Motor Vehicle Insurance | Route Permit Violation Unrelated To Accident Cannot Be Ground To Repudiate Claim: Chandigarh Consumer Commission

The District Consumer Disputes Redressal Commission–II, Chandigarh, comprising Shri Amrinder Singh Sidhu (President) and Shri B.M. Sharma (Member), has held that an alleged route permit violation having no nexus with the occurrence of an accident cannot be a valid ground for repudiation of a motor insurance claim. Holding the repudiation to be arbitrary, the Commission found United India Insurance Company Limited guilty of deficiency in service and directed it to reimburse the claim amount along with interest and compensation. Brief Facts The complainant, Sukhvir Singh, is the owner of a truck bearing registration number PB-65-AN-0251, which was insured with United India Insurance Company Limited for the period from 18 August 2018 to 17 August 2019. On 9 July 2019, while the truck was being driven by Gurcharan Singh, who held a valid driving licence, it met with an accident near the light point of Sector 25/38 (West), Chandigarh. The vehicle suffered substantial damage and was taken to an authorised workshop, which raised a repair bill dated 27 September 2019 amounting to ₹3,07,790. Following the accident, the complainant lodged an insurance claim. The insurer appointed a surveyor, who inspected the damaged vehicle and assessed the loss. However, after keeping the claim pending for a considerable period, the insurer repudiated the claim vide letter dated 1 July 2020. The claim was rejected on the ground that, at the time of the accident, the truck was being driven within the territorial limits of the Union Territory of Chandigarh, whereas the vehicle allegedly had a route permit only for the State of Punjab. Treating this as a violation of permit conditions, the insurer denied liability under the policy. Aggrieved, the complainant approached the District Consumer Commission alleging that the repudiation was illegal, arbitrary, and amounted to deficiency in service and unfair trade practice. Contentions of the Opposite Party The insurer admitted issuance of the policy and appointment of a surveyor but justified the repudiation on the ground that the accident occurred in Chandigarh, where the vehicle allegedly did not have a valid route permit. It was contended that this constituted a breach of policy conditions warranting rejection of the claim. The insurer further submitted that, in any event, its liability could not exceed ₹2,31,854. Observations and Decision The Commission observed that there is a clear distinction between a vehicle not having a route permit at all and a situation where the vehicle has a valid permit but is alleged to lack permit validity for a particular area at a given time. In the present case, it was undisputed that the vehicle possessed a valid route permit for the State of Punjab. The Commission held that the alleged absence of a route permit for UT Chandigarh had no nexus with the occurrence of the accident or the damage caused to the vehicle. Relying upon the judgment of the Punjab and Haryana High Court in National Insurance Company Ltd. v. Paramjit Kaur and the decision of the National Consumer Disputes Redressal Commission in United India Insurance Co. Ltd. v. Singhla Engineers & Contractors Pvt. Ltd., the Commission reiterated that technical or minor irregularities which do not contribute to the cause of loss cannot be treated as fundamental breaches justifying repudiation of insurance claims. The Commission also took note of the statement of an official from the Regional Transport Authority, Patiala, placed on record by the complainant, which clarified that vehicles holding valid Punjab route permits are permitted to ply in UT Chandigarh, being the capital of Punjab. Further relying on the Supreme Court's decision in Dharmendra Goel v. Oriental Insurance Co. Ltd., the Commission observed that insurance companies, being in a dominant position, cannot deny claims on hyper-technical grounds after accepting premiums. Holding the repudiation to be unjustified and arbitrary, the Commission concluded that the insurer was guilty of deficiency in service. Accordingly, the complaint was partly allowed and the insurer was directed to reimburse ₹3,07,790 along with interest at 9% per annum from the date of repudiation, i.e., 1 July 2020, till realisation, and to pay ₹25,000 towards compensation for harassment and litigation expenses. Case Title: Sukhvir Singh v. United India Insurance Company Limited Case No.: CC/20/2021 Click Here To Read/Download Order

Motor Vehicle Insurance | Route Permit Violation Unrelated To Accident Cannot Be Ground To Repudiate Claim: Chandigarh Consumer Commission

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Motor Vehicle Insurance | Route Permit Violation Unrelated To Accident Cannot Be Ground To Repudiate Claim: Chandigarh Consumer Commission

Praveen Mishra

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