Delhi District Court
Victoria Car Rental Pvt Ltd Through Its ... vs M/S United India Insurance Co Ltd ... on 26 October, 2023
IN THE COURT OF MS. SAVITA RAO
DISTRICT JUDGE (COMMERCIAL COURTS)-02
SOUTH WEST DISTRICT: DWARKA: NEW DELHI
CS (Comm) No. 153/20
CNR No. DLSW01-007211-2020
In the matter :
Victoria Car Rental Pvt Ltd
CG-3 RG Complex, D.B. Gupta Road,
Motia Khan, Paharganj, Delhi- 110055 ... Plaintiff
Versus
M/s United India Insurance Co Ltd
Through Its Directors
C-20 Janak Cinema Complex
Janakpuri New Delhi- 110048 ... Defendant
Date of Institution : 16.10.2020
Date of Arguments : 19.10.2023
Date of Judgment : 26.10.2023.
EX-PARTE JUDGMENT
1. This is suit filed by the plaintiff against the defendant for
recovery of Rs.14,04,195/- alongwith pendente lite and future
interest.
2. As stated, plaintiff insured its vehicle bearing registration
no. DL-01-N-7721 (Toyota Corolla Altis) with the defendant and
defendant had issued policy no. 2219043117P113821280
commencing w.e.f. 25.12.2017 till 24.12.2018. Said vehicle met
with an accident near PS IP Estate and accordingly, FIR dated
23.07.2018 was registered vide Diary no. 49B. On 14.07.2018,
CS (Comm): 153/20 1/11
the accidental vehicle was sent to Toyota Service centre, at
69/1A, Moti Nagar Crossing, Najafgarh Road, Delhi where bill
of Rs.14,04,194.83 was raised vide estimate BPE18-04871.
3. Plaintiff notified the defendant company but vide letter
dated 01.02.2019, the defendant company repudiated the said
claim stating that the plaintiff had availed said policy based on
false declaration in the proposal form and suppression of facts
which amounted to breach of GR 27 of India Motor Tariff.
However, in reply dated 26.02.2019 to said letter, plaintiff again
stated about its entitlement for claim settlement in terms of GR
27 of IMT. Reminder dated 27.06.2019 was issued but of no
avail.
4. Plaintiff, thereafter, filed complaint dated 13.08.2019 to
the office of Insurance Ombudsman but the same was also
rejected stating that the insurance was not issued under personal
insurance and the plaintiff company is registered under the
Companies Act, 2013 which does not fall within their jurisdiction
and also that the matter did not fall in the purview of the
Insurance Ombudsman's adjudication.
5. Plaintiff thereafter, initiated "Pre-Institution Mediation"
proceedings and filed an application for Mediation before the
competent authority under Rule 2 (c) of The Commercial Courts
(Pre-Institution) Mediation and Settlement Rules, 2018 wherein
Non-Starter Report dated 29.09.2020 was issued by the
concerned authority and the plaintiff was constrained to file the
instant suit.
CS (Comm): 153/20 2/11
6. Summons of the suit were issued to the defendant but
none appeared on behalf of defendant. Despite opportunity given,
defendant did not file any Written statement within mandatory
period of 30 days nor within the extended period of 120 days of
service. Vide order dated 06.12.2021, right of the defendant to
file the Written Statement was closed. Thereafter, defendant was
proceeded ex-parte.
7. In support of its case plaintiff examined Sh. Bhavneet
Singh who filed his evidence by way of affidavit Ex.PW1/A.
PW1 relied upon following documents:-
(1) Insurance policy bearing No. 2219043117P113821280, Ex.
PW1/1.
(2) FIR dated 23.07.2018 bearing diary no. 49B, Ex. PW1/2
(OSR).
(3) Copy of repair bills bearing estimate no. BPE18-0487, Ex.
PW1/3 (colly. 30 pages).
(4) Letter dated 01.02.2019 sent by the defendant company to the
plaintiff, Ex. PW1/4.
(5) Copy of letter dated 26.02.2019 sent by the plaintiff to the
defendant company, Mark A
(6) Copy of letter dated 27.06.2019 sent by the plaintiff to the
defendant company, Ex. PW1/6 (colly. 3 pages).
(7) Copy of letter dated 13.08.2019 sent by the plaintiff to the
office of insurance ombudsman Mark B
(8) Copy of letter bearing no. DEL-G-051-1920-0146/GR-70/19
dated 30.09.2019 sent by office of the insurance ombudsman to
the plaintiff, Ex.PW1/8.
(9) Copy of internal document bearing reference no.
HO:MOT::OD:CIR:02:19 sent by the technical (motor)
department head office, Chennai of M/s United India Insurance
Company Ltd. To Ros/Dos/Bos/Mos/LCBs, Ex. PW1/9.
8. Plaintiff has established on record that it availed an
insurance policy Ex.PW-1/1 bearing no. 2219043117P113821280
CS (Comm): 153/20 3/11
commencing from 25.12.2017 with No Claim Bonus of 20%,
expiring on 24.12.2018 for its vehicle i.e. Toyota Corolla Altis
bearing registration no. DL-01-N-7721. On 23.07.2018, the said
vehicle met with an accident for which FIR Ex.PW-1/2 was
registered. When the said said vehicle was sent to the requisite
Toyota service center at 69/1 A, Moti Nagar Crossing, Najafgarh
Road, Delhi on 24.07.2018, it raised repair bill Ex.PW-1/3 bearing
Estimate No.BPE18-04871 for Rs.14,04,194.83/-. As deposed by
PW1, plaintiff company accordingly informed the defendant
company regarding the said accident and claimed
Rs.14,04,194.83/-, paid towards the repairs of the car but was
shocked to receive a letter vide which defendant company had
repudiated the claim on the ground that the plaintiff has already
availed the NCB which amounted to a breach of G.R. 27 of India
Motor Tariff, 2002.
9. Plaintiff has relied on the principle that failure on the part of
insurer granting the NCB to write to previous insurer within 21
days after granting the coverage amounts to breach of GR 27 of
IMT. In this regard plaintiff has relied upon "United India
Insurance Company Vs. Et. Trav. Aids Pvt. Ltd.". As per internal
documents sent by Technical (Motor) Department, in case of wrong
declaration of NCB by the insured, the OD claim otherwise
admissible shall be treated as such that the policy issuing office to
collect the difference in premium and regularize the policy
bypassing endorsement. The claim amount to be reduced by
proportionately by the ineligible percentage of NCB declared by the
CS (Comm): 153/20 4/11
insured which is to be in addition to the recovery of balance
premium through endorsement.
10. As per plaintiff, the defendant had failed to do its own due
diligence in compliance to G.R. 27 of India Motor Tariff, 2002
wherein the defendant was required to write to the policy issuing
office and previous insurer. The G.R. 27 (f) of India Motor Tariff,
2002 which states that "Notwithstanding the above declaration,
the insurer allowing the NCB will be obliged to write to the
policy issuing office of the previous insurer by recorded delivery
calling for confirmation of the entitlement and rate of NCB for
the particular insured and the previous insurer shall be obliged
to provide the information sought within 30 days of receipt of the
letter of enquiry failing which the matter will be treated as a
breach of Tariff on the part of the previous insurer. Failure of the
insurer granting the NCB to write to the previous insurer within
21 days after granting the cover will also constitute a breach of
the Tariff."
11. In reply to the rejection letter dated 01.02.2019 Ex.PW-
1/4, plaintiff issued letter dated 26.02.2019, Ex.PW-1/5 stating
that as per G.R. 27 of the India Motor Tariff, 2002 it was the
insurer's duty to write to the previous Insurer within 21 days after
granting the cover and it constitutes a breach of the G.R. 27 of
India Motor Tariff, 2002. 9. As defendant chose not to respond to
the letter dated 26.02.2019, on 27.06.2019 (Exhibit PW 1/6 page
no. 36 to 38) again the plaintiff wrote another letter to the Claims
Manager of the defendant company as a reminder that there is a
failure on part of the defendant as they did not make the plaintiff
CS (Comm): 153/20 5/11
fully aware about the rules/ regulations applicable (G.R. 27 of
India Motor Tariff, 2002). The plaintiff also informed that the
software and passwords are secured by the insurance company
only and details are not disclosed to the customer i.e. the plaintiff
company. It was submitted that only when the claim was raised
by the plaintiff company, the defendant company contacted the
previous insurer for the confirmation with respect to the previous
claims which was supposed to be done within 21 days of
issuance of the cover. It is evident that the defendant failed to
write to the previous insurer within 21 days in compliance to the
G.R. 27 of India Motor Tariff, 2002 after granting of cover and
are thus in a breach of G.R. 27 of India Motor Tariff, 2002.
12. Plaintiff has relied upon NCDRC in RP No. 2920 of 2015
& 1836 of 2016 titled as United India Insurance Company Ltd.
Versus M/s Jindal Poly Buttons Limited & National Insurance
Company Ltd. Versus Naresh Kumar wherein it is stated as
under:
"a. The cases in which it is established that the insured by
making wrongful declaration has taken benefit of No Claim
Bonus and the insurer had means to verify the correctness of the
declaration of the insured seeking No Claim Bonus by exercising
ordinary diligence of verifying the truthfulness of the claim from
the insurer's own record, Exception to 19 of Indian Contract Act
would come into play and the insurer would not be justified in
repudiating the insurance claim on the ground of
misrepresentation or concealment of fact. However, because the
CS (Comm): 153/20 6/11
insured had taken benefit of No Claim Bonus and paid less
premium, the insurance claim would be reduced proportionately.
b. In cases of the insured taking the insurance policy of the
vehicle from new insurance company and it is established that
the insured by making wrongful declaration has taken benefit of
No Claim Bonus and where the insurer had failed to seek
confirmation regarding correctness of the declaration submitted
by the insured in support of plea for No Claim Bonus within the
stipulated period as provided in GR 27 of Indian Motor Tariff,
the insurer would not be justified in repudiating the insurance
claim. However, because the insured had taken benefit of No
Claim Bonus by making false declaration his insurance claim
would be reduced proportionately."
13. Similar observations were made by Ld. NCDRC in RP no.
1051 of 2017 titled as "Anjani Gupta versus Future Generally
India Insurance Company" and "New India Assurance Co. Ltd,
Versus aninder Pal Singh & Anr." RP No. 3761 of 2013, as
follows:-
"That repudiation of the insurance claim by the insurance
company was not justified because insurance company failed to
fulfil its obligation under GR 27 of Indian Motor Tariff. However,
as the complainant had paid 20% less premium, equity demands
that insurance company should have allowed the insurance claim
on pro rata basis i.e. by reducing the entitlement under the claim
by 20%, which amounts to Rs.3,43,200/-."
CS (Comm): 153/20 7/11
14. In another case of United India Insurance Company
versus Et. Trav. Aids Pvt. Ltd having RP No. 3263 of 2007 the
Ld. NCDRC stated as under:-
"13. Further, although the petitioner wrote a letter to the
Oriental Insurance Company Ltd. on 17.3.2005, it is not clear
from the facts available on record, whether the Oriental
Insurance Company Ltd. confirmed anywhere that they made
payment of any claim to the complainant under the previous
policy. The remarks stated to have been written by the Oriental
Insurance Company Ltd. on the letter dated 17.3.2005 sent by
the petitioner, do not say that any claim was paid by the previous
insurance company to the complainant. It is very clear, therefore,
that in the absence of any conclusive evidence on the issue, it
cannot be stated that the complainant obtained any claim from
the previous insurance company. In the light of these facts, the
claim for NCB made at the time of obtaining the policy from the
petitioner does not seem to be irregular."
15. It was submitted by counsel for plaintiff that defendant is
well aware of the judgments passed by Ld. NCDRC vide
notification having circular no. HO:MOT:OD:CIR:02:19 dated
13.06.2019 (Ex.PW-1/9). Defendant itself has made note of these
judgments and referred as "this has reference to the recent
NCDRC Judgments on the issue of settlement of Motor OD
Claims where the Insures had availed NCB based on wrong
declaration while taking policy. In cases of Anjani Gupta VS
Future Generali and in another case of Mr. Shinder Pal Singh &
Other, NCDRC has reduced 20% of the OC claim as the Insured
CS (Comm): 153/20 8/11
has given false declaration for 20% NCB. In all the similar
judgments of NCDRC as well as of Supreme Court, the court has
decided to reduce the claim amount by the same percentage as
wrongly claimed NCB.
In view of above referred NCDRC Judgment(s), provision
of GR 27 (f) of India Motor Tariff and misrepresentation of
Facts, Insurer derive rights to finalize the amount for such OD
Claims settlement. Therefore, in case of wrong declaration of NCB by the Insured, the OD claim otherwise admissible shall be treated as under:
S. Case Solution No. 1 Wherever no OD claim has The policy issuing office to
occurred/lodged and proven from collect the difference and previous insurer that insured has regularize the policy by taken NCB correctly. passing endorsement. 2 Wherever a claim has already The claim amount to be occurred and NCB declaration is finalized as per the NCDRC found to be incorrect after confirming judgment i.e. the claim from the previous insurer amount to be reduced by proportionately by the ineligible % of NCB declared by insured. This is to be in addition to the recovery of balance premium through endorsement.
16. The averments made in the plaint, which is supported with the affidavit and statement of truth, remained uncontroverted, unrebutted and unchallenged for the failure of defendant to file any written statement and to contest the matter. The averments made in the plaint and affidavit of evidence are duly substantiated by documents on record. As noted in authorities (Supra), if No Claim CS (Comm): 153/20 9/11 Bonus is wrongfully taken by the insured, the claim would still be payable on a non-standard basis, if the insurer had the means to verify the correctness of the declaration made by the insured, while claiming the No Claim Bonus. In the present case also, the defendant had an opportunity to verify the correctness or otherwise of the declaration made by the plaintiff by making necessary enquiry from the concerned insurer. That having not been done, the plaintiff shall be entitled for reimbursement of the loss/damages sustained by it, subject to proportionate deduction. Since the No Claim Bonus was availed by the plaintiff @ 20%, the amount payable to the plaintiff shall have to be reduced in the same proportion.
17. In terms of insurance policy, Ex.PW-1/1, insured declared value was Rs.9 lacs, therefore, claim of damages cannot be more than the value of insured vehicle. Counsel for plaintiff conceded to the same and also submitted that in view of aforesaid judgments, the claim may be reduced to 20% i.e., proportionate reduction against the percentage of NCB.
18. Plaintiff, therefore, is held entitled for the amount of Rs.7,20,000/- alongwith interest @ 9% per annum from the date of raising of the claim till realization.
19. Instant suit is accordingly decreed with cost in favour of the plaintiff and against the defendant for recovery of Rs.7,20,000/- alongwith interest @ 9% per annum from the date of raising of the claim till realization.
CS (Comm): 153/20 10/1120. Decree sheet be prepared accordingly. After completion of formalities, file be consigned to record room.
Digitally signed by SAVITA RAOSAVITA Date:
Announced in the Open Court RAO 2023.10.26 15:28:25 on 26.10.2023 +0530 (SAVITA RAO) District Judge (Commercial)-02 South West District:Dwarka:New Delhi CS (Comm): 153/20 11/11