Unregistered Vehicles Ineligible For Insurance Claims: NCDRC

Brief Facts:

Rajiv Kumar (“Complainant”) had purchased a Chevrolet TAVERA from Regent Automobiles on Hire Purchase Agreement through ICICI Bank Ltd, which was insured with HDFC Ergo General Insurance (“Insurance Company”) for Rs.6,57,000/-. The Complainant alleged that the vehicle was stolen from his residence's parking lot on 22.02.2007 and he intimated the theft to the Insurance Company. However, the Insurance Company repudiated the claim, stating that the vehicle was being driven on the public road without valid registration at the time of theft, which violated the policy terms. Subsequently, the Complainant lodged a complaint with the District Consumer Disputes Redressal Commission, VI New Delhi ("District Commission"). The District Commission upheld the Complaint, ordering the Insurance Company to pay Rs. 6,57,000/-, along with 9% interest from the date of claim filing until the amount is realized, and Rs. 25,000/- as compensation for harassment and litigation expenses. Dissatisfied with this ruling, the Insurance Company appealed to the State Consumer Disputes Redressal Commission, Delhi (“State Commission”) but the appeal was rejected on 11.09.2017. As a result, the Insurance Company approached the National Consumer Disputes Redressal Commission (“NCDRC”) with a revision petition.

The Insurance Company submitted that the State Commission ignored the settled law that non-registration of the insured vehicle takes it beyond the protection of the insurance policy. They argued that the vehicle was not registered at the time of theft, and registration of the vehicle is a mandatory obligation under Section 39 of the Motor Vehicle Act, which disentitles the insured for coverage under the policy. Regent Automobiles, the dealer, contended that it was their responsibility to hand over the registered vehicle to the Complainant, and they had not provided any temporary registration to the Complainant when the vehicle was delivered.

On the other hand, Rajiv Kumar argued that he had paid the premium for the policy, and thus the risk was covered. He contended that Regent Automobiles was negligent in not getting the registration done and delivering the vehicle without registration.

Decision of the Commission:

The NCDRC held that the action of Mr. Rajiv Kumar in taking the vehicle on the public road without valid registration was in clear violation of the Motor Vehicle Act and Rules. The NCDRC agreed with the Insurance Company that insurance is a prerequisite for vehicle registration, and non-registration of the vehicle is beyond the protection of the insurance policy.

The NCDRC relied on various judgments, including those by the Supreme Court and the NCDRC itself, that established the requirement of registration for coverage under the insurance policy and the consequences of plying a vehicle without valid registration. Reliance was placed on the judgment in Kaushalendra Kumar Mishra Vs. Oriental Insurance Co. Ltd., wherein it was held that use of the vehicle in violation of the law itself will take it beyond the protection of the insurance policy. NCDRC also referred to the case of Classic Bakery & Anr. Vs. Tata AIG Gen. Ins. Co. Ltd. & Anr., where the temporary registration of the vehicle had expired, and the complainant did not have a valid registration at the time of the incident. The NCDRC observed that non-registration of a vehicle is not only a violation of provisions of the Motor Vehicle Act 1988 but also a fundamental breach of terms and conditions of the Motor Insurance Policy. Further reliance was placed on Narinder Singh Vs. New India Ass. Co. Ltd. & Ors., wherein the Supreme Court held that a vehicle on the public road without any registration is not only an offence punishable under section 192 of the Motor Vehicles Act but also a fundamental breach of the terms and conditions of the policy contract.

Based on the principles established in these judgments, the NCDRC concluded that the Rajiv Kumar’s action of using the vehicle on public roads without valid registration was a violation of the law and the terms of the insurance policy. Therefore, the NCDRC upheld the Insurance Company’s repudiation of the claim and set aside the orders of the District Commission and the State Commission. The Revision Petition was allowed, and the parties were directed to bear their respective costs.

Case: HDFC Ergo General Insurance Company Ltd. vs Rajiv Kumar Agarwal & Anr.

Case No.: RP/453/2018

Advocate for the Complainant: Mr. Navneet Kumar

Advocate for the Respondent: Ms. Neena Malhotra

Click Here To Read/Download Order