Appeal against insurance claim repudiation dismissed. Court held claim for stolen lorry was genuine, keys were safely kept locked, delay in FIR reporting was excused, and repudiation based on investigator's surmises was unsustainable.
Appeal dismissed; cross objection for enhanced interest dismissed; costs left to parties.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE P.N.RAVINDRAN & THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN
MONDAY, THE 6TH DAY OF NOVEMBER 2017/15TH KARTHIKA, 1939
RFA.No. 405 of 2011 ( )
AGAINST THE ORDER/JUDGMENT IN OS 112/2006 of ADDL.SUB COURT, KOLLAM DATED 27-01-2011
APPELLANT(S)/APPELLANTS:
1. THE SENIOR DIVISIONAL MANAGER THE ORIENTAL INSURANCE CO.LTD.,, DIVISIONAL OFFICE, L.I.C.BUILDING,, IIIRD FLOOR, RESIDENCY ROAD, CHINNAKKADA,, KOLLAM.
2. THE REGIONAL MANAGER, THE ORIENTAL INSURANCE CO.LTD., REGIONAL OFFICE, MOTHER SQUARE, OPPOSITE NORTH RAILWAY STATION, ERNAKULAM.
BY ADVS.SRI.K.N.SIVASANKARAN
SRI.SUNIL SHANKER
RESPONDENT(S):
C.ANIL KUMAR S/O.K.CHELLAPPAN NAIR, RESIDING AT MANGALATHU HOUSE, KAVANAD P.O., KOLLAM-3.
R1 BY ADV. SMT.BABITHA THAMBI R1 BY ADV. SRI.LEO GEORGE R1 BY ADV. SRI.M.SUNIL R1 BY ADV. SRI.K.N.SASIDHARAN NAIR
THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD ON 06-11-2017, ALONG WITH CO. 90/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
AMV
“CR”
P.N.RAVINDRAN
&
DEVAN RAMACHANDRAN, JJ
R.F.A.No.405 of 2011
with
C.O.No.90 of 2011
Dated this the 6th day of November, 2017
JUDGMENT
DEVAN RAMACHANDRAN, J
The repudiation of a claim made by the respondent herein at the hands of the appellant insurance company, namely the Oriental Insurance Co. Ltd., is the basis for the proceedings which lead to this appeal.
the provisions of the Companies Act and the second appellant is its regional manager. The appellants entered into a “commercial vehicles package policy,” which is an insurance contract with the respondent, who was the owner of a lorry bearing registration No.KL-02/D-2275. This insurance policy was valid from 17.01.2002 to 16.01.2003. The allegation of the respondent is that his vehicle had been stolen on
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R.F.A.No.405 of 2011 with C.O.No.90 of 2011
06.11.2002 between 2.15 and 2.30 p.m. and he thus raised a claim with the 1st appellant company on the strength of the policy referred to above which was, however, repudiated by the appellants on the accusation that the respondent had not taken reasonable care against the possibility of such a theft and they allege that the respondent acted in violation of condition Nos. 5 and 8 of the policy, thus entitling them to refuse his claim through a valid repudiation. Faced with this, the respondent filed O.S.No.112 of 2006 on the files of the Additional Sub Court, Kollam against the appellants praying that a decree be issued directing them to pay an amount of ₹4,05,000/-, along with interest @12% from the date of the claim till payment. The court below allowed the suit after trial, decreeing it directing the appellants to pay an amount of ₹ 4,05,000/- along with 6% interest for ₹4,00,000/- from 07.11.2002 till realisation. The appellants have filed this appeal, impugning the judgment and decree of the court below, on various grounds.
R.F.A.No.405 of 2011 with C.O.No.90 of 2011
3
and Sri.Leo George, learned counsel appearing for the respondent.
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R.F.A.No.405 of 2011 with C.O.No.90 of 2011
5. The appellant insurance company, however,
repudiated the claim on the ground that the respondent, his driver and his cleaner were negligent in dealing with the vehicle, which according to them contributed to the theft itself. The appellant insurance company relies upon two conditions of the insurance policy, which has been marked and evidenced as Ext.B1. The two conditions therein, namely Nos. 5 and 8, reads as under:
Condition No.5: The insured shall take all reasonable steps to safeguard the vehicle insured from loss or damage and to maintain it in efficient condition and the company shall have at all times free and full access to examine the vehicle insured or any part thereof or any driver or employee of the insured. In the event of any accident or breakdown, the vehicle insured shall not be left unattended without proper precautions being taken to prevent further damage or loss and if the vehicle insured be driven before the necessary repairs are affected, any extension of the damage or any further damage to the vehicle shall be entirely at the insured's risk.
Condition No.8: The due observance and fulfillment of the terms, conditions and endorsements of this Policy in so far as they relate to anything to be done or complied with by the insured and the truth of the statements and answers in the said proposal shall be condition precedent to any liability of the Company to make any payment under this policy.
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R.F.A.No.405 of 2011 with C.O.No.90 of 2011
that the insured shall take all reasonable steps to safeguard
the vehicle from loss or damage and to maintain it in an efficient condition. The latter limb of the said condition relates to the event when the vehicle is involved in an accident and it provides that should such an accident occur, it shall not be left unattended without proper precaution. As far as condition No.8 is concerned, it is a general clause which says that due observance and fulfillment of all the conditions and endorsement of the policy shall be adhered by the insured and that the truth of the statements and answers in the proposal shall be a condition precedent to the liability. The effect of these two conditions are virtually that the contract is being one entered uberrimafides, the insured will be entitled to make a claim only if he complies strictly with the conditions and covenants of the contract.
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R.F.A.No.405 of 2011 with C.O.No.90 of 2011
Manager of the first appellant company was examined as DW1 and the private investigator employed by the insurance company, who looked into the case of the theft, was examined as DW2. Exts.B1 to B5 documents were also marked on the side of the defendants. The court below on an assessment of all these material and evidence on record, however, entered into a conclusion that the action of the company in repudiating the claim was without any basis and legally unsustainable.
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7
that was caused to be done through DW2, the private investigator, who had also given an investigation report to the company, which has been produced and recorded as Exts.B2 and B3. These two reports, which DW2 says, has been made after detailed investigation virtually finds that the appellant and his servants, namely the driver and cleaner, were culpable in the theft and he also insinuates that the police are also complicit one way or the other in the said event. The reasoning that went into the mind of DW2, about which he has also deposes in evidence, is that the police were rather negligent in the manner in which they dealt with the crime and he says that there was several instances of theft from the area in question in the last few months prior. He, therefore, gets into an inference, based on surmises and conjectures, that the thefts that were reported from that area was on an account of either complicity of the police personnel or on account of complete mismanagement by the investigating officers of the police department. The relevant portion of Ext.B2 investigation report made by DW2 reads as under:-
From my investigation I find lots of anomalies in the claim. The entire documents, key etc. were kept inside the Driver's
R.F.A.No.405 of 2011 with C.O.No.90 of 2011
8
cabin. Although the theft was noticed within 15-20 minutes neither the driver nor the cleaner intimate the theft to Control Room Telephone No.100 which is a common number all over India. The diesel tank was having around 220 litres, which is sufficient to cross the boarder freely because all original documents were in the lorry by the time of theft was reported to police ie; after 26 hours.
Police while registering the crime deliberately deleted the important points ie; all documents and key is also missing along with lorry. Further the reason stated by complainant that he went to verify whether the financier seized the vehicle due to non payment of loan availed was not verified the police. As on the day of theft the balance amount to be paid to financier against Rs.2,25,000/-. Loan availed on 11.12.2000, was Rs.18,652/-. (it is an unofficial practice even known to police that financier seize the vehicle of payments are defaulted by more than 3 months continuously because for every delay exorbitant additional interest is levied).
Enclosed herewith please find a circular issued by National Crime Record Bureau (confidential and for your eyes only) dated 26.07.2000. All vehicle theft cases should be intimated immediately to District Crime Record Bureau and District Crime Record Bureau should intimate State Crime Record Bureau. State Crime Record Bureau should National Crime Record Bureau and National Crime Record bureau acknowledge the receipt of information back the police station concerned within 7 days. I understand from retired police personnel that no such practices are followed in Kerala.
This is, to the best of my knowledge 10th lorry stolen between Kalamassery and Aluva within the past 3 years with all original documents. Police had arrested ex convicts who are
R.F.A.No.405 of 2011 with C.O.No.90 of 2011
9
behind these crimes however no action was initiated to recover the vehicles. All these vehicles are given to these criminals who arrange dismantling or sales (because all original documents are with them) with the knowledge and connivance of R/C owner. One of the lorries disappeared in identical way was seized by Excise Department, Wynad with forged registration names. Many original documents are used by owners of similar vehicles which Insurance Companies settled on Cash/Total loss basis.
One of the hurdles what Police Department is facing is expenses which cannot be accounted by them. Even if they arrest an ex convict, it may take one or two days questioning to confess the crime. Keeping an arrested person for more than 24 Hours in custody is violation of Supreme Court order. Again the recovery of stolen vehicle based on confession may take days and often one or two weeks because these vehicles must have been sold or dismantled from other states. Police should take the accused to wherever it is at their expenses. The question is why should police take such risks?
Crimes Squads of various Districts, known to me personally has agreed to recover the stolen vehicles or persuade the R/C owner to withdraw the claim provided we meet their expenses or reward suitably I think this is a point to be discussed, viewed perceptively and seriously as the theft claims are reported every day.
I am not convinced about the theft reported by insured. On 31.10.2003 he has paid Rs.50,000/- to financier and settled their accounts (Receipt attached).
I strongly believe that it is high time we seek help of police to recover the stolen vehicles even if we have to spend few percentage of its value as recovery expenses.
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10
In the case of insured you may write a letter to Director General of Police. Police Head Quarters, Trivandrum pointing out all anomalies and requesting re enquiry. This will enable us to delay the claim settlement of give sufficient time to decide whether we should seek police help and of course justify our action in case the insured approaches any redressal forums.
Submitted without any prejudice for your information.
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R.F.A.No.405 of 2011 with C.O.No.90 of 2011
mismanagement by the driver and the cleaner. They seem to suggest that if the driver had taken the key of the lorry with him, the theft could have been averted. The reasons for repudiating the claim is founded on the premise that since the driver had left the key along with the documents, admittedly in the lorry itself, the theft, which could have been easily averted, had thus occurred due to their negligence.
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12
the lorry in leaving the key in such a manner, along with the documents, inside the glovebox is completely negligent and would give a valid cause to the insurance company to refuse to honour the claim. In support of these contentions, Sri.Sunil Shankar cites the judgment of the Hon'ble High court of Madras in Venkatachalam v. Sundarambal Ammal and Anr. [ AIR 1983 Mad 197]. He reads from the said judgment
and asserts that the facts of that case is akin to the facts involved in this case.
R.F.A.No.405 of 2011 with C.O.No.90 of 2011
13
key in the ignition, but had safely kept it in the glovebox, along with the original papers and had locked it and taken out the key of the glovebox with him. This is not a case where the ignition of the vehilce was let unattended with the key on it but the driver actually kept it away in the overhead glovebox of the vehicle. From that perspective alone, it becomes obvious that the judgment of the Hon'ble Madras High Court, referred to above, cannot apply to the facts of this case at all.
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14
glove compartment, the key of which was in his custody. This is more so because PW1, the owner of the lorry while being examined as a witness, stated categorically that the keys and the documents of the lorry were not left in a casual manner or unattended inside the lorry but kept in the glove compartment locked by his driver. This version of PW1 has not been controverted at all in cross examination, but on the contrary, it virtually stands proved.
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R.F.A.No.405 of 2011 with C.O.No.90 of 2011
brokers, during which the vehicle was stolen but does not mean that they were negligent or that they have acted foul of the conditions of the policy.
R.F.A.No.405 of 2011 with C.O.No.90 of 2011
16
suspicion that the vehicle may have been re-possessed by the financing company, suggested to them to contact the owner, namely, the respondent herein and find out whether this was a case of such re-possession. The driver and the cleaner, thereafter, contacted the respondent, and PW1 has deposed specifically that it was after they made such an enquiry with the finance company to confirm that this was not a case of repossession, that they went back to the Police station and registered a crime on 7.11.2017 at about 5 am. It is this delay of about 26 hours that the insurance company has used as its primary excuse to repudiate the claim. This delay, as a general principle, would perhaps be enough for the insurance company to do so. But in the facts of this case, going by the uncontroverted version that the driver of the lorry had, in fact, gone to the Kalamassery Police Station soon after the vehicle was stolen, would completely impeach the stand of the insurance company that they would not honour the claim merely on account of the alleged delay. The specific facts presented in this case would show that there is no delay at all in registering the crime and that the driver and the cleaner, as
R.F.A.No.405 of 2011 with C.O.No.90 of 2011
17
also the respondent, have employed all due diligence and care in ensuring that the theft was reported in time. Add to this, the fact that even the insurance company does not have a contention that the theft occurred on account of any illegal complicity on the part of the respondent and his men as also the concede fact that the police had closed the case of theft as “undetected” would show that this was a genuine case of theft and that the appellant insurance company was liable to indemnify the insured/ the respondent herein as per the terms of the policy.
left 220 liters of fuel inside the lorry and then left it unattended, virtually giving a free hand to a person to attempt theft of the same.
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R.F.A.No.405 of 2011 with C.O.No.90 of 2011
true factual scenario being different. The driver of the lorry has categorically stated in his deposition as PW2, that while the vehicle was travelling back from Ahmedabad to Cochin, it travelled through the area of Mahi, which is a Union Territory and that since the cost of fuel is lower there, the lorry, as is done by every other vehicle, was fuelled in one of the pumps there, and that the tank was full when it left Mahi. He has also testified that the vehicle was refuelled because they were sure that they would get some consignment from Cochin for transport to Kollam, for which the vehicle was required to be fully fuelled, because for a fully loaded vehicle, to complete the drive from Mahi to Kollam through Cochin would require about 120 liters. We do not see anything that is suspicious in the testimony of PW2 and on the contrary, we think that it is a justifiable explication that he has made out. This is also because even in spite of the most vigorous cross examination, the testimony of neither PW2 or PW1 is seen to have been impeached by the appellant insurance company in any manner on these counts. We, therefore, do not find that the factum of
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R.F.A.No.405 of 2011 with C.O.No.90 of 2011
the vehicle having about 220 liters of fuel in it would be an unusual or suspicious circumstance which would warrant an inference of complicity on the side of servants of the respondent in the theft of the vehicle.
R.F.A.No.405 of 2011 with C.O.No.90 of 2011
20
the claim, merely based on Exts.P2 and P3, which according to us are the products of conjunctures and surmises. We do not want to say any thing more regarding the evidentiary value of Exts.P2 and P3 or the testimony of PW2, the private investigator, except that even this testimony would show that he had not at any point of time, cared to contact the police officer in charge of the crime and to find out whether the theft had occurred in a manner that was alleged and pleaded by the respondent. His testimony is luculent that he did not go to the Police Station nor had he contacted the investigating police officers but he has still chosen, in Ext.B2, to insinuate that the police are also complicit in such events in that area. This attitude of PW2, in our view, does not deserve any legal recognition and the surmises in Exts.P2 and P3 against the police is, in our opinion, completely untenable. We, therefore, cannot find favour with Exts.P2 or P3 or with Ext.A1, which is the letter of repudiation issued by the appellant company.
what we have said above, we see no reason to allow this appeal or to interfere, in any manner, with the views and
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R.F.A.No.405 of 2011 with C.O.No.90 of 2011
conclusions taken and entered into by the court below. We, therefore, find ourselves compelled to dismiss this appeal, but in the peculiar circumstances we have noticed above, we refrain from imposing costs and leave the parties to suffer their respective costs in this appeal.
In such perspective, we are of the opinion that the court below has decreed the suit in a very circumspect manner, granting 6% interest, which in our view is also completely
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22
justifiable in the facts of the case. We, therefore, dismiss the cross objection also, but without ordering costs.
Sd/-
P.N.RAVINDRAN JUDGE
sd/-
DEVAN RAMACHANDRAN JUDGE
AMV/16/12/2017
/TRUE COPY/ P.A.TO JUDGE
3 issues framed by the court
Whether the insurance company was justified in repudiating the claim based on alleged negligence regarding the vehicle keys and delayed police reporting.
Whether the High Court should interfere with the lower court's decree directing the payment of claim amount.
Whether the cross objection claiming higher interest should be allowed.
Colour shows how this judgement treated each authority
Venkatachalam v. Sundarambal Ammal and Anr.Distinguished¶85
Venkatachalam v. Sundarambal Ammal and Anr. [ AIR 1983 Mad 197] · Who else cites this
THE SENIOR DIVISIONAL MANAGER THE ORIENTAL INSURANCE CO.LTD.
THE REGIONAL MANAGER, THE ORIENTAL INSURANCE CO.LTD.
C.ANIL KUMAR
P.N.RAVINDRAN
DEVAN RAMACHANDRAN
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
