- If there is a fundamental infringement of the policy's terms and conditions, the claim of insurance money will be disallowed, said a bench headed by Justice U ULalit.
- It is a fundamental breach if the vehicle was driven/used without a valid registration on the day of theft - the court observed.
- The above observations were made during the hearing of an appeal filed by United India Insurance Co Ltd challenging an order of NCDRC (National Consumer Disputes Redressal Commission).
- The bench consisted of Justices U ULalit, S. Ravindra Bhat and Bela M Trivedi.
- In this case, the policy holder, Mr Sushil Kumar Godhra, a resident of the State of Rajasthan, purchased a new bolero and obtained an insurance policy from the insurer for the same, somewhere in Punjab.
- The vehicle had temporary registration, which expired on July 19, 2011.
- After the registration expired, Mr Sushil travelled outside his residence.
- The complainant went to Jodhpur, where he parked his car outside the guest house premises, from where it was stolen.
- He filed an FIR at the Jodhpur Police station alleging theft under Section 378 of the Indian Penal Code. In November the police lodged a final report saying that the car was untraceable.
- He applied for insurance, but it was denied because the vehicle's temporary registration had expired.
- After that Mr.Sushil approached the District Forum, asking for an order to the insurer to pay him the sum insured for the car, plus 1,40,000/-in rent, as well as relief for mental anguish and litigation costs.
- The above complaint was dismissed and thus he approached the State Consumer Dispute Redressal Commission.
- The state commission found that the insurer could not deny the insured's genuine claim based on technical, petty, and frivolous grounds such as the lack of a permanent registration certificate from the competent authority, and thus escape its obligation to compensate the insured for the vehicle's loss.
- The petition filed by the complainant before the National Consumer Dispute Redressal Commission was dismissed and thus it approached the Supreme Court.
- Relying on the Supreme Court Judgement in Narinder Singh v. New India Assurance Co. Ltd, and also an order in Naveen Kumar v. National Insurance Co. Ltd. the appellant insurance argued that the lack of registration on the car in question constituted a fundamental breach of the contract, entitling the insurer to reject the claims made under it.
- The Apex court noted that on the date of theft, the vehicle had been used/driven without a valid registration, which amounts to a clear violation of Section 39 and 192 of Motor Vehicles Act, 1988.
- This results in a fundamental breach of the terms and conditions of the policy, as held by this Court in Narinder Singh (supra), entitling the insurer to repudiate the policy.
- “This court is of the opinion that the NCDRC's order cannot be sustained,” the bench said.
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