The supreme court was entertaining an appeal against the order of the National Commission, whereby the revision of the State Commission’s order absolving the liability of the insurance company was upheld in the matter titled as Manjeet Singh Vs National Insurance Company Ltd. and Anr, Civil Appeal no(s). 21552 of 2017 @special leave petition (c) no. 34605 of 2015 decided on 08.12.2017
It was challenged by appellant in the present SLP that the insurance company was liable to compensate him for the loss caused to him by the theft of the truck.
The Insurance company stood by the defence 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 insurance company was not liable. This ground found favour with the District Forum
The appeal filed by the appellants was rejected by the state commission, and the revision filed was rejected by national commission.
The District Forum had not properly appreciated the scope and ambit of the insurance policy.
The appellant who is the owner, was not at fault. His driver gave a lift to some passengers. Carrying 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 apex court relied on the following judgements, National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297, National Insurance Co. Ltd. v. Nitin Khandelwal, (2008) 11 SCC 259, B.V. Nagaraju v. Oriental Insurance Co. Ltd., (1996) 4 SCC 647 to state that the violation of the condition should be such a fundamental breach so that the claimant cannot claim any amount whatsoever. As far as the violation in carrying passengers is concerned, this has consistently been held not to be a fundamental breach
The court relied upon the judgement of Lakhmi Chand v. Reliance General Insurance, (2016) 3 SCC 100 to propound that the insurance company must not only establish the 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.
The Appeal was allowed, and the orders of the courts below were set aside.
In view of judgements cited Insurance 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.