Case title: Ashok Kumar v. New India Assurance Co. Ltd.
Summary
The Supreme Court ruled in a car theft case that any policy condition violation should be considered a fundamental breach, resulting in the claimant’s insurance coverage being denied. The insurer rejected the claim due to the driver leaving the car unattended on a public road with the key in the ignition. The court decided that, although a certain amount of negligence was present, there was not a serious enough violation of the terms to completely reject the insurance claim. As a result, an award of up to 75% must be given on an irregular basis. The Supreme Court is currently hearing an appeal against the NCDRC judgment, which overturned the findings of the state commission and district forum ordering New India Assurance Co. Ltd. to indemnify the claimant to the extent of 75% of the sum assured-$8,40,000.
About the case
The Supreme Court ruled in a car theft case that any policy condition violation should be considered a fundamental breach that results in the claimant’s insurance coverage being denied.
Here, the driver had left the car unattended on a public road with the key in the ignition, according to the insurer, which rejected the claim.
The Court decided that, although a certain amount of negligence, there was not a serious enough violation of the terms to completely reject the insurance claim. As a result, an award of up to 75% must be given on an irregular basis.
An appeal against the NCDRC judgment, which overturned the findings of the state commission and district forum ordering New India Assurance Co. Ltd. (respondent) to indemnify the claimant to the extent of 75% of the sum assured-$8,40,000-was being heard by the Supreme Court bench, which is made up of Justices J.K. Maheshwari and KV Vishwanathan. From 2008 to 2009, the appellant was the owner of a truck covered by a legitimate insurance policy for Rs. 8,40,000. The appellant’s automobile was taken on June 26, 2008. He informed the respondent about the theft and filed a FIR.
He filed a complaint with the district forum in 2009, nearly a year later, citing a failure in service and the respondent’s delay in settling the claim. Due to the delay in the proceedings, this complaint was inadvertently withdrawn, and a new one was filed. The respondent asserted that the policy’s terms and conditions were broken and that it was prohibited by statute. Overriding the objections, the district forum awarded 75% of the pledged cash on an unconventional basis.
The respondent filed an appeal with the state commission, claiming that they were notified of the theft six days following the incident, in violation of the policy’s first requirement.
The appellant filed the first complaint the following day and notified the respondent as well, according to the state commission, which noted that there was no delay. Regarding the fifth condition, the commission cited Amalendu Sahoo v. Oriental Insurance Company Limited (2010) and National Insurance Company Limited v. Nitin Khandelwal (2008) to conclude that, even in the event of a breach of that clause, the claim could not have been completely rejected and that, at most, 75% of the claim would be admissible.
The appellant brought up Gurshinder Singh v. Shriram General Insurance Co. Ltd., 2021, which the Supreme Court cited. The ruling stated that “mere tardiness in notifying the insurance company about the theft cannot be a ground to deny the claim of the insured 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 after the vehicle was not traced and when the surveyors/investigators appointed by the insurance company have found the theft to be genuine.”
The court reaffirmed that in order to deny the claimant any compensation, any infringement of the requirement must constitute a fundamental breach. The respondent had acknowledged that theft did occur, the judge observed.
“The Insurance Company does not claim that the claimant approved or assisted in the removal of the vehicle, in which case that would not be considered theft in legal terms,” the statement reads. The Court decided that, although a certain amount of negligence, there was not a serious enough violation of the terms to completely reject the insurance claim. As a result, an award of up to 75% must be given on an irregular basis. The court determined that if there is a contributory factor, the insurance company can only deduct the appropriate amount from the total and cannot be entitled to more, based on the rulings of Nitin Khandelwal and Amalendu.
