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Synopsis

The Supreme Court has underscored the significance of considering the context and prevailing circumstances of an accident when applying an exclusionary clause in an insurance policy.

A bench comprising Justices P.S. Narasimha and Sandeep Mehta allowed an appeal filed by Rajesh Kumar, challenging the National Consumer Disputes Redressal Commission's (NCDRC) 2019 order. The NCDRC had reduced the insurance amount payable for damages to Kumar’s car, which was impacted by a short circuit following an accident.

The Commission had allowed a plea by the insurance company in view of a condition in the policy which stated that in case of any accident, the vehicle should not be left unattended without proper precaution.

"In our opinion, the National Commission could not have interfered with pure finding of fact arrived at by the District and State Commissions while exercising revisional jurisdiction. It is unclear as to how the National Commission perceived that the State Commission exercised jurisdiction not vested in it or has failed to exercise jurisdiction vested in. There is nothing to indicate in the decision of the National Commission as to whether there is any illegality in the approach adopted by the State Commission or that it had acted with material irregularity," the bench said.

Referring to TEXCO Marketing Pvt Ltd Vs TATA AIG General Insurance Co Ltd (2023), the bench pointed out that the court explained the principles of interpreting and applying exclusionary clauses in an insurance policy.

It noted that in the present case, policy's condition no 4 merely prescribed that in the event of any accident, the vehicle shall not be left unattended without proper precaution being taken.

"While interpreting such a clause the Court/Commission or Tribunal will see whether the said obligation has been complied with reasonably or not. The context in which accident occurs and the circumstances that prevailed at the time of accident are extremely important to conclude whether the insured has taken reasonable care or not," the bench said.

Court also noted that facts of the present case were amply clear that the appellant was acting under compelling circumstances when he had to take his co-passenger to a hospital immediately as his condition was precarious.

"It is not disputed that the co passenger had also succumbed to the injury. It is also difficult to imagine that how he could have prevented short-circuiting of the vehicle which had fallen into a ditch," the bench said.

The bench also said the court has already examined the scope and ambit of jurisdiction of the National Commission while exercising revisional jurisdiction in an earlier matter.

In Sunil Kumar Maity Vs State Bank of India & Ors (2022), it was held that the conditions laid down in Section 21(b) of the Consumer Protection Act are the only parameters under which a revision may be invoked. If a document has already been considered and rejected by the State Commission, a revision does not lie merely because the National Commission has a different view on the same.

Similarly, in Rajiv Shukla Vs Gold Rush Sales & Services Ltd (2022), it was laid down that in cases where the courts below have reached findings on facts, the jurisdiction of revision is very limited and must be invoked only when there is a patent illegality in the findings. In Rubi Chandra Dutta Vs United India Insurance Co Ltd (2011), it has been held that even if no patent error, the revisional jurisdiction may be invoked in a case of gross miscarriage of justice.

In the case at hand, the appellant, who purchased a policy from the National Insurance Co Ltd, met with an accident on March 25, 2013, while he was driving the said vehicle and a cow suddenly turned up before it. In an attempt to avoid the animal, he made a sudden turn which caused his car to turn upside down and fall in a ditch.

At the time of the accident, the appellant had a co-passenger along with him. While both the occupants of the car had suffered some injuries, the appellant felt that the co-passenger needed immediate attention.

The appellant rushed the co-passenger to a hospital, leaving the car capsized in the ditch. In this state, one of the wires in the car short-circuited, which set the car on fire and it was damaged substantially. While the appellant lodged an FIR on the same day, he wrote to the respondent only on March 28, 2013. The respondent appointed a surveyor, who assessed the damage to be Rs 53,543.97 but stated that the damage occurred due to the appellant’s omission to take care of the vehicle.

Accordingly, the respondent denied the insurance claim citing delay in the intimation and on having left the vehicle unattended, exposing it to further damage.

The appellant approached the district consumer forum, which by its order in 2016 directing the respondent to release 75% of the insurance amount, i.e., Rs 3,76,713.

On appeal, the State Commission allowed the appeal of the appellant fully and directed the release of the entire insured sum of Rs 5,02,285 with 9% interest from the date of filing the complaint till actual realisation.

The National Commission, however, partly allowed the appeal by the insurance company and reduced the amount to just Rs 53,543.

Having examined the matter, the bench said, "In the present case, no miscarriage of justice is made out by the respondent (insurance company)."

The court noted that the State Commission had addressed all the issues raised before it and found the delay in intimation to be reasonable and that the insurance claim was payable on the damage due to the accident as well as the short-circuiting.

The State Commission also examined the genuineness of the accident’s claim by considering the police report and discarded the surveyor’s report for lack of evidence. It then directed the respondent to pay the entire insured sum giving its reasons for the same, the bench noted.

"Hence, the appellant is correct in stating that the National Commission has transgressed its jurisdiction by interfering with the State Commission’s order," the bench said.

"We are of the opinion that the State Commission has come to a correct conclusion that Condition No 4 would not apply in the facts and circumstances of the case. In any event, the respondent has not explained as to how the unavailability of the appellant during the said period has led to further damage of the vehicle and that burden heavily lies on the respondent and the same was not discharged," the bench added.

The bench restored the judgment and order of the State Commission directing the insurer to release the entire insured declared value of Rs 5,02,285 to the appellant with 9% interest from the date of the consumer complaint till the date of realisation.

Case Title: Rajesh Kumar Vs National Insurance Co Ltd