Haryana Commission Rules Unregistered Vehicles Ineligible for Insurance Claims

August 22, 2024

The State Consumer Disputes Redressal Commission, Haryana, comprising Mr. Naresh Katyal (Judicial Member) and Mr. S.C. Kaushik (Member), ruled that insurers are not required to pay out accidental claims for vehicles that were unregistered at the time of the incident or theft. The Commission emphasized that failure to register a vehicle is an offense under Section 192 of the Motor Vehicles Act, which disqualifies the vehicle owner from claiming insurance benefits.

Brief Facts

The complainant had purchased a Sonalika Tractor with a loan of Rs. 4,80,000/- from L&T Finance Limited (“Financer”) under a Loan-cum-Hypothecation Agreement. The Financer required that the tractor be insured through L&T Insurance Co. Ltd. (“Insurance Company”), which the complainant complied with.

On 02.09.2015, the tractor was stolen, leading to an FIR under Section 379 of the IPC. The complainant filed a claim with both the Financer and the Insurance Company, completing all necessary formalities. Although he was assured that the insurance claim would be processed within two months, the payment was delayed. He was told that compensation would be provided only after an untraced report was submitted.

On 07.06.2016, after obtaining the untraced report from the court, the complainant submitted it to the Financer. Despite this, no compensation was provided. Instead, the Insurance Company demanded the repayment of the financed amount with interest. The complainant issued a legal notice to both the Insurance Company and the Financer, urging them to settle the loan amount, but no action was taken. Dissatisfied, the complainant filed a consumer complaint with the District Consumer Disputes Redressal Commission, Karnal, Haryana (“District Commission”).

In response, the Insurance Company argued that the complaint was premature since the complainant had not filed a claim with them or notified them of the theft. The Insurance Company also claimed that the consumer forum lacked jurisdiction.

The Financer contended that disputes arising from the Loan Agreement should be resolved through arbitration and maintained that they had not received any claim or intimation from the Insurance Company. They argued that the release of compensation was a matter between the complainant and the Insurance Company.

The District Commission dismissed the complaint. The complainant then appealed to the State Consumer Disputes Redressal Commission, Haryana (“State Commission”).

Observations by the State Commission

The State Commission found no merit in the complainant’s argument that the Insurance Company and Financer’s failure to respond to the legal notice constituted an admission of the claims. The Commission clarified that a lack of response to a legal notice does not equate to an admission of facts; only statements made in formal replies or written statements count as admissions.

The Commission noted that the complainant purchased the tractor on 03.04.2015, but it was stolen on 02.09.2015. During this period, the complainant failed to register the tractor in his name. The temporary registration number was valid for only 30 days, and it was the complainant’s responsibility to ensure timely registration. The Commission found that the complainant’s failure to register the tractor before the theft was a significant lapse that exposed him to risk. As a result, the Insurance Company was not obligated to cover the theft claim, and the complainant was not entitled to insurance benefits.

The State Commission referred to the ruling in Narinder Singh v. New India Assurance Company, where it was determined that an unregistered vehicle at the time of an accident constituted a breach of the insurance policy and an offense under Section 192 of the Motor Vehicles Act. The Commission found the current case similar, as the complainant did not provide evidence of applying for an extension of temporary registration or permanent registration before the theft.

Based on this, the State Commission upheld the District Commission’s decision and dismissed the complaint, finding no deficiency in service by the Insurance Company or the Financer.

Posted and reproduced in Public Interest by

Adv. Sulaiman Bhimani Legal Consultant

Expert in RERA & Consumer Matters, Co-operative Scty Matters,

Deem Conveyance, Family Matters, and Property Disputes.

Human and Civil Rights Campaigner

President Citizens Justice Forum https://citizensjusticeforum.in