An exclusion clause in an insurance policy should be read down to serve the main purpose of the policy and not be construed strictly to deny indemnification for a breach of condition that is not fundamental or does not contribute to the loss.

M.M. Punchhi, J.—In this appeal by special leave, the question of importance arising therein is whether the alleged breach of carrying humans in a goods’ vehicle more than the number permitted in terms of the insurance policy, is so fundamental a breach so as to afford ground to the insurer to eschew liability altogether? Ancillary to the question is the poser : whether the terms of the policy of insurance need be construed strictly or be read down to advance the main purpose of the contract as viewed by this Court in Skandia Insurance Company Ltd. v. Kokilaben Chandravadan & Ors., 1987 2 SCC 654?

2. The appellant herein was the registered owner of a Tata’ Truck bearing No. KA-13/438, duly insured with the Oriental Insurance Company Ltd., the respondent herein, vide Policy dated 24.8.90 covered for period uptil 23.8.91. The policy was conprehensive in nature, covering risk to the limit of Rs. 2,09,000/-. During the subsistence of the policy, the vehicle of the appellant met with an accident on 5.8.1991. When, allegedly, a gas tanker came and dashed against the said vehicle. Apart from the other damage which occasioned due to the accident, the appellant’s vehicle sustained major damages on account of which repairs were necessitated. The appellant, therefore, incurred from his pocket repair charges/damages to the tune of Rs. 87,170/- in order to make the vehicle road- worthy. Pursuant to such expenditure, the appellant raised a claim with the respondent-Company inter alia for reimbursement of the repair charges / damages submitting therewith the claim form and the bills for payment. The claim of the appellant was spurned. The appellant sent a legal notice calling upon the respondent-Company to make payment of the claim as per the contractual conditions of the policy but in vain. The appellant then moved the Karnataka State Consumer Redressal Forum under the Consumer Protection Act, 1986 raising a demand of Rs. 2,13,500/-, diversifying the claim as repair charges, loss of prospective income, interest, legal notice charges and other miscellaneous expenses.

3. The respondent-Company denied their liability altogether stating that since the appellant’s goods vehicle was used for the purpose of carrying passengers, the appellant was disentitled to claim any compensation, and even otherwise those were nine in numbers: The amount of money spent by the appellant on repairs however was not seriously disputed as the respondent’s Official Surveyor himself had estimated the repair possibly at Rs. 75,700/-.

4. The State Commission went into the matter thoroughly and by its order dated 19.7.93 allowed the claim of the appellant to the extent of Rs. 75,700/-, the figure at which the Official Surveyor of the respondent-Company had estimated the repair charges, alongwith interest at the rate of 18% per annum from the date of the accident i.e. 5.8.91 till the date of payment. A sum of Rs. 2,000/- also was awarded to the appellant as costs. This order, at the instance of the respondent-Company, was, however, upset an appeal on 30.11.94 by the National Consumer Disputes Redressal Commission, New Delhi, relying upon the terms of the insurance policy in taking the view that the policy did not cover use for carrying passengers in the vehicles except employees [other than the Driver] not exceeding 6 in numbers, coming under the purview of the Workmen’s Compensation Act. This has culminated into this appeal.

5. The terms of the insurance policy, inter alia, provide as follows :

Limitations as to use: Only for the carriage of goods within the meaning of the Motor Vehicles Act, 1988.

The policy does not cover—(1) Use for organised racing, pace-making reliability trial or speed testing, (2) Use whilst drawing a trailer except towing of any one disabled mechanically propelled vehicle, (3) Use for carrying passengers in the vehicle except employees (other than driver) not exceeding six in numbers coming under the purview of W.C. Act, 1923.

6. Learned Counsel fo