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2017 Supreme(Del) 3824
IN THE HIGH COURT OF DELHI AT NEW DELHI
VALMIKI J.MEHTA, J.
National Insurance Company Ltd. – Appellant
Versus
Canara Bank And Ors. – Respondents
RFA No.796 of 2017
Decided On : 20-09-2017
For the Appellant :Mr. S. Venkatesh, Advocate with Mr. Varun Singh, Advocate.
For the Respondents:Ms. Seema Gupta, Advocate with Mr. Manoj Kumar Arora, Advocate
The main legal point established in the judgment is that the breach of the terms of an insurance policy can be a ground for denying a claim only when the insurance company establishes that the breach is fundamental and had a connection with the insurance done under the policy. The judgment also emphasizes that the breach of such clauses of the insurance policy will have no connection with the insured event of theft, and therefore, the insurance company cannot succeed in denying its liability for claim under the insurance policy.
Headnote:
Insurance - Recovery of Loan - Code of Civil Procedure, 1908 (CPC) - [Section 96 of CPC] - [Summary of Acts and Sections: The court discussed the validity of the impugned judgment of the trial court against the insurance company under Section 96 of CPC. The court also referred to the recent judgment of the Supreme Court in the case of Lakhmi Chand Vs. Reliance General Insurance (2016) 3 SCC 100, which held that breach of the terms of the insurance policy can be a ground for denying the claim only when the insurance company establishes that the breach is fundamental and had a connection with the insurance done under the policy. The court highlighted the relevant paras of the judgment in the case of Lakhmi Chand (supra) and applied its ratio to the present case. The court also addressed the argument raised by the appellant/insurance company regarding the delayed intimation and violation of the terms of the policy, and refused to permit the appellant/insurance company to raise factual issues for the first time in the first appeal. The court concluded that the breach of such clauses of the insurance policy will have no connection with the insured event of theft, and therefore, the appellant/insurance company cannot succeed in denying its liability for claim under the insurance policy in the present case.]
Fact of the Case:
The respondent no.1/plaintiff filed a suit for recovery of a loan amount against the defendant nos.1 and 2 and the appellant/defendant no.3, National Insurance Company Ltd. The suit was decreed for an amount of Rs.4,54,904/- along with interest. The dispute arose from the theft of a vehicle that was insured by the appellant/defendant no.3.
Finding of the Court:
The court found that the appellant/insurance company cannot deny its liability for the claim under the insurance policy based on the breach of the terms of the policy, as the breach had no connection with the insured event of theft. The court also refused to permit the appellant/insurance company to raise factual issues for the first time in the first appeal.
Issues: The issues included the entitlement of the plaintiff to a decree of recovery of the loan amount, the decree of permanent injunction against the appellant/defendant no.3, and the maintainability of the suit against defendant nos.1 & 2.
Ratio Decidendi: The court applied the recent judgment of the Supreme Court in the case of Lakhmi Chand Vs. Reliance General Insurance (2016) 3 SCC 100, which held that breach of the terms of the insurance policy can be a ground for denying the claim only when the insurance company establishes that the breach is fundamental and had a connection with the insurance done under the policy. The court also emphasized that the breach of such clauses of the insurance policy will have no connection with the insured event of theft, and therefore, the appellant/insurance company cannot succeed in denying its liability for claim under the insurance policy in the present case.
Final Decision: The court dismissed the appeal filed by the appellant/defendant no.3, National Insurance Company Ltd.
VALMIKI J. MEHTA, J.
C.M. No.34152/2017 (exemption)
1. Exemption allowed subject to just exceptions.
C.M. stands disposed of.
C.M. No.34153/2017 (for condonation of delay)
2. For the reasons stated in the application, delay of 82 days in re-filing the appeal is condoned.
C.M. stands disposed of.
C.M. No.34151/2017 (for condonation of delay of 416 days in filing the appeal)
3. Learned counsel for the respondent no.1 does not oppose the application only as a technicality inasmuch as the arguments have otherwise been heard on merits. Without prejudice to the rights of the respondent no.1 in the connected appeal which is said to have been filed by the defendant no.1 and 2 in the suit/borrowers, the present application is allowed.
C.M. stands disposed of.
RFA No.796/2017
4. This Regular First Appeal under Section 96 of Code of Civil Procedure, 1908 (CPC) is filed by the defendant no.3 in the suit, namely National Insurance Company Ltd, impugning the judgment of the Trial Court dated 4.8.2015 whereby the suit filed by the respondent no.1/plaintiff/Canara Bank has been decreed for an amount of Rs.4,54,904/- along with interest.
5. The facts of the case are that respondent no.1/plaintiff filed the subject suit for recovery of Rs.4,54,904/- along with interest and costs by pleading that it had given vehicle (Chevrolet Tavera, Saloon) loan to the respondent nos.2 and 3/defendant nos.1 and 2. The car loan was for an amount of Rs.5,35,000/-. The loan was granted after taking margin money from respondent nos.2 and 3/defendant nos.1 and 2 and the respondent nos.2 and 3/defendant nos.1 and 2 had executed the loan documents and related documents. The loan was repayable in 60 monthly installments of Rs.12,658/- w.e.f May, 2009. The vehicle in question was insured in terms of the insurance policy issued by the appellant/defendant no.3 and which insurance policy was renewed for the period of 29.3.2012 till 28.3.2013. The vehicle in question was stolen and with respect to which an FIR dated 12.6.2012 was lodged. In view of the respondent no.1/plaintiff/bank having a first charge on the vehicle on account of hypothecation of the vehicle, it asked the appellant/defendant no.3 to release the insured amount to the respondent no.1/plaintiff. The subject suit was filed by the respondent no.1/plaintiff for recovery of loan amount from respondent nos.2 and 3/defendant nos.1 and 2 and as against the appellant/insurance company to release the amount under the insurance policy directly to respondent no.1/plaintiff.
6. (i) The respondent nos.2 and 3/defendant nos.1 and 2 filed their written statement and did not deny the taking of loan. It was pleaded that the respondent no.1/plaintiff/bank however did not have power to recover the loan as the vehicle was stolen. It was pleaded by the respondent nos.2 and 3/defendant nos.1 and 2 that the loan amount can be recovered by the respondent no.1/plaintiff/bank from the appellant/defendant no.3. Respondent nos.2 and 3/defendant nos.1 and 2 pleaded that they approached the respondent no.1/plaintiff/bank on 22.6.2012 with factum of theft and giving to the respondent no.1/plaintiff/bank the police complaint and FIR dated 12.6.2012. Respondent nos.2 and 3/defendant nos.1 and 2 therefore prayed for the dismissal of the suit.
(ii) The appellant/defendant no.3 filed its written statement and pleaded that it is not liable under the policy as the vehicle was insured as a private vehicle but the same was being illegally used as a commercial vehicle.
7. After pleadings were complete, the trial court framed the following issues:-
“1. Whether the plaintiff is entitled to a decree of recovery of Rs.4,54,904/- against the defendant nos.1 & 2 with interest, as claimed? OPP
2. Whether the plaintiff is also entitled to decree of permanent injunction against defendant no.3 in respect of claim of vehicle no.UP-14-AT-8508 payable to defendant nos.1 and 2, if any? OPP
3. Whether the suit is not maintainable against defendant nos.1 & 2? OPP
4. Rel
