MANJEET SINGHversusNATIONAL INSURANCE COMPANY LTD. & ANR.

                                                      '/



                           [2017] 12 S.C.R. 90



A                            MANJEET SINGH
                                         v.
           NATIONAL INSURANCE COMPANY LTD. & ANR.
                       (Civil Appeal No. 21552 of2017)
B                           DECEMBER 08, 2017
           [MADAN B. LOKUR AND DEEPAK GUPTA, JJ.]
          Consumer Protection Act, 1986 - lnsurance Policy - Breach
   of - On facts, theft of vehicle by passengers who were given lift by
c -theHeld:
       driver - Owner not at fault - Insurance claim - Compensation
             Violation of the condition should be such a fundamental
   breach so ihat the claimant cannot claim any amoullt whatsoever -
   Carrying such passengers may he a hr<!acl1 of the policy, but it
   cannot be said to be such a fundamental breach as to bring the
   insurance policy to an end and to terminate the insurance policy -
D Act of the driver, giving lift to some persons standing on the road
   on a cold wintery night, was a humanitarian gesture and not a breach
   that it nullifies the policy - Driver would not have foreseen stealing
   of the vehicle - Furthermore, arbitration proceedings between the
  financer and the insurer, relating to recovery of the loan amount,
   would not negate the rights of the insured against the insurance
E
   cvmpany - Thus, insurance company to pay 75% of the insured
   amount of R.«. 7,28,0001- along with interest at the mte of 9% per
   annum from the date of filing the claim petition till the deposit of the
   amount and Rs.1.00,000/- as compensation.
           Disposing of the appeal, the Court
F
           HELD: 1.1 The violation of the c!>ndition should be such a
    fundamental breach so that the claimant cannot claim any amount
    whatsoever. In the instant case, the appellant who is the owner,
    was not at fault. His driver gave a lift to some passengers. Carrying
G   such passengers may be a breach of the policy, but it cannot be
    said to be such a fundamental breach as to bring the insurance
    policy to an end and to terminate the insurance policy. The driver,
    on a t'Uld wintcry night, gave lift to some persons standing on the
    road. It was a humanitarian gesture. It cannot be said to be such
    a breach that it nullifies the policy. No doubt, these passengers
H
                                    90
  MANJEET SINGH v. NATIONAL INSURANCE COMPANY                         91
                    LTD. & ANR.

turned against the driver and stole the truck, but this, the driver   A
could not have foreseen. Such claims where there is breach of
policy, have been treated to be non-standard claims and have
been directed to be settled at 7S%. [Para 7] [93-G-H; 94-A]

      1.2 As far as the second ground is concerned, the arbitration
proceedings between the financer and the insurer, relating to         B
recovery of the loan amount, cannot negate the rights of the
insured against the insurance company. [Para 8] [94-B]

       1.3 The orders of the courts below are set aside. The
respondent no.1-insurancc company is directed to pay 7S% of
the insured amount of Rs.7,28,000/- along with interest at the C<
rate of 9°1., per annum from the date of filing the claim petition till
the deposit of the amount. In addition, the insurance company
shall also pay another sum of Rs.1,00,000/- as compensation. Since
the financer is also a party to the petition, the amount shall be
deposited before the District Forum, and in case the claim of the D
financer has not been settled in terms of the arbitration award,
then the deposited amount shall first be used to pay the awarded
amount and the balance, if any, shall be paid to the appellant.
[Para 9] [94-C-D]

      National Insurance Co. Ltd. v. Swara11 Singh (2004) 3           E
      SCC 297 : [2004] 1 SCR 180 ; National Insurance Co.
      Ltd. v. Nitin Khandelwal (2008) 11 SCC 2S9 ; Lakhmi
      Chand v. Reliance General Insurance (2016) 3 SCC
      100 ; B. V. Nagaraju v. Oriental Insurance Co. Ltd.
      (1996) 4 SCC 647 : [1996] 3 Suppl. SCR 22 - referred
                                                                      F
      to.

                        Case Law Reference
       [2004] .1 SCR 180          referred to         Para S

       (2008) 11 sec 2s9          referred to         Paras           G

       (2016) 3 sec 100           referred to         Paras

       [1996] 3 Suppl. SCR 22      referred to        Para S

                                                                      H
92            SUPREME COURT REPORTS                         [2017] 12 S.C.R.



A         CIVIL APPELLATE JURISDICTION: Civil Appeal No. 21552
     of2017.
          From the Judgment and Order dated 03.06.2015 of the National
     Consumer Disputes Redressal Commission, New Delhi (in short, National
     Commission) in Revision Petition No. 4419 of 2014.
B          Dharmendra Kumar Sinha, Sanjeev Kr. Verma, Advs for the
     Appellant.
           Gaurav Sharma, Adv for the Respondents.
           The Judgment of the Court was delivered by
C          DEEPAK GUPTA, J. 1. Leave granted.
           2. None has put in appearance on behalf of the respondent no. 2
     despite service. Hence, the matt~r has been ltearc\ in the absence of the
                                     l                                      .
     learned counsel for the respondent no. 2.
          3. Briefly stated the facts of the case are that the appellant Manjeet
D
   Singh purchased a second-hand Tata open truck under a Hire Purchase
   agreement dated 13.10.2(X)3 for a sum of Rs. 8,57,()()0/- from Respondent
   No.2. The vehicle was hypothecatcd in favour of Respondent No.2. It
   was insured for a value of Rs.7.28,000/- and the insurance policy was
  ·valid from 25.09.2004 to 24.09.2005. On 12.12.2004, the vehicle was
E being driven by Sanjay Kumar on the National Highway near Kamal.
   Some persons gave a signal to the driver to stop the vehicle. After he
   stopped, they requested the driver to give them lift up to Yamuna Nagar
   since no other mode of transport was available. Since it was a cold
   wintery night, the driver gave a lift to these persons. After a little while,
   one of the p;1ssengers requested the driver to stop the truck on the pretext
F
   that he had to answer the call of nature. When the truck driver stopped
   the truck, the three passengers assaulted the driver, tied his hands and
   legs with a rope and threw him in a nearby field and fled away with the
   vehicle.
            4. An FIR was lodged at Police Station, Ladwa on 13.12.2004
G    and the respondent no. 2, finance company was intimated about the
     theft. The complainant had also given a letter of authority to the finance
     company to negotiate and settle the claim with the insurance company.
     However, no settlement was arrived at and the claim was not settled
     and repudiated vide letter dated 11.11.2005 on the ground of breach of
H    terms of the policy. The owner-complainant filed a claim petition before
   MANJEET SINGH v. NATIONAL INSURANCE COMPANY                                93
           LTD. & ANR. [DEEPAK GUPTA, J.]

the District Consumer Disputes Redressal Forum (for short 'the District A
Forum') alleging that the insurance company was liable to compensate
him for the loss caused to him by the theft of the truck. The main
 defence taken by the respondent no. 2, insurance company was that the
driver of the vehicle. by giving a lift to the passengers, had violated the
terms of the policy and, as such, there was breach of policy and the
                                                                            B
insurance company was not liable. This ground found favour with the
District Forum. The appeal filed by the claimant before the State
Consumer Disputes Redressal Commission (for short 'the State
Commission') was rejected and so was the revision filed before the ·
National Consumer Disputes Redressal Commission (for short 'the
National Commission·). The District Forum also rejected the claim on c
the ground that the arbitration proceedings had been initiated by the
Respondent No. 2, finance company against the complainant and they
were at the final stage.
       5. As far as the first ground is concerned, we are of the considered
opinion, that the District Forum had not properly appreciated the scope       D
and ambit of the policy. The vic!:•tion of the condition should be such a
fund<imental breach so that the claimant cannot claim any amount
whatson lT. As far as the violation in carrying passengers is concerned.
this has consistently been held not to be a fundamental breach and, in
this behalf, we may make reference to the judgments of this Court in the
case of National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC             E
297, National Insurance Co. Ltd. v. Nitin Khandelwal, (2008) 11
SCC259, Lakhmi Chand v. Reliance General Insurance, (2016) 3
SCC 100 and B.V. Nagaraju v. Oriental Insurance Co. Ltd., (1996)
4 sec 647.
        6. In Lakhmi Chand case (supra), this Court held that to avoid its    F
liability, the insurance company must not only establish~he defence that
the policy has been breached, but must also show that the breach of the
policy is so fundamental in nature that it brings the contract to an end.
         7. In the present case, the appellant who is the owner, was not at
fault. His driver gave a lift to some passengers. Carrying such passengers    G
may be a breach of the policy, but it cannot be said to be such a
fundamental breach as to bring the insurance policy to an end and to
terminate the insurance policy. The driver, on a cold wintery night, gave
lift to some persons standing on the road. It was a humanitarian gesture.
It cannot be said to be such a breach that it nullifies the policy. No        H
94                SUPREME COURT REPORTS                      (2017] 12 S.C.R.



A    doubt, these passengers turned against the <:)river and stole the truck, but
     this. the driver could not have foreseen. In the cases cited above, such
     claims where· there is breach of policy, have been treated to be non-
     standard claims and have been directed to be settled at 75%.
             8. As far as the second ground is concerned, we fail to understand
B how the arbitration proceedings between the financer and the insurer,
     relating to recovery of the loan amount, can in any way. negate the
     rights of the in~urcd against the insurance company.
            9. In view of the above discussion, we allow the appeal, set aside
     the orders of the courts below and direct the respondent no. I-insurance
c    company to pay 75% of the insured amount of Rs.7,28,000/- along with
     interest at the rate of 9% per annum from the date of filing the claim
     petition till the deposit of the amount. In addition, the insurance company
     shall also pay another sum ofRs.1,00,000/- as compensation. Since the.
     financer is also a pmiy to the petition, the amount shall be deposited
     before the District Forum, and in case the claim of the financer has not
D    been settled in terms of the arbitration award, then the deposited amount
     shall first be used to pay the awarded amount and the balance, if any,
     shall be paid to the appellant. The appeal is disposed of in the aforesaid
     terms. Pending application(s), if any, also stand(s) disposed of.



     Nidhi Jain                                                  Appeal disposed of.