We, therefore, hold that when an insured has lodged the FIR immediately after the theft of a vehicle occurred and when the police after investigation have lodged a final report after the vehicle was not traced and when the surveyors/investigators appointed by the insurance company have found the claim of the theft to be genuine, then mere delay in intimating the insurance company about the occurrence of the theft cannot be a ground to deny the claim of the insured.

We, therefore, hold that when an insured has lodged the FIR immediately after the theft of a vehicle occurred and when the police after investigation have lodged a final report after the vehicle was not traced and when the surveyors/investigators appointed by the insurance company have found the claim of the theft to be genuine, then mere delay in intimating the insurance company about the occurrence of the theft cannot be a ground to deny the claim of the insured.

1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No.653 OF 2020
(Arising out of S.L.P.(C) No. 24370 of 2015)
GURSHINDER SINGH ….APPELLANT(S)

                           VERSUS

SHRIRAM GENERAL INSURANCE CO.
LTD. & ANR. …. RESPONDENT(S)
J U D G M E N T
B.R. GAVAI, J.
Leave granted.

  1. Noticing that there is a conflict between the decisions of the
    Bench of the two Judges of this Court in Om Prakash vs. Reliance
    General Insurance & Anr.1
    and in the case of Oriental Insurance
    Co. Ltd. vs. Parvesh Chander Chadha2
    , on the question, as to
    whether delay in informing the occurrence of the theft of the
    vehicle to the insurance company, though the FIR was registered
    immediately, would disentitle the claimant of the insurance claim.
    The Bench of two Judges of this Court vide Order dated
    09.01.2018 has referred the matter to a three­Judge Bench.
    1 Civil Appeal No.15611/ 2017 decided on 04.10.2017
    2 Civil Appeal No.6739/ 2010 decided on 17.08.2010; 2009 (1) CLT 552]
    2
  2. The appellant had got his tractor insured with the
    respondent(s) on 19.06.2010. On 28.10.2010, the tractor was
    stolen and an FIR was lodged on the same day. However, the claim
    was submitted to the respondent(s) on 15.12.2010. It was
    rejected on the ground that intimation was given belatedly after 52
    days. The appellant herein, therefore, approached the District
    Consumer Disputes Redressal Forum, Jalandhar, Punjab,
    (hereinafter referred to as the “District Forum”) vide Complaint No.
    380 of 2011. The District Forum, relying on the decisions of the
    National Consumer Disputes Redressal Commission (hereinafter
    referred to as the ‘National Commission’) in the case of Parvesh
    Chander Chadha (supra) and T.D.P. Gram Sewa Sahakari Samiti
    Ltd. & Ors. vs. Charanjit Kaur and Ors.3
    ., allowed the complaint
    and directed the respondents to pay a sum of Rs.4,70,000/­ being
    the declared insured value of the vehicle to the complainant within
    one month from the date of receipt of copy of the order, failing
    which, the respondents were made liable to pay interest at the
    rate of 12% per annum from the date of order till payment.
  3. Being aggrieved thereby, the respondents preferred an
    appeal before the State Consumer Disputes Redressal
    3 2011(3) CPC 422
    3
    Commission, Punjab (hereinafter referred to as the “State
    Commission”). The State Commission dismissed the appeal vide
    order dated 26.03.2013.
  4. Being aggrieved by the dismissal of the appeal by the State
    Commission, the respondents preferred a Revision Petition before
    the National Commission. The National Commission relying on its
    earlier judgment in the case of New India Assurance Co. Ltd. vs.
    Trilochan Jane4
    allowed the revision petition thereby setting aside
    the orders of the District Forum as well as the State Commission
    and dismissed the complaint. Being aggrieved thereby, the
    appellant is before this Court.
  5. When the matter was heard by the two­Judge bench of this
    Court, it noticed that though in the case of Om Prakash (supra),
    the theft of the vehicle was reported to the police on the day after
    the theft occurred, the intimation was sent to the insurance
    company much later. This Court took the view that delay in
    informing the insurance company would not debar the insured to
    get the insurance claim. Per contra, it noticed that in the case of
    Parvesh Chander Chadha (supra), this Court accepted the
    contention of the insurance company that on account of delay in
    4 (2012) CPJ 441 (NC)
    4
    intimating the insurance company about the theft, though the FIR
    was lodged immediately, the insurance company was entitled to
    repudiate the claim of the claimant. Hence, the present appeal.
  6. It will be relevant to refer to Condition No.1 of the Standard
    Form for Commercial Vehicles Package Policy, which reads as
    follows:
    “1. Notice shall be given in writing to the Company
    immediately upon the occurrence of any accidental loss or
    damage and in the event of any claim and thereafter the
    insured shall give all such information and assistance as the
    Company shall require. Every letter claim writ summons
    and/or process or copy thereof shall be forwarded to the
    Company immediately on receipt by the insured. Notice shall
    also be given in writing to the company immediately the
    insured shall have knowledge of any impending prosecution
    inquest or fatal inquiry in respect of any occurrence which
    may give rise to a claim under this policy. In case of theft or
    criminal act which may be the subject of a claim under this
    policy the insured shall give immediate notice to the police
    and co­operate with the company in securing the conviction
    of the offender.”
  7. The condition which falls for consideration in the present
    case is identical with the condition that fell for consideration in
    both the cases, namely, Om Prakash (supra) and Parvesh Chander
    Chadha (supra). In the case of Parvesh Chander Chadha (supra),
    the vehicle was stolen between 18.01.1995 and 20.01.1995. The
    FIR for the alleged theft of car was registered on 20.01.1995.
    However, the intimation was given to the insurer on 22.05.1995.
    5
    On account of the delay, the claim for compensation was
    repudiated by the insurance company for breach of policy. In the
    said case, the District Forum had allowed the complaint of the
    claimant, which order was maintained by the State Commission
    as well as the National Commission. However, reversing the
    concurrent orders, this Court held that though the theft had
    occurred between 18.01.1995 and 20.01.1995, the intimation to
    the insurance company was given only on 22.05.1995. It observed
    that no explanation for such an unusual delay in informing the
    insurer was given by the claimant. This Court found that in terms
    of the policy issued by the insurer (appellant therein), the
    respondent was duty bound to inform it about the theft of the
    vehicle immediately after the incident. It further observed, that on
    account of delay in intimation, the insurer was deprived of its
    legitimate right to get an inquiry conducted into the alleged theft
    of the vehicle and make an endeavour to recover the same.
  8. Per contra, in the case of Om Prakash (supra), the vehicle
    was stolen on 23.03.2010 at around 9.00 p.m. The claimant
    lodged an FIR immediately on 24.03.2010. He lodged the
    insurance claim on 31.03.2010. Since the claim of the claimant
    was repudiated, he filed complaint before the District Forum
    6
    which was allowed. The State Commission also maintained the
    order of the District Forum. However, in the revision, the National
    Commission reversed the same. In an appeal, this Court found
    that the claimant (the appellant therein) had assigned cogent
    reasons for the delay of 8 days in lodging the complaint. It further
    found that the word “immediately”’ cannot be construed narrowly
    so as to deprive claimant the benefit of the settlement of genuine
    claim, particularly when the delay was explained. It further held,
    that rejection of the claim on purely technical grounds and in a
    mechanical manner will result in loss of confidence of policy
    holders in the insurance industry. It further held, that if the
    reasons for delay in making a claim is satisfactorily explained,
    such a claim cannot be rejected on the ground of delay. This Court
    also held that it would not be fair and reasonable to reject the
    genuine claims which have already been verified and found to be
    correct by the investigator. It further held, that the condition
    regarding the delay shall not be a shelter to repudiate the
    insurance claims which have been otherwise proved to be genuine.
    This Court observed that the Consumer Protection Act aims at
    providing better protection of the interest of the consumers. It is a
    beneficial legislation that deserves a liberal construction.
    7
  9. We are of the view that much would depend upon the words
    ‘co­operate’ and ‘immediate’, in condition No. 1 of the Standard
    Form for Commercial Vehicles Package Policy. Before we analyze
    this case any further, we need to observe the rules of
    interpretation applicable to a contract of insurance. Generally, an
    insurance contract is governed by the rules of interpretation
    applicable to the general contracts. However, due to the
    specialized nature of contract of insurance, certain rules are
    tailored to suit insurance contracts. Under the English law, the
    development of insurance jurisprudence is given credence to Lord
    Mansfield, who developed the law from its infancy. Without going
    much into the development of the interpretation rules, we may
    allude to Justice Neuberger in Arnold v. Britton5
    , which is
    simplified as under:
    (1) reliance placed in some cases on commercial
    common sense and surrounding circumstances
    was not to be invoked to undervalue the
    importance of the language of the provision
    which is to be construed.
    (2) the less clear the words used were, the more
    ready the court could properly be to depart from
    their natural meaning, but that did not justify
    departing from the natural meaning.
    5 [2015] UKSC 36
    8
    (3) commercial common sense was not to be
    invoked retrospectively, so that the mere fact that
    a contractual arrangement has worked out badly,
    or even disastrously, for one of the parties was
    not a reason for departing from the natural
    language.
    (4) a court should be very slow to reject the
    natural meaning of a provision as correct simply
    because it appeared to be a very imprudent term
    for one of the parties to have agreed.
    (5) when interpreting a contractual provision, the
    court could only take into account facts or
    circumstances which existed at the time that the
    contract was made and which were known or
    reasonably available to both parties.
    (6) if an event subsequently occurred which was
    plainly not intended or contemplated by the
    parties, if it was clear what the parties would
    have intended, the court would give effect to that
    intention.6
  10. A perusal of the aforesaid shows that this contract is to be
    interpreted according to the context involved in the contract. The
    contract we are interpreting is a Commercial Vehicle Package
    Policy. There is no gainsaying that in a contract, the bargaining
    power is usually at equal footing. In this regard, the joint intention
    of the parties is taken into consideration for interpretation of a
    contract. However, in most standard form contracts, that is not
    so. In this regard, the Court in such circumstances would
    6 Robert Merkin QC et el., Colinvaux’s Law of Insurance (11th Eds.),
    p. 159.
    9
    consider the application of the rule of contra preferatum, when
    ambiguity exists and an interpretation of the contract is preferred
    which favors the party with lesser bargaining power.
  11. It is argued on behalf of the respondents and rightly so, that
    the insurance policy is a contract between the insurer and the
    insured and the parties would be strictly bound by the terms and
    conditions as provided in the contract between the parties.
  12. In our view, applying the aforesaid principles, Condition No.
    1 of the Standard Form for Commercial Vehicles Package Policy
    will have to be divided into two parts. The perusal of the first part
    of Condition No. 1 would reveal, that it provides that ‘a notice
    shall be given in writing to the company immediately upon the
    occurrence of any accidental loss or damage’. It further provides,
    that in the event of any claim and thereafter, the insured shall
    give all such information and assistance as the company shall
    require. It provides, that every letter claim writ summons and/or
    process or copy thereof shall be forwarded to the insurance
    company immediately on receipt by the insured. It further
    provides, that a notice shall also be given in writing to the
    company immediately by the insured if he shall have knowledge of
    10
    any impending prosecution inquest or fatal inquiry in respect of
    any occurrence, which may give rise to a claim under this policy.
  13. A perusal of the wordings used in this part would reveal,
    that all the things which are required to be done under this part
    are related to an occurrence of an accident. On occurrence of an
    accidental loss, the insured is required to immediately give a
    notice in writing to the company. This appears to be so that the
    company can assign a surveyor so as to assess the damages
    suffered by the insured/vehicle. It further provides, that any letter
    claim writ summons and/or process or copy thereof shall be
    forwarded to the company immediately on receipt by the insured.
    As such, the intention would be clear. The question of receipt of
    letter claim writ summons and/or process or copy thereof by the
    insured, would only arise in the event of the criminal proceedings
    being initiated with regard to the occurrence of the accident. It
    further provides, that the insured shall also give a notice in
    writing to the company immediately if the insured shall have the
    knowledge of any impending prosecution inquest or fatal inquiry
    in respect of any occurrence which may give rise to a claim under
    this policy. It will again make the intention clear that the
    11
    immediate action is contemplated in respect of an accident
    occurring to the vehicle.
  14. We find, that the second part of Condition No. 1 deals with
    the ‘theft or criminal act other than the accident’. It provides, that
    in case of theft or criminal act which may be the subject of a claim
    under the policy, the insured shall give immediate notice to the
    police and co­operate with the company in securing the conviction
    of the offender. The object behind giving immediate notice to the
    police appears to be that if the police is immediately informed
    about the theft or any criminal act, the police machinery can be
    set in motion and steps for recovery of the vehicle could be
    expedited. In a case of theft, the insurance company or a surveyor
    would have a limited role. It is the police, who acting on the FIR of
    the insured, will be required to take immediate steps for tracing
    and recovering the vehicle. Per contra, the surveyor of the
    insurance company, at the most, could ascertain the factum
    regarding the theft of the vehicle.
  15. It is further to be noted that, in the event, after the
    registration of an FIR, the police successfully recovering the
    vehicle and returning the same to the insured, there would be no
    12
    occasion to lodge a claim for compensation on account of the
    policy. It is only when the police are not in a position to trace and
    recover the vehicle and the final report is lodged by the police after
    the vehicle is not traced, the insured would be in a position to
    lodge his claim for compensation. As observed by the bench of two
    learned Judges in the case of Om Prakash (supra), after the vehicle
    is stolen, a person, who lost his vehicle, would immediately lodge
    an FIR and the immediate conduct that would be expected of such
    a person would be to assist the police in search of the vehicle. The
    registration of the FIR regarding the theft of the vehicle and the
    final report of the police after the vehicle is not traced would
    substantiate the claim of the claimant that the vehicle is stolen.
    Not only that, but the surveyors appointed by the insurance
    company are also required to enquire whether the claim of the
    claimant regarding the theft is genuine or not. If the surveyor
    appointed by the insurance company, upon inquiry, finds that the
    claim of theft is genuine then coupled with the immediate
    registration of the FIR, in our view, would be conclusive proof of
    the vehicle being stolen.
  16. That the term ‘co­operate’ as used under the contract needs
    to be assessed in facts and circumstances. While assessing the
    13
    ‘duty to co­operate’ for the insured, inter alia the Court should
    have regards to those breaches by the insured which are
    prejudicial to the insurance company. Usually, mere delay in
    informing the theft to the insurer, when the same was already
    informed to the law enforcement authorities, cannot amount to a
    breach of ‘duty to co­operate’ of the insured.
  17. We concur with the view taken in the case of Om Prakash
    (supra), that in such a situation if the claimant is denied the claim
    merely on the ground that there is some delay in intimating the
    insurance company about the occurrence of the theft, it would be
    taking a hyper technical view. We find, that this Court in Om
    Prakash (supra) has rightly held that it would not be fair and
    reasonable to reject genuine claims which had already been
    verified and found to be correct by the investigator.
  18. We find, that this Court in Om Prakash (supra) has rightly
    held that the Consumer Protection Act aims at protecting the
    interest of the consumers and it being a beneficial legislation
    deserves pragmatic construction. We find, that in Om Prakash
    (supra) this Court has rightly held that mere delay in intimating
    the insurance company about the theft of the vehicle should not
    14
    be a shelter to repudiate the insurance claim which has been
    otherwise proved to be genuine.
  19. We, therefore, hold that when an insured has lodged the FIR
    immediately after the theft of a vehicle occurred and when the
    police after investigation have lodged a final report after the
    vehicle was not traced and when the surveyors/investigators
    appointed by the insurance company have found the claim of the
    theft to be genuine, then mere delay in intimating the insurance
    company about the occurrence of the theft cannot be a ground to
    deny the claim of the insured.
  20. We, therefore, answer the reference accordingly.
  21. In the present case, the facts are undisputed. The theft had
    occurred on 28.10.2010. The FIR was lodged at P.S. Nakodar,
    Jalandhar, Punjab on the same day i.e. 28.10.2010. The police
    have admittedly lodged the final report. The investigators
    appointed by the insurance company have submitted their
    investigation report on 25.02.2011, finding the claim of the
    appellant to be genuine. In this background, the National
    Commission was not justified in reversing the concurrent orders of
    15
    the District Forum and the State Commission. The appeal is,
    therefore, allowed. The impugned Judgment and order dated
    17.03.2015 passed by the National Commission is quashed and
    set aside. The order of the District Forum dated 09.05.2012 as
    maintained by the State Commission vide order dated 26.03.2013
    is maintained.
  22. The amount, i.e., 75% of the claim amount deposited by the
    respondents, pursuant to the orders of this Court dated
    09.01.2018, in this Registry shall be permitted to be withdrawn by
    the appellant herein along with interest accrued thereon. The
    remainder shall be paid by the respondents within a period of six
    weeks from today along with interest at the rate of 12% per
    annum on the entire amount of Rs.4,70,000/­ from the date of the
    order of the District Forum till its realisation.
    ………………………….J.
    [N.V. RAMANA]
    …………………………..J.
    [R. SUBHASH REDDY]
    …………………………..J.
    [B.R. GAVAI]
    NEW DELHI;
    JANUARY 24, 2020