2023 (7) TMI 1513 - SC - Indian Laws

Vehicle theft claim allowed despite 6-day delay in intimation and keys left in ignition

Ashok Kumar Versus New India Assurance Co. Ltd.

The SC allowed the appeal in an insurance claim dispute involving vehicle theft. The insured's vehicle was stolen on 26.06.2008, FIR filed on 27.06.2008, ... Withdrawal of the earlier complaint - Breach of insurance policy condition regarding delay in intimation of theft - breach of condition concerning safeguarding the vehicle - Settlement of insurance claims on a non-standard basis. Whether the delay of 6 days in intimating the Insurance Company about the theft comes within the purview of breach of Condition No. 1 and also whether on facts there was breach of condition No. 5 of the insurance policy to justify the rejection of the claim in toto? HELD THAT:- A careful perusal of Condition No.1 shows that notice is to be given in writing to the Insurance Company immediately upon occurrence of any accidental loss or damage. The later part of the clause says that in case of theft or criminal act, which may be subject of a claim under the policy, the insured shall give immediate notice to the police and cooperate with the Insurance Company in securing the conviction of the offender - In the present case, after the incident of theft on 26.06.2008, FIR was registered on 27.06.2008. The intimation was also given to the Insurance Company admittedly on 02.07.2008. The Police have also reported the vehicle as untraced as the records indicate. Insofar as the alleged breach of Condition No.5 is concerned, it is seen from the record that the driver of the claimant left the key in the keyhole of the vehicle when he got down to search the location of “Mittal Farm”, where he had to unload the stone dust. The investigator recommended the repudiation of claim because, according to him, steps to safeguard the vehicle insured were not taken by the driver. It is contended by the appellant that breach of condition No.5, if any, cannot result in total repudiation of the claim - It is noticed in the repudiation letter that the driver Mam Chand had, after alighting from the vehicle, gone to enquire about the location of Mittal’s Farm and that after he went some distance, he heard the sound of the starting of the vehicle and it being stolen away. The time gap between the driver alighting from the vehicle and noticing the theft, is very short as is clear from the facts of the case. It cannot be said, in such circumstances, that leaving the key of the vehicle in the ignition was an open invitation to steal the vehicle. Nitin Khandelwal [2008 (5) TMI 763 - SUPREME COURT] and Amalendu Sahoo [2010 (3) TMI 1290 - SUPREME COURT] lay down the correct formula that where there is some contributory factor, a proportionate deduction from the assured amount would be all that the Insurance Company can aspire to deduct. The judgment of the National Commission set aside - Appeal allowed. Issues Involved:1. Withdrawal of the earlier complaint and its implications.2. Breach of Condition No. 1 of the insurance policy regarding delay in intimation of theft.3. Breach of Condition No. 5 concerning safeguarding the vehicle.4. Settlement of insurance claims on a non-standard basis.Issue-wise Detailed Analysis:1. Withdrawal of the Earlier Complaint:The National Commission erred in considering the withdrawal of the earlier complaint as a bar to filing a fresh complaint. The original complaint was filed before the insurance company had repudiated the claim, and the withdrawal was due to the counsel's mistake, not on the merits of the case. The Supreme Court found that the appellant should not be penalized for the lawyer's actions, and the withdrawal did not challenge the repudiation, which occurred later. Thus, the complaint should be considered on its merits, and the bar under Order XXIII Rule (1)(4) CPC was not applicable.2. Breach of Condition No. 1:Condition No. 1 required immediate notice to the insurance company upon any accidental loss or damage. However, in theft cases, the insured must notify the police immediately and cooperate with the insurance company. The Supreme Court, referencing prior judgments, clarified that mere delay in notifying the insurer, when the police were informed promptly, does not constitute a breach of the duty to cooperate. In this case, the FIR was filed the day after the theft, and the insurance company was informed within six days. Thus, there was no breach of Condition No. 1 as the delay was not prejudicial to the insurer.3. Breach of Condition No. 5:Condition No. 5 required the insured to take reasonable steps to safeguard the vehicle. The insurance company argued that leaving the vehicle unattended with the key in the ignition constituted a breach. However, the Supreme Court noted that the driver left the vehicle briefly to search for a location, and the theft occurred within a short time frame. This did not amount to a fundamental breach of the condition. The Court referenced the principle that a violation must be fundamental to deny any claim amount, and in this case, the breach was not significant enough to justify total repudiation.4. Settlement of Insurance Claims on a Non-standard Basis:The Supreme Court upheld the decisions of the District Forum and the State Commission to settle the claim on a non-standard basis, awarding 75% of the insured amount. This approach aligns with the guidelines and precedents that allow for a proportionate deduction where there is a contributory factor. The Court emphasized that the breach was not fundamental and that the insurance company could only aspire to deduct a proportionate amount from the assured sum. The decision to award 75% of the claim was justified and consistent with the established legal framework for non-standard settlements.Conclusion:The Supreme Court allowed the appeal, setting aside the National Commission's judgment and restoring the decision of the District Forum, as affirmed by the State Commission, to award 75% of the claim on a non-standard basis. The Court found that the earlier complaint's withdrawal did not preclude the fresh complaint, there was no breach of Condition No. 1, and the breach of Condition No. 5 was not fundamental. The case was resolved in favor of the appellant, ensuring a fair settlement of the insurance claim.