[needs edit] Insurable incident potentially resulting in liability occurs, there should be no fundamental breach conditions in the contract of insurance: Supreme Court

The Supreme Court on Thursday 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.

A bench headed by Justice UU Lalit, Justice S Ravindra Bhat and Justice Bela M Trivedi noted while referring to the Judgment in the case of Narinder Singh Vs. New India Assurance Co. Ltd noted, "if a vehicle without a valid registration is or has been used/driven on a public place or any other place that would constitute a fundamental breach of the terms and conditions of the contract of insurance even if the vehicle is not being driven at the time it is stolen or is damaged."

The bench was hearing a plea filed by United India Insurance Co. Ltd. challenging the order of the National Consumer Disputes Redressal Commission dismissing the revision petition challenging the order of the Rajasthan State Consumer Disputes Redressal Commission directing the insurer to pay to the an amount of Rs. 6,17,800/- to the complainant.

Brief Facts:
The matter is pertaining the issue that the policy holder had purchased a new Bolero which had a temporary registration, whereas, the registration lapsed on July 19, 2011. However, the complainant never alleged or proved that he applied for a permanent registration, or sought extension of the temporary registration beyond July 19. In addition he travelled outside his residence, to Jodhpur, in his car, and stayed overnight in a guest house. In the morning of July 28, 2011, he discovered that the car had been stolen, when parked outside the guest house premises in Jodhpur.

SC Holds:

The bench observed, "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, 1988. This results in a fundamental breach of the terms and conditions of the policy, as held by this Court in Narinder Singh (supra), entitling the insurer to repudiate the policy."

While setting aside the order of the State Commission the Court said that the NCDRC should not have overlooked and disregarded a clear binding judgment of this Court.

Case Title- United India Insurance Co. Ltd. Vs. Sushil Kumar Godara