Repudiation of claim of a vehicle on the ground that the vehicle was not duly registered, proper

National Consumer Disputes Redressal Commission: An insurance company can reject an insurance claim of a stolen vehicle on the ground that the vehicle was not duly registered, observed NCDRC while allowing a revision petition of Oriental Insurance Co. Ltd. vide which the Company challenged the order of Himachal Pradesh State Consumer Commission granting compensation to vehicle owner.

This order of the National Consumer Disputes Redressal Commission has its origin in the theft of a vehicle owned by the complainant, and the rejection of his claim by the insurance company on the ground that the vehicle was not registered at the time of theft. The vehicle, Mahindra Bolero SLX, purchased on June 14, 2008 for Rs 5,94,000  had been insured covering the period from 19.06.2008 to 18.07.2009. Six months later, on December 27, 2008, the vehicle unfortunately was stolen, giving rise to a claim. The insurance company however repudiated the claim on the ground that the vehicle had no valid registration at the time of theft. Since this amounted to violation of the provisions of the Motor Vehicles Act, it was considered a violation of the terms of the insurance policy and, therefore, the insured amount was not payable, the insurance company told the claimant. Before the consumer court too, the insurance company pointed out that Section 39 of the Motor Vehicles Act clearly prohibited the use of an unregistered vehicle. Further, Section 43 of the MV Act also specified that a temporary registration was valid only for one month, except under certain circumstances allowed in the provision. Since in this case, the temporary registration, valid for one month, had obviously expired (at the time of theft) there was clearly a violation of the MV Act. And this amounted to breach of the terms of the insurance policy, the insurer argued.

The District Forum dismissed the complaint, observing that there was no deficiency in service on behalf of the insurance company in not settling the complainant’s claim. Aggrieved by the said order, the complainant preferred an appeal before the State Commission, which set aside the order of the District Forum, holding that the condition in the policy was to the effect that the vehicle will not be used at any public place, without registration;  Law also does not mandate the registration of a vehicle, but it only prohibits use of the vehicle at  any  public  place, unless it is registered, as per Section 39 of the Motor Vehicles Act, 1988 and as the complainant’s vehicle  was  parked  in front of  his  residence and was not being used at any public place, it did not constitute breach of any condition. The State Commission also directed the insurance company to pay compensation to the complainant.

In its revision petition before the National Commission, the insurance company again argued that there was a clear violation of the Motor Vehicles Act in that the vehicle was not registered at the time of theft. After perusal of material on record, NCDRC observed that, “the vehicle was without any registration for the period 13.06.2008 to 26-27.12.2008, i.e., for more than a period of five months.  Though, there is a specific pleading by the complainant  that  the said vehicle  was  not used and was only parked at his residence as he was involved in some marital disputes, yet, the fact  remains that no attempts were made by the Complainant in getting the registration extended.   Irrespective of the fact, whether, the vehicle is parked or plying, it is mandatory that the vehicle be registered, as stipulated under Section 39 of the Motor Vehicle Act, 1988.” While observing that non-registration of vehicle is a fundamental breach and the insurance company has rightly dishonored the claim, NCDRC allowed the revision petition and set aside the order of State Commission for payment of compensation. [Oriental Insurance Co. Ltd. v. Vikram Kanda2016 SCC OnLine NCDRC 1108 , decided on September 1, 2016]

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