Insurance company

Involvement of the driver in the theft of the vehicle, insurance company still responsible; NCDRC

The bench of the National Commission comprising Justice Viswanath, presiding member and Surat Ram Maurya, member has said the insurance policy covered loss of the vehicle through burglary, break-in or malicious act. This is a case of theft and the driver’s involvement in the theft will not preclude commission of the theft.

In this case, the insured (respondent) took out an insurance policy with the insurance company (appellant) for his vehicle. One day, the Insured entrusts the vehicle to the driver to ship manure/fertilizer from Gondia (Maharashtra) to Mashal (Maharashtra). Said vehicle was stolen. During the investigation, it was revealed that the driver was involved in a theft. The insurance company denied the claim on the grounds that the driver was involved in the offense which amounted to criminal breach of trust. Alleging failure in service on the part of the insurance company, the insured filed a complaint in the State Commission requested Rs. 21,66,000/- with interest @ 18% from the date of the theft until the full and final realization of the amount and Rs.1,00,000/- for mental and physical harassment. The State Commission partially cleared the complaint and ordered the insurance company to pay the complainant Rs.20.71 lacs with interest @ 9% per annum from the date of dismissal of his claim until its realization by him and Rs.25,000/- for physical and mental harassment.

The Maharashtra State Commission relied on a case of S. Bhagat Singh v Oriental Insurance Co. Ltd., where it was found that, “Even assuming that the driver dishonestly took away the taxi car, even then the matter would fall under Section 378 of the Indian Penal Code in which theft was defined.”

The State Commission said that, “the driver had in collusion with two other culprits committed the theft of the Vehicle belonging to the Insured.

Aggrieved by the decision of the Maharashtra State Commission, the insurance company filed an appeal with the National Commission under Section 19 of the Consumer Protection Act 1986.

Before the National Commission, the insurance company (appellant) argued that the State Commission had failed to understand that it was not a theft but a criminal breach of trust and that it did not fall within the scope of the police.

Respondent (Insured) argued that the insurance company failed to provide the terms and conditions of the policy to the insured. The Insurer cannot rely on the exclusion clause of the Policy which was not part of the contract, for lack of provision of this clause to the Insured.

The question to be decided before the National Commission was whether or not the Insurance Company is liable for the damage suffered by the Insured.

The Commission found that the insurance company had not filed a complete copy of the insurance policy. Only the cover note has been filed. The vehicle was stolen and during the police investigation it was discovered that the driver of the vehicle was also involved in the theft.

Commission stated that, “The insurance company denied the claim saying it was not a theft but a breach of trust which was outside the scope of the insurance policy. The insurance policy The insurance covered the loss of the vehicle by burglary, break-in or malicious act. This is a case of theft and the driver’s involvement in the theft will not exclude the commission of the theft.”

The Commission considered that the State Commission correctly relied on a case of S. Bhagat Singh v Oriental Insurance Co. Ltd., and said the driver was also involved in the theft and the insurance policy covered loss of the vehicle to theft. Therefore, the insurance company is liable for the loss suffered by the Insured.

In view of the foregoing, the Commission observed that the State Commission issued a well-reasoned order. insurance company did not find any illegality or irregularity in the contested order. The National Commission dismissed the appeal.

Case name: New India Assurance Co. Ltd. & Anr. against Tirath Singh Awatarsingh Bhatia

Case no: FIRST CALL NO. 1034 OF 2015

Court: Judge Viswanath, Presiding Member and Judge Surat Ram Maurya, Member

Determined to: 1st July 2022

Click here to read/download the order