Read Judgment: United India Insurance Co. Ltd vs. Sushil Kumar Godara

Pankaj Bajpai

New Delhi, October 1, 2021: The Supreme Court has opined 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. 

A Larger Bench of Justice Uday Umesh Lalit, Justice S. Ravindra Bhat and Justice Bela M. Trivedi however, observed that if on the date of theft, the vehicle had been driven/ used without a valid registration, then it amounts to a clear violation of Sections 39 & 192 of the Motor Vehicles Act, 1988

Therefore, such fundamental breach of the terms and conditions of the policy, entitles the insurer to repudiate the policy, added the Bench.

Going by the background of the case, the policy holder (respondent) had purchased a new Bolero car, which had a temporary registration. After the registration lapsed, he travelled outside his residence and parked outside the guest house premises from where it was stolen. 

He claimed insurance but it was repudiated on the ground that the temporary registration of the vehicle expired. Thereafter, he approached the District Forum seeking a direction to the insurer to pay him the sum insured for the vehicle with rent amount of Rs.1,40,000 and also claimed relief for mental agony and costs of litigation. 

The said complaint got dismissed, against which he approached the State Consumer Disputes Redressal Commission, which was allowed observing that the insurer could not repudiate the insured’s 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. 

Aggrieved by the same, the insurer sought relief before the National Consumer Disputes Redressal Commission, which was dismissed. Hence, present appeal before the Supreme Court. 

It was contended on behalf of the appellant insurer that since the vehicle in question was not registered, it constituted a fundamental breach of the policy, entitling the insurer to repudiate the claims made under it. 

After considering the arguments and lapses on part of the insured, the Top Court noted that in the decision of Narinder Singh Vs. New India Assurance Co. Ltd , this court had held that “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”. 

“In the present case, the temporary registration of the respondent’s 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 respondent’s premises. There is nothing on record to suggest that the respondent had applied for registration or that he was awaiting registration” observed the Top Court.  

The Larger Bench clearly said that the fact that the car was not plying on the road when it was stolen is of no consequence, rather the material fact is that concededly, it was driven to the place from where it was stolen, after the expiry of temporary registration.

Therefore, stating that the NCDRC had overlooked and disregarded a clear binding judgment of this Court, the Larger Bench allowed the appeal and quashed the order of the State Commission.

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