Oral Order (Per Honble Justice Sri D.Appa Rao, President)
This is an appeal preferred by the insurance company/opposite party No.2 against the order of the District Forum directing it to pay 3,23,048/- together with interest at 12% p.a. from the date of complaint till the date of payment together with costs of Rs.2,000/-.
The case of the complainant in brief is that he insured his car for Rs.3,63,000/-(?) (Rs.2,90,400 vide Ex.A5) commencing from 27-1-2005 to 27-1-2006 having purchased the same under Hire Purchase Agreement from opposite party No.1. While so on 24-8-2005 the vehicle was damaged in an accident. On a report, the Police registered the case in Crime No.64. When the vehicle was taken to Autofin Limited, Secunderabad, it has given estimate for Rs.3,17,848/-. When he made a claim, the insurance company repudiated the same on the ground what while the car was used as a transport vehicle, it was registered as a private car. In fact, opposite party No.1, financier, had taken the policy mistakenly noting it as a private car and it was used as a motor cab for eking out his livelihood evident from the invoice. For the mistake committed by the financier, he should not be penalized and therefore he claimed Rs.3,17,848/- together with demurrage at Rs.200/- per day and costs.
The financier, opposite party No.1, resisted the case. The cover note was raised by it and the same was sent along with the invoice to the insurance company mentioning that it was for taxi trade. The insurance company was having information that the said vehicle was purchased for taxi trade, therefore, it could not have issued the policy as private car. This was not observed either by the complainant or by it and therefore raising the said question at the time when the claim was to be settled was wrong. The insurance company without perusing the invoice has invalidly issued the policy as a private car. There is no deficiency in service on its part and prayed that the appeal be dismissed against it.
The appellant, insurance company, equally resisted the case. While admitting that a policy was issued, however it was issued for a private car and not for a commercial vehicle. It collected premium as a private car and not as a commercial vehicle. In fact the complainant has being using the vehicle from the date of inception of policy. Immediately after receipt of the claim, a surveyor was appointed who in turn informed that the vehicle was registered as taxi. The complainant was not entitled to the amount as it was being used for a different purpose. The mistake, if any, was that of opposite party No.1 and therefore, it was not liable to pay compensation.
The complainant in proof of his case filed his affidavit evidence and got Exs.A1 to A10 marked while the opposite party No.1 filed the affidavit of its Junior Manager, Legal and opposite party No.2 that of its Regional Manager, however, they did not file any documents.
The District Forum after considering the evidence placed on record opined that for whatever reason there was a mistake or fault on the part of opposite parties 1 and 2 in insuring the vehicle as private car instead of taxi and found that the surveyor assessed the damage at Rs.3,17,848/- out of which Rs.1,42,750/- was payable to opposite party No.1 towards balance while for the remaining amount, the complainant is entitled. It therefore directed opposite party No.1 to pay Rs.3,17,848/0 along with charges of Rs.5,200/- from Rs.1,42,750/- was to be paid to opposite party No.1 and the remaining amount payable to the complainant together with interest at 12% p.a. from the date of complaint till the date of payment together with costs of Rs.2,000/-.
Aggrieved by the said order, the insurance company preferred this appeal contending that the District Forum did not appreciate the facts or law in correct perspective. It ought to have seen that the policy was issued for a private car and not for commercial purpose. The premium was also collected for private car and the complainant has been using the vehicle as a taxi. There is violation of the terms and conditions of the policy and therefore prayed that the appeal be allowed by dismissing the complaint?
The point that arises for consideration is whether the order of the District Forum is vitiated by any mis-appreciation of fact or law in that regard?
It is an undisputed fact that the complainant had purchased a car for âtaxi trade only evident from Ex.A1, invoice dated 24-1-2004. He purchased the car under hire purchase agreement from opposite party No.1, Ashok Leyland Finance Ltd., payable in 35 instalments. The financier, opposite party No.1, has taken policy for Rs.3,63,000/- and paid the premium vide Ex.A3. It may be stated herein that while the policy was taken, the invoice was also enclosed, unfortunately, the insurance company over looked the fact and collected the premium as a private car. The fact that the policy was given on the premise that it was a private car was not verified either by the financier or by the complainant. All of them have assumed that the policy was covering the risk of the vehicle.
It is not in dispute that the car met with an accident on 24-8-2005 evidence under FIR, Ex.A6. The complainant claimed Rs.3,17,848/- based on the estimate given by Autofin Limited from which it purchased the vehicle. The insurance company has appointed a surveyor who for the first time found that the insurance policy was issued as private car though it was registered as taxi and being used as such. The insurance company repudiated the claim on the ground that the car was being used as a commercial vehicle. The conditions for private car and commercial vehicle are completely different and the appellant in Ex.A9, letter dated 26-12-2005 stated as follows:
âFurther it may be noted that the conditions of a private car policy and commercial vehicle policy are completely different. In view of the provisions of Section 64VB of the Insurance Act, it may not be possible for us to regularize the policy by collecting the premium at this stage.
It has been pointed out to you on various occasions that the mistakes of such types occur because of not collecting the proposal form for insurance from the insured. But till date the practice of collecting proposal form is not being strictly adhered to by your locations.
You may appreciate that in the past we had taken up such cases for approval with our higher offices on the assurance that this type of mistakes will not recur. However, we find that the same mistakes have started to recur. Under the circumstances, we are sorry to inform you that it may not be possible to entertain the claim. The claim, moreover, falls under our Regional Office limits.
When the insurance company without bothering to look into the invoice collected the premium as private car instead of taxi, the financier could have found fault with it nor the complainant. It is the bounden duty of the insurance company to verify the type of the vehicle and collect the appropriate premia. For any reasons, if the insurance company commits mistake and collects premium, it cannot be construed that there was no policy covering the risk. For the mistake committed by it, neither the complainant nor the financier, could be held responsible. It is not as though the insurance policy has been taken for the first time, the policy was renewed continuously for two years. At no time this mistake has been pointed out. At the cost of repetition, we may state that for the mistake committed by the insurance company, the complainant cannot be penalized. As stated above, the insurance company itself has noted that in various occasions, mistakes of such type had occurred. If such mistakes had occurred then it is for it to take remedial measures, however, it cannot repudiate the claim.
Even otherwise, we may state that if the vehicle is used other than the purpose for which the policy was taken, the insurance company is not free to deny its liability. The Supreme Court in AMALENDU SAHOO v. ORIENTAL INSURANCE CO.LTD., (2010) II CPJ SC 9 has categorically pointed out that such cases have to be settled on non standard basis. However, coming to the facts of the instant case, the insurance company need not be given this benefit in view of the fact that it issued the policy with its eyes open without bothering to look into the invoice that was submitted at the time of proposal, undoubtedly it is liable.
The appellant, insurance company, insured the vehicle under Ex.A5, covering the risk at Rs.2,90,400/-. In fact the value of the vehicle was estimated at that amount and therefore, the insurance company could not be made liable beyond the amount for which it has agreed to pay. It could never be more than the insured amount and this needs modification.
In the result this appeal is allowed in part by modifying the order of the District Forum directing the insurance company to pay Rs.2,90,400/- together with interest at 12% p.a. from the date of complaint till the date of payment together with costs of Rs.2,000/-. The rest of the claim is dismissed. No order as to costs in this appeal. Time for compliance four weeks.