Involvement Of Driver In Theft Of Vehicle, Insurance Company Still Liable; NCDRC

In this case, the Insured (Respondent) took Insurance Policy from the Insurance Company (Appellant), for his vehicle. One day, the Insured entrusted the vehicle to the driver to despatch manure/fertilizer from Gondia (Maharashtra) to Mashal (Maharashtra). The said vehicle was stolen. During investigation it was revealed that the driver was involved in theft. The Insurance Company, repudiated the claim on the ground that the driver was involved in the offence which amounted to criminal breach of trust. Alleging deficiency in service on the part of the Insurance Company, the Insured filed a Complaint before the State Commission prayed Rs. 21,66,000/- with interest @ 18% from the date of theft till full and final realization of the amount and Rs.1,00,000/- for mental and physical harassment. State Commission partly allowed the Complaint and directed the Insurance Company to pay to the complainant Rs.20.71 lacs with interest @ 9% p.a. from the date of repudiation of his claim till its realization by him and Rs.25,000/- towards physical and mental harassment.

State Commission Maharashtra relied on a case of S. Bhagat Singh v. Oriental Insurance Co. Ltd., whereby it was observed that, "Even if it is assumed that the driver dishonestly took away the taxi-car, even then the case would fall under sec. 378 of Indian Penal Code wherein theft has been defined."

State Commission stated that, "the driver had in collusion with two other culprits committed theft of the Vehicle owned by the Insured."

Aggrieved by the decision of State Commission Maharashtra the Insurance Company filed an appeal before the National Commission under Section 19 of the Consumer Protection Act, 1986.

Before the National Commission, the Insurance Company (appellant) submitted that, the State Commission failed to appreciate that it was not a matter of theft but criminal breach of trust and was outside the purview of the Policy.

The respondent (Insured) submitted that, the Insurance Company did not supply the terms & conditions of the Policy to the Insured. The Insurance Company cannot take the benefit of the exclusion clause of the Policy which did not form part of the contract, due to non-supply of the same to the Insured.

The issue for consideration before the National Commission was whether the Insurance Company is liable for the loss suffered by the Insured or not.

Commission found that, the Insurance Company has not filed complete copy of the Insurance Policy. Only cover note has been filed. The vehicle was stolen and during police investigation it was found that the driver of the vehicle was also involved in the theft.

Commission stated that, "The Insurance Company repudiated the claim stating that it was not a case of theft but breach of trust, which was outside the purview of the Insurance Policy. The Insurance Policy covered the loss to the vehicle by burglary, house breaking or by malicious act. It is a case of theft and involvement of driver in the theft will not rule out the commission of theft."

Commission opined that, the State Commission has rightly relied on a case of S. Bhagat Singh v. Oriental Insurance Co. Ltd., and stated that, the driver was also involved in the theft and insurance policy covered the loss to the vehicle by theft. Hence, the insurance company is liable for the loss suffered by the Insured.

In view of the above, Commission observed that the State Commission passed a well-reasoned order. Insurance Company have failed to point out any illegality or irregularity in the impugned order. National Commission dismissed the appeal.

Case Name: New India Assurance Co. Ltd. & Anr. v. Tirath Singh Awatarsingh Bhatia

Case No.: FIRST APPEAL NO. 1034 OF 2015

Corum: Justice Viswanath, Presiding Member and Justice Surat Ram Maurya, Member

Decided on: 1^st July, 2022

Click Here To Read/Download Order