Karnataka HC: How Insurance Company should prove breach of policy conditions?

 In catena of cases, the Hon'ble Supreme Court has clearly held that the Insurance Company must not only take a defence that there was a violation of the condition of the policy, but must also prove the defence that there has been a substantive violation of the said policy condition. Moreover, the burden of proving a defence is always on the party which pleads it. In order to discharge this burden, the Insurance Company can either summon the driver as a witness, or adduce the documents from the Regional Transport Authority as documentary evidence to prove and establish its plea that the driver of the offending vehicle, indeed, did not have a valid driving licence. In the case of Rukmini (supra), the Hon'ble Supreme Court has clearly opined that until and unless the Insurance Company were to be discharge its burden, it cannot be absolved of its liability to pay the compensation amount. {Para 12}

13. The issue whether the Insurance Company is liable to pay the compensation in the absence of a valid driving licence has been laid to rest in the case of Swaran Singh (supra). In paragraph No. 69 of the judgment, the Hon'ble Supreme Court has observed as under:

"69. The proposition of law is no longer res integra that the person who alleges breach must prove the same. The insurance company is, thus, required to establish the said breach by cogent evidence. In the event the insurance company fails to prove that there has been breach of conditions of policy on the part of the insured, the insurance company cannot be absolved of its liability."

 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

Miscellaneous First Appeal No. 6206 of 2009 (MV)

Decided On: 22.03.2016

C. Balakrishna Vs. C. Muniraju and Ors.

Hon'ble Judges/Coram:

R.S. Chauhan, J.

Citation: 2016:KHC:10286,MANU/KA/0769/2016

Print Page

Supreme Court: Coverage for the purpose of Motor accident claim petition under Insurance policy would begin from the day the money (i.e. premium) was received by the Insurance Company

Another aspect in need of consideration is as to whether the liability of the Insurance Company under the insurance certificate/policy granted by it would cover the incident. This is in reference to the question as to the date and time from when the concerned vehicle would be deemed to be covered by the policy. In the present case, the incident occurred on 11.04.2017 at 14:15 hrs, whereas the insurance policy discloses that insurance was obtained at 15:54 hrs on 11.04.2017. In this regard, on facts, the MACT has found that the premium was paid/given prior to the accident and it was the internal procedure, due to which the policy was issued the next day and, thus, coverage under the policy would begin from the day the money (i.e. premium) was received by the Insurance Company. {Para 11}

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOs. 15016-15017 OF 2024

NATIONAL INSURANCE COMPANY LTD. Vs  MAYA DEVI AND OTHERS 

Author: AHSANUDDIN AMANULLAH, J.

Citation:  2024 INSC 1050.

Dated: SEPTEMBER 02, 2024.

Print Page

Supreme Court : Motor accident claim tribunal can not allow deductions from the amount of compensation on account of insurance, pensionary benefits, gratuity or grant of employment to a kin of the deceased

 The law is well settled that deductions cannot be allowed from the amount of compensation either on account of insurance, or on account of pensionary benefits or gratuity or grant of employment to a kin of the deceased. The main reason is that all these amounts are earned by the deceased on account of contractual relations entered into by him with others. It cannot be said that these amounts accrued to the dependents or the legal heirs of the deceased on account of his death in a motor vehicle accident. The claimants/dependents are entitled to 'just compensation' under the Motor Vehicles Act as a result of the death of the deceased in a motor vehicle accident. Therefore, the natural corollary is that the advantage which accrues to the estate of the deceased or to his dependents as a result of some contract or act which the deceased performed in his life time cannot be said to be the outcome or result of the death of the deceased even though these amounts may go into the hands of the dependents only after his death. {Para 12}

13. As far as any amount paid under any insurance policy is concerned whatever is added to the estate of the deceased or his dependents is not because of the death of the deceased but because of the contract entered into between the deceased and the insurance company from where he took out the policy. The deceased paid premium on such life insurance and this amount would have accrued to the estate of the deceased either on maturity of the policy or on his death, whatever be the manner of his death. These amounts are paid because the deceased has wisely invested his savings. Similar would be the position in case of other investments like bank deposits, share, debentures etc.. The tort-feasor cannot take advantage of the foresight and wise financial investments made by the deceased.

14. As far as the amounts of pension and gratuity are concerned, these are paid on account of the service rendered by the deceased to his employer. It is now an established principle of service jurisprudence that pension and gratuity are the property of the deceased. They are more in the nature of deferred wages. The deceased employee works throughout his life expecting that on his retirement he will get substantial amount as pension and gratuity. These amounts are also payable on death, whatever be the cause of death. Therefore, applying the same principles, the said amount cannot be deducted.

15. As held by the House of Lords in Perry v. Cleaver MANU/UKHL/0008/1969 : 1969 ACJ 363 the insurance amount is the fruit of premium paid in the past, pension is the fruit of services already rendered and the wrong doer should not be given benefit of the same by deducting it from the damages assessed.

 IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 10588-89 of 2018.

Decided On: 12.10.2018

Sebastiani Lakra and Ors. Vs. National Insurance Company Ltd. and Ors.

Hon'ble Judges/Coram:

Madan B. Lokur, S. Abdul Nazeer and Deepak Gupta, JJ.

Author: Deepak Gupta, J.

Citation:  MANU/SC/1162/2018,(2019) 17 SCC 465.

Print Page

Whether insurance claim can be granted if insured building is demolished by municipal corporation?

We find considerable merit in the submission which has been urged on behalf of the insurer. Clause V of the insurance policy contains an exclusion, where the destruction of the property has been caused "by order of the government or any lawfully constituted authority". The expression "by order of" means under the authority of government or of a lawfully constituted authority. There can be no dispute about the position that the Municipal Corporation is indeed a lawfully constituted authority, being a statutory authority under the Jammu and Kashmir Municipal Corporation Act 2000. From the records as well as from the pleadings before the State Commission, there is no dispute about the fundamental position that the demolition was carried out by the Municipal Corporation. The destruction was hence by order of a lawfully constituted authority. Once this be the position, there can be no manner of doubt that the exclusion under the policy of insurance was attracted.

15. The position of the common law with respect to the interpretation of exclusionary clauses in insurance policies is no different. In Cornish v. Accident Insurance Co Ltd.2, the Court of Appeal emphasized the duty of the insurer to except their liability in clear and unambiguous terms. The Court of Appeal held that:

... in a case of real doubt, the policy ought to be construed most strongly against the insurers; they frame the policy and insert the exceptions. But this principle ought only to be applied for the purpose of removing a doubt, not for the purpose of creating a doubt, or magnifying an ambiguity, when the circumstances of the case raise no real difficulty.

According to The Law Relating to Accidental Insurance3, insurers are exempt from any liability where the loss is attributable to an excepted cause which is inserted ex abundanti cautela to make it quite clear to the assured that the policy is not intended to cover such losses. The position is elucidated below:

The object of the exceptions is to define with greater precision the scope of the policy by making clear what is intended to be excluded and contrasting it with what is intended to be included.

Since exceptions are inserted in the policy mainly for the purpose of exempting the insurers from liability for a loss which, but for the exception, would be covered by the policy, they are construed against the insurers with the utmost strictness and it is the duty of the insurers to except their liability in clear and unambiguous terms. The onus of proving that the loss falls within an exception lies upon the insurers, unless by proving the language of the exception the assured is expressly required to prove that, in the circumstances, the exception does not apply.

 IN THE SUPREME COURT OF INDIA

Civil Appeal No. 11885 of 2018 

Decided On: 07.12.2018

 New India Assurance Company Limited   Vs.  Rajeshwar Sharma and Ors.

Hon'ble Judges/Coram:

Dr. D.Y. Chandrachud and M.R. Shah, JJ.

Citation: (2019) 2 SCC 671

Print Page

Whether Insurance Company Can Unilaterally Delete Policy Terms To Reduce Coverage?

The appellant-Company has knocked at the doors of this Court
for the reason that the insurance policy dated 15.10.2010 clearly
protected the appellant-Company against floods, rains, etc., and
the premium was paid on this basis.
3) It so happened that a match in Kochi was called off due to
rain on 17.10.2010. As a result of which, the appellant went to
the insurance company to settle its claim which was eventually
settled on 31.05.2011. Apprehending that similar claims may be
made in future qua other matches, the insurance company,
unilaterally, by an endorsement dated 18.10.2010, deleted from the
policy, the expression “floods, rains, etc.”
4) On 20.10.2010, the appellant before us immediately lodged its
protest against this unilateral deletion. On 24.10.2010, the match
at Goa was called off under similar circumstances, owing to rain.
The appellant knocked at the doors of the High Court in which it
stated that the action of the insurance company in unilaterally
doing away with the expression, “floods, rains”, from the policy,

was arbitrary and affects its fundamental right under Article 14 of
the Constitution of India. Both the single Judge and the Division
Bench, thought it fit not to interfere as disputed questions of
fact arise and as the dispute pertains purely to the realm of
contract.
5) Having heard learned counsel for both the sides, we are of the
view that the judgment of the High Court needs to be set aside.
There is no dispute whatsoever that the action in the present case
by the respondent was wholly arbitrary and violated the appellant’s
fundamental right under Article 14. No disputed question of fact
is raised, and it is settled by several decisions of this Court
that even within the contractual sphere, the State, as defined
under Article 12 of the Constitution, cannot be arbitrary.
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1128 OF 2019

M/S TWENTY FIRST CENTURY MEDIA PRIVATE LIMITED 
Vs
NEW INDIA ASSURANCE COMPANY LTD.
Dated: January 25, 2019.

Print Page

Whether driver of truck giving lift to some persons amounts to fundamental breach of insurance policy?

In Lakhmi Chand case (supra), this Court held that to avoid its liability, the insurance company must not only establish the defence that the policy has been breached, but must also show that the breach of the policy is so fundamental in nature that it brings the contract to an end.

7. In the present case, the Appellant who is the owner, was not at fault. His driver gave a lift to some passengers. Carrying such passengers may be a breach of the policy, but it cannot be said to be such a fundamental breach as to bring the insurance policy to an end and to terminate the insurance policy. The driver, on a cold wintery night, gave lift to some persons standing on the road. It was a humanitarian gesture. It cannot be said to be such a breach that it nullifies the policy. No doubt, these passengers turned against the driver and stole the truck, but this, the driver could not have foreseen. In the cases cited above, such claims where there is breach of policy, have been treated to be non-standard claims and have been directed to be settled at 75%.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 21552 of 2017 (Arising out of Special Leave Petition (C) No. 34605 of 2015)

Decided On: 08.12.2017

 Manjeet Singh Vs National Insurance Company Ltd. and Ors.

Hon'ble Judges/Coram:

Madan B. Lokur and Deepak Gupta, JJ.

Citation: (2018) 2 SCC108

Print Page

Whether transferee of vehicle is entitled to get benefit of insurance policy if there is theft of vehicle?

The relevant observations made by the
Hon'ble Supreme Court in para 10 of its judgment in Mallamma's case
(supra), which can be gainfully followed in the present case, read as under:-
“Before us, learned counsel for the appellants
relying upon Section 157 of the M.V. Act, contended that
there is an admitted transfer of ownership of the vehicle as
proved before the Commissioner. Once the ownership of
the vehicle is admittedly proved to have been transferred to
Jeeva Rathna Setty, the existing insurance policy in respect
of the same vehicle will also be deemed to have been
transferred to the new owner and the policy will not lapse
even if the intimation as required under Section 103 of the
M.V. Act is not given to the insurer, hence the impugned
order passed by the High Court is contrary to law. In
support of this contention, learned counsel for the
appellant has relied upon a judgment of this Court in G.
Govindan Vs. New India Assurance Co. Ltd . (1999) 3
SCC 754.”
When the abovesaid ratio of the law laid down in Mallamma's
case (supra), is considered in the factual context of the present case, same
squarely applies in favour of respondent No.1 and against the petitioner-

Insurance Company. In this view of the matter, it can be safely concluded
that learned Permanent Lok Adalat was well justified, while placing reliance
on the judgment of the Hon'ble Supreme Court in Mallamma's case (supra)
and the impugned order deserves to the upheld for this reason also.
 IN THE HIGH COURT OF PUNJAB AND HARYANA
 AT CHANDIGARH
Civil Writ Petition No. 14086 of 2016
Date of Decision: 11.8.2016
The Oriental Insurance Company Limited and others

Vs.
Abhishek Kumar and another

CORAM :  MR. JUSTICE RAMESHWAR SINGH MALIK
Citation: 2017(2) ALLMR(JOURNAL)23

Print Page

Whether insurance claim for house theft can be allowed if there is theft without forcible entry?

The term burglary and/or house breaking has been defined in terms of the policy which are as follows: "'Burglary and/or house breaking' shall mean theft involving entry to or exit from the premises stated therein by forcible and violent means or following assault or violence or threat thereof to the insured or to his employees or to the members of his family."

8. A comparison of the above terms as defined in the policy in the case of United India Insurance Co. Ltd. v. Harchand Rai Chandan Lal (supra) and the scope of cover in the proposal form in the instant case are similar. This Court in the said judgment of United India Insurance Co. Ltd. v. Harchand Rai Chandan Lal (supra) considered the scope of a policy involving burglary and house breaking and held as follows: "The policy is a contract between the parties and both parties are bound by the terms of contract.

As per the definition of the word "burglary", followed with violence, makes it clear that if any theft is committed it should necessarily be preceded with violence i.e. entry into the premises for committing theft should involve force or violence or threat to insurer or to his employees or to the members of his family. Therefore, the element of force and violence is a condition precedent for burglary and housebreaking. The term 'burglary' as defined in the English Dictionary means an illegal entry into the building with an intent to commit crime such as theft. But in absence of violence or force the insurer cannot claim indemnification against the insurance company.

The terms of the policy have to be construed as it is and we cannot add or subtract something. Howsoever liberally we may construe the policy but we cannot take liberalism to the extent of substituting the words which are not intended. It is true that in common parlance the term "burglary" would mean theft but it has to be preceded with force or violence. If the element of force and violence is not present then the insurer cannot claim compensation against theft from the insurance company. This expression appearing in the insurance policy came up for interpretation before the English Courts and the English Courts in no uncertain terms laid down that burglary or theft has to be preceded with force or violence in order to be indemnified by the insurance company.

In this connection reference may be made to the statement of law as summarized in Halsbury's Laws of England Fourth Edition (2003 Reissue) Para 646. It reads as under: "646. Forcible and violent entry. The terms of a burglary insurance may exclude liability in certain circumstances unless there is forcible and violent entry into the premises. If so, the entry must be obtained by the use of both force and violence or the definition is not satisfied and the policy does not apply. An entry obtained by turning the handle of an outside door or by using a skeleton key, though sufficient to constitute a criminal offence, is not within the policy since the element of violence is absent. However, an entry obtained by picking the lock or forcing back the catch by means of an instrument involves the use of violence and is therefore covered.

The policy may be so framed as to apply only to violent entry from the outside; or the violent entry into a room within the insured premises may be sufficient. In any case, the violence must be connected with the act of entry; if the entry is obtained without violence, the subsequent use of violence to effect the theft, as for instance where a show-case is broken open, does not bring the loss within the policy.""

9. It is well-settled law that there is no difference between a contract of insurance and any other contract, and that it should be construed strictly without adding or deleting anything from the terms thereof. On applying the said principle, we have no doubt that a forcible entry is required for a claim to be allowed under the policy for burglary/house breaking.

SUPREME COURT OF INDIA

M/s. Industrial Promotion & Investment Corporation of Orissa Ltd. Vs. New India Assurance Company Ltd. & ANR.

[Civil Appeal No. 1130 of 2007]

L. NAGESWARA RAO, J.

Dated:22 august 2016.
Citation: (2016) 15 SCC 315

Print Page

Repudiation of Insurance policy should be in exceptional circumstances

 Learned counsel for Respondent No. 2 also relied on paragraph No. 16 of the decision in Life Insurance Corporation of India & Ors. v. Smt. Asha Goel & others - MANU/SC/0804/2000 : 2001 (2) SCC 160 to contend that Respondent No. 2 has been put to untold harassment by the mechanical and routine approach of the LIC. Relevant extract is reproduced hereunder:-

"16. In course of time the Corporation has grown in size and at present it is one of the largest public sector financial undertakings. The public in general and crores of policy-holders in particular look forward to prompt and efficient service from the Corporation. Therefore the authorities in-charge of management of the affairs of the Corporation should bear in mind that its credibility and reputation depend on its prompt and efficient service. Therefore, the approach of the Corporation in the matter of repudiation of a policy admittedly issued by it should be one of extreme care and caution. It should not be dealt with in a mechanical and routine manner."

Equivalent Citation: 2015(3)JKJ301,AIR 2016(NOC)145 J&K.

IN THE HIGH COURT OF JAMMU AND KASHMIR AT JAMMU

OWP No. 77/2010 and CMA No. 83/2010

Decided On: 27.07.2015

 Kotak Mahindra Old Mutual Life Insurance Ltd.
Vs.
J & K State Consumer Disputes Redressal Commission, Jammu and Ors.

Hon'ble Judges/Coram:B.S. Walia, J.

Print Page