SC rules no insurance claim for stolen vehicle without valid registration

New Delhi, Sep 30:  The Supreme Court on Thursday ruled that an insurance company can reject the claim, if a vehicle does not have valid registration, as it denied a claim for the theft of a car having temporary registration.

A bench headed by Justice U.U. Lalit and comprising Justices S. Ravindra Bhat and Bela M. Trivedi said: "What is important is this court's opinion of the law, 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."

The bench added that on the date of theft, the vehicle was driven 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," it noted.

The top court set aside the judgment of the National Consumer Disputes Redressal Commission (NCDRC), which dismissed a plea by the United Insurance Company Ltd, challenging the Rajasthan state commission's order to pay Rs 6,17,800 to Sushil Kumar Godara, along with 9 per cent interest, for claims for his new Bolero car, which was stolen from Jodhpur. The bench noted that in the present case, the temporary registration of Godara's vehicle had expired on July 28, 2011.

Godara, on July 28, went to Jodhpur on business, staying at a guest house at night and parking his vehicle outside the premises. In the morning, he found that car was stolen.

The bench noted that Godara plied his vehicle and took it to Jodhpur, where the theft took place. "It is of no consequence, that the car was not plying on the road, when it was stolen; the material fact is that concededly, it was driven to the place from where it was stolen, after the expiry of temporary registration. But for its theft, the respondent would have driven back the vehicle," it said.

It noted that the vehicle was taken to another city, where it was stationed overnight in a place other than Godara's premises. "There is nothing on record to suggest that the respondent had applied for registration or that he was awaiting registration," it said.

"This court is of the opinion that the NCDRC's order cannot be sustained. Furthermore, the NCDRC should not have overlooked and disregarded a clear binding judgment of this Court - it also should not have disregarded its ruling in Naveen Kumar (supra), as well," the court stressed.