The Supreme Court on Thursday observed that if a vehicle is being used/driven without a valid registration, an insurance claim can be rejected, since it constitutes a fundamental breach of the terms and conditions of the contract of insurance.
There should be no fundamental breach of the conditions contained in the contract of insurance, when an insurable incident that potentially results in liability occurs. If on the date of theft, the vehicle had been driven/used without a valid registration, it amounts to fundamental breach, noted the bench of Justices Uday Umesh Lalit, S. Ravindra Bhat and Bela M. Trivedi.
In this case, the policy holder had purchased a new Bolero, which had a temporary registration. After the registration lapsed, he travelled outside his residence. He parked outside the guest house premises, from where it was stolen. He claimed insurance, but it was repudiated on the ground that the temporary registration of the vehicle expired.
Thereafter, he approached the District Forum, seeking a direction to the insurer to pay him the sum insured for the vehicle with rent amount of Rs 1,40,000 and also claimed relief for mental agony and costs of litigation. The said complaint got dismissed, against which he approached the State Consumer Disputes Redressal Commission.
Allowing the appeal, the state commission observed that the insurer could not repudiate the insured’s genuine claim on technical, petty and frivolous grounds of absence of permanent registration certificate from the competent authority and thus escape its liability to indemnify the insured for the loss of the vehicle.
The revision petition filed by the insurer before National Consumer Disputes Redressal Commission was dismissed and thus it approached the Apex Court.
Relying on the Supreme Court judgment in Narinder Singh Vs. New India Assurance Co. Ltd (2014) 9 SCC 324 and also an NCDRC order in Naveen Kumar Vs. National Insurance Company Ltd, the appellant insurer contended that since the vehicle in question, had no registration, it constituted a fundamental breach of the policy, entitling the insurer to repudiate the claims under it. On behalf of the complainant, it was contended that the judgment in Narinder Singh (supra) pertained to claim for compensation for a damaged vehicle on account of accident, and not on account of theft of a vehicle, and was thus not applicable to the present case.