JAINA CONSTRUCTION COMPANYversusTHE ORIENTAL INSURANCE COMPANY LIMITED & ANR.

                         [2022] 2 S.C.R. 175                             175


               JAINA CONSTRUCTION COMPANY                                A
                                  v.
 THE ORIENTAL INSURANCE COMPANY LIMITED & ANR.
                   (Civil Appeal No. 1069 of 2022)
                       FEBRUARY 11, 2022                                 B
        [SANJIV KHANNA AND BELA M. TRIVEDI, JJ.]
       Consumer Protection – Insurance claim – Theft of vehicle –
Delay in informing the insurance company– Claim repudiated–
Appellant filed complaint before District forum, allowed – Appeal,
                                                                         C
dismissed by State Commission – Appellant had also filed appeal
seeking enhancement of compensation which was partly allowed as
the rate of interest awarded was increased from 6% to 9% – Revision
Petition filed by Insurance Company, allowed by NCDRC – On appeal,
held: FIR was lodged immediately by the appellant on the next day of
the occurrence of theft of the vehicle – Accused were also arrested      D
and chargesheeted, however, the vehicle could not be traced out –
Insurance Company has not repudiated the claim on the ground that
it was not genuine but only on the ground of delay – 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
                                                                         E
that there was delay in intimating about the occurrence of the theft –
NCDRC should not have set aside the orders of the District Forum
and State Commission by holding that the repudiation of the insurance
claim by the insurance company was justified – Impugned order set
aside – Order of State Commission affirmed.
        Gurshinder Singh v. Shriram General Insurance                    F
        Company Ltd. & Another 2020 (11) SCC 612 : [2020]
        2 SCR 564 – relied on.
                       Case Law Reference
[2020] 2 SCR 564               relied on                 Para 8
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        CIVIL APPELLATE JURISDICTION: Civil Appeal No.1069 of
2022.
       From the Judgment and Order dated 09.09.2016 of the National
Consumer Disputes Redressal Commission, New Delhi in Revision
Petition No.1104 of 2016.
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176            SUPREME COURT REPORTS                           [2022] 2 S.C.R.


A           Avinash Lakhanpal, Ms. Kamakshi S. Mehlwal, Advs. for the
      Appellant.
            The Judgment of the Court was delivered by
             BELA M. TRIVEDI, J.
             1. The present appeal is directed against the impugned order dated
B      th
      9 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 16th December, 2015 passed by the State
C     Consumer Disputes Redressal, Commission, Haryana at Panchkula and
      the order dated 26th 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.
D
             3. The precise question that falls for consideration before this
      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 regarding
E     the theft of vehicle?
             4. The undisputed facts transpiring from the record are that 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
F     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, District
      Mewat (Haryana). The police arrested the accused and also filed the
      challan against them in the concerned Court, however, the vehicle in
      question could not be traced and, therefore, the police filed untraceable
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      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 within a
      reasonable time, and therefore, the appellant-complainant filed a complaint
      being the Consumer Complaint No. 63 of 2010 before the District
H     Consumer Disputes Redressal Forum, Gurgaon.
     JAINA CONSTRUCTION COMPANY v. THE ORIENTAL                                177
 INSURANCE COMPANY LIMITED & ANR. [BELA M. TRIVEDI, J.]

       5. It may be noted that during the pendency of the complaint            A
before the District Forum, the respondent no.1- Insurance Company
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
                                                                               B
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.          C
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 preferred an
appeal being Appeal No. 612 of 2015 before the State Consumer Disputes         D
Redressal Commission (Haryana), Panchkula. The complainant also
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 filed 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                E
aggrieved Insurance Company preferred the Revision Petition before
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 complainant had
committed the breach of Condition No. 1 of the Insurance Contract, it          F
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 give all
      such information and assistance as the company shall require.            G
      Every letter, claim, writ, summons and/or process or 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 inquiry in                H
178            SUPREME COURT REPORTS                         [2022] 2 S.C.R.


A           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 policy the
            insured shall give immediate notice to the policeand co-operate
            with the company in securing the conviction of the offender.”
B            8. At the outset, it may be noted that there being a conflict of
      decisions of the Bench of two Judges of this Court in case 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 informing the
      Insurance Company about the occurrence of the theft of the vehicle,
C     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
D     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 the rules
E           of interpretation applicable to a contract of insurance.
            Generally, an insurance contract is governed by the rules of
            interpretation applicable to the general contracts. However,
            due to the specialised nature of contract of insurance, certain
            rules are tailored to suit insurance contracts. Under the
            English law, the development of insurance jurisprudence is
F           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 Neuberger, J.
            in Arnold v. Britton, which is simplified as under:
            (1)    Reliance placed in some cases on commercial common
G                  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 natural
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    JAINA CONSTRUCTION COMPANY v. THE ORIENTAL                           179
INSURANCE COMPANY LIMITED & ANR. [BELA M. TRIVEDI, J.]

          meaning, but that did not justify departing from the           A
          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          B
          from the natural language.
    (4)   A court should be very slow to reject the natural
          meaning of a provision as correct simply because it
          appeared to be a very imprudent term for one of the
          parties to have agreed.                                        C
    (5)   When interpreting a contractual provision, the court
          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.                                                       D
    (6)   If an event subsequently occurred which was plainly
          not intended or contemplated by the parties, if it was
          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     E
    interpreted according to the context involved in the contract.
    The contract we are interpreting is a commercial vehicle
    package policy. There is no gainsaying that in a contract, the
    bargaining power is usually at equal footing. In this regard,
    the joint intention of the parties is taken into consideration for   F
    interpretation of a contract. However, in most standard form
    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 favours the
    party with lesser bargaining power.                                  G
    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 the
    parties.                                                             H
180     SUPREME COURT REPORTS                        [2022] 2 S.C.R.


A     12. In our view, applying the aforesaid principles, Condition
      1 of the standard form for commercial vehicles package
      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 damage”. It
B
      further provides that in the event of any claim and thereafter,
      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
C     by the insured. It further provides that a notice shall 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 may give
      rise to a claim under this policy.
D     13. A perusal of the wordings used in this part would reveal
      that all the things which are required to be done under this
      part are related to an occurrence of an accident. On
      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
E     as to assess the damages suffered by the insured/vehicle. It
      further provides that any letter, claim, writ, summons and/or
      process or copy thereof shall be forwarded to the company
      immediately on receipt by the insured. As such, the intention
      would be clear. The question of receipt of letter, claim, writ,
F     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 accident. It
      further provides that the insured shall also give a notice in
      writing to the company immediately if the insured shall have
      the knowledge of any impending prosecution inquest or fatal
G     inquiry in respect of any occurrence which may give rise to a
      claim under this policy. It will again make the intention clear
      that the immediate action is contemplated in respect of an
      accident occurring to the vehicle.
      14. We find that the second part of Condition 1 deals with the
H     “theft or criminal act other than the accident”. It provides
    JAINA CONSTRUCTION COMPANY v. THE ORIENTAL                         181
INSURANCE COMPANY LIMITED & ANR. [BELA M. TRIVEDI, J.]

    that in case of theft or criminal act which may be the subject     A
    of a claim under the policy, the insured shall give immediate
    notice to the police and cooperate with the company in securing
    the conviction of the offender. The object behind giving
    immediate notice to the police appears to be that if the police
    is immediately informed about the theft or any criminal act,
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    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 limited
    role. It is the police, who acting on the FIR of the insured,
    will be required to take immediate steps for tracing and
    recovering the vehicle. Per contra, the surveyor of the            C
    insurance company, at the most, could ascertain the factum
    regarding the theft of the vehicle.
    15. It is further to be noted that, in the event, after the
    registration of an FIR, the police successfully recovering the
    vehicle and returning the same to the insured, there would be      D
    no occasion to lodge a claim for compensation on account of
    the policy. It is only when the police are not in a position to
    trace and recover the vehicle and the final report is lodged
    by the police after the vehicle is not traced, the insured would
    be in a position to lodge his claim for compensation.
                                                                       E
    16. ……………………
    17. That the term “cooperate” as used under the contract
    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 insured      F
    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 authorities,
    cannot amount to a breach of “duty to cooperate” of the
    insured.
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    18. ……………
    19. …………..
    20. We, therefore, hold that when an insured has lodged the
    FIR immediately after the theft of a vehicle occurred and
    when the police after investigation have lodged a final report     H
182             SUPREME COURT REPORTS                            [2022] 2 S.C.R.


A           after the vehicle was not traced and when the surveyors/
            investigators appointed by the insurance company have found
            the claim of the theft to be genuine, then mere delay in
            intimating the insurance company about the occurrence of
            the theft cannot be a ground to deny the claim of the insured.”
B             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 occurrence of
      theft of the vehicle by the complainant. The accused were also arrested
      and charge-sheeted, however, the vehicle could not be traced out. Of
      course, it is true that there was a delay of about five months on the part
C     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
D     after the investigation had arrested the accused and also filed 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.
E            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 to be set
      aside, and is set aside, accordingly.
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          11. The appeal is allowed, affirming the order of the State
      Commission.


      Divya Pandey                                                   Appeal allowed.
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