Jaina Construction Company v. the Oriental Insurance Company Limited & Anr.

BELA M. TRIVEDI, J. 1. The present appeal is directed against the impugned order dated 9th September, 2016 passed by the National Consumer Disputes Redressal Commission, New Delhi (hereinafter referred to as “the NCDRC”) in Revision Petition No. 1104 of 2016 whereby the NCDRC while allowing the said Revision Petition filed by Respondent No. 1-Insurance Company, has set aside the order dated 16 th December, 2015 passed by the State Consumer Disputes Redressal, Commission, Haryana at Panchkula and the order dated 26 th February, 2015 passed by the District Consumer Disputes Redressal Forum, Gurgaon. 2. Heard Mr. Avinash Lakhanpal, learned counsel appearing on behalf of the appellant. None has entered appearance on behalf of the respondents though duly served. 3. The precise question that falls for consideration before t his Court is -whether the Insurance Company could repudiate the claim in toto, made by the owner of the vehicle, which was duly insured with the insurance company, in case of loss of the vehicle due to theft, merely on the ground that there was a delay in informing the company regardi ng the theft of vehicle? 4. The undisputed facts transpiring from the record are tha t the vehicle in question i.e., Tata Aiwa Truck bearing Registration No. RJ- 02-098177 was purchased by the appellant on 31.10.2007. The said vehicle was duly insured with Respondent No. 1- Insurance Company. The said vehicle was robbed by some miscreants on 04.11.2007. Consequently, an FIR was registered by the appellant-complainant on 05.11.2007 for the offence under Section 395 IPC at Police Station Nagina, D istrict Mewat (Haryana). The police arrested the accused and also f iled the challan against them in the concerned Court, however, the vehicl e in question could not be traced and, therefore, the police filed untraceable report on 23.08.2008. Thereafter, the complainant lodged the claim with the Insurance Company with regard to the theft of the vehicle in question. The Insurance Company, however, failed to settle the claim w ithin a reasonable time, and therefore, the appellant-complainant filed a complaint being the Consumer Complaint No. 63 of 2010 before the District Consumer Disputes Redressal Forum, Gurgaon. 177 5. It may be noted that during the pendency of the complaint before the District Forum, the respondent no.1- Insurance Compa ny repudiated the claim of the complainant vide its letter dated 19.10.2010, stating inter alia that there was a breach of condition no. 1 of the policy which mandated immediate notice to the insurer of the accidental loss/ damage, and that the complainant had intimated about the loss on 11.04.2008 i.e. after the lapse of more than five months and, therefore, the Insurance Company had disowned their liability on the claim of the complainant. 6. The District Forum allowed the said claim of the complainant by holding that the complainant was entitled to the insured amount on non-standard basis, i.e., Rs. 12,79,399/- as 75% of the IDV i.e., Rs. 17,05,865/- with interest @ 6% p.a. from the date of filing of the complaint till realization from the Insurance Company. The District Forum also awarded compensation of Rs.10,000/- and litigation expenses of Rs.5,000/ - to the complainant. The aggrieved Insurance Company prefer red an appeal being Appeal No. 612 of 2015 before the State Consumer Disputes Redressal Commission (Haryana), Panchkula. The complainant a lso preferred an appeal being Appeal No. 537 of 2015 seeking enhancement of compensation. The State Commission dismissed the appeal filed by the Insurance Company and partly allowed the appeal fi led by the complainant by increasing rate of interest awarded by the District Forum from 6% to 9% vide the Judgment and Order dated 16.12.2015. The aggrieved Insurance Company preferred the Revision Petition b efore the NCDRC which came to be allowed as stated hereinabove. 7. Since the respondent no.1 - Insurance Company has repudiated the claim of the complainant on the ground that the complainan t had committed the breach of Condition No. 1 of the Insurance Contract, i t would be beneficial to reproduce the said condition, which reads as under: “1. Notice shall be given in writing to the company immediately upon the occurrence of any accidental loss or damage in the event of any claim and thereafter the insured shall gi ve all such information and assistance as the company shall require. Every letter, claim, writ, summons and/or process o r copy thereof shall be forwarded to the company immediately on receipt by the insured. Notice shall also be given in writing to the company immediately the insured shall have knowledge of any impending prosecution, inquest or fatal inqu iry in JAINA CONSTRUCTION COMPANY v. THE ORIENTAL INSURANCE COMPANY LIMITED & ANR. [BELA M. TRIVEDI, J.] respect of any occurrence which may give rise to a claim under this policy. In case of a major loss, theft or criminal act which may be the subject of a claim under this poli cy the insured shall give immediate notice to the policeand co-operate with the company in securing the conviction of the off ender.” 8. At the outset, it may be noted that there being a confli ct of decisions of the Bench of two Judges of this Court in c ase of Om Prakash vs. Reliance General Insurance & Another and in case of Oriental Insurance Company Limited vs. Parvesh Chander Chadha, on the question as to whether the delay occurred in info rming the Insurance Company about the occurrence of the theft of the vehicl e, though the FIR was registered immediately, would disentitle the claimant of the insurance claim, the matter was referred to a three Judge Bench. The three Judge Bench in case of Gurshinder Singh vs. Shriram General Insurance Company Ltd. & Another reported in 2020 (11) SCC 612 in similar case as on hand, interpreted the very condition no. 1 of the Insurance Contract and observed as under: “9. We are of the view that much would depend upon the words “cooperate” and “immediate”, in Condition 1 of the standard form for commercial vehicles package policy. Before we analyse this case any further, we need to observe th e rules of interpretation applicable to a contract of insur ance. Generally, an insurance contract is governed by the rule s of interpretation applicable to the general contracts. Howe ver, due to the specialised nature of contract of insurance, c ertain rules are tailored to suit insurance contracts. Und er the English law, the development of insurance jurisprude nce is given credence to Lord Mansfield, who developed the law from its infancy. Without going much into the development of the interpretation rules, we may allude to Neuberge r, J. in Arnold v. Britton, which is simplified as under: (1) Reliance placed in some cases on commercial common sense and surrounding circumstances was not to be invoked to undervalue the importance of the language of the provision which is to be construed. (2) The less clear the words used were, the more ready the court could properly be to depart from their natura l 179 meaning, but that did not justify departing from th e natural meaning. (3) Commercial common sense was not to be invoked retrospectively, so that the mere fact that a contractual arrangement has worked out badly, or even disastrously, for one of the parties was not a reason for departing from the natural language. (4) A court should be very slow to reject the natura l meaning of a provision as correct simply because it appeared to be a very imprudent term for one of the parties to have agreed. (5) When interpreting a contractual provision, the cou rt could only take into account facts or circumstances which existed at the time that the contract was made and which were known or reasonably available to both parties. (6) If an event subsequently occurred which was plai nly not intended or contemplated by the parties, if it wa s clear what the parties would have intended, the court would give effect to that intention. 10. A perusal of the aforesaid shows that this contract is to be interpreted according to the context involved in the contr act. The contract we are interpreting is a commercial ve hicle package policy. There is no gainsaying that in a contrac t, the bargaining power is usually at equal footing. In this regar d, the joint intention of the parties is taken into consideration for interpretation of a contract. However, in most standard f orm contracts, that is not so. In this regard, the court in such circumstances would consider the application of the rule of contra proferentem, when ambiguity exists and an interpretation of the contract is preferred which favou rs the party with lesser bargaining power. 11. It is argued on behalf of the respondents and rightly so, that the insurance policy is a contract between the insurer and the insured and the parties would be strictly bound by the terms and conditions as provided in the contract between t he parties. JAINA CONSTRUCTION COMPANY v. THE ORIENTAL INSURANCE COMPANY LIMITED & ANR. [BELA M. TRIVEDI, J.] 12. In our view, applying the aforesaid principles, Cond ition 1 of the standard form for commercial vehicles pack age policy will have to be divided into two parts. The perusal of the first part of Condition 1 would reveal that it provides that “a notice shall be given in writing to the company immediately upon the occurrence of any accidental loss or damag e”. It further provides that in the event of any claim and the reafter, the insured shall give all such information and assistance as the company shall require. It provides that every letter, claim, writ, summons and/or process or copy thereof shall be forwarded to the insurance company immediately on receipt by the insured. It further provides that a notice sha ll also be given in writing to the company immediately by the insured if he shall have knowledge of any impending prosecution inquest or fatal inquiry in respect of any occurrence, which ma y give rise to a claim under this policy. 13. A perusal of the wordings used in this part would re veal that all the things which are required to be done under t his part are related to an occurrence of an accident. O n occurrence of an accidental loss, the insured is required to immediately give a notice in writing to the company . This appears to be so that the company can assign a surveyor so as to assess the damages suffered by the insured/vehi cle. It further provides that any letter, claim, writ, summons and/or process or copy thereof shall be forwarded to the compa ny immediately on receipt by the insured. As such, the i ntention would be clear. The question of receipt of letter, cl aim, writ, summons and/or process or copy thereof by the insured, would only arise in the event of the criminal proceedings being initiated with regard to the occurrence of the acci dent. It further provides that the insured shall also give a noti ce in writing to the company immediately if the insured shal l have the knowledge of any impending prosecution inquest or fat al inquiry in respect of any occurrence which may give rise to a claim under this policy. It will again make the intent ion clear that the immediate action is contemplated in respec t of an accident occurring to the vehicle. 14. We find that the second part of Condition 1 deals with t he “theft or criminal act other than the accident”. It p rovides 181 that in case of theft or criminal act which may be th e subject of a claim under the policy, the insured shall give imme diate notice to the police and cooperate with the company in securing the conviction of the offender. The object behind g iving immediate notice to the police appears to be that if the po lice is immediately informed about the theft or any criminal act , the police machinery can be set in motion and steps for recovery of the vehicle could be expedited. In a case of theft, the insurance company or a surveyor would have a limi ted role. It is the police, who acting on the FIR of the i nsured, will be required to take immediate steps for tracin g and recovering the vehicle. Per contra, the surveyor of the insurance company, at the most, could ascertain the f actum regarding the theft of the vehicle. 15. It is further to be noted that, in the event, a fter the registration of an FIR, the police successfully recover ing the vehicle and returning the same to the insured, there w ould be no occasion to lodge a claim for compensation on account of the policy. It is only when the police are not in a pos ition to trace and recover the vehicle and the final report i s lodged by the police after the vehicle is not traced, the ins ured would be in a position to lodge his claim for compensation. 16. …………………… 17. That the term “cooperate” as used under the con tract needs to be assessed in the facts and circumstances. While assessing the “duty to cooperate” for the insured, inter alia, the court should have regard to those breaches by the ins ured which are prejudicial to the insurance company. Usually, mere delay in informing the theft to the insurer, when the same was already informed to the law enforcement authori ties, cannot amount to a breach of “duty to cooperate” of the insured. 18. …………… 19. ………….. 20. We, therefore, hold that when an insured has lodged the FIR immediately after the theft of a vehicle occurr ed and when the police after investigation have lodged a final report JAINA CONSTRUCTION COMPANY v. THE ORIENTAL INSURANCE COMPANY LIMITED & ANR. [BELA M. TRIVEDI, J.] after the vehicle was not traced and when the surve yors/ investigators appointed by the insurance company have found the claim of the theft to be genuine, then mere del ay in intimating the insurance company about the occurrenc e of the theft cannot be a ground to deny the claim of the insured.” 9. In the opinion of the Court the afore-stated ratio of the judgment clinches the issue involved in the case on hand. In the instant case also, the FIR was lodged immediately on the next day of the occurre nce of theft of the vehicle by the complainant. The accused were also arrested and charge-sheeted, however, the vehicle could not be traced o ut. Of course, it is true that there was a delay of about five months on the part of the complainant in informing and lodging its claim before the Insurance Company, nonetheless, it is pertinent to note that the Insurance Company has not repudiated the claim on the ground that it was not genuine. It has repudiated only on the ground of delay. When the complainant had lodged the FIR immediately after the theft of the vehicle, and when the police after the investigation had arrested the accused and also file d challan before the concerned Court, and when the claim of the insured was not found to be not genuine, the Insurance Company could not have repudiated the claim merely on the ground that there was a delay in intimating the Insurance Company about the occurrence of the theft. 10. In that view of the matter, the Court is of the opinion that the NCDRC should not have set aside the orders of the District Forum and the State Commission by holding that the repudiation of the insurance claim by the insurance company was justified. The impugned order being erroneous and against the settled position of law, deserves t o be set aside, and is set aside, accordingly. 11. The appeal is allowed, affirming the order of th e State Commission. Divya Pandey Appeal allowed.