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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.

2. 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]

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3. 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.

4. Being aggrieved thereby, the respondents preferred an

appeal before the State Consumer Disputes Redressal

3  2011(3) CPC 422

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Commission, Punjab (hereinafter referred to as the “State

Commission”).   The State Commission dismissed the appeal  vide

order dated 26.03.2013.

5. 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.

6. 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)

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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.

7. 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.”

8. 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.

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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.

9. 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

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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.

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10. 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

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(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

11. 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.

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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.

12. 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.

13. 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

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any impending prosecution inquest or fatal inquiry in respect of

any occurrence, which may give rise to a claim under this policy.

14. 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

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immediate action is contemplated in respect of an accident

occurring to the vehicle.

15. 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.

16. 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

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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.  

17. That the term ‘co­operate’ as used under the contract needs

to be assessed in facts and circumstances. While assessing the

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‘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.

18. 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.

19. 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

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be a shelter to repudiate the insurance  claim which  has  been

otherwise proved to be genuine.  

20. 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.

21. We, therefore, answer the reference accordingly.   

22.  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

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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.

23.  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