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Supreme Court of India
Gurshinder Singh vs Sriram General Insurance Co. Ltd. on 24 January, 2020Author: B.R. Gavai
Bench: Hon’Ble The Justice, B.R. Gavai, Surya Kant
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No.653 OF 2020
(Arising out of S.L.P.(C) No. 24370 of 2015)
GURSHINDER SINGH ….APPELLANT(S)
VERSUS
SHRIRAM GENERAL INSURANCE CO.
LTD. & ANR. …. RESPONDENT(S)
JUDGMENT
B.R. GAVAI, J.
Leave granted.
2. Noticing that there is a conflict between the decisions of the
Bench of the two Judges of this Court in Om Prakash vs. Reliance
General Insurance & Anr.1 and in the case of Oriental Insurance
Co. Ltd. vs. Parvesh Chander Chadha2, on the question, as to
whether delay in informing the occurrence of the theft of the
vehicle to the insurance company, though the FIR was registered
immediately, would disentitle the claimant of the insurance claim.
The Bench of two Judges of this Court vide Order dated
09.01.2018 has referred the matter to a threeJudge Bench.
Signature Not Verified
Digitally signed by
SANJAY KUMAR
Date: 2020.01.24
16:38:15 IST
Reason:
1 Civil Appeal No.15611/ 2017 decided on 04.10.2017
2 Civil Appeal No.6739/ 2010 decided on 17.08.2010; 2009 (1) CLT 552]
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3. The appellant had got his tractor insured with the
respondent(s) on 19.06.2010. On 28.10.2010, the tractor was
stolen and an FIR was lodged on the same day. However, the claim
was submitted to the respondent(s) on 15.12.2010. It was
rejected on the ground that intimation was given belatedly after 52
days. The appellant herein, therefore, approached the District
Consumer Disputes Redressal Forum, Jalandhar, Punjab,
(hereinafter referred to as the “District Forum”) vide Complaint No.
380 of 2011. The District Forum, relying on the decisions of the
National Consumer Disputes Redressal Commission (hereinafter
referred to as the ‘National Commission’) in the case of Parvesh
Chander Chadha (supra) and T.D.P. Gram Sewa Sahakari Samiti
Ltd. & Ors. vs. Charanjit Kaur and Ors. 3., allowed the complaint
and directed the respondents to pay a sum of Rs.4,70,000/ being
the declared insured value of the vehicle to the complainant within
one month from the date of receipt of copy of the order, failing
which, the respondents were made liable to pay interest at the
rate of 12% per annum from the date of order till payment.
4. Being aggrieved thereby, the respondents preferred an
appeal before the State Consumer Disputes Redressal
3 2011(3) CPC 422
3
Commission, Punjab (hereinafter referred to as the “State
Commission”). The State Commission dismissed the appeal vide
order dated 26.03.2013.
5. Being aggrieved by the dismissal of the appeal by the State
Commission, the respondents preferred a Revision Petition before
the National Commission. The National Commission relying on its
earlier judgment in the case of New India Assurance Co. Ltd. vs.
Trilochan Jane4 allowed the revision petition thereby setting aside
the orders of the District Forum as well as the State Commission
and dismissed the complaint. Being aggrieved thereby, the
appellant is before this Court.
6. When the matter was heard by the twoJudge bench of this
Court, it noticed that though in the case of Om Prakash (supra),
the theft of the vehicle was reported to the police on the day after
the theft occurred, the intimation was sent to the insurance
company much later. This Court took the view that delay in
informing the insurance company would not debar the insured to
get the insurance claim. Per contra, it noticed that in the case of
Parvesh Chander Chadha (supra), this Court accepted the
contention of the insurance company that on account of delay in
4 (2012) CPJ 441 (NC)
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intimating the insurance company about the theft, though the FIR
was lodged immediately, the insurance company was entitled to
repudiate the claim of the claimant. Hence, the present appeal.
7. It will be relevant to refer to Condition No.1 of the Standard
Form for Commercial Vehicles Package Policy, which reads as
follows:
“1. Notice shall be given in writing to the Company
immediately upon the occurrence of any accidental loss or
damage and in the event of any claim and thereafter the
insured shall give all such information and assistance as the
Company shall require. 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 respect of any occurrence which
may give rise to a claim under this policy. In case of theft or
criminal act which may be the subject of a claim under this
policy the insured shall give immediate notice to the police
and cooperate with the company in securing the conviction
of the offender.”
8. The condition which falls for consideration in the present
case is identical with the condition that fell for consideration in
both the cases, namely, Om Prakash (supra) and Parvesh Chander
Chadha (supra). In the case of Parvesh Chander Chadha (supra),
the vehicle was stolen between 18.01.1995 and 20.01.1995. The
FIR for the alleged theft of car was registered on 20.01.1995.
However, the intimation was given to the insurer on 22.05.1995.
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On account of the delay, the claim for compensation was
repudiated by the insurance company for breach of policy. In the
said case, the District Forum had allowed the complaint of the
claimant, which order was maintained by the State Commission
as well as the National Commission. However, reversing the
concurrent orders, this Court held that though the theft had
occurred between 18.01.1995 and 20.01.1995, the intimation to
the insurance company was given only on 22.05.1995. It observed
that no explanation for such an unusual delay in informing the
insurer was given by the claimant. This Court found that in terms
of the policy issued by the insurer (appellant therein), the
respondent was duty bound to inform it about the theft of the
vehicle immediately after the incident. It further observed, that on
account of delay in intimation, the insurer was deprived of its
legitimate right to get an inquiry conducted into the alleged theft
of the vehicle and make an endeavour to recover the same.
9. Per contra, in the case of Om Prakash (supra), the vehicle
was stolen on 23.03.2010 at around 9.00 p.m. The claimant
lodged an FIR immediately on 24.03.2010. He lodged the
insurance claim on 31.03.2010. Since the claim of the claimant
was repudiated, he filed complaint before the District Forum
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which was allowed. The State Commission also maintained the
order of the District Forum. However, in the revision, the National
Commission reversed the same. In an appeal, this Court found
that the claimant (the appellant therein) had assigned cogent
reasons for the delay of 8 days in lodging the complaint. It further
found that the word “immediately”’ cannot be construed narrowly
so as to deprive claimant the benefit of the settlement of genuine
claim, particularly when the delay was explained. It further held,
that rejection of the claim on purely technical grounds and in a
mechanical manner will result in loss of confidence of policy
holders in the insurance industry. It further held, that if the
reasons for delay in making a claim is satisfactorily explained,
such a claim cannot be rejected on the ground of delay. This Court
also held that it would not be fair and reasonable to reject the
genuine claims which have already been verified and found to be
correct by the investigator. It further held, that the condition
regarding the delay shall not be a shelter to repudiate the
insurance claims which have been otherwise proved to be genuine.
This Court observed that the Consumer Protection Act aims at
providing better protection of the interest of the consumers. It is a
beneficial legislation that deserves a liberal construction.
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10. We are of the view that much would depend upon the words
‘cooperate’ and ‘immediate’, in condition No. 1 of the Standard
Form for Commercial Vehicles Package Policy. Before we analyze
this case any further, we need to observe the rules 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
specialized nature of contract of insurance, certain rules are
tailored to suit insurance contracts. Under the English law, the
development of insurance jurisprudence is 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 Justice Neuberger in Arnold v. Britton5, which is
simplified as under:
(1) reliance placed in some cases on commercial
common 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 meaning, but that did not justify
departing from the natural meaning.
5 [2015] UKSC 36
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(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 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.
(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.
(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.6
11. A perusal of the aforesaid shows that this contract is to be
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 interpretation of a
contract. However, in most standard form contracts, that is not
so. In this regard, the Court in such circumstances would
6Robert Merkin QC et el., Colinvaux’s Law of Insurance (11th Eds.),
p. 159.
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consider the application of the rule of contra preferatum, when
ambiguity exists and an interpretation of the contract is preferred
which favors the party with lesser bargaining power.
12. 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.
13. In our view, applying the aforesaid principles, Condition No.
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 No. 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 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 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
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any impending prosecution inquest or fatal inquiry in respect of
any occurrence, which may give rise to a claim under this policy.
14. 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 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 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 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
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immediate action is contemplated in respect of an accident
occurring to the vehicle.
15. We find, that the second part of Condition No. 1 deals with
the ‘theft or criminal act other than the accident’. It provides, that
in case of theft or criminal act which may be the subject 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, 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
insurance company, at the most, could ascertain the factum
regarding the theft of the vehicle.
16. 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 no
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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. As observed by the bench of two
learned Judges in the case of Om Prakash (supra), after the vehicle
is stolen, a person, who lost his vehicle, would immediately lodge
an FIR and the immediate conduct that would be expected of such
a person would be to assist the police in search of the vehicle. The
registration of the FIR regarding the theft of the vehicle and the
final report of the police after the vehicle is not traced would
substantiate the claim of the claimant that the vehicle is stolen.
Not only that, but the surveyors appointed by the insurance
company are also required to enquire whether the claim of the
claimant regarding the theft is genuine or not. If the surveyor
appointed by the insurance company, upon inquiry, finds that the
claim of theft is genuine then coupled with the immediate
registration of the FIR, in our view, would be conclusive proof of
the vehicle being stolen.
17. That the term ‘cooperate’ as used under the contract needs
to be assessed in facts and circumstances. While assessing the
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‘duty to cooperate’ for the insured, inter alia the Court should
have regards to those breaches by the insured 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.
18. We concur with the view taken in the case of Om Prakash
(supra), that in such a situation if the claimant is denied the claim
merely on the ground that there is some delay in intimating the
insurance company about the occurrence of the theft, it would be
taking a hyper technical view. We find, that this Court in Om
Prakash (supra) has rightly held that it would not be fair and
reasonable to reject genuine claims which had already been
verified and found to be correct by the investigator.
19. We find, that this Court in Om Prakash (supra) has rightly
held that the Consumer Protection Act aims at protecting the
interest of the consumers and it being a beneficial legislation
deserves pragmatic construction. We find, that in Om Prakash
(supra) this Court has rightly held that mere delay in intimating
the insurance company about the theft of the vehicle should not
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be a shelter to repudiate the insurance claim which has been
otherwise proved to be genuine.
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 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.
21. We, therefore, answer the reference accordingly.
22. In the present case, the facts are undisputed. The theft had
occurred on 28.10.2010. The FIR was lodged at P.S. Nakodar,
Jalandhar, Punjab on the same day i.e. 28.10.2010. The police
have admittedly lodged the final report. The investigators
appointed by the insurance company have submitted their
investigation report on 25.02.2011, finding the claim of the
appellant to be genuine. In this background, the National
Commission was not justified in reversing the concurrent orders of
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the District Forum and the State Commission. The appeal is,
therefore, allowed. The impugned Judgment and order dated
17.03.2015 passed by the National Commission is quashed and
set aside. The order of the District Forum dated 09.05.2012 as
maintained by the State Commission vide order dated 26.03.2013
is maintained.
23. The amount, i.e., 75% of the claim amount deposited by the
respondents, pursuant to the orders of this Court dated
09.01.2018, in this Registry shall be permitted to be withdrawn by
the appellant herein along with interest accrued thereon. The
remainder shall be paid by the respondents within a period of six
weeks from today along with interest at the rate of 12% per
annum on the entire amount of Rs.4,70,000/ from the date of the
order of the District Forum till its realisation.
………………………….J.
[N.V. RAMANA]
…………………………..J.
[R. SUBHASH REDDY]
…………………………..J.
[B.R. GAVAI]
NEW DELHI;
JANUARY 24, 2020
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