JAINA CONSTRUCTION COMPANY versus THE ORIENTAL INSURANCE COMPANY LIMITED & ANR. on 11 February 2022

1. The present appeal is directed against the impugned order datedB9[th] September, 2016 passed by the National Consumer Disputes RedressalCommission, New Delhi (hereinafter referred to as “the NCDRC”) inRevision Petition No. 1104 of 2016 whereby the NCDRC while allowingthe said Revision Petition filed by Respondent No. 1-Insurance Company,has set aside the order dated 16[th] December, 2015 passed by the StateCConsumer Disputes Redressal, Commission, Haryana at Panchkula andthe order dated 26[th] February, 2015 passed by the District ConsumerDisputes Redressal Forum, Gurgaon.

2. Heard Mr. Avinash Lakhanpal, learned counsel appearing onbehalf of the appellant. None has entered appearance on behalf of therespondents though duly served.D

3. The precise question that falls for consideration before thisCourt is -whether the Insurance Company could repudiate the claim intoto, made by the owner of the vehicle, which was duly insured with theinsurance company, in case of loss of the vehicle due to theft, merely onthe ground that there was a delay in informing the company regardingEthe theft of vehicle?

4. The undisputed facts transpiring from the record are that thevehicle in question i.e., Tata Aiwa Truck bearing Registration No. RJ-02-098177 was purchased by the appellant on 31.10.2007. The said vehiclewas duly insured with Respondent No. 1- Insurance Company. The saidFvehicle was robbed by some miscreants on 04.11.2007. Consequently,an FIR was registered by the appellant-complainant on 05.11.2007 forthe offence under Section 395 IPC at Police Station Nagina, DistrictMewat (Haryana). The police arrested the accused and also filed thechallan against them in the concerned Court, however, the vehicle inquestion could not be traced and, therefore, the police filed untraceableGreport on 23.08.2008. Thereafter, the complainant lodged the claim withthe Insurance Company with regard to the theft of the vehicle in question.The Insurance Company, however, failed to settle the claim within areasonable time, and therefore, the appellant-complainant filed a complaintbeing the Consumer Complaint No. 63 of 2010 before the DistrictHConsumer Disputes Redressal Forum, Gurgaon.

5. It may be noted that during the pendency of the complaintbefore the District Forum, the respondent no.1- Insurance Companyrepudiated the claim of the complainant vide its letter dated 19.10.2010,stating inter alia that there was a breach of condition no. 1 of the policywhich mandated immediate notice to the insurer of the accidental loss/damage, and that the complainant had intimated about the loss on11.04.2008 i.e. after the lapse of more than five months and, therefore,the Insurance Company had disowned their liability on the claim of thecomplainant.

6. The District Forum allowed the said claim of the complainantby holding that the complainant was entitled to the insured amount onnon-standard basis, i.e., Rs. 12,79,399/- as 75% of the IDV i.e., Rs.17,05,865/- with interest @ 6% p.a. from the date of filing of the complainttill realization from the Insurance Company. The District Forum alsoawarded compensation of Rs.10,000/- and litigation expenses of Rs.5,000/- to the complainant. The aggrieved Insurance Company preferred anappeal being Appeal No. 612 of 2015 before the State Consumer DisputesRedressal Commission (Haryana), Panchkula. The complainant alsopreferred an appeal being Appeal No. 537 of 2015 seeking enhancementof compensation. The State Commission dismissed the appeal filed bythe Insurance Company and partly allowed the appeal filed by thecomplainant by increasing rate of interest awarded by the District Forumfrom 6% to 9% vide the Judgment and Order dated 16.12.2015. Theaggrieved Insurance Company preferred the Revision Petition beforethe NCDRC which came to be allowed as stated hereinabove.

7. Since the respondent no.1 - Insurance Company has repudiatedthe claim of the complainant on the ground that the complainant hadcommitted the breach of Condition No. 1 of the Insurance Contract, itwould be beneficial to reproduce the said condition, which reads as under:

“1. Notice shall be given in writing to the company immediatelyupon the occurrence of any accidental loss or damage in theevent of any claim and thereafter the insured shall give allsuch information and assistance as the company shall require.Every letter, claim, writ, summons and/or process or copythereof shall be forwarded to the company immediately onreceipt by the insured. Notice shall also be given in writing tothe company immediately the insured shall have knowledgeof any impending prosecution, inquest or fatal inquiry in A

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178SUPREME COURT REPORTS

Arespect of any occurrence which may give rise to a claimunder this policy. In case of a major loss, theft or criminal actwhich may be the subject of a claim under this policy theinsured shall give immediate notice to the policeand co-operatewith the company in securing the conviction of the offender.”

B8. At the outset, it may be noted that there being a conflict ofdecisions of the Bench of two Judges of this Court in case of OmPrakash vs. Reliance General Insurance & Another and in case ofOriental Insurance Company Limited vs. Parvesh Chander Chadha,on the question as to whether the delay occurred in informing theInsurance Company about the occurrence of the theft of the vehicle,Cthough the FIR was registered immediately, would disentitle the claimantof the insurance claim, the matter was referred to a three Judge Bench.The three Judge Bench in case of Gurshinder Singh vs. ShriramGeneral Insurance Company Ltd. & Another reported in 2020 (11)SCC 612 in similar case as on hand, interpreted the very condition no. 1Dof the Insurance Contract and observed as under:

“9. We are of the view that much would depend upon thewords “cooperate” and “immediate”, in Condition 1 of thestandard form for commercial vehicles package policy. Beforewe analyse this case any further, we need to observe the rulesEof interpretation applicable to a contract of insurance.Generally, an insurance contract is governed by the rules ofinterpretation applicable to the general contracts. However,due to the specialised nature of contract of insurance, certainrules are tailored to suit insurance contracts. Under theEnglish law, the development of insurance jurisprudence isFgiven credence to Lord Mansfield, who developed the lawfrom its infancy. Without going much into the development ofthe interpretation rules, we may allude to Neuberger, J.in Arnold v. Britton, which is simplified as under:

(1) Reliance placed in some cases on commercial commonGsense and surrounding circumstances was not to beinvoked to undervalue the importance of the languageof the provision which is to be construed.

(2) The less clear the words used were, the more ready thecourt could properly be to depart from their natural H

JAINA CONSTRUCTION COMPANY v. THE ORIENTALINSURANCE COMPANY LIMITED & ANR. [BELA M. TRIVEDI, J.]

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meaning, but that did not justify departing from thenatural meaning.

(3) Commercial common sense was not to be invokedretrospectively, so that the mere fact that a contractualarrangement has worked out badly, or even disastrously,for one of the parties was not a reason for departingBfrom the natural language.

(4) A court should be very slow to reject the naturalmeaning of a provision as correct simply because itappeared to be a very imprudent term for one of theparties to have agreed.

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(5) When interpreting a contractual provision, the courtcould only take into account facts or circumstanceswhich existed at the time that the contract was madeand which were known or reasonably available to bothparties.

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(6) If an event subsequently occurred which was plainlynot intended or contemplated by the parties, if it wasclear what the parties would have intended, the courtwould give effect to that intention.

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10. A perusal of the aforesaid shows that this contract is to beinterpreted according to the context involved in the contract.The contract we are interpreting is a commercial vehiclepackage policy. There is no gainsaying that in a contract, thebargaining power is usually at equal footing. In this regard,the joint intention of the parties is taken into consideration forinterpretation of a contract. However, in most standard formcontracts, that is not so. In this regard, the court in suchcircumstances would consider the application of the ruleof contra proferentem, when ambiguity exists and aninterpretation of the contract is preferred which favours theparty with lesser bargaining power.

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11. It is argued on behalf of the respondents and rightly so,that the insurance policy is a contract between the insurerand the insured and the parties would be strictly bound by theterms and conditions as provided in the contract between theparties.

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SUPREME COURT REPORTS

12. In our view, applying the aforesaid principles, Condition1 of the standard form for commercial vehicles packagepolicy will have to be divided into two parts. The perusal ofthe first part of Condition 1 would reveal that it provides that“a notice shall be given in writing to the company immediatelyupon the occurrence of any accidental loss or damage”. Itfurther provides that in the event of any claim and thereafter,the insured shall give all such information and assistance asthe company shall require. It provides that every letter, claim,writ, summons and/or process or copy thereof shall beforwarded to the insurance company immediately on receiptby the insured. It further provides that a notice shall also begiven in writing to the company immediately by the insured ifhe shall have knowledge of any impending prosecution inquestor fatal inquiry in respect of any occurrence, which may giverise to a claim under this policy.

13. A perusal of the wordings used in this part would revealthat all the things which are required to be done under thispart are related to an occurrence of an accident. Onoccurrence of an accidental loss, the insured is required toimmediately give a notice in writing to the company. Thisappears to be so that the company can assign a surveyor soas to assess the damages suffered by the insured/vehicle. Itfurther provides that any letter, claim, writ, summons and/orprocess or copy thereof shall be forwarded to the companyimmediately on receipt by the insured. As such, the intentionwould be clear. The question of receipt of letter, claim, writ,summons and/or process or copy thereof by the insured, wouldonly arise in the event of the criminal proceedings beinginitiated with regard to the occurrence of the accident. Itfurther provides that the insured shall also give a notice inwriting to the company immediately if the insured shall havethe knowledge of any impending prosecution inquest or fatalinquiry in respect of any occurrence which may give rise to aclaim under this policy. It will again make the intention clearthat the immediate action is contemplated in respect of anaccident occurring to the vehicle.

14. We find that the second part of Condition 1 deals with the“theft or criminal act other than the accident”. It provides JAINA CONSTRUCTION COMPANY v. THE ORIENTALINSURANCE COMPANY LIMITED & ANR. [BELA M. TRIVEDI, J.]

that in case of theft or criminal act which may be the subjectof a claim under the policy, the insured shall give immediatenotice to the police and cooperate with the company in securingthe conviction of the offender. The object behind givingimmediate notice to the police appears to be that if the policeis immediately informed about the theft or any criminal act,the police machinery can be set in motion and steps forrecovery of the vehicle could be expedited. In a case of theft,the insurance company or a surveyor would have a limitedrole. It is the police, who acting on the FIR of the insured,will be required to take immediate steps for tracing andrecovering the vehicle. Per contra, the surveyor of theinsurance company, at the most, could ascertain the factumregarding the theft of the vehicle.

15. It is further to be noted that, in the event, after theregistration of an FIR, the police successfully recovering thevehicle and returning the same to the insured, there would beno occasion to lodge a claim for compensation on account ofthe policy. It is only when the police are not in a position totrace and recover the vehicle and the final report is lodgedby the police after the vehicle is not traced, the insured wouldbe in a position to lodge his claim for compensation.

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17. That the term “cooperate” as used under the contractneeds to be assessed in the facts and circumstances. Whileassessing the “duty to cooperate” for the insured, inter alia,the court should have regard to those breaches by the insuredwhich are prejudicial to the insurance company. Usually, meredelay in informing the theft to the insurer, when the samewas already informed to the law enforcement authorities,cannot amount to a breach of “duty to cooperate” of theinsured.

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20. We, therefore, hold that when an insured has lodged theFIR immediately after the theft of a vehicle occurred andwhen the police after investigation have lodged a final report AB

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Aafter the vehicle was not traced and when the surveyors/investigators appointed by the insurance company have foundthe claim of the theft to be genuine, then mere delay inintimating the insurance company about the occurrence ofthe theft cannot be a ground to deny the claim of the insured.”

B9. In the opinion of the Court the afore-stated ratio of the judgmentclinches the issue involved in the case on hand. In the instant case also,the FIR was lodged immediately on the next day of the occurrence oftheft of the vehicle by the complainant. The accused were also arrestedand charge-sheeted, however, the vehicle could not be traced out. Ofcourse, it is true that there was a delay of about five months on the partCof the complainant in informing and lodging its claim before the InsuranceCompany, nonetheless, it is pertinent to note that the Insurance Companyhas not repudiated the claim on the ground that it was not genuine. It hasrepudiated only on the ground of delay. When the complainant had lodgedthe FIR immediately after the theft of the vehicle, and when the policeDafter the investigation had arrested the accused and also filed challanbefore the concerned Court, and when the claim of the insured was notfound to be not genuine, the Insurance Company could not have repudiatedthe claim merely on the ground that there was a delay in intimating theInsurance Company about the occurrence of the theft.

E10. In that view of the matter, the Court is of the opinion that theNCDRC should not have set aside the orders of the District Forum andthe State Commission by holding that the repudiation of the insuranceclaim by the insurance company was justified. The impugned order beingerroneous and against the settled position of law, deserves to be setaside, and is set aside, accordingly.F

11. The appeal is allowed, affirming the order of the StateCommission.

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Divya Pandey

Appeal allowed.

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