National Consumer Disputes Redressal
National Insurance Co. Ltd. vs Suresh Babu on 3 November, 2006
Equivalent citations: AIR 2007 (NOC) 259 (NCC) = 2007 (1) ALJ 86, 2007 (1) ALJ 86
NCDRC NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI FIRST APPEAL No.166 OF 2003 (From the order dated 1.1.03 in C.No.156/99 of the State Commission, Karnataka) National Insurance Co. Ltd. APMC Yard Branch Mrutyunjaya Nagar Dharwad. Through Manager Delhi Regional Office Jeevan Bharti Connaught Place New Delhi 110 001. Appellant Versus 1. Suresh Babu Agriculturist R/o Uppoin Betageri Dharwad. 2. Karnataka State Financial Corporation Through its Branch Office P.B. Road Rayapur Dharwad. Respondents BEFORE : HONBLE MR.JUSTICE M.B. SHAH, PRESIDENT MRS. RAJYALAKSHMI RAO, MEMBER For the Appellant : Mr. Vishnu Mehra, Advocate For the Respondent : Mr. Kantesh Betgeri , Advocate 03.11.2006 ORDER
M.B. SHAH, J., PRESIDENT In a vehicle having Permit for sitting capacity of 19 passengers, if 35 to 36 passengers are carried, whether the insured is entitled to get the compensation for damages caused to the vehicle due to accident?
This question is required to be decided by taking into consideration:
(a) Breach of Section 88(11) of Motor Vehicles Act, 1988 and Rules; and,
(b) Flagrant violation of the terms of the insurance policy.
Under the Motor Vehicles Act, 1988, if a vehicle is used to carry passengers more than the permitted capacity, it is an offence. May be that the authorities empowered to implement such law may not be taking any action; but, that law cannot be ignored while passing an order for getting compensation on the ground of damage to the vehicle due to accident. If the law is ignored, it encourages its violation.
Secondly, if there is a flagrant violation of the term of the policy, the Insurance Company cannot be directed to reimburse the Complainant even on the basis of non-standard claim adopted by the Insurance Companies. Relevant part of the said policy is as under:
Non Standard Claims:
Following types of claims shall be considered as non-standard and shall be settled as indicated below after recording the reasons.
Sr.No. Description Percentage of settlement i. Under declaration Deduct 3 years difference of licensed premium from the amount carrying of claim or deduct 25% of capacity claim amount, which ever is higher ii Overloading of Pay claims not exceeding vehicles beyond 75% of admissible claim.
licensed carrying capacity.
iii Any other breach Pay upto 75% of admissible of warranty/ claim.
condition of policy including limitation as to use.
For breach of warranties/conditions which do not involve any saving in premiums or any additional exposure of the Insurers, such claims be considered as Standard Claims e.g. Route Permit No doubt, in case of over-loading of vehicles beyond the license carrying capacity, discretion is given to the Insurance Company to settle the same by paying upto 75%. If that discretion is not properly exercised, the Court/Consumer Fora may interfere and direct the Insurance Company to reimburse the insured appropriately. However, it would depend upon facts of each case.
In the present case, as far as policy cover is concerned, there is under declaration of the license carrying capacity in the vehicle. Not only that, the vehicle was overloaded beyond reasonable limits of license carrying capacity. In such a situation, to direct the Insurance Company to pay as if the claim is non-standard claim would be unjustified one.
Facts:
Being aggrieved and dissatisfied by the judgement and order dated 1.1.2003 passed by the Karnataka State Consumer Disputes Redressal Commission, Bangalore, in Complaint No.156/1999, National Insurance Company Ltd. (hereinafter referred to as the insurance company) has preferred this Appeal.
It is not disputed that the complainant has taken insurance policy for Tourist Omnibus having sitting capacity of 18+1 passengers as per the permit given by the Transport Authority. It is also not disputed that the assured sum was Rs.6,90,000/- for the period between 31.3.1997 and 30.3.1998. The accident took place at Pune-Bangalore Road on 7.11.1997.
As a result of the accident, the bus was completely smashed. In all 6 persons died and it is alleged that as per the FIR, 25 persons were injured.
After considering the evidence on record and on the basis of the report submitted by the surveyor, the State Commission directed the insurance company to pay Rs.6,90,000/- with interest at the rate of 12% p.a. from 10.8.1999 till its payment with costs quantified at Rs.3000/-.
Submissions:
At the time of hearing of this Appeal, learned counsel appearing on behalf of the Insurance Company submitted that the insurance company has rightly repudiated the claim on the ground that there was total violation of the terms and conditions of the policy, inasmuch as, as per the insurance cover the Mini bus was to be used to carry only 12+1 passengers.
As against this, in the vehicle, there were more than 35 passengers at the time of the accident. He, therefore, submitted that the order passed by the State Commission is, on the face of it, erroneous as there is clear violation of the terms of the policy.
The learned Counsel for the Complainant submitted that the order passed by the State Commission is justified. The cause of the accident is altogether different and it is not because of overloading of the truck. He pointed out that the accident occurred on account of negligence on the part of the driver of the other vehicle who parked the vehicle on the road. The accident took place at the dead of night as from the opposite direction other vehicle with dazzling light was coming. And, therefore, the vehicle dashed with the vehicle which was parked on the road.
He, therefore, submitted that there is no negligence on the part of the driver of the vehicle.
Findings:
Before hearing of this Appeal, sufficient time was given to the parties to produce the judgements rendered by the Motor Accident Claims Tribunal (MACT) as well as in criminal prosecution. At the time of hearing of this Appeal, learned counsel for the insurance company relied upon the judgement decided by JMFC ( II Court), Chitradurga in CC No.1103/1998. No doubt, by the said judgement the driver was acquitted for the offences punishable under Sections 279, 337, 338 and 304(A) of the Indian Penal Code.
However, in para-9 it has been specifically stated that the aforesaid discussion establishes beyond doubt that prosecution witnesses 1 to 25 were eye-witnesses and were traveling in the Mini bus. Six persons died on the spot. This establishes that in the vehicle there were at least more than 31 passengers.
However, learned counsel appearing on behalf of the complainant submitted that in the MACT proceedings, the insurance company has failed to establish that there were 35 passengers traveling in the Mini bus.
We have gone through the said judgements but there is no clear finding to the effect that the Mini bus was not carrying 35 passengers. The finding recorded by the MACT is on the basis that the insurance company has failed to prove that in the said vehicle, at the relevant time, there were 35 passengers.
As against this, on record, there is an FIR, charge-sheet and the judgement rendered by the competent Criminal Court wherein prosecution witnesses, who in all were 25, were injured. In these set of circumstances, in our view, repudiation of the claim cannot be said to be unjustified as the insurance policy specifically provides that maximum licence carrying capacity including the driver and cleaner would be 12+1. The schedule of the premium specifically provides that - premium was paid for 12 passengers at the rate of Rs.110/- i.e. in all Rs.1320/-. Obviously, this term of the policy was violated.
Further important aspect is with regard to limitation as to use, which is as under :
This policy covers the use only under a permit within the meaning of Motor Vehicles Act, 1988 or such a carriage falling under Sub-section 3 of Section 66 of the Motor Vehicles Act, 1988.
It is true that as per the permit issued under Motor Vehicles Act by the Regional Transport Officer, Dharwad, the sitting capacity for the vehicle was 19 in all. Even if we take that the complainant was entitled to carry 17 passengers one driver and one conductor then also the breach of the terms of the policy would be with regard to limitation as to use. Because, in the Mini bus having capacity to carry 17 passengers + 1 driver and one conductor, 35-36 passengers were being carried. This would have its own adverse effect in driving the vehicle. That too, in the dead of night, the driver may lose control at any point of time. As per the judgment of the M.A.C.T. one of the witnesses stated that the mini bus was driver very fast and recklessly and it dashed behind the vehicle which was parked on the road side. Hence, it cannot be said that such breach of the conditions of the policy and the permit could not be one of the causes for the accident. Therefore, the decision relied upon by the State Commission in the case of B.V. Nagaraju Vs. Oriental Insurance Company Ltd. - (1996) 4 SCC 647, would have no bearing in the facts of the case because in that case only 2 to 3 more passengers were carried in a goods vehicle.
In this view of the matter: (i) there is a gross violation of the terms of the policy; and, (ii) the provisions of the Law. Hence, in such a situation, the Insurance Company has no alternative but to repudiate the claim as there is gross violation of the terms of the contract.
In the result, the Appeal is allowed. Impugned order passed by the State Commission is set aside. There shall be no order as to costs.
However, considering the fact and the interpretation as it stood and the fact that the Insurance Company has deposited some amount and the same is withdrawn by the Complainant, who according to the learned Counsel, is a poor person, it would be open to the Insurance Company to waive recovery of the said amount from the Complainant.
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..J. (M.B. SHAH) PRESIDENT Sd/-
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(RAJYALAKSHMI RAO) MEMBER