IMPORTANT POINTS
(1) Transparency and Exclusion Clauses – The Commission emphasized that if an insurance company intends to exclude certain liabilities based on specific interpretations, they must be transparently disclosed and specifically placed in the “exclusion clause” at the time of issuance. In the absence of such specific exclusions, the insurer cannot bypass the authoritative pronouncements of the Supreme Court regarding non-standard settlements.
(2) Nature of Use vs. Fundamental Breach in Theft Cases – The Commission reiterated the settled law (following National Insurance Co. Ltd. v. Nitin Khandelwal) that in the event of theft, the nature of the vehicle’s use (e.g., using a private vehicle as a taxi) cannot be a ground for total repudiation. Since the theft is an independent event, the violation of the “hire and reward” clause does not constitute a “fundamental breach” that would void the policy entirely.

ORDER :

Anoop Kumar Mendiratta, Member.—Present Revision Petition has been preferred on behalf of petitioner (opposite party in the complaint preferred before the learned District Forum), challenging Order dated 17.01.2018 passed by the learned State Commission in Appeal No.29 of 2016, whereby the claim was allowed to be settled on non-standard basis at 75% of the assured amount along with interest of 9% p.a., with compensation of Rs.10,000/- and cost of Rs.5,000/-.

The petitioner and respondent are hereinafter referred to as opposite party/complainant respectively, as appearing in the complaint for sake of convenience.

2. In brief, complainant purchased Mahindra and Mahindra Bolero Jeep which was insured for the period 31.05.2011 to 30.05.2012, for assured sum of Rs.5,74,704/-. On 15.09.2011, the vehicle was stolen from More Kataiya Road, Badka Gaon Bazar while complainant deputed the driver to bring his daughter. At the relevant time, vehicle was driven by one Mr. Ali who was holding a valid driving licence. An FIR was lodged on the basis of the statement of driver of the vehicle under Section 379/420 IPC. On investigation a charge-sheet was presented against accused by the police but the vehicle could not be recovered. An information regarding theft of the vehicle was also given to the Insurance Company/opposite Party.

3. Since Insurance Company failed to settle the claim, a complaint was preferred by the complainant before the District Consumer Forum, Gopalganj. The Insurance Company/Opposite Party took a stand that at the relevant time the vehicle was being used for hire and reward basis which amounts to violation of terms and conditions of the insurance policy and as such the claim was repudiated vide letter dated 21.02.2012.

4. Learned District Forum allowed the complaint thereby directing the Opposite Party to pay the insured amount of Rs.5,74,704/- with interest @ 12% along with compensation of Rs.25,000/- and litigation cost.

5. Aggrieved against the Order passed by the District Forum, an appeal was preferred by the Insurance Company before the learned Bihar Consumer Disputes Redressal Commission, which held that the claim is required to be settled on non-standard basis at 75% of the assured amount. Accordingly, Insurance Company/Opposite Party was directed to pay sum of Rs.4,31,027/- with interest @ 9% p.a. along with compensation for Rs.10,000/- and costs.

6. Present Revision Petition has thereafter been preferred by the Insurance Company challenging the Order passed by the State Commission.

7. Learned counsel for the petitioner/opposite party assails the Order passed by the learned State Commission on the ground that the claim could not have been allowed as the vehicle was used for hire and reward, contrary to the terms and conditions of the policy. Further, there was delay in intimating the Insurance Company, though the FIR was lodged on the date of theft.

8. Relying upon United India Insurance Co. Ltd. v. Manubhai Dharmasinhbhai Gajera & Ors., II (2008) ACC 718 (SC), learned counsel for the petitioner/opposite party urged that there exists a distinction between private player in the field of insurance and public sector Insurance Company, as a private player is only bound by the statutory regulations operating in the field while the public sector insurance companies are also bound by the directions issued by the General Insurance Corporation as well as the Central Government. Reliance was further placed upon Oriental Insurance Co. Ltd. v. Sony Cheriyan, (1999) 6 SCC 451, RP No. 4290 of 2010, IFFCO Tokio General Insurance Co. Ltd. v. Gaurav Bhargava, Order dated 28.01.2015 and RP No. 3045 of 2015, Rajesh Kumar v. National Insurance Co. Ltd. & 2 Ors., Order dated 20.02.2017.

9. The issue is no longer res integra that in the event of theft of vehicle, nature of use of vehicle cannot be invoked by the Insurance Company for repudiating the claim, as held in National Insurance Company Ltd. v. Nitin Khandelwal, (2008) 11