance Co. Ltd. and Ors., Civil Appeal No.2253 of 2018 decided by the Hon’ble Supreme Court on 17.05.2018 is concerned; with due respect to the ratio of law laid down in this case, it is submitted here that the facts and circumstances of the case in hand are totally distinguishable. The judgment in Amrit Paul Singh’s case (supra) is rendered in the context of 'no permit' i.e. the insured was not holding any permit and it was only under those circumstances held that the use of vehicle in public place without permit (no permit at all) is fundamental statutory infraction and the insurance company is not liable to pay any claim amount/compensation arising out in those cases. Thus, reliance placed by respondent no.1 on Amrit Paul Singh’s case (supra) to support its  present case is misplaced.
14.           Keeping in view the above discussion, we are of the considered view that the appellant is entitled to get the claim amount of Rs.4,02,225/- i.e. the Insured Declared Value of the vehicle in question, being total loss, as its repair cost has arrived at Rs.5,61,601/- i.e. more than the IDV, as is evident from Surveyor Report dated 02.04.2019, Annexure OP-1/2.
15.           For the reasons recorded above, the impugned order passed by the District Commission, dismissing the consumer complaint, being not based on the correct appreciation of evidence and law on the point, suffers from illegality and perversity, warranting interference of this Commission. Accordingly, the order impugned  is set aside.
16.           Resultantly, this appeal stands partly allowed. Respondent no.1/Universal Sompo General Insurance Company Limited is directed as under:-
    1. To pay the amount of Rs.4,02,225/- as Insured Declared Value (IDV),  to the appellant/complainant, alongwith interest @9% per annum after three months of the survey report dated 02.04.2019 (Annexure OP-1/2) i.e. from 02.07.2019 onwards, on receipt of salvage of the vehicle in question, if it is retained with the appellant/complainant.
    2. To pay a lump sum amount of Rs.75,000/- to the appellant/complainant towards compensation for causing financial loss and litigation expenses. 
    3. This order shall be complied with by respondent no.1, within a period of 30 days from the date of receipt of a copy thereof, failing which the awarded amounts shall further entail penal interest @12% p.a. from the date of default till realization.

 

17.           However, it is made clear that the first charge of the awarded amount shall be of respondent no.2/opposite party no.2- HDFC Bank Limited to the extent of due loan amount. With these directions, consumer complaint against respondent no.2/opposite party no.2- HDFC Bank Limited  only is dismissed with no order as to cost.
18.            Certified Copies of this order be sent to the parties, free of charge.
19.           The concerned file be consigned to Record Room, after completion.

Pronounced

28.12.2022

 

Sd/-

 [JUSTICE RAJ SHEKHAR ATTRI]

PRESIDENT

 

 

 

 

Sd/-

 (RAJESH K. ARYA)

 MEMBER

 Rg.