National Consumer Disputes Redressal
Bharti Axa General Insurance Co. Ltd. vs Gursewak Singh on 25 February, 2026
Date of pronouncement:- o2 - 2-°2 (>
IN THE NATIONAL CONSUMER DISPUTES REDRESSAL
COMMISSION NEW DELHI
REVISION PETITION NO. 3394 OF 2018
(Against the Order dated 25.04.2018 in Appeal No. 182/2018 of the
State Commission Punjab)
ICICI Lombard General Insurance Co. Ltd.
(In place of Bharti AXA General Insurance Co. Ltd.),
4th Floor, Red Fort Capital Parsvnath Tower,
Bhai Veer Singh Marg, Gole Market,
New Delhi -110001. Petitioner
Versus
Gursewak Singh,
S/o Sh. Maghar Singh,
R/o Village Roglan, Tehsil Sunam,
District Sangrur. Respondent
BEFORE:
HON'BLE MR. JUSTICE SUDIP AHLUWALIA, PRESIDING MEMBER
HON'BLE MR. JUSTICE ANOOP KUMAR MENDIRATTA, MEMBER
Appearance at the time of arguments:-
For Petitioner : Mr. Navneet Kumar, Advocate with
Mr. Harsh Sharan, Advocate
For Respondent: : Mr. Vineet Kr. Yadav, Advocate (Through
VC)
JUSTICE ANOOP KUMAR MENDIRATTA, MEMBER
ORDER
1. The instant Revision Petition has been filed under Section 21(b) of the Consumer Protection Act, 1986 (for short "the Act") assailing Order RP/3394/2018 Pagel of 21 dated 25.04.2018 passed by the learned State Consumer Disputes Redressal Commission, Punjab, Chandigarh (hereinafter referred to as the "State Commission") in First Appeal No. 182/2018, whereby the Appeal filed by the Insurance Company/OP was dismissed.
There is a delay of 22 days in filing the present Revision Petition.
In the interest of justice, the short delay in filing the petition is condoned.
2. In brief, during the subsistence of valid Private Car Package Policy, the car owned by the complainant met with an accident on 26.03.2017 which would be treated as a total loss. An FIR was registered at PS Sadar, Karnal in this regard. The Insurance Company repudiated the claim vide letter dated 08.06.2017 on the ground that though the vehicle was insured as a private car, the same was being plied as a taxi/hired vehicle with PRTC, thereby violating the terms of the policy. Learned District Forum allowed the complaint on 'non-standard basis', relying upon ratio laid down in National Insurance Co. Ltd. v. Nitin Khandelwal, (2008) 11 SCC 259 and directed the Insurance Company to pay 75% of the assessed loss of Rs.2,27,992/- with interest @ 9% p.a. from 07.09.2017 till realization, along with compensation and litigation costs. An appeal preferred by the Insurance Company/opposite party before the learned State Commission, Punjab Chandigarh was further dismissed holding that in case of breach on account of use of the RP/3394/2018 Page 2 of 21 • vehicle for 'hire and reward', the claim cannot be repudiated in toto and is to be settled on non-standard basis, upto 75% of the admissible claim.
The Order passed by the learned District Forum was accordingly upheld by the learned State Commission. Aggrieved against the Order passed by the learned State Commission, present Revision Petition has been preferred by the Insurance Company/opposite party.
3. Learned counsel for the revisionist/lnsurance Company contends that the use of vehicle for commercial purpose while paying the premium amount for a private vehicle constitutes a gross and fundamental violation of policy condition, and accordingly the claim could not have been allowed on non-standard basis. Reference is further made to Export Credit Guarantee Corporation of India Ltd. v. Garg Sons International, (2014) 1 SCC 686 to contend that insurance is a commercial contract and the terms and conditions are required to be strictly read. Relying upon Sanjay Kumar v. Reliance General Insurance Co. Ltd., RP No. 2158-2159 of 2011, learned Counsel for Insurance Company also emphasized that settlement on non-standard basis upto 75% of the claim amount is applicable to breaches like carrying beyond capacity, overloading etc. The settlement of claim as directed by the learned District Forum and learned State Commission, placing reliance on Amalendu Sahoo v. Oriental Insurance Co. Ltd., RP/3394/2018 Puge 3 of 21 ' < (2010) 4 SCC 536, is stated to be erroneous. The claim in Amelendu Sahoo v. Oriental Insurance Co. Ltd. (supra) is stated to have been allowed keeping in consideration that the insurer had framed guidelines permitting settlement of claims on non-standard basis. Reference is also made to National Insurance Co. Ltd. v. Meena Aggarwal, (2009) 2 SCC 523 and Rajesh Kumar v. National Insurance Co. Ltd., RP No. 3045 of 2015.
4. On the other hand, learned counsel for the complainant contends that claim could not be repudiated in toto by the Insurance Company merely because the vehicle was allegedly used for hire and reward, since the accident has not been attributed due to negligence of the driver of the insured car. The accident is stated to have occurred due to unbalancing of vehicle and hitting the divider of the road, as a stray animal had come in front of the car. The insured car was further hit by a car driven behind, which resulted in extensive damage and total loss of vehicle.
5. Perusal of impugned Order passed by the learned State Commission reveals that the claim has been allowed on non-standard basis relying upon the ratio laid down by the Hon'ble Supreme Court in Amalendu Sahoo v. Oriental Insurance Co. Ltd. (supra) and New RP/3394/2018 Page 4 of 21 J * \ India Assurance Co. Ltd. v. Narayan Prasad Appaprasad Pathak, II (2006) CPJ 144 (NC).
6. In Amalendu Sahoo v. Oriental Insurance Co. Ltd. (supra), appellant/complainant therein had taken a comprehensive insurance policy of his private car and had handed over the car to one of the employees of the bank which was under its tenancy. The vehicle met with an accident during subsistence of the policy. The claim was repudiated by the Insurance Company on the ground that the vehicle was given on hire, contrary to the terms of the policy. Learned District Forum therein disallowed the claim and an appeal preferred by the complainant was dismissed by the learned State Consumer Disputes Redressal Commission, on the ground that the report of the surveyor had not been challenged by the complainant. Also the Revision Petition preferred against the Order of the learned State Commission was dismissed by National Commission holding that the car was being used for hire and was not given as a gesture of goodwill.
Hon'ble Apex Court noticed the decision of National Commission rendered in United India Insurance Co. Ltd. v. Gian Singh, (2006) 2 CPJ 83 (NC), whereby it was held that in case of violation of condition of the policy, as to the nature of use of vehicle, the claim ought to be settled on non-standard basis. The said decision was approved in RP/3394/2018 Page 5 of21 National Insurance Co. Ltd. v. Nitin Khandelwal (supra) and the claim on non-standard basis was accordingly allowed.
Hon'ble Apex Court in Amalendu Sahoo v. Oriental Insurance Co. Ltd. (supra) further made reference to New India Assurance Co.
Ltd. v. Narayan Prasad Appaprasad Pathak (supra), wherein the question was whether the Insurance Company can repudiate the claim in a case where the vehicle carrying passengers met with accident and the driver did not have a proper driving licence. While granting the claim on non-standard basis, the National Commission set out in its Judgement the guidelines issued by the Insurance Company about settling of such cases on non-standard basis. It was categorically held that from the perusal of guidelines, that one of the cases where 75% of the admissible claim was settled was where the condition of policy including limitation as to use was breached. The observations in para 10 to 17 in Amalendu Sahoo v. Oriental Insurance Co. Ltd. (supra) may be beneficially reproduced for reference:-
10. What is disputed by the insurance company is that the vehicle was not used for personal use but was used by way of being hired, though no payment for hiring charges was proved. However, according to the insurance company, by using the vehicle on hire, the appellant had violated the terms of the insurance policy and on that basis the insurance company was within its right to repudiate the claim.RP/3394/2018 Page 6 of 21
11. Reference in this case may be made to the decision of National Commission rendered in the case of United India Insurance Company Limited v. Gian Singh (2006) 2 CPJ 83 (NC). In that decision of the National Consumer Disputes Redressal Commission (NCDRC) it has been held that in a case of violation of condition of the policy as to the nature of use of the vehicle, the claim ought to be settled on a non-standard basis. The said decision of the National Commission has been referred to by this Court in the case of National Insurance Company Limited v. Nitin Khandelwal (2008)
11 SCC 259.
12. In paragraph 12 of the judgment, in the case of Nitin Khandelwal (supra) this Court held:-
"12. ...The appellant Insurance Company is liable to indemnify the owner of the vehicle when the insurer has obtained comprehensive policy for the loss caused to the insurer. The respondent submitted that even assuming that there was a breach of condition of the insurance policy, the appellant Insurance Company ought to have settled the claim on non- standard basis."
13. In the case of Nitin Khandelwal (supra) the State Commission allowed 75% of the claim of the claimant on non-standard basis. The said order was upheld by the National Commission and this Court refused to interfere with the decision of the National Commission.
14. In this connection reference may be made to a decision of National Commission in the case of New India Assurance Company Limited v. Narayan Prasad Appaprasad Pathak (2006) 2 CPJ 144 (NC). In that case also the question was, whether the insurance company can repudiate the claims in a case where the vehicle carrying passengers and the driver did not have a proper driving licence and met with an accident. While granting claim on non standard basis the National Commission set out in its judgment the RP/3394/2018 Page 7 of21 guidelines issued by the insurance company about settling all such non-standard claims. The said guidelines are set out below:-
SI. No. Description Percentage of settlement
(i) Under declaration of licensed Deduct 3 years' difference in
carrying capacity. premium from the amount of claim or
deduct 25% of claim amount,
whichever is higher.
(H) Ovedoading of vehicles Pay claims not exceeding 75% of
beyond licensed carrying admissible claim.
capacity.
(Hi) Any other breach of warranty / Pay up to 75% of admissible claim.
condition of policy including
limitation as to use.
15. From a perusal of the aforesaid guidelines it is clear that one of the cases where 75% claim of the admissible claim was settled was where condition of policy including limitation as to use was breached.
16. In the instant case the entire stand of the insurance company is that claimant has used the vehicle for hire and in the course of that there has been an accident. Following the aforesaid guidelines, this Court is of the opinion that the insurance company cannot repudiate the claim in toto.
17. For the reasons stated, we cannot affirm the order of the fora below. We direct the respondent insurance company to pay a consolidated sum of Rs. 2,50,000/- even though compensation claimed is Rs. 5,00,000/-. In the facts and circumstances of this case, the said sum is to be paid to the appellant by the insurance company without any interest within a period of six weeks from date. However, if the insurance company delays the aforesaid payment beyond six weeks, then this amount will carry an interest of 9% from the date of the expiry of the period of six weeks till the date of actual payment."
RP/3394/2018 Page 8 of 217. It may also be appropriate to reiterate that in National Insurance Co. Ltd. v. Nitin Khandelwal (supra), the vehicle insured for personal use was alleged to be used as a taxi and was snatched by the passengers travelling in the taxi while proceeding from Gwalior to Karoli.
The Insurance Company repudiated the claim on the ground that the claimant had violated the terms of the insurance policy. The claim was allowed by the learned State Commission relying upon judgement passed by the National Commission in United India Insurance Co. Ltd.
v. Gian Singh (supra) wherein it was held that in a case of violation of condition of the policy as to the nature of use of the vehicle, the claim ought to be settled on non-standard basis. The Order was upheld by the National Commission and was further taken in appeal on behalf of the Insurance Company. Hon'ble Apex Court observed that in the case of theft of vehicle, the breach of condition is not germane and as such the appellant Insurance Company is liable to indemnify the owner of the vehicle when the insurer has obtained comprehensive policy for the loss caused to the insurer.
8. In the afore-said context it may also be noticed that in Lakhmi Chand v. Reliance General Insurance, (2016) 3 SCC 100, the claim towards repair of insured vehicle, which met with an accident, on account of rash and negligent driving of offending vehicle was rejected RP/3394/2018 Page 9 of 21 by the Insurance Company on the ground of contravention of terms and conditions of policy, in as much as the driver allowed six passengers to travel in the vehicle when the permitted load capacity was only 1+1.
Hon'ble Apex Court after noticing the judgements in B.V. Nagaraju v.
Oriental Insurance Co. Ltd., (1996) 4 SCC 647, National Insurance Company Ltd. v. Swaran Singh & Ors., (2004) 3 SCC 297 and Oriental Insurance Company Ltd. v. Meena Variyal, (2007) 5 SCC 428 held that to avoid liability Insurance Company must not only establish the defence claimed in the proceeding concerned, but also establish breach on the part of the owner/insured of the vehicle for which the burden of proof would rest with the insurance company. Further, in the said case since the Insurance Company failed to produce evidence on record to prove that the accident occurred on account of the overloading of passengers in the goods carrying vehicle the breach of policy condition was not held to be fundamental. The observations in para 11 to 16 may further be beneficially reproduced for reference:-
11. 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 J 9860. FIR No. 66 of 2010 dated 11-2-2010 was registered under Sections 279, 337, 338, 304-A and 427 of the Penal Code against the driver of the said vehicle for the offences referred to supra. The vehicle of the appellant was badly damaged in the accident and it is an undisputed fact that the report of the Surveyor assessed the loss at Rs 90,000, RP/3394/2018 Page 10 of 21 but the actual, amount incurred by the appellant on the repair of his vehicle was Rs 1,64,033. 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 the terms and conditions of the policy of the vehicle.
12. The National Commission upheld the order of dismissal of the complaint of the appellant passed by the State Commission. The National Commission, however, did not consider the judgment of this Court in B.V. Nagaraju v. Oriental Insurance Co. Ltd. [B.V. Nagaraju v. Oriental Insurance Co. Ltd., (1996) 4 SCC 647] 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.
13. This Court in the said case has held as under:-
"It is plain from the terms of the Insurance Policy that the insured vehicle was entitled to carry six workmen, excluding the driver. If those six workmen when travelling in the vehicle, are assumed not to have increased risk from the point of view of the Insurance Company on occurring of an accident, how could those added persons be said to have contributed to the causing of it is the pose, keeping apart the load it was carrying. In the present case the driver of the vehicle was not responsible for the accident. Merely by lifting a person or two, or even three, by the driver or the cleaner of the vehicle, without the knowledge of the owner, cannot be said to be such a fundamental breach that the owner should, in all events, be denied indemnification. The RP/3394/2018 Page 11 of 21 misuse of the vehicle was somewhat irregular though, but not so fundamental in nature so as to put an end to the contract, unless some factors existed which by themselves, had gone to contribute to the causing of the accident."
(emphasis supplied)
14. Further, in the case of National Insurance Company Ltd. v. Swaran Singh & Ors. a three judge bench of this Court has held as under:
"49. Such a breach on the part of the insured must be established by the insurer to show that not only the insured used or caused or permitted to be used the vehicle in breach of the Act but also that the damage he suffered flowed from the breach.
52. In Narvinva's case a Division Bench of this Court observed:
'12... The insurance company complains of breach of a term of contract which would permit it to disown its liability under the contract of insurance. If a breach of a term of contract permits a party to the contract to not to perform the contract, the burden is squarely on that party which complains of breach to prove that the breach has been committed by the other party to the contract. The test in such a situation would be who would fail if no evidence is led.'
69. The proposition of law is no longer res Integra that the person who alleges breach must prove the same. The insurance company is, thus, required to establish the said breach by cogent evident. In the event the insurance company fails to prove that there has been breach of conditions of policy on the part of the insured, the insurance company cannot be absolved of its liability."
(emphasis supplied)
15. The judgment in the case of Swaran Singh has been followed subsequently in the case of Oriental Insurance Company Ltd. v. Meena Variyal, wherein this Court held as under RP/3394/2018 Page 12 of 21 "16. We shall now examine the decision in Swaran Singh on which practically the whole of the arguments on behalf of the claimants were rested. On examining the facts, it is found that, that was a case which related to a claim by a third party. In claims by a third party, there cannot be much doubt that once the liability of the owner is found, the insurance company is liable to indemnify the owner, subject of course, to any defence that may be available to it under Section 149(2) of the Act. In case where the liability is satisfied by the insurance company in the first instance, it may have recourse to the owner in respect of a claim available in that behalf. Swaran Singh was a case where the insurance company raised a defence that the owner had permitted the vehicle to be driven by a driver who really had no licence and the driving licence produced by him was a fake one. There Lordships discussed the position and held ultimately that a defence under Section 149(2)(a)(ii) of the Act was available to an insurer when a claim is filed either under Section 163-A or under Section 166 of the Act. The breach of a policy condition has to be proved to have been committed by the insured for avoiding liability by the insurer. Mere absence of or production of fake or invalid driving licence or disqualification of the driver for driving at the relevant time, are not in themselves defences available to the insurer against either the insured or the third party. The insurance company to avoid liability, must not only establish the available defence raised in the proceeding concerned but must also establish breach on the part of the owner of the vehicle for which the burden of proof would rest with the insurance company. Whether such a burden had been discharged, would depend upon the facts and circumstances of each case. Even when the insurer is able to prove breach on the part of the insured concerning a policy condition, the insurer would not be allowed to avoid its liability towards the insured unless the said breach of condition is so fundamental as to be found to have RP/3394/2018 Page 13 of 21 contributed to the cause of the accident. "
(emphasis supplied)
16. It becomes very clear from a perusal of the above mentioned case law of this Court that the insurance company, in order to avoid liability must not only establish the defence claimed in the proceeding concerned, but also establish breach on the part of the owner/insured of the vehicle for which the burden of proof would rest with the insurance company. 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. Further, as has been held in the case of B.V. Nagaraju 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. 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. 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. Therefore, the judgment and order of the National Commission dated 26.04.2013 passed in Lakhmi Chand v. Reliance General Insurance is liable to be set aside, as the said findings recorded in the judgment are erroneous in law."
9. In view of the afore-said legal position it is well-settled that if the condition of policy as to limitation of use is breached, which is not so fundamental to the cause or extent of loss, the claim ought to be settled on non-standard basis. The reason for the same is absence of a direct RP/3394/2018 Page 14 of 21 link between the breach of policy condition and the cause or extent of loss. In the present case accident was not as a result of use of vehicle for hire or reward at the relevant time but on account of sudden coming of a stray animal on the road. There is nothing on record to show if the driver of the insured car did not possess a valid licence. Neither the accident is attributed to the negligence of the driver at the relevant time.
In the afore-said background the view taken by the learned District Forum and learned State Commission for settling the claim on non standard basis does not require any interference.
10. Learned counsel for the Revisionist/opposite party has further urged that guidelines as available in respect of Public Sector Insurance Companies are non-existent in relation to the complainant i.e. ICICI Lombard General Insurance Company Ltd. and, as such, there is no scope to grant relief to the complainant on non-standard basis.
11. In the aforesaid context, reference may be made to RP No.1488 of 2018 titled Bajaj Allianz QIC Ltd. v. Yugal Ram decided by this Commission on 04.12.2025, of which one of us (Anoop Kumar Mendiratta, J.) was a Member.
Findings of this Commission in para 7 to 16 may be reproduced for reference as they squarely cover the issues raised by learned counsel for the petitioner/lnsurance Company herein:-
RP/3394/2018 Page 15 of 217. Learned counsel for the petitioner/opposite party assails the Order passed by the learned State Commission on the ground that the claim could not have been allowed as the vehicle was used for hire and reward, contrary to the terms and conditions of the policy.
Further, there was delay in intimating the Insurance Company, though the FIR was lodged on the date of theft.
8. Relying upon United India Insurance Co. Ltd. v. Manubhai Dharmasinhbhai Gajera & Ors., II (2008) ACC 718 (SC), learned counsel for the petitioner/opposite party urged that there exists a distinction between private player in the field of insurance and public sector Insurance Company, as a private player is only bound by the statutory regulations operating in the field while the public sector insurance companies are also bound by the directions issued by the General Insurance Corporation as well as the Central Government. Reliance was further placed upon Oriental Insurance Co. Ltd. v. Sony Cheriyan, (1999) 6 SCC 451, RP No. 4290 of 2010, IFFCO Tokio General Insurance Co. Ltd. v. Gaurav Bhargava, Order dated 28.01.2015 and RP No. 3045 of 2015, Rajesh Kumar v. National Insurance Co. Ltd. & 2 Ors., Order dated 20.02.2017.
9. The issue is no longer res Integra that in the event of theft of vehicle, nature of use of vehicle cannot be invoked by the Insurance Company for repudiating the claim, as held in National Insurance Company Ltd. v. Nitin Khandelwal, (2008) 11 SCC 259. In the aforesaid case, repudiation of claim by the Insurance Company on the ground of private vehicle being used as a Taxi was negated by the Hon'ble Apex Court. Similarly, the repudiation of claim by the Insurance Company in Amalendu Sahoo v. Oriental Insurance Company, (2010) 4 SCC 536 (supra) on the ground that the vehicle was being used on hire was not accepted. By a series of pronouncements by the Hon'ble Apex Court, it is settled position of law that the claim cannot be repudiated unless the violation of RP/3394/2018 Page 16 of 21 condition of insurance policy is in the nature of fundamental breach as reiterated in Ashok Kumar v. New India Assurance Co. Ltd., (2024) 1 SCC 357.
10. The contention raised by learned counsel for Insurance Company justifying the repudiation of claim on account of 14 days delay in informing the Insurance Company is also without any merits, in view of settled position of law in Gurshinder Singh v. Shriram General Insurance Co. Ltd., (2020) 11 SCC 612 as reiterated in Jaina Construction Company v. Oriental Insurance Co. Ltd., (2022) 4 SCC 527. Hon'ble Apex Court observed that when an insured lodged the FIR immediately after the theft of vehicle occurred and the police after investigation have lodged a final report after vehicle was not traced and the Surveyor appointed by Insurance Company has found the claim to be genuine, then mere delay in intimating the Insurance Company about the occurrence of theft cannot be a ground to deny the claim of insured.
11. The aforesaid ratio is squarely applicable to the case in hand, since pursuant to the incident of theft charge-sheet was duly presented after arrest of accused but unfortunately the vehicle could not be recovered. There is nothing on record to indicate complicity of complainant in lodging a false FIR. Further, the repudiation was not made by Insurance Company on account of delay in lodging the FIR.
12. Next, learned counsel for petitioner relying upon observations of the Hon'ble Apex Court in United India Insurance Company Ltd. v. Manubhai Dharmasinhbhai Gajera & Ors. (supra) has vehemently urged that the claim could not have been decided on the basis of ratio laid down in Amalendu Shahoo v. Oriental Insurance Company (supra) on non-standard basis. He emphasized that the guidelines for settling the claim on non-standard basis in violation of policy conditions adopted by public sector insurance companies is not applicable to private insurance companies. The said issue is RP/3394/2018 Page 17 of 21 stated to have been left open by the National Commission in IFFCO Tokio GIC Ltd. v. Anil, 2022 SCC OnLine NCDRC 114. He points out that no such guidelines have been adopted by the petitioner company and, as such, Amalendu Sahoo v. Oriental Insurance Company (supra) is not applicable for settling the claim on non standard basis.
13. In Manubhai Dharmasinhbhai Gajera & Ors. (supra), Hon'ble Apex Court observed that there exists a distinction between private player in the field of insurance and public sector Insurance Company, as a private player is only bound by the statutory regulations operating in the field while the public sector insurance companies are also bound by the directions issued by the General Insurance Corporation as well as the Central Government.
However, it needs to be appreciated that the observations in the aforesaid case were made while considering the issue, if the renewal of a mediclaim policy on account of payment would be automatic. The issue arose since the renewal of the mediclaim policy was refused by the Insurance Company on the purported ground of high claim ratio, a The Writ Petition filed before the Single Bench of the Hon'ble High Court was allowed directing the renewal of the mediclaim insurance policy which was upheld in an intra-court appeal.
In the aforesaid context, while examining the concept under Article 12 of the Constitution of India and Section 24A of the Insurance Regulatory Act, 1972 it was observed that it may be possible to hold that even while the State shall have more liberty to enter into a contract or fix the terms and conditions thereof having regard to the field of competition opened by reason of taking away of its monopoly status, but there exists a distinction between the acts of a private player and the State. Hon'ble Apex Court held that a private player, as the law stands now, may not be bound to comply with the constitutional requirements of the equality clause. Further, RP/3394/2018 Page 18 of 21 there exists a distinction between a private player in the field and a public sector Insurance Company, whereas private player in the field is only bound by statutory regulations operating in the field, the public sector Insurance Companies are also bound by the directions issued by the General Insurance Corporation as also by the Central Government which cannot be ignored.
i/l/e are of the considered view that there is no dispute as to the proposition of law that the Insurance Policy between the insurer and the insured has to be strictly construed to determine the extent of liability of the insurer. Further, insured cannot claim anything more than what is covered by the Insurance Policy as held by the Hon'ble Apex Court in Oriental Insurance Co. Ltd. v. Sony Cheriyan, AIR 1999 SC. Also, it is well settled that in case of fundamental breach of terms and conditions of the policy, the insured may not be entitled for honouring of the insurance claim.
However, Rajesh Kumar v. National Insurance Co. Ltd. & Ors., Revision Petition No. 3045 of 2015 decided on 20.02.2017, no longer reflects the correct position of law that use of vehicle for commercial purpose as taxi would not amount to fundamental breach in view of the authoritative pronouncement by the Hon'ble Apex Court in Amalendu Sahoo v. Oriental Insurance Company (supra) wherein claim was considered against public Insurance Company.
14. In IFFCO Tokio General Insurance Co. Ltd. v. Gaurav Bhargava, Revision Petition No. 4290 of 2010 decided on 28.01.2015, the National Commission after referring to the observations in United India Insurance Co. Ltd. v. Manubhai Dharmasinhbai Gajera & Ors. (supra) held that the ratio laid down in National Insurance Co. Ltd. v. Nitin Khandelwal 2008 (7) Scale 351 and National Insurance Co. Ltd. v. Meena Aggarwal, IV (2009) CPJ 25 (SC) applies only to public Insurance Companies which were earlier subsidiaries of General Insurance Company. It was further observed that the said National Insurance Companies are bound by RP/3394/2018 Page 19 of 21 A."
their guidelines and not the private Insurance Companies such as IFFCO Tokio General Insurance Company Ltd.
15. We are of the considered view that interpretation of fundamental breach of policy as enunciated by the Hon'ble Apex Court in Amalendu Sahoo v. Oriental Insurance Company (supra) for considering the claim on non-standard basis, does not open a door for distinction of implementation between private player and public Insurance Companies. If the contention of learned counsel for the petitioner is accepted, it would amount to arbitrary methodology being adopted by respective Insurance Companies for interpretation of same clause of 'fundamental breach' in a different manner. Such distinction may be violative of Article 14 of the Constitution of India.
16. It may further be observed that the Insurance Company at the time of issuance of policy is bound to disclose the terms and conditions of policy and exceptions. In case the Insurance Company does not intend to incur the liability based upon the statutory interpretation of law by the Hon'ble Apex Court, Insurance Companies would have to specifically place the same in exclusion clause. The terms and conditions of offer of insurance must be transparent and made known to the policy holders. For foregoing reasons, repudiation of claim by Insurance Company on aforesaid ground is impermissible. "
12. It may be emphasized that the concept of settlement on non-
standard basis as held in Amalendu Sahoo v. Oriental Insurance Company (supra), National Insurance Company Ltd. v. Nitin Khandelwal (supra) and followed in subsequent judgments, highlight that key criteria for settlement on non-standard basis is the absence of direct link between the breach of policy condition and the cause or RP/3394/2018 Page 20 of 21 * extent of loss. The evolution of concept of settlement of claims on non-
standard basis permits to reduce the amount of admissible claim considering that the breach of policy terms is insignificant and is not related to the loss occurred. The inconsistent treatment of similar claims by different insurers cannot be permitted on the ground of circulation of internal guidelines despite the concept being recognized in principle by virtue of settled precedents of the Hon'ble Apex Court.
For the foregoing reasons, we are of the considered opinion that the claim has been rightly allowed by the learned State Commission on non-standard basis and is upheld. Revision Petition is accordingly dismissed. No order as to costs. Pending application(s), if any, stand disposed of. Registry is directed to provide a copy of this Order to both the parties.
Sd/-
( SUDIP AHLUWALIA, J.) ' PRESIDING MEMBER Sd/-
( ANOOP KUMAR MENDIRATTA, J.) MEMBER ar/sd/B-2/reserved matter RP/3394/2018 Page 21 of 21