Pranav B Prem

The District Consumer Disputes Redressal Commission–II, Chandigarh, comprising Shri Amrinder Singh Sidhu (President) and Shri B.M. Sharma (Member), held that an alleged route permit violation having no nexus with the occurrence of the accident cannot be a valid ground to repudiate a motor insurance claim. Holding the repudiation to be arbitrary, the Commission found United India Insurance Company Limited guilty of deficiency in service and directed it to reimburse the claim amount along with interest and compensation. The complainant, Sukhvir Singh, is the owner of a truck bearing registration number PB-65-AN-0251, which was insured with United India Insurance Company Limited for the period from 18 August 2018 to 17 August 2019 after payment of the requisite premium.

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On 9 July 2019, while the truck was being driven by Gurcharan Singh, who held a valid driving licence, it met with an accident near the light point of Sector 25/38 (West), Chandigarh. The vehicle suffered damage and was sent to an authorised workshop, which raised a repair bill dated 27 September 2019 amounting to ₹3,07,790.

The complainant lodged a claim with the insurer. The insurer deputed a surveyor who inspected the vehicle and assessed the loss. However, the claim was ultimately repudiated vide letter dated 1 July 2020 on the ground that the truck was being driven within the limits of the Union Territory of Chandigarh, whereas the route permit was allegedly only for the State of Punjab. The repudiation letter stated that the file stood rejected because the “Route Permit is not valid for plying vehicle in Chandigarh.” Aggrieved by the repudiation, the complainant approached the District Consumer Commission alleging that the rejection was illegal, arbitrary, and amounted to deficiency in service and unfair trade practice.

In its written version, the insurer admitted issuance of the policy and appointment of the surveyor. However, it contended that the accident occurred in Chandigarh, where the vehicle did not have a valid route permit, and therefore the claim was rightly repudiated. It was also submitted that in any event its maximum liability would be ₹2,31,854.

The Commission observed that there is a distinction between a situation where a vehicle does not have a route permit at all and one where it has a permit but not for a particular area at a given time. In the present case, it was not the insurer’s case that the vehicle did not have any permit; rather, the allegation was only that it lacked permit validity for Chandigarh.  The Commission further held that whether or not the vehicle had a route permit for a particular area “had nothing to do with the accident and the damage caused to it thereby.”

Relying on the judgment of the Punjab and Haryana High Court in National Insurance Company Ltd. v. Paramjit Kaur, the Commission noted that merely operating a vehicle outside the permitted area would not constitute a violation unless it was shown that the vehicle was used for a purpose not allowed by the permit.

It also relied on the decision of the National Consumer Disputes Redressal Commission in United India Insurance Co. Ltd. v. Singhla Engineers & Contractors Pvt. Ltd., where it was held that the absence of a route permit for a particular area, without any nexus to the accident, is at best a technical irregularity and not a fundamental breach justifying repudiation of the claim.

The Commission took note of the statement of a clerk from the office of the Regional Transport Authority, Patiala, which clarified that vehicles having route permits for the State of Punjab are permitted to ply in the area of U.T. Chandigarh, being the capital of Punjab.  Relying on the Supreme Court’s decision in Dharmendra Goel v. Oriental Insurance Co. Ltd., the Commission observed that insurance companies, being in a dominant position, often act unreasonably and attempt to deny claims on technical grounds after accepting premiums. 

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In view of these findings, the Commission concluded that the insurer was unjustified in repudiating the claim and that the act amounted to deficiency in service. The complaint was partly allowed, and the insurer was directed to reimburse ₹3,07,790 along with interest at 9% per annum from 1 July 2020, the date of repudiation, till realisation, and to pay ₹25,000 towards compensation for harassment and litigation expenses.

Cause Title: Sukhvir Singh v. United India Insurance Company Limited

Case No: CC/20/2021

Coram: Shri Amrinder Singh Sidhu (President) and Shri B.M. Sharma (Member)