UNITED INDIA INSURANCE CO. LTD. versus SUSHIL KUMAR GODARA on 30 September 2021

1. Counsel for parties were heard, with their consent, for finaldisposal of the appeal. The appellant (hereby “insurer”) questions thejudgment and order of the National Consumer Disputes RedressalCommission, New Delhi[1] (“hereafter the NCDRC”). In the impugnedorder, the NCDRC dismissed the appellant’s revision petition, thatEchallenged the order[2] of the Rajasthan State Consumer DisputesRedressal Commission, Circuit Bench at Bikaner (hereafter “the StateCommission”).

2. The respondent-complainant obtained an insurance policy[3] fromthe insurer for his Bolero car, somewhere in Punjab, though he was aFresident of Sri Ganganagar, Rajasthan. The vehicle had a temporaryregistration (No. PB-11-T-5101 from 20-06-2011 to 19-07-2011). Thesum insured was 6,17,800/-. The temporary registration of the vehicle,however, expired on 19-07-2011.

3. As the respondent/complainant was engaged in business as aGprivate contractor, for business purposes he had to be outside the city.

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1 Dated 11/12/2020 in Revision Petition No. 1984/ 2015

2 dated 20/03/2015, in FA No. 244/2013

3 bearing policy no. 200104/31/11/0100000947

On 28-07-2011 the complainant went to Jodhpur for business purposes;and stayed in Geeta Guest House at night. Whilst there, his vehicle wasparked outside the guest house premises. When the respondent awokein the morning, he found that the Bolero car had been stolen. He lodgeda first information report (FIR) on 29-07-2011 with PS Ratanada, Jodhpuralleging commission of offences under Section 379, IPC. However, on30-09-2011 the police lodged a final report stating that the vehicle wasuntraceable.

4. The respondent claimed the loss, from the appellant/insurer.The insurance claim, however was repudiated by order dated23-01-2013 on three grounds:

(i) Intimation of theft of vehicle was given to the insurer afterdelay which was in violation of the policy condition.

(ii) The temporary registration of the vehicle expired on19-07-2011 and the respondent did not get the vehicle permanentlyregistered; and

(iii) The complainant left the vehicle unattended outside theguesthouse in violation of the policy conditions.

5. Aggrieved by the repudiation of his claim the respondent/complainant filed a complaint before the District Forum ConsumerProtection, Shri Ganganagar (hereafter the “District Forum”) for adirection that the insurer ought to pay him the sum insured for the vehiclewith rent amount of 1,40,000/- and also claimed relief for mental agonyand costs of litigation.

6. The insurer’s position before the District Forum was that tillthe incidence of theft, the complainant’s vehicle was not registered whichwas in violation of conditions of insurance policy; the insurer thereforerequested for dismissal of the complaint. The District Forum dismissedthe complaint against the insurer while observing that on 28-07-2011(date of the incident) the vehicle’s temporary registration had expiredand relying upon two previous orders of the NCDRC had concludedthat if at the time of theft, the vehicle was not registered then the claimwas not payable to the complainant. It was held that repudiation of theclaim by the insurer did not amount to deficiency in service on its part.Aggrieved by the dismissal of his complaint, the respondent/complainantapproached the State Commission. The State Commission set aside the A

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Aorder of the District Forum and allowed the appeal, and held that as theinsurer had covered the complainant’s vehicle with particular engineand chassis number, and issued a policy during the currency of which,the vehicle was stolen it could not repudiate the insured’s genuine claimon technical, petty and frivolous grounds of absence of permanentregistration certificate from the competent authority and thus escape itsBliability to indemnify the insured for the loss of the vehicle. The StateCommission directed the insurer to pay to the respondent/complainantan amount of 6,17,800/- (Rupees Six Lakhs Seventeen Thousand EightHundred Only) along with 9% interest per annum from the date of filingof the complaint and also pay to the respondent/complainant 20,000/-Cas litigation costs. The insurer preferred a revision petition before theNCDRC which was dismissed, affirming the State Commission’sreasoning.

7. This Court issued notice; despite service, the respondent didnot cause appearance to be entered. In the circumstances, Ms. GauriDPuri was appointed to assist the Court, as amicus curie. The Courtheard the learned counsel for the petitioner Mr. Amit Singh, AOR andlearned amicus.

8. It was argued by Mr. Amit Singh that the NCDRC committedan error in not appreciating the judgment of this Court in Narinder SinghEVs. New India Assurance Co. Ltd[4]. He also relied on a previous orderof the NCDRC, i.e., Naveen Kumar Vs. National Insurance CompanyLtd[5]. It was urged that the impugned order should be set aside, since theNCDRC ignored a binding judgment of this court, and disregarded thecircumstance that the vehicle in question, had no registration. Thisconstituted a fundamental breach of the policy, entitling the insurer toFrepudiate the claims under it.

9. The learned amicus, on the other hand, urged that this Courtshould not disturb the findings of the State Commission or the NCDRC.It was argued by the learned counsel that the judgment in NarinderSingh (supra) pertained to claim for compensation for a damaged vehicleGon account of accident, and not on account of theft of a vehicle, and wasthus not applicable to the present case. She urged that in the presentcase, it could not be said that the policy holder’s vehicle was an 4 (2014) 9 SCC 324.H5 [RP/250/2019] decided on 26.11.2019

unregistered one; rather a temporary number had been assigned to it,but a few days after its expiry, the theft occurred. In the givencircumstances, the preclusion of liability, in the manner expressed inNarinder Singh (supra) by this court, was inapplicable.

10. What is discernible from the above narration of facts, is thatthe policy holder had purchased a new Bolero which had a temporaryregistration. That registration lapsed on 19-07-2011. The respondent/complainant never alleged or proved that he applied for a permanentregistration, or sought extension of the temporary registration beyond19-07-2011. He travelled outside his residence, to Jodhpur, in his car,and stayed overnight in a guest house. In the morning of 28-07-2011, hediscovered that the car had been stolen, when parked outside the guesthouse premises in Jodhpur.

11. In Narinder Singh (supra), the claim was in the context ofan accident, involving a vehicle, the temporary registration of which hadexpired. This Court held that the insurer was not liable, and observedthat:

“12. A bare perusal of Section 39 shows that no person shalldrive the motor vehicle in any public place without any validregistration granted by the registering authority in accordancewith the provisions of the Act.

13. However, according to Section 43, the owner of the vehiclemay apply to the registering authority for temporaryregistration and a temporary registration mark. If suchtemporary registration is granted by the authority, the sameshall be valid only for a period not exceeding one month.The proviso to Section 43 clarified that the period of onemonth may be extended for such a further period by theregistering authority only in a case where a temporaryregistration is granted in respect of chassis to which bodyhas not been attached and the same is detained in a workshopbeyond the said period of one month for being fitted with abody or unforeseen circumstances beyond the control of theowner.

14. Indisputably, a temporary registration was granted inrespect of the vehicle in question, which had expired on11.1.2006 and the alleged accident took place on 2.2.2006

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Awhen the vehicle was without any registration. Nothing hasbeen brought on record by the appellant to show that beforeor after 11.1.2006, when the period of temporary registrationexpired, the appellant, owner of the vehicle either appliedfor permanent registration as contemplated under Section39 of the Act or made any application for extension of periodBas temporary registration on the ground of some specialreasons. In our view, therefore, using a vehicle on the publicroad without any registration is not only an offencepunishable under Section 192 of the Motor Vehicles Act butalso a fundamental breach of the terms and conditions ofCpolicy contract.”12. In Naveen Kumar (supra), NCDRC decided a reference, toits bench, and held that:

“9. For the reasons stated hereinabove, the reference isanswered in following terms:-D

(i) If a vehicle without a valid registration is or has been used/driven on a public place or any other place that wouldconstitute a fundamental breach of the terms and conditionsof the contract of insurance even if the vehicle is not beingdriven at the time it is stolen or is damaged:E

(ii) If a vehicle without a valid registration is used/driven ona public place or any other place, it would constitute afundamental breach of terms and conditions of the policy evenif the owner of the vehicle has applied for the issuance of aregistration in terms of S.41 of the Act before expiry of theFtemporary registration, but the regular registration has notbeen issued”.

(emphasis supplied)

13. In the present case, the temporary registration of therespondent’s vehicle had expired on 28-07-2011. Not only was the vehicleGdriven, but also taken to another city, where it was stationed overnight ina place other than the respondent’s premises. There is nothing on recordto suggest that the respondent had applied for registration or that he wasawaiting registration. In these circumstances, the ratio of NarinderSingh (supra) applies, in the opinion of this court. That Narinder SinghH(supra) was in the context of an accident, is immaterial. Despite this, the respondent plied his vehicle and took it to Jodhpur, where the thefttook place. It is of no consequence, that the car was not plying on theroad, when it was stolen; the material fact is that concededly, it wasdriven to the place from where it was stolen, after the expiry of temporaryregistration. But for its theft, the respondent would have driven back thevehicle. What is important is this Court’s opinion of the law, that whenan insurable incident that potentially results in liability occurs, there shouldbe no fundamental breach of the conditions contained in the contract ofinsurance. Therefore, on the date of theft, the vehicle had been driven/used without a valid registration, amounting to a clear violation of Sections39 and 192 of the Motor Vehicles Act, 1988[6. ]This results in a fundamentalbreach of the terms and conditions of the policy, as held by this Court inNarinder Singh (supra), entitling the insurer to repudiate the policy.

14. This Court is of the opinion that the NCDRC’s order cannotbe sustained. Furthermore, the NCDRC should not have overlookedand disregarded a clear binding judgment of this Court – it also shouldnot have disregarded its ruling in Naveen Kumar (supra), as well. Before

6 39. Necessity for registration. - No person shall drive any motor vehicle and no ownerof a motor vehicle shall cause or permit the vehicle to be driven in any public place orin any other place unless the vehicle is registered in accordance with this Chapter andthe certificate of registration of the vehicle has not been suspended or cancelled and thevehicle carries a registration mark displayed in the prescribed manner:Provided that nothing in this section shall apply to a motor vehicle in possession of adealer subject to such conditions as may be prescribed by the Central Government.192. Using vehicle without registration.—(1) Whoever drives a motor vehicle orcauses or allows a motor vehicle to be used in contravention of the provisions of section39 shall be punishable for the first offence with a fine which may extend to five thousandrupees but shall not be less than two thousand rupees for a second or subsequentoffence with imprisonment which may extend to one year or with fine which may extendto ten thousand rupees but shall not be less than five thousand rupees or with both:Provided that the court may, for reasons to be recorded, impose a lesser punishment.(2) Nothing in this section shall apply to the use of a motor vehicle in an emergency forthe conveyance of persons suffering from sickness or injuries or for the transport offood or materials to relieve distress or of medical supplies for a like purpose:Provided that the persons using the vehicle reports about the same to the RegionalTransport Authority within seven days from the date of such use.(3) The court to which an appeal lies from any conviction in respect of an offence of thenature specified in sub-section (1), may set aside or vary any order made by the courtbelow, notwithstanding that no appeal lies against the conviction in connection withwhich such order was made.

Explanation.—Use of a motor vehicle in contravention of the provisions of section 56shall be deemed to be a contravention of the provisions of section 39 and shall bepunishable in the same manner as provided in sub-section (1).

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Aparting, this Court expresses its appreciation for the assistance renderedby the learned amicus, Ms. Gauri Puri.

15. For these reasons, the impugned order and the order of theState Commission are hereby set aside; the respondent’s complaint isdismissed. The appeal is allowed in these terms, without order on costs.

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Devika Gujral

Appeal allowed.

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