Consumer Protection – Insurance – Standard Form Contract – Commercial Vehicles Package Policy – Appellant’s tractor was insured with respondent(s) on 19.06.10 – Tractor stolen on 28.10.10 – FIR lodged on the same day – Claim submitted to the respondent(s) on 15.12.10 – Rejected on the ground that intimation was given belatedly – District Forum & State Commission allowed the appellant’s complaint– National Commission dismissed it – Conflict between two Judges’ Bench decisions of Supreme Court in Om Prakash v. Reliance General Insurance & Anr. [2017] 11 SCR 893 & Oriental Insurance Co. Ltd. v. Parvesh Chander Chadha (2018) 9 SCC 798, as to whether delay in informing about theft of vehicle to insurance company, though the FIR was registered immediately, would disentitle the insurance claim – In view thereof, present matter referred by two Judges’ Bench – Held: Much would depend upon the words ‘co-operate’ & ‘immediate’, in condition no.1 of the Policy wherein immediate action is contemplated in case of accident of the vehicle – Second part of aforesaid condition deals with ‘theft or criminal act other than accident’ – While assessing the ‘duty to cooperate’ for the insured, inter alia the Court should have regard to those breaches by the insured which are prejudicial to the insurance company – Usually, mere delay in informing the theft to the insurer, when the same was already informed to the law enforcement authorities, cannot amount to breach of ‘duty to co-operate’ of the insured – View taken in the case of Om Prakash is concurred with, that in such a situation if the claimant is denied the claim merely on the ground of delay, it would be taking hyper technical view – It was also rightly held that Consumer Act being beneficial legislation deserves pragmatic construction – When an insured has lodged the FIR immediately after the theft of vehicle and when the police on investigation lodged final report after the vehicle was not traced and when the surveyors appointed by the insurance company found the claim of the theft to be genuine, then mere delay in intimating the insurance company cannot be a ground to deny the claim of the insured – In the present case, facts are undisputed – Impugned order set aside – Order of District Forum, upheld by State Commission is maintained – 75% of the claim amount deposited by respondents in Registry be withdrawn by the appellant with interest accrued thereon – Remainder be paid within six weeks from today with interest @ 12% p.a. on entire amount of Rs.4,70,000/- from the date of order of District Forum till its realisation.
Insurance – Contract of insurance – Rules of interpretation – Discussed.
Allowing the appeal, the Court
HELD: 1.1 Much would depend upon the words ‘cooperate’ and ‘immediate’, in condition No. 1 of the Standard Form for Commercial Vehicles Package Policy. Generally, an insurance contract is governed by the rules of interpretation applicable to the general contracts. However, due to the specialized nature of contract of insurance, certain rules are tailored to suit insurance contracts. The contract being interpreted is a Commercial Vehicle Package Policy. There is no gainsaying that in a contract, the bargaining power is usually at equal footing. In this regard, the joint intention of the parties is taken into consideration for interpretation of a contract. However, in most standard form contracts, that is not so. In this regard, the Court in such circumstances would consider the application of the rule of contra preferatum, when ambiguity exists and an interpretation of the contract is preferred which favors the party with lesser bargaining power. The insurance policy is a contract between the insurer and the insured and the parties would be strictly bound by the terms and conditions as provided in the contract between the parties. [Paras 10-12][571-B; 572-B-D]
Om Prakash v. Reliance General Insurance & Anr. [2017] 11 SCR 893 – affirmed.
Oriental Insurance Co. Ltd. v. Parvesh Chander Chadha 2018 (9) SCC 798 ; T.D.P. Gram Sewa Sahakari Samiti Ltd. & Ors. v. Charanjit Kaur and Ors. 2011 (3) CPC
422 ; New India Assurance Co. Ltd. v. Trilochan Jane (2012) CPJ 441 (NC) – referred to.
Arnold v. Britton [2015] UKSC 36 – referred to.
1.2 The second part of Condition No.1 deals with the ‘theft or criminal act other than the accident’. It provides, that in case of theft or criminal act which may be the subject of a claim under the policy, the insured shall give immediate notice to the police and co-operate with the company in securing the conviction of the offender. The object behind giving immediate notice to the police appears to be that if the police is immediately informed about the theft or any criminal act, the police machinery can be set in motion and steps for recovery of the vehicle could be expedited. It is only when the police are not in a position to trace and recover the vehicle and the final report is lodged by the police after the vehicle is not traced, the insured would be in a position to lodge his claim for compensation. [Para 15][573-D-E]
1.3 The term ‘co-operate’ as used under the contract needs to be assessed in facts and circumstances. While assessing the ‘duty to co-operate’ for the insured, inter alia the Court should have regards to those breaches by the insured which are prejudicial to the insurance company. Usually, mere delay in informing the theft to the insurer, when the same was already informed to the law enforcement authorities, cannot amount to a breach of ‘duty to co-operate’ of the insured. The view taken in the case of Om Prakash is concurred with, that in such a situation if the claimant is denied the claim merely on the ground that there is some delay in intimating the insurance company about the occurrence of the theft, it would be taking a hyper technical view. This Court in Om Prakash rightly held that it would not be fair and reasonable to reject genuine claims which had already been verified and found to be correct by the investigator. [Paras 17-18][574-C-E]
1.4 This Court in Om Prakash rightly held that the Consumer Protection Act aims at protecting the interest of the consumers and it being a beneficial legislation deserves pragmatic construction. In Om Prakash this Court rightly held that mere delay in intimating the insurance company about the theft of the vehicle should not be a shelter to repudiate the insurance claim which has been otherwise proved to be genuine. Therefore, when an insured has lodged the FIR immediately after the theft of a vehicle occurred and when the police after investigation have lodged a final report after the vehicle was not traced and when the surveyors/investigators appointed by the insurance company have found the claim of the theft to be genuine, then mere delay in intimating the insurance company about the occurrence of the theft cannot be a ground to deny the claim of the insured. In the present case, the facts are undisputed. The police have admittedly lodged the final report. The investigators appointed by the insurance company have submitted their investigation report finding the claim of the appellant to be genuine. In this background, the National Commission was not justified in reversing the concurrent orders of the District Forum and the State Commission. The impugned judgment passed by the National Commission is quashed and set aside. The order of the District Forum as maintained by the State Commission is maintained. [Paras 19, 20 & 22][574-F-H; 575-A-C]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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