Delhi District Court
Supreme Auto Carrier vs National Insurance Co.Ltd on 19 August, 2023
Supreme Auto Carrier Vs. National Insurance Co. Ltd.
IN THE COURT OF SH. ALOK SHUKLA,
ADDITIONAL DISTRICT JUDGE - 07 (CENTRAL DIS-
TRICT), TIS HAZARI COURTS, DELHI
CNR NO.:- DLCT01-011105-2018
SUIT NO.:- 161/2018
DJ NO.:- 5961/2018
IN THE MATTER OF :-
Supreme Auto Carrier
Through:
Shri Prem Prakash Gupta, Proprietor
H. No. 441, Sector-14,
Gurgaon, Haryana-122001 ....Plaintiff
VERSUS
National Insurance Company Limited
Delhi Regional Office-II
Motor Claim Hub
2E/25, Above HDFC Bank,
Jhandewalan Extension,
New Delhi-110055 ....Defendant
SUIT FOR RECOVERY OF RS.32,42,460.00 (RUPEES
THIRTY TWO LACS FORTY TWO THOUSAND FOUR
HUNDRED SIXTY ONLY) WITH PENDENTE LITE AND
COST FOR WRONGFUL TREATMENT OF INSURANCE
CLAIM
Date of institution of the Suit : 28.08.2018
Date on which Judgment was reserved : 24.07.2023
Date of Judgment : 19.08.2023
Suit No. 5961/2018 Page 1 of 27
Supreme Auto Carrier Vs. National Insurance Co. Ltd.
::- J U D G M E N T -::
1. By way of present judgment, this court shall conscien-
tiously adjudicate upon suit for recovery of Rs.32,42,460/- with
pendentelite interest and cost for wrongful treatment of insurance
claim filed by the plaintiff against the defendant.
CASE OF THE PLAINTIFF AS PER PLAINT
2. Succinctly, the necessary facts for just adjudication of the
present suit, as stated in the plaint, are as under:-
(i).The Plaintiff is a proprietary firm engaged in the
business of transportation and logistics. Mr. Prem
Prakash Gupta is the sole proprietor of the
Plaintiff firm and is therefore competent to present
the subject plaint and sign and verify the same.
(ii).The Defendant Company is a company
incorporated under the Companies Act 1956. The
defendant is a leading insurance company of the
country. The defendant engages in the business of
underwriting general insurance against various
risks faced by industrial and non-industrial
property including motor vehicles. The defendant
has its registered and head office in Kolkata and
its subordinate offices in all major cities of the
country. The defendant has four regional offices,
Suit No. 5961/2018 Page 2 of 27
Supreme Auto Carrier Vs. National Insurance Co. Ltd.
and more than 100 subordinate operational offices
in the city of Delhi alone.
(iii).The plaintiff for its business owns a number of
commercial vehicles which are used for
transportation of cars and motor vehicles. The
Plaintiff has been insuring all its commercial
vehicles with the defendant for last many years.
(iv).Relevant facts for the present dispute would
reveal that the Plaintiff insured in the year 2013,
five of its vehicles with the Defendant Insurance
Company for which it submitted the proposal
forms and premium to the Defendant. The vehicles
thus sent for insurance at the same time in 2013
were as under:
S. IDV (Rs.) Vehicle No. Premium (Rs.)
1. 23,35,000 HR55Q7974 37,845
2. 23,35,000 HR55Q7979 37,845
3. 23,35,000 HR55Q7983 37,845
4. 23,35,000 HR55Q7988 37,845
5. 23,35,000 HR55Q7992 37,845
6. 2,75,000 HR55A8083 19,662
As required by the Defendant, the Plaintiff paid
premium of Rs.2,08,887/- vide cheque No. 142041
dated 24.07.2013 drawn on Punjab & Sind Bank,
Gurdwara Road, Gurgaon. The vehicles were
insured against Risks of accident, burglary and
theft as per Package Policy of the Defendant.
(v).It would appear that in respect of policy for
vehicle No. HR-55Q-7988 IDV (i.e. the sum
Suit No. 5961/2018 Page 3 of 27
Supreme Auto Carrier Vs. National Insurance Co. Ltd.
insured) of the vehicle was wrongly mentioned as
Rs.12,76,000.00. The IDV proposed was
Rs.23,35,500.00 and the premium was also paid
on the same IDV. However, this mistake could not
be noticed immediately as in respect of the
remaining policies, the IDV was correctly
mentioned. Also it is noteworthy that in respect of
remaining four vehicles the IDV as well as
premium was identical.
(vi).Most unfortunately the above vehicle No. HR-
55Q-7988 of the Plaintiff met with a very serious
accident and was totally destroyed. On 24.04.2014
while passing through Canal Bridge at Bewar in
Mainpuri UP, the vehicle of the Plaintiff was hit by
another vehicle coming from opposite side. Due to
collision with the other vehicle, the vehicle of the
plaintiff caught fire. The fire went out of control
and the vehicle as well as several cars loaded
thereon were totally destroyed. The driver of the
Plaintiff's vehicle also expired in the accident due
to burn injuries.
(vii).The Plaintiff filed its claim with the Defendant
Insurance Company. The Defendant appointed Mr.
R. K. Jain, licensed surveyor to carry out survey
and assessment of the loss. The surveyor
conducted a detailed examination of the burnt
vehicle at the workshop of the authorized
Suit No. 5961/2018 Page 4 of 27
Supreme Auto Carrier Vs. National Insurance Co. Ltd.
repairers. The Plaintiff provided to the
Surveyor/Defendant all documents necessary for
the purpose of loss assessment which included the
estimate of repair, details of the driver, the FIR,
the details of the goods being carried and such
other and further information as was required by
them.
(viii).After detailed examination the surveyor reached
the conclusion that vehicle was a total loss and it
was beyond repair. The condition of the vehicle
was such that the cost of repair was turning out to
more than its value after the repair. The surveyor
accordingly recommended to the Defendant
Insurance Company to settle the loss of the
Plaintiff on "Total Loss Basis".
(ix).Soon after the loss was reported to the Insurance
Company it had become apparent that there was a
mistake in the policy where the IDV i.e. the sum
insured was incorrectly mentioned as
Rs.12,76,000.00. The Plaintiff raised this issue
with the Defendant Insurance Company where it
was admitted that it had happened due to a
clerical mistake by oversight. The Plaintiff
thereupon communicated with the Defendant
Insurance Company vide e-mail dated 05.08.2014
requesting for correction of the mistake.
Suit No. 5961/2018 Page 5 of 27
Supreme Auto Carrier Vs. National Insurance Co. Ltd.
(x).On receipt of the e-mail from Plaintiff the local
office of the Defendant Insurance Company
approached its senior office to allow them to
correct the mistake. The Plaintiff was able to
obtain a copy of the said letter dated 25.04.2014.
It was thereupon expected that the Defendant
Insurance Company shall correct its clerical
mistake and settle the claim of the Plaintiff for the
sum insured of Rs.23,35,500.00 which was the
intended sum insured and for which the premium
had been paid.
(xi).The claim of the Plaintiff was not settled for a
very long time by the Defendant. The Plaintiff
continued to represent to the Defendant Company
and made several personal visits for conclusion of
the claim. However, the Defendant Insurance
Company was totally unmindful of the difficulties
faced by Plaintiff and all requests for early
settlement were ignored. The Defendant Insurance
Company did not move to settle the claim for 3 ½
years after the claim was lodged.
(xii).Vide e-mail dated 19th November, 2017 the
Plaintiff received from the Defendant Insurance
Company a communication informing that
Plaintiff's claim has been settled for Rs.
8,99,500.00. No details of the basis of settlement
was given. It was however mentioned in the
Suit No. 5961/2018 Page 6 of 27
Supreme Auto Carrier Vs. National Insurance Co. Ltd.
communication that the claim was being approved
on net of salvage basis without RC. An enquiry
with the Defendant revealed that the IDV of the
vehicle was taken at Rs.12,76,000.00, and
deduction for salvage was carried out for the sum
of Rs.3,75,000.00, and the "Excess" was deducted
for Rs.1,500.00.
(xiii).The communication sent by the Defendant was
hurting and highly unjust. Despite repeated
requests by the Plaintiff, the Defendant had not
corrected the mistake causing serious injustice to
the Plaintiff. The Plaintiff had paid premium for
the sum insured of Rs.23,35,500.00 which factum
has not been disputed by the Defendant Insurance
Company. The Policy was by oversight issued for
Rs.12,76,000.00 which also has been admitted by
the Defendant. In these circumstances there is no
justification for taking the incorrect sum insured
for the purpose of computing the loss.
(xiv).Vide e-mail dated 15.12.2017 the Plaintiff wrote
to the Defendant informing them of its stand and
declined to accept Rs.8,99,500.00 towards full and
final settlement. The Plaintiff has received no
further information from the Defendant and there
is therefore clear sign that the Defendant is
unwilling to accept the correct IDV of the vehicle
and is adamant to pay only the sum as was
Suit No. 5961/2018 Page 7 of 27
Supreme Auto Carrier Vs. National Insurance Co. Ltd.
wrongly recorded by oversight by the Defendant
itself.
(xv).The vehicle of the Plaintiff was duly covered by
the Defendant against the loss caused to the
vehicle in the present case. The Plaintiff had paid
the premium for the vehicle as was asked for by
the Defendant. The vehicle was insured for
Rs.23,35,500.00 and the Plaintiff therefore is
entitled to the said amount as basis of settlement.
The Defendant cannot take advantage of its own
mistake in recording a wrong figure of IDV in its
own policy. The conduct of the defendant is mala
fide, unreasonable and contrary to the rule of fair
play which formed elementary basis of the
contract of insurance.
(xvi).The failure of the Defendant to meet its valid
and legal obligations under the contract of
insurance caused severe and untold hardship to
the plaintiff. The plaintiff has been compelled to
continue paying installments though the vehicle
has long since been destroyed. The plaintiff was
also disenables from fulfilling its business
commitments causing serious and sizable loss of
business revenue. The Plaintiff had paid all taxes
for several coming years in advance though the
vehicle was destroyed much before the incident of
taxation was liable to be imposed. The family of
Suit No. 5961/2018 Page 8 of 27
Supreme Auto Carrier Vs. National Insurance Co. Ltd.
the driver filed a suit for compensation against the
Plaintiff which the Plaintiff had to bear in view of
legal provisions. The Plaintiff was thus compelled
to suffer grave injustice all because of a clerical
mistake at the end of the Defendant, which the
Defendant shameless refused to acknowledge
effectively.
(xvii).In addition to the value of the vehicle, the
Plaintiff is now entitled to interest for
unreasonable, unjustified and extraordinary delay
in settlement of the claim. The pre- suit interest
calculated from the date of loss until filing of the
suit @ 9% p.a. comes to Rs.9,06,960.00.
3. Summons of the suit were issued to the defendant.
Defendant appeared and filed written statement.
CASE OF DEFENDANT AS PER WRITTEN STATEMENT
4. Succinctly, the case of defendants is as under:
(i).That the present suit is liable to be dismissed with
exemplary costs, as the plaintiff has not come to
this Hon'ble Court with clean hands and has
suppressed the material facts as mentioned
hereinabove.
(ii).That the present suit is liable to be dismissed, in
view of the fact that there is no provision for
Suit No. 5961/2018 Page 9 of 27
Supreme Auto Carrier Vs. National Insurance Co. Ltd.
increase of the sum insured/insured declared value
after the loss was reported. The principle involved
is that the part of the property was not insured
earlier. As per GR-8 of Indian Motor Tariff which
stipulates that for the purpose of total loss claim
settlement, the IDV (Existing) will not change
during the current policy period. The answering
defendant has considered all the aspects and
provisions and ultimately, processed the claim on
the basis of IDV i.e. Rs.12,76,000/- shown in the
insurance policy pertaining to vehicle No.HR-55Q
7988 for the period 31-07-2013 to 30-07-2014
vide Policy No.361802/31/13/630004205. The
answering defendant has promptly engaged the
surveyor and on his recommendation the claim has
been assessed for Rs.8,99,500/- on Net of salvage
basis based upon existing sum insured amounting
to Rs.12,76,000/-.
(iii).That the present suit is not maintainable in the
present form and, hence, the same is liable to be
dismissed.
(iv).That there is no cause of action in favour of the
plaintiff and against the answering defendants
and, therefore, the same is liable to be dismissed.
(v).That the present suit is devoid of any merits and
has been filed on the basis of wrong averments
and, therefore, the same is liable to be dismissed.
Suit No. 5961/2018 Page 10 of 27
Supreme Auto Carrier Vs. National Insurance Co. Ltd.
The Insurance Policy between the parties is a
contract, the terms and conditions thereof must
necessarily be adhered to by both the parties in
letter and spirit.
(vi).That the suit of the plaintiff is hopelessly time
barred, hence, the same is liable to be dismissed.
REPLICATION
5. The plaintiff filed the replication and reiterated all the
averments made in the plaint.
ISSUES
6. On the basis of the pleadings, following issues were
framed on 08.04.2019:
(i). Whether the suit of the plaintiff is barred by the law
of limitation? OPD
(ii). Whether the plaintiff is entitled to the recovery of
the amount as claimed for in the plaint? OPP
(iii). Whether the plaintiff is entitled for interest, if so,
at what rate and for which period.
(iv). Relief.
PLAINTIFF'S EVIDENCE
7. The plaintiff has examined his Manager as PW1 who
relied upon evidence by way of affidavit ExPW1/A and also has
relied upon following documents:
Suit No. 5961/2018 Page 11 of 27
Supreme Auto Carrier Vs. National Insurance Co. Ltd.
(i). Goods Carrying Commercial Vehicle (Open)
Policy No.361802/31/13/6300004205 alongwith
Certificate of Insurance issued by defendant for the
period from 31.07.2013 to 30.07.2014 is Ex.P-1.
(ii). Office copy of letter dated 24.07.2013 along
with photocopy of Cheque for Rs.2,08,887/- of the
plaintiff addressed to the defendant is Ex.PW-1/1 (Colly. -
2 pages).
(iii). Photocopy of Proposal Form in respect of vehicle
no. HR-55Q-7979 is Ex.PW-1/2.
(iv). Photocopy of insurance policy in respect of Vehicle
No. HR-55Q-7979 for the period from 31.07.2013 to
30.07.2014 is Ex.P-2.
(v). Photocopy of Proposal Form in respect of Vehicle
No. HR-55Q-7992 is Ex.PW-1/3.
(vi). Photocopy of Insurance Policy in respect of Vehicle
No. HR-55Q-7992 for the period from 31.07.2013 to
30.07.2014 is Ex.P-3.
(vii). Photocopy of Proposal Form in respect of Vehicle
No. HR-55Q-7974 is Ex.PW-1/4.
(viii). Photocopy of Insurance Policy in respect of Vehicle
No. HR-55Q-7974 for the period from 31.07.2013 to
30.07.2014 is Ex.P-4.
Suit No. 5961/2018 Page 12 of 27
Supreme Auto Carrier Vs. National Insurance Co. Ltd.
(ix). Photocopy of Proposal Form in respect of Vehicle
No. HR-55Q-7983 is Ex.PW-1/5.
(x). Photocopy of Insurance Policy in respect of Vehicle
No. HR-55Q-7983 for the period from 31.07.2013 to
30.07.2014 is Ex.P-5.
(xi). Photocopy of Proposal Form in respect of Vehicle
No. HR-55Q-7988 is Ex.PW-1/6.
(xii). Photocopy of Insurance Policy in respect of Vehicle
No. HR-55Q-7988 for the period from 31.07.2013 to
30.07.2014 is Ex.P-6.
(xiii). Photocopy of letter dated 26.07.2013 of the
defendant company addressed to the defendant
acknowledging the receipt of premium is Ex.PW-1/7.
(xiv). Office copy of letter dated 25.04.2014 of the
Branch Office of defendant addressed to its Divisional
Office seeking permission to enhance the sum in sured
from inception, duly receipted by Delhi Regional Office-II
of the defendant is Ex.P-7.
(xv). Original RC in respect of vehicle no.HR-55Q-
7988 is Ex.PW-1/8.
(xvi). Original National Permit in respect of vehicle
no. HR-55Q-7988 valid from 06.08.2013 to 12.08.2014 is
Ex.PW-1/9.
Suit No. 5961/2018 Page 13 of 27
Supreme Auto Carrier Vs. National Insurance Co. Ltd.
(xvii). Original National Permit for Public Carriers (Part
A) in respect of Vehicle No. HR-55Q-7988 valid for the
period from 14.08.2012 to 12.08.2017 is Ex.PW-1/10.
(xviii).Original National Permit for Public Carriers
(Part B) in respect of Vehicle No. HR-55Q-7988 valid for
the period from 14.08.2012 to 12.08.2017 is Ex.PW-1/11.
(xix). Carbon Copy of GR No. 1012, dated 21.04.2014
issued by the plaintiff company is Ex.PW-1/12.
(xx). Photocopy of FIR No.143/14, dated 24.04.2014
under Section 279/304-A registered by Police Station Main
Puri is Mark-A (3 pages).
(xxi). Photocopy of Vehicle Inspection Report in respect
of Vehicle No.HR-55Q-7988 of Senior Forman, UPRSC
Bewar Depot is Mark-B.
(xxii). Photocopy of Claim Form submitted by the
plaintiff with the defendant is Ex.P-8.
(xxiii).Original letter dated 29.04.2014 of the
defendant received by the plaintiff is Ex.P-9.
(xxiv).Photocopy of DL No.8411000107/MPT/2011
valid for the period from 27.09.2012 to 26.09.2015
with License Verification Report of LA, Mainpuri is
Mark-C (2 pages).
Suit No. 5961/2018 Page 14 of 27
Supreme Auto Carrier Vs. National Insurance Co. Ltd.
(xxv). Email copy dated 05.08.2014 of the plaintiff
to the defendant for issuance of correction of sum insured
in respect of vehicle no.HR-55Q-7988 is Mark-D.
(xxvi).Original letter dated 24.11.2014 of Mr. R.K.
Jain, Surveyor appointed by the defendant addressed to
the plaintiff is Ex.PW-1/13.
(xxvii).Photocopy of Professional Fees Bill dated
15.05.2014 of Mr. S.B. Sharma, Surveyor for
conducting spot survey is Ex.P-10.
(xxviii).Spot Survey Report from Mr. S.B. Sharma,
Surveyor in respect of Vehicle No.HR-55Q-7988 is
Ex.P-11.
(xxix).E-mail dated 20.11.2017 of the defendant
addressed to the plaintiff asking them to submit consent
letter to accept the claim amount of Rs.8,99,500/- is
Ex.P- 12
(xxx). E-mail dated 15.12.2017 of the plaintiff
addressed to the defendant refusing to accept the amount
of claim offered by insurance company is Ex.PW-1/14.
(xxxi).Internet copy of e-mail dated 08.03.2018 of the
plaintiff addressed to the defendant is Ex.PW-1/15 (2
pages).
(xxxii).Copy of Income Tax Return of the plaintiff for
the assessment year 2017-2018 is Mark-E.
Suit No. 5961/2018 Page 15 of 27
Supreme Auto Carrier Vs. National Insurance Co. Ltd.
(xxxiii).Notice under Order XII Rule 8 CPC for production
of documents sent by Ld. counsel for the plaintiff to the
defendant is Ex.PW-1/16 (3 pages).
DEFENDANT'S EVIDENCE
8. AR of the defendant company has examined as DW-1,
who relied upon evidence by way of affidavit ExDW-1/A and
also relied upon the following documents:
(i). The document Ex.DW-1/1 (Wrongly mentioned as
Ex.RW-1/1 in the affidavit is de-exhibited being not on
record).
(ii). The report of Surveyor is Ex.DW-1/2 (Colly.) (six
pages).
9. I have heard the counsels for parties and gone through the
record carefully.
ISSUEWISE FINDINGS
10. To settle the controversies between the parties, the issues
wise findings are as follows:-
Issue no. 1
(i) Whether the suit of the plaintiff is barred by the law of
limitation? OPD
FINDINGS AND CONCLUSION
11. The onus to prove this issue was on the defendant.
Defendant has examined its Senior Divisional Manager as DW-1.
Suit No. 5961/2018 Page 16 of 27
Supreme Auto Carrier Vs. National Insurance Co. Ltd.
This witness has not deposed in support of the contents that the
suit is barred by the law of limitation. In the written statement,
defendants have taken a preliminary objection that suit filed by
the plaintiff is hopelessly time barred. No evidence has been led
by the defendants to prove this issue.
Plaintiff has examined its Manager as PW-1, who deposed
that the subject vehicle was insured with the defendant company
on 31.07.2013. Thereafter, the subject vehicle met with an
accident on 24.04.2014. The loss was reported to the defendant
company. Soon it came to the notice of the plaintiff that there is a
mistake in the policy and the IDV was incorrectly mentioned.
The plaintiff thereof, communicated with the defendant company
vide email dated 05.08.2014. Vide e-mail dated 20.11.2017,
plaintiff received an email from the defendant company
informing the plaintiff that the claim of the plaintiff has been
settled for Rs. 8,99,500/-. Being aggrieved by the fact that
Defendant has failed to correct the IDV in the insurance contract
and the claim has been settled only for Rs. 8,99,500/-, plaintiff
has filed the present suit.
In the written statement, the defendant has admitted that
the plaintiff was informed vide email dated 20.11.2017 that the
plaintiff's claim has been settled for Rs.8,99,500/-. The present
suit has been filed on 28.08.2018. Thus, the present suit is within
limitation. Accordingly, issue no. 1 is decided in favour of the
plaintiff and against the defendant.
Suit No. 5961/2018 Page 17 of 27
Supreme Auto Carrier Vs. National Insurance Co. Ltd.
Issues no. 2 and 3
(ii) Whether the plaintiff is entitled to the recovery of the
amount as claimed for in the plaint? OPP
(iii) Whether the plaintiff is entitled for interest, if so, at what
rate and for which period.
Both issues no. 2 & 3 are taken up together for discussion
as both are interconnected.
FINDINGS AND CONCLUSION
12. Manager of the plaintiff company deposed as PW-1 and
testified that in the year 2013, 06 vehicles, out of which 5 were
similar in all respects were insured by the plaintiff company with
the defendant insurance company for which the plaintiff
company had paid the premium of Rs.2,08,887/- vide cheque no.
142041 dated 24.07.2013 and vehicles were insured against the
risks of accident, burglary and theft as per package policy of the
defendant. The witness further deposed that IDV of vehicle
bearing no. HR-55Q-7988, which was also insured alongwith
other vehicles, was wrongly mentioned in insurance policy Ex. P-
6. On 24.04.2014, vehicle no. HR-55Q-7988 insured with the
defendant met with serious accident and was totally destroyed
while passing through canal bridge at Bewar in Mainpuri, U.P.
and driver of the said vehicle also expired in the accident.
Plaintiff filed its claim with the defendant insurance company
and provided all the necessary documents for the purpose of loss
assessment to the Surveyor appointed by the defendant company.
Suit No. 5961/2018 Page 18 of 27
Supreme Auto Carrier Vs. National Insurance Co. Ltd.
The surveyor after detailed examination concluded that the
vehicle was a total loss and was beyond repair and accordingly,
recommended the defendant insurance company to settle the loss
of the plaintiff on total loss basis. Soon after the loss was
reported to the defendant insurance company, plaintiff noticed
mistake in Insurance Policy Ex. P-6, where IDV of the subject
vehicle was incorrectly mentioned as Rs.12,76,000/-. The witness
deposed that issue was raised with the defendant company, who
admitted the same to be clerical mistake by oversight. Plaintiff
thereupon communicated with the defendant company vide e-
mail dated 05.08.2014 requesting for correction of the mistake.
Defendant company approached its senior office vide letter dated
25.04.2014 seeking permission to correct the mistake. The
witness has relied upon the letter dated 25.04.2014, which is the
internal communication between the officials of defendant
company and same is exhibited as Ex. P-7. Plaintiff thereupon
requested the defendant to correct its clerical mistake and settle
the claim of the plaintiff for the sum insured of Rs.23,35,500/-
which was the intended sum insured and for which the premium
had been paid. Witness has relied upon Ex.PW1/A, which is
original RC of the said vehicle; Ex.PW1/9 i.e. original national
permit of the subject vehicle; photocopy of FIR no. 143/2014,
which is marked as Mark A; photocopy of vehicle inspection
report, which is marked as Mark B; photocopy of claim form
submitted by the plaintiff with defendant company, which is
exhibited as Ex.P-8 and original letter dated 29.04.2014, which is
exhibited as Ex.P-9. Witness deposed that vide e-mail dated
Suit No. 5961/2018 Page 19 of 27
Supreme Auto Carrier Vs. National Insurance Co. Ltd.
20.11.2017, defendant informed the plaintiff company that the
claim of the plaintiff has been settled for Rs.8,99,500/-. On
enquiry with the defendant company, it was revealed that IDV of
the vehicle was taken as Rs.12,76,000/- and deduction for
salvage was carried out for the sum of Rs.3,75,000/- and the
excess of Rs.1500/- was deducted. The Surveyor report and e-
mail dated 20.11.2017 are exhibited as Ex. P-11 and Ex.P-12.
Plaintiff again vide e-mail dated 15.12.2017 approached the
defendant company informing them of its stand and declined to
accept Rs.8,99,500/- towards full and final settlement. Plaintiff
again sent another e-mail to the defendant company on
08.03.2018 asking the defendant company to rectify the defects
with regard to the wrong IDV mentioned in the insurance policy.
13. The witness was cross-examined by the defendant's
counsel and suggestion was given that the IDV mentioned in Ex.
P-6 is Rs.12,76,000/- for which defendant company charged
Rs.29,319/- as premium. On seeing Ex. P-1 (also exhibited as Ex.
P-6), the witness admitted that the premium mentioned in Ex. P-1
is of Rs.29,319/-. Witness stated that he had telephonically
informed the defendant company regarding the incorrect
mentioning of the insurance premium.
14. There is no dispute between the parties that the plaintiff in
the year 2013, got six vehicles insured with the defendant
insurance company including subject vehicle. Interestingly, in
para no.4 of the plaint, the plaintiff has given a table showing the
IDV of the different vehicles and the premium paid against these
vehicles to the defendant company in the year 2013. The contents
Suit No. 5961/2018 Page 20 of 27
Supreme Auto Carrier Vs. National Insurance Co. Ltd.
of para no.4 have been admitted by the defendant in the written
statement stating that they are matter of record, however,
defendant stated that policy in question with IDV of
Rs.12,76,000/- was issued to the plaintiff and the plaintiff has not
written any letter or informed orally to the defendant regarding
wrong IDV/ sum insured, thus, it does not lie in the mouth of the
plaintiff to scream regarding wrong IDV after the total loss of the
vehicle.
15. Defendant examined DW-1 to prove its case, who stated
that as per GR-8 of Indian Motor Tariff which stipulates that for
the purpose of total loss claim settlement, the IDV will not
change during the current policy period. The answering
defendant has considered all the aspects and provisions and
ultimately, processed the claim on the basis of IDV i.e.
Rs.12,76,000/- which showed in the insurance policy pertaining
to the subject vehicle during the period from 31.07.2013 to
30.07.2014. He further stated that defendant company has
promptly engaged his Surveyor and, on his recommendation, the
claim has been assessed for Rs.8,99,500/- on net of salvage basis
based upon existing sum insured amounting to Rs.12,76,000/-.
The witness also exhibited the report of Surveyor which is
Ex.DW1/2.
16. During his cross-examination Witness did not deny
Ex.PW1/6 and stated that he do now know whether proposal
form was obtained from the plaintiff or not. DW1 also admitted
that Defendant usually obtain proposal form prior to issuance of
the policy. He also identified the Proposal form in respect of
Suit No. 5961/2018 Page 21 of 27
Supreme Auto Carrier Vs. National Insurance Co. Ltd.
vehicle no. HR-55Q-7988 is Ex.PW1/6 and stated that the same
belongs to the defendant company. It is settled proposition of law
that insurance policy is contract between parties and same has to
be construed as per the provisions of Indian Contract Act. The
proposal form of the insurance policy is part of the insurance
policy and perusal of the Ex.PW1/6 shows that IDV, which is
mentioned in the proposal form is Rs.23,35,500/-. Section 20 of
the Indian Contract Act, stipulates as under:
20. Agreement void where both parties are under mistake
as to matter of fact
Where both the parties to an agreement are under a
mistake as to a matter of fact essential to the agreement,
the agreement, the agreement is void.
Explanation: An erroneous opinion as to the value of the
things which forms the subject-matter of the agreement, is
not be deemed a mistake as to a matter of fact.
17. In the present case, none of the parties are under a mistake
of fact and as evident from the proposal form Ex.PW1/6 and
letter dated 25.04.2014 Ex. P-7, both the parties were well aware
of the correct IDV of the subject vehicle. Ex. P-7 has been
admitted by the defendant, the relevant portion of the letter is
reproduced hereunder:
....
We have renewed four policies for Sum insured of Rs.2335500/-, but due to oversight one policy no. 361802/31/13/6300004205 was renewed for Sum insured 12,76,000/-. Now we have received the mail from Supreme Auto Carriers for enhancement of Sum insured of Rs. 10,59,500/- for trolly.
Suit No. 5961/2018 Page 22 of 27Supreme Auto Carrier Vs. National Insurance Co. Ltd.
......
The oversight in the policy Ex.P1 (Ex.P6) cannot be termed as mistake of fact by both the parties and thus the Ex.P1 is enforceable.
18. During the course of final arguments, Ld. Counsel for the defendant has argued that the document Ex. P-7 cannot be considered as the same has been illegally obtained by the plaintiff. Ex.P-7 is an admitted document. In Yashwant Sinha v. CBI, (2019) 6 SCC 1, the Hon'ble Supreme Court observed as under:
'9. An issue has been raised by the learned Attorney with regard to the manner in which the three documents in question had been procured and placed before the Court. In this regard, as already noticed, the documents have been published in The Hindu newspaper on different dates. That apart, even assuming that the documents have not been procured in a proper manner should the same be shut out of consideration by the Court? In Pooran Mal v. Director of Inspection [Pooran Mal v. Director of Inspection, (1974) 1 SCC 345 : 1974 SCC (Tax) 114 : AIR 1974 SC 348] this Court has taken the view that the "test of admissibility of evidence lies in its relevancy, unless there is an express or necessarily implied prohibition in the Constitution or other law evidence obtained as a result of illegal search or seizure is not liable to be shut out".'
19. Further Ex. P-7 is an admitted document and neither there is any pleading by defendant nor any suggestion is given to the witness examined by the plaintiff that the said document has been illegally obtained by the plaintiff. Merely because the document is internal communication between defendant company does not per se mean that the document has been procured by the plaintiff Suit No. 5961/2018 Page 23 of 27 Supreme Auto Carrier Vs. National Insurance Co. Ltd.
by illegal means. Thus, the contention raised by the Ld. Counsel for the defendant is without merit. As discussed hereinabove, proposal form is part of the insurance contract between the parties. The Insurance Regulatory and Development Authority of India, by a notification dated 16 October 2002 issued the Insurance Regulatory and Development Authority (Protection of Policyholders' Interests) Regulations 2002. The expression - proposal form is defined in Regulation 2(d) thus:
2(d) ―Proposal form means a form to be filled in by the proposer for insurance, for furnishing all material information required by the insurer in respect of a risk, in order to enable the insurer to decide whether to accept or decline, to undertake the risk, and in the event of acceptance of the risk, to determine the rates, terms and conditions of a cover to be granted.
Explanation: ―Material‖ for the purpose of these regulations shall mean and include all important, essential and relevant information in the context of underwriting the risk to be covered by the insurer.‖ Regulation 4, deals with proposals for insurance and is in the following terms:
4. Proposal for insurance (1) Except in cases of a marine insurance cover, where current market practices do not insist on a written proposal form, in all cases, a proposal for grant of a cover, either for life business or for general business, must be evidenced by a written document. It is the duty of an insurer to furnish to the insured free of charge, within 30 days of the acceptance of a proposal, a copy of the proposal form.
(2) Forms and documents used in the grant of cover may, depending upon the circumstances of each case, be made available in languages recognised under the Constitution of India.
Suit No. 5961/2018 Page 24 of 27Supreme Auto Carrier Vs. National Insurance Co. Ltd.
(3) In filling the form of proposal, the prospect is to be guided by the provisions of Section 45 of the Act. Any proposal form seeking information for grant of life cover may prominently state therein the requirements of Section 45 of the Act.
(4) Where a proposal form is not used, the insurer shall record the information obtained orally or in writing, and confirm it within a period of 15 days thereof with the proposer and incorporate the information in its cover note or policy. The onus of proof shall rest with the insurer in respect of any information not so recorded, where the insurer claims that the proposer suppressed any material information or provided misleading or false information on any matter material to the grant of a cover.
20. DW1 has admitted PW1/6 to be the proposal form of the defendant company. An insurance contract is governed by the provisions of Indian Contract Act. As per law of contract, proposal and acceptance form an integral part of the contract. The contract has to be read as a whole. The proposal form makes it clear that the IDV of the vehicle was proposed to be 23,35,500/-. From Ex. P-7, It is admitted fact that due to oversight wrong IDV was mentioned in Ex. P1. Thus, the case put forth by the defendant that as per GR-8 of Indian Motor Tariff which stipulates that for the purpose of total loss claim settlement, the IDV will not change during the current policy period, is not tenable. The present is not a case of change of IDV, but of correction of IDV, which is incorrectly mentioned in Ex. P-1 due to oversight.
21. Surveyor report is Ex.DW1/2, which shows that loss has been assessed at Rs. 18,71,383/- after deducting excess of Rs.1500/- and expected salvage value of Rs. 3,75,000/-. Defendant has not examined the Surveyor, who had authored the Suit No. 5961/2018 Page 25 of 27 Supreme Auto Carrier Vs. National Insurance Co. Ltd.
Ex.DW1/2. No justification for deduction towards salvage has been furnished nor any document on record has been proved by defendant to show that salvage value of subject value is Rs.3,75,000/-. Ex.DW1/2 merely provides the expected salvage value. Thus, the deduction made towards salvage is not justified. In absence of any evidence to the contrary proved on record by the defendant, this Court find that plaintiff is entitled to the insured sum i.e. Rs. 23,35,5000/-.
22. The claim form Ex.P-8 does not bear any date on which the same was submitted. Similarly, plaintiff has not mentioned any date on which claim form was submitted by the plaintiff. Plaintiff has also not specified the date from which interest @ 9% per annum is calculated on the sum insured in the plaint. From the perusal of email dated 05.08.2014, which is not specifically denied in the Written statement, it is clear that claim form must have been submitted prior to 05.08.2014. Since no specific date of submission of claim form has been provided, the court if of the considered opinion that interest of justice would be served if the plaintiff is granted 9% interest on the sum insured i.e. 23,35,500/- from 05.08.2014.
23. Section-34 CPC postulates and envisages the pendent-elite interest at any rate not exceeding 6% and future interest at any rate not exceeding the rate at which nationalized banks advanced loan. Keeping in mind the mandate of the said proposition, interest of justice would be served if plaintiff is granted pendentelite simple rate of interest @ 6% per annum from date of filing of the suit till decision of the suit and future rate of interest Suit No. 5961/2018 Page 26 of 27 Supreme Auto Carrier Vs. National Insurance Co. Ltd.
@ 9% per annum till its realization. Issue no. 2 and 3 are accordingly decided in favor of the plaintiff and against the defendant.
24. Applying priori and posteriori reasoning, this Court is satisfied that plaintiff has proved his case against the defendant for the amount, as mentioned hereinabove.
RELIEF
25. From the discussions, as adumbrated hereinabove, I hereby pass the following:
FINAL ORDER
(a). The suit of the plaintiff is decreed for Rs. 23,35,500/-
alongwith interest @ 9% per annum from 05.08.2014 till 27.08.2018. Plaintiff shall also be entitled to pendentlite interest @ 6% per annum and future interest @ 9% per annum on Rs.23,35,500/- till its realisation.
(b). No order as to the cost.
26. Decree-sheet be prepared accordingly.
27. File be consigned to Record Room after due compliance.
Announced in the open Court on (ALOK SHUKLA) this 19th Day of August, 2023. ADJ-07 (Central) Tis Hazari Courts, Delhi Suit No. 5961/2018 Page 27 of 27