The Supreme Court on Thursday declared that an insurance company can repudiate the claim of a stolen vehicle if it is being driven after the expiry of its temporary registration number.
A bench of Justices U U Lalit, S Ravindra Bhat and Bela M Trivedi said there should be no fundamental breach of the conditions contained in the contract of insurance when the incident related to potential liability has occurred.
The top court set aside a judgement of the National Consumer Disputes Redressal Commission, which had dismissed a plea by the United Insurance Company Ltd against the Rajasthan state commission's order to pay Rs 6,17,800 to Sushil Kumar Godara along with 9 per cent interest for claims of his new Bolero car being stolen from Jodhpur.
It pointed out, "On the date of theft, the vehicle had been driven and used without 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 entitling the insurer to repudiate the policy."
The bench relied upon its 2014 judgement in Narinder Singh's case to say that although it was related to a case of an accident, in this incident as well, the vehicle was driven after expiry of temporary registration.
It also pointed out that not only was the vehicle being driven but it was also taken to another city, where it was stationed overnight at a guest house from where it was stolen. Further, there was nothing on record to suggest that the owner had applied for registration or that he was awaiting registration.
The bench also said the NCDRC disregarded not only binding judgement of this court but its own previous judgement in Naveen Kumar's case of 2019 which stated that if a vehicle without a valid registration was or had been used or driven in a public place or any other place that would constitute a fundamental breach of the terms and conditions of the contract of insurance, though the vehicle was not being driven at the time it was stolen or was damaged.
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