IMPORTANT POINT
Violation of Policy Condition – insured vehicle was being used for hire in violation of the policy condition, the claim cannot be repudiated in toto but should be settled upto 75% of the admissible claim on non-standard basis.

ORDER

This revision petition has been filed under section 21(b) of the Act 1986 in challenge to the Order dated 08.12.2015 of the State Commission in appeal no. 1598 of 2014 arising out of the Order dated 08.07.2014 of the District Commission in complaint no. 1037 of 2011.

2. We have heard the learned counsel for the insurance co. (the petitioner herein) and have perused the record.

No one appears for the complainant (the respondent herein).

3. The matter relates to repudiation of an insurance claim on the insured vehicle meeting with an accident. The premium had been paid, the policy was valid, the accident had in fact actually taken place, the surveyor appointed by the insurance company had assessed the net loss at Rs.1,96,850/-. However the insured vehicle was being used for hire, in violation of the policy conditions. The two fora below have returned concurrent findings in favour of the complainant (the respondent herein), ordering the insurance co. (the petitioner herein) to pay the claim on non-standard basis i.e. at 75% of the loss assessed by its surveyor.

4. The vehicle was insured as a private vehicle. An investigator appointed by the insurance co. found that it was being used for transporting employees of Doordarshan i.e. for hire which was in violation of the policy conditions.

The District Commission ordered the insurance co. to settle the claim on non-standard basis. The insurance co. preferred appeal before the State Commission. The State Commission, citing Amalendu Sahoo vs. Oriental Insurance Co. Ltd., II (2010) CPJ 9 (SC), dismissed the appeal observing that it found no infirmity in the District Commission directing the insurance co. to settle the claim on non-standard basis.

5. The following extract of the State Commission’s Order captures the crux of the case:

- - -

“3. The appellant Insurance Company states that the vehicle was registered and insured as a private vehicle, but on investigation by Shri D S Bhasin, it was found that it was being used commercially to carry employees of the Doordarshan Department. The surveyor assessed the loss at Rs.1,96,850/-, but as the vehicle was being used in violation of the policy conditions, the claim was repudiated.”

- - -

“7. The law on the point of commercial use of a vehicle is now too well settled. The Hon’ble Apex Court in Amlendu Sahoo vs. Oriental Insurance Co. Ltd., II (1010) CPJ 9 (SC), has held that in cases of breach of policy conditions, the claim should be settled on a non-standard basis.”

- - -

6. Paras 1 and 14 to 18 of the Amalendu Sahoo judgment quoted in the State Commission’s Order are reproduced below for reference:-

“1. Leave granted. This appeal has been filed challenging the judgment and order dated 13-10-2008 of the National Consumer Disputes Redressal Commission (hereinafter “the National Commission”) which upheld the concurrent finding of the District and the State Consumer Forums that the car at the time of the accident was being driven on hire and was outside the scope of the insurance policy.

….

14. In this connection reference may be made to a decision of the National Commission in New India Assurance Co. Ltd. v. Narayan Prasad Appaprasad Pathak. In that case also the question was, whether the Insurance Company can repudiate the claims in a case where the vehicle carrying passengers and the driver did not have a proper driving licence and met with an accident. While granting claim on non-standard basis the National Commission set out in its judgment the guidelines issued by the Insurance Company about settling all such non-standard claims. The said guidelines are set out below: