Appointment of surveyor is not treated as waiver in repudiating a claim

The Supreme Court ruled that an insurance company appointing a surveyor to assess vehicle damage does not signify acceptance of the claim. The court clarified that the insurer must prove a fundamental breach of policy terms to repudiate a claim. In this case, the insurer failed to provide evidence of overloading, a condition they claimed invalidated the policy, leading to the claim being allowed.

LAKHMI CHAND V. RELIANCE GENERAL INSURANCE [SC]
CIVIL APPEAL NOS.49-50 OF 2016 (ARISING OUT OF SLP (C) NOS.37534-37535 OF 2013-DATED: 07/01/2016

BRIEF FACTS

1. The appellant was the owner of a Tata Motors goods carrying vehicle and the vehicle was insured with the respondent- Company.

2. The risk covered in this policy was to the tune of Rs.2,21,153/-. The said vehicle met with an accident on account of rash and negligent driving of the offending vehicle bearing registration no. UP-75-J 9860.

3. In this regard, an FIR No.66 of 2010 dated 11.02.2010 was registered with the jurisdictional Police Station. The appellant incurred expenses amounting to Rs.1,64,033/- for the repair of his vehicle and the Surveyor appointed by the respondent assessed the damage caused to the said vehicle at Rs.90,000/-.

4. The appellant had preferred a claim for a sum of Rs.1,64,033/- with supporting bills, which was rejected by the respondent.

5. Aggrieved of rejection of the claim of the appellant by the respondent- Company, he filed Complaint before the District Forum, which allowed the claim.

6. Aggrieved of the order of the District Forum, the respondent Company preferred an appeal before the State Commission urging various grounds. The State Commission allowed the appeal.

7. The said judgment passed by the State Commission was challenged by the appellant before the National Commission, which dismissed the petition on the ground that the appellant had violated the terms of the insurance contract. Review petition was also dismissed.

8. Decision: Petition allowed.

9. REASON: The Apex Court In our considered view, the concurrent findings recorded by the National Commission in the impugned judgment and order are erroneous in law for the following reasons.

i) It is an admitted fact that the accident of the vehicle of the appellant was caused on account of rash and negligent driving of the offending vehicle bearing registration no. UP-75-J9860. An FIR No. 66 of 2010 dated 11.02.2010 was registered against the driver of the said vehicle for the offences referred to supra.

ii) The vehicle of the appellant was badly damaged in the accident and it is an undisputed fact that the report of Surveyor assessed the loss at Rs.90,000/-, but the actual amount incurred by the appellant on the repair of his vehicle was Rs.1,64,033/-.

iii) The said claim was arbitrarily rejected by the respondent-Company on the ground that the damage caused to the vehicle did not fall within the scope and purview of the insurance policy, as there was a contravention of terms and conditions of the policy of the vehicle.

iv) The National Commission upheld the order of dismissal of the complaint of the appellant passed by the State Commission.

v) The National Commission however, did not consider the judgment of this Court in the case of B.V. Nagaraju v. Oriental Insurance Co. Ltd Divisional Officer, Hassan, IV 2010 CPJ 315 (SC). In that case, the insurance company had taken the defence that the vehicle in question was carrying more passengers than the permitted capacity in terms of the policy at the time of the accident. The said plea of the insurance company was rejected. This Court held that the mere factum of carrying more passengers than the permitted seating capacity in the goods carrying vehicle by the insured does not amount to a fundamental breach of the terms and conditions of the policy so as to allow the insurer to eschew its liability towards the damage caused to the vehicle.

vi) In the instant case, the respondent-Company has not produced any evidence on record to prove that the accident occurred on account of the overloading of passengers in the goods carrying vehicle.

vii) Further, as has been held in the case of B.V. Nagaraju (supra) that for the insurer to avoid his liability, the breach of the policy must be so fundamental in nature that it brings the contract to an end.

viii) In the instant case, it is undisputed that the accident was in fact caused on account of the rash and negligent driving of the offending vehicle by its driver, against whom a criminal case vide FIR no. 66 of 2010 was registered for the offences referred to supra under the provisions of the IPC.

ix) These facts have not been taken into consideration by either the State Commission or National Commission while exercising their jurisdiction and setting aside the order of the District Forum.

x) Therefore, the judgment and order of the National Commission dated 26.04.2013 passed in the Revision Petition No. 2032 of 2012 is liable to be set aside, as the said findings recorded in the judgment are erroneous in law. Accordingly, we allow these appeals and restore the judgment and order of District Forum.

xi) Further, we award a sum of Rs.25,000/- towards the cost of the litigation as the respondent-Company has unnecessarily litigated the matter up to this Court despite the clear pronouncement of law laid down by this Court on the question with regard to the violation of terms and conditions of the policy and burden of proof is on the insurer to prove the fact of such alleged breach of terms and conditions by the insured.