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Lakhmi Chand v. Reliance General Insurance
Factual and Procedural Background
The petitioner, Lakhmi Chand, owner of Tata vehicle ACE-E-3 (No. HR-67-7492) insured with Reliance General Insurance (Policy No. 15019923334104992, 31.07.2009–30.07.2010), suffered an accident on 11.02.2010 with offending vehicle No. UP-75-J 9880. FIR No. 66/10 dated 11.02.2010 (sections 279/337/338/304A/427 IPC) was registered and the insurer was informed. The petitioner repaired the vehicle and paid Rs. 1,64,033/-. The insurer refused payment by letters dated 07.07.2010 and 26.07.2010, contending the loss was not within policy scope; its surveyor assessed loss at Rs. 90,000 and an investigator reported that six persons (five passengers plus driver) were on the goods-carrying vehicle though registration permitted 1+1 seating.
The petitioner filed Consumer Complaint No. 517 of 2010 before the District Forum, Sonepat, which on 18.08.2011 allowed the complaint and directed settlement on a non-standard basis up to 75% of the assessed loss (considering Rs. 1,64,033/-), with interest @9% p.a. and Rs. 2,000 for mental agony. The State Commission (Haryana) in First Appeal No. 1396/2011 reversed the District Forum on 29.02.2012, finding policy violation due to excess passengers and relying on the Supreme Court decision in Suraj Mal Ram Niwas Oil Mills (P) Ltd. v. United India Insurance Co. Ltd. The petitioner filed this revision petition under Section 21(b) of the Consumer Protection Act, 1986 before the National Consumer Disputes Redressal Commission.
Legal Issues Presented
- Whether carriage of passengers beyond the vehicle's permitted seating (six persons present where seating was 1+1) amounted to a violation of the insurance policy such as to relieve the insurer of liability.
- Whether the District Forum's direction to settle the claim on a non-standard basis (up to 75% of loss) could be sustained in view of the alleged policy violation.
Arguments of the Parties
Petitioner's Arguments
- The offending vehicle was directly responsible for the accident and the petitioner incurred Rs. 1,64,033/- for repairs; therefore the petitioner was entitled to the relief granted by the District Forum.
- The District Forum's order was based on precedents including National Insurance Co. Ltd. v. Pravinbhai D. Prajapati and B.V. Nagaraju v. Oriental Insurance Co. Ltd.
- The facts of Suraj Mal Ram Niwas Oil Mills (supra) are not applicable to the present case, according to petitioner’s counsel.
Respondent's Arguments
- The insurer relied on multiple judgments of the Supreme Court and the National Commission to contend that carrying more passengers than permitted constitutes violation of policy terms and vitiates the claim.
- The respondent cited Naresh Kumar v. Reliance General Insurance Co. Ltd. and Oriental Insurance Co. Ltd. v. Sony Cheriyan, among others, to support the proposition that deviation from permitted use (excess passengers or carriage contrary to permit) amounts to policy breach.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Suraj Mal Ram Niwas Oil Mills (P) Ltd., Vs. United India Insurance Co. Ltd., & Anr., 2011 CTJ 11 (Supreme Court) (CP). | That the terms and conditions of contract of insurance have to be strictly construed and no exception can be made on the ground of equity. | The National Commission agreed with the State Commission's reliance on this decision and applied its principle to hold there was policy violation. |
| National Insurance Co. Ltd. Vs. Pravinbhai D. Prajapati, IV (NC) 315 (NC) | This case was cited by the District Forum as part of the basis for its order (specific rule not elaborated in the opinion). | Noted as a precedent relied upon by the District Forum and cited by petitioner’s counsel; the National Commission recorded that the District Forum had relied on it. |
| B.V. Nagaraju Vs. Oriental Insurance Company, AIR 1996 (SC) 2054. | This case was cited by the District Forum as part of its reasoning (specific rule not elaborated in the opinion). | Recorded as precedent relied upon by the District Forum and cited by petitioner’s counsel. |
| Naresh Kumar Vs. Reliance General Insurance Co. Ltd. (Revision Petition No. 2316 of 2012, National Commission order dated 10.10.2012) | The National Commission stated that carrying 20 passengers amounted to violation where vehicle was permitted to carry only two persons including the driver. | Cited by the respondent to demonstrate that carrying excess passengers constitutes policy violation. |
| Oriental Insurance Co. Ltd. Vs. Sony Cheriyan, AIR 1999 (SC) 3252 | Held that carriage of hazardous/inflammable articles contrary to permit amounted to violation of the insurance policy. | Cited by the respondent to support the proposition that deviation from permitted use breaches policy terms. |
| Vikram Greentech (I) Ltd., & Anr. Vs. New India Assurance Co. Ltd., AIR 2009 SC 2493 | Stated the principle that the terms and conditions of the insurance policy have to be observed. | Cited by the respondent as supporting authority for strict observance of policy terms. |
| Export Credit Guarantee Corpn. Of India Ltd. Vs. Garg Sons International, 2013 (1) Scale 410 | Reiterated principles regarding observance of insurance policy terms (as referenced in the opinion). | Cited by the respondent to support the proposition that policy terms must be observed. |
Court's Reasoning and Analysis
The Court examined the record and noted it was undisputed that at the time of the accident the vehicle carried six persons though permitted capacity was 1+1 (two persons). The Court reasoned that carrying three times the permitted number impaired the driver's control of the vehicle, constituting a violation of the policy's terms and conditions. Relying on the Supreme Court's observation in Suraj Mal Ram Niwas Oil Mills (supra) that insurance contracts must be strictly construed and not altered on equity grounds, the Court concluded that the State Commission correctly reversed the District Forum's order. The Court therefore found the petition without merit.
Holding and Implications
The revision petition is dismissed and the order of the State Commission is upheld.
Consequences: The State Commission's reversal of the District Forum (which had allowed settlement on a non-standard basis) stands; the petition is dismissed with no order as to costs. The opinion does not discuss broader legal implications or announce a new precedent beyond applying established authority that insurance policy terms must be strictly observed.
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
NEW DELHI
REVISION PETITION NO. 2032 OF 2012
(Against the Order dated 29/02/2012 in Appeal No. 1396/2011 of the State Commission Haryana)
1. LAKHMI CHAND
S/o Shri Hari Ram R/o Village Panchi Jattan,Tehsil Ganaur Sonepat
Haryana ...........Petitioner(s)
Versus
1. RELIANCE GENERAL INSURANCE
Through its Regional Manager Having Office SCO-212- 214,Sector-34A
Chandigarh
Chandigarh ...........Respondent(s)
BEFORE:
HON'BLE MR. JUSTICE K.S. CHAUDHARI, PRESIDING MEMBER HON'BLE MR. DR. B.C. GUPTA, MEMBER
For the Petitioner : Mr. R.P. Parashar, Advocate For the Respondent : Mr. Navneet Kumar, Advocate Dated : 26 Apr 2013
ORDER
PER DR. B.C. GUPTA, MEMBER
This revision petition has been filed under Section 21(b) of the Consumer Protection Act, 1986 against the order dated 29.02.2012 passed by the Haryana State Consumer Disputes Redressal Commission, Panchkula (hereinafter referred to as "State Commission") in First Appeal No. 1396 of 2011, vide which appeal against the order passed by the District Consumer Disputes Redressal Forum, Sonepat dated 18.08.2011 was accepted and consumer complaint in question, dismissed. The District Forum, Sonepat vide their order dated 18.8.2011 in consumer complaint No. 517 of 2010 had allowed the said complaint; the original complainant has therefore, filed the present revision petition before this Commission.
2. The brief facts of the case are that the complainant / petitioner is the owner of the Tata vehicle ACE-E-3 bearing Number HR-67-7492 and the same was insured with the respondent / opposite party vide policy No. 15019923334104992 with effect from
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31.07.2009 to 30.07.2010. The said vehicle met with an accident on 11.02.2010 against the offending vehicle bearing No. UP-75-J 9880 and an FIR No. 66/10 dated 11.02.2010 under Section 279/337/338/304A/427 IPC was registered with the police. The insurance company was also informed on telephone after the accident. The petitioner got the vehicle repaired from an authorized repair shop and a bill of Rs. 1,64,033/- was paid. However, the respondent refused to make payment of the repair bill stating vide its letters dated 07.07.2010 and 26.07.2010 that the loss did not fall within the scope and purview of the insurance policy. The insurance company appointed a surveyor to assess the loss and as per the survey report, the loss was assessed as Rs. 90,000/-. Further, as per the report of the investigator, it was revealed that five passengers were travelling in the goods-carrying vehicle at the time of accident, in addition to the driver, whereas seating capacity of the vehicle as per the registration certificate was 1+1 only. The complainant filed the consumer complaint in question with the District Forum, Sonepat requesting for payment of Rs. 1,64,033/- as spent on repair charges plus Rs. 50,000/- for mental agony / harassment and legal fees etc. The District Forum, after taking into account the evidence of the parties, allowed the complaint vide its order dated 18.08.2011 and directed to settle the claim on 'non-standard-basis' upto 75% of the amount of loss after taking into consideration the amount of Rs. 1,64,033/- and the said settled amount was directed to be paid to the complainant along with interest @ 9% per annum and Rs. 2,000/- was allowed for mental agony / harassment etc. However, the State Commission vide impugned order reversed the order passed by the District Forum in appeal, saying that there was violation of the policy in question, because five passengers were travelling in the goods-carrying vehicle at the time of accident in addition to the driver, whereas seating capacity of the vehicle as per registration certificate was 1+1. The learned State Commission relied upon the judgment of the Hon'ble Apex Court in case of Suraj Mal Ram Niwas Oil Mills (P) Ltd., Vs. United India Insurance Co. Ltd., & Anr., 2011 CTJ 11 (Supreme Court) (CP). It is stated in the said judgment that the terms and conditions of contract of insurance have to be strictly
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construed and no exception can be made on the ground of equity. It is against this order that the present petition has been filed.
3. At the time of hearing before us, the learned counsel for the petitioner stated that offending vehicle was directly responsible for the accident in question. The petitioner was entitled to get the claim as allowed by the District Forum because they had spent a sum of Rs. 1,64,033/- for the repair of the vehicle. The learned counsel further stated that the order passed by the District Forum was based upon the case law as cited in National Insurance Co. Ltd. Vs. Pravinbhai D. Prajapati, IV (NC) 315 (NC) and the case B.V. Nagaraju Vs. Oriental Insurance Company as reported in AIR 1996 (SC) 2054. On the other hand, the facts of the case relied upon by the State Commission i.e. Suraj Mal Ram Niwas Oil Mills (P) Ltd., Vs. United India Insurance Co. Ltd., & Anr. (Supra), are not applicable to the present case.
4. The learned counsel for the respondent has drawn our attention to a number of judgments on the issue made by the Hon'ble Apex Court and the National Commission. In
Naresh Kumar Vs. Reliance General Insurance Co. Ltd., the National Commission in their order dated 10.10.2012 passed in Revision Petition No. 2316 of 2012, stated that carrying of 20 passengers amounted to violation of the terms of the policy when the vehicle was permitted to carry only two persons including the driver. The learned counsel also invited our attention to the judgment in Oriental Insurance Co. Ltd. Vs. Sony Cheriyan
decided on 19.08.1999 by the Hon'ble Supreme Court as reported in AIR 1999 (SC) 3252, saying that the respondent was carrying hazardous and highly inflammable articles, whereas the permit was to transport only non-hazardous articles and hence it was a violation of the insurance policy. Further, there are other judgments passed in Vikram Greentech (I) Ltd., & Anr. Vs. New India Assurance Co. Ltd., as reported in AIR 2009 SC 2493 and Export Credit Guarantee Corpn. Of India Ltd. Vs. Garg Sons International bas reported in 2013 (1) Scale 410, in which the same principles has been stated that the terms and conditions of the insurance policy in question have to be observed.
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5. We have examined the entire material on record and given a thoughtful consideration to the arguments advanced before us. From the facts of the case, it is very clear and denied nowhere that at the time of accident, the vehicle in question was carrying six passengers, although it was permitted to carry only two passengers, including the driver and carrying three times the number of passengers permitted, the driver cannot have proper control on the vehicle. It is very clear therefore, that there has been violation of the terms and conditions of the policy in question. We therefore, tend to agree with the order passed by the State Commission based on the observations made by the Hon'ble Apex Court in Suraj Mal Ram Niwas Oil Mills (P) Ltd., Vs. United India Insurance Co. Ltd., & Anr.
(Supra) that the terms of a contract of insurance have to be strictly construed and no exception can be made on the ground of equity. We therefore, hold that this petition is without any force and the same is ordered to be dismissed upholding the orders passed by the learned State Commission with no order as to costs.
......................J
K.S. CHAUDHARI
PRESIDING MEMBER
......................
DR. B.C. GUPTA
MEMBER
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