Non-registration of vehicle ground for insurance company to deny insurance claim: Supreme Court

The Supreme Court has held that when an insurable incident that potentially results in liability occurs, there should be no fundamental breach of the conditions contained in the contract of insurance in order to be eligible to claim insurance (United India Insurance vs Sushil Kumar Godara).The Bench of Justices UU Lalit, Ravindra Bhat and Bela M Trivedi said that when an incident involves a vehicle which has no valid registration, then the insurance company can deny payment of the insurance claim since it is a breach of the conditions of the agreement..The judgment was delivered in appeal by United India Insurance against a judgment of the National Consumer Disputes Redressal Commission (NCDRC) which had upheld a verdict of the Rajasthan State Consumer Disputes Redressal Commission directing payment of insurance amount for theft of a car.The respondent-complainant had obtained an insurance policy from the insurer for his Bolero car, somewhere in Punjab, though he was a resident of Sri Ganganagar, Rajasthan. The vehicle had a temporary registration which however, expired on September 19, 2011. The sum insured was ₹6,17,800.The respondent took the car to Jodhpur where he parked the car outside the guest house where he was staying. It was stolen from there at night.This led to the insurance claim. The insurance company rejected the claim on the ground that the temporary registration of the vehicle had expired on July 19, 2011 and the respondent did not get the vehicle permanently registered.The respondent then moved the District Consumer Protection Forum (District Forum)..The insurer's position before the District Forum was that till the incident of theft, the complainant’s vehicle was not registered which was in violation of conditions of insurance policy.The District Forum dismissed the plea against the insurer. It was held that repudiation of the claim by the insurer did not amount to deficiency in service on its part.Aggrieved, the respondent/complainant approached the State Commission which set aside the order of the District Forum and allowed the appeal.The insurer preferred a revision petition before the NCDRC which was dismissed, affirming the State Commission’s verdict.This led to the appeal before the Supreme Court..The top court held that when an insurable incident that potentially results in liability occurs, there should be no fundamental breach of the conditions contained in the contract of insurance. "Therefore, on the date of theft, the vehicle had been driven/used without a valid registration, amounting to a clear violation of Sections 39 and 192 of the Motor Vehicles Act, 19886 . This results in a fundamental breach of the terms and conditions of the policy, as held by this Court in Narinder Singh, entitling the insurer to repudiate the policy," the Court held. .The top court, therefore, set aside the NCDRC ruling and allowed the appeal..[Read Judgment]