IMPORTANT POINT
Irregular use of vehicle did not constitute any fundamental breach due to which owner of vehicle should be denied indemnification by insurer.

Vinay Kumar, Member—Complainant Gafur Alamgeer Sayyad had insured his car with OPs/ICICI Lombard General Insurance Co. Ltd. During the period of insurance the car met with an accident. The surveyor appointed by the insurance company made a detailed assessment and submitted his report. However, the claim was repudiated on the ground that while it was insured for private use, the vehicle was used on hire basis at the time of the accident, which was in violation of the terms and conditions of the policy.

2. The District Forum considered the evidence in detail. It took note of the fact that the driver of the vehicle had made a deposition before Workman Compensation Commissioner Belgaum, which showed that the vehicle was being used for commercial purpose on the date of the accident. However, it held that even if it was a violation of terms and conditions, it did not constitute a fundamental breach of the policy conditions. Therefore, the claim could not have been repudiated in totality. The District Forum accordingly, held that the OPs should have settled the claim on non-standard basis. Therefore, it held the OPs responsible to pay Rs.4.5 lakhs to the complainant with 6 % interest, from the date of the repudiation. The vehicle was insured for Rs.6.72 lakhs.

3. The decision of the District Forum was challenged by both sides before the State Commission. In a commonORDER, the State Commission has agreed with the District Forum and held that “Even if there is a violation in terms & conditions of the Policy, the OPs are not justified in repudiating the entire claim of the complainant. In similar cases, this Commission has taken the view that if there is a violation in terms of the Policy, the OPs are liable to settle the claim on non-standard basis.”

4. ICICI Lombard General Insurance Co. has filed this revision petition challenging the concurrent view taken by the fora below that it was a case for settlement on non-standard basis and not for outright repudiation of the claim in its entirety. The sole ground of challenge is that the liabilities of the insurance company cannot go beyond the terms and conditions of the insurance policy which is binding on the parties to the insurance contract.

5. The revision petition has been considered by the Circuit Bench of this Commission at Bangalore. Advocates Mr. A. N. Krishnaswamy for the Insurance Company and Mr. Prashant F. Goudar for the respondent/complainant have been heard. We have also carefully perused the records as submitted before us. The petition has been filed with delay of 123 days. A perusal of application seeking condonation of this delay shows that the copy of the impugnedORDER was received on 7.10.2010. Thereafter, for the next four months the matter just kept moving from one office to another within the insurance company. Finally, papers were sent to their counsel on 2.2.2011 with decision to file the revision petition before this Commission. The explanation for such inordinate consumption of time is far from satisfactory. The revision petition is therefore liable to be dismissed on the ground of limitation alone.

6. Coming to merits, the pleadings of the OP/Insurance Co. before the District Forum show that the repudiation of the claim was on the solitary ground of the vehicle being used for commercial purpose i.e. for hire. Learned counsel for the revision petitioner emphasised that use of the vehicle for commercial purpose had been clearly established before the fora below. There is no dispute that the vehicle was insured for private use only. For commercial use, the insured would have an obligation to pay premium at a higher rate. He therefore argued that there cannot be any justification for settlement at 75% of the assessed loss.

7. On the other hand, learned counsel for respondent/complainant has placed direct reliance on the decision of Hon’ble Supreme Court in National Insurance Company Vs. Nitin Khandelwal.1 This too was a case where the vehicle was found