Insurance company liable to pay claim even if vehicle stolen and unauthorisedly driven: Delhi High Court

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The Delhi High Court has held that an insurance company is liable to pay compensation to the deceased's family even if the offending vehicle was stolen and driven unauthorisedly by someone else [United India Insurance Co. Ltd. v Smt. Anita Devi and Ors].

"...if the proposition of the insurance company was accepted, it would militate against the very concept of beneficial legislation for the victims of an accident. If such a finding were to be returned then the effect would be that even though a vehicle is insured but is stolen, not only would the insurance company be entitled to avoid its liability but the owner of the vehicle who has insured his vehicle against theft and accident would be saddled with liability for no fault of his. Alternatively, the claimants would be left without any remedy to seek compensation," the Court held.

The order was passed on a plea by United Insurance (appellant) challenging the order of tribunal granting recovery rights against the driver of the vehicle.

The insurance company had argued that the vehicle was stolen and was being driven by a professional thief and, therefore, there was no liability on the insurance company to pay the amount.

However, the tribunal had found that though the vehicle was stolen by one Niraj alias Mika, a complaint had already been lodged with Police Station Narela with regard to the offending vehicle.

Therefore, the question before the Court was whether the insurance company is absolved of the liability to pay the amount in a case where the vehicle was stolen and was unauthorizedly being driven by somebody else.

It relied on the Supreme Court judgment in United India Insurance Company vs. Lehru and Ors to hold that the insurance company had failed to show any willful breach on the part of insured.

Justice Sachdeva also disagreed with the Madras High Court order which was relied upon by the counsel for the appellant. The Court said that the Madras High Court had not considered the apex court's judgement in Lehru.

"I am in respectful disagreement with the said judgment of the Madras High Court in New India Assurance Co Ltd vs. Selvarajamani & Ors, 1998 ACJ 547 relied on by learned counsel appearing for the appellant. Said judgment does not consider the proposition as laid down by the Supreme Court in Lehru (supra) as to whether there is a willful breach on the part of the insured or not so as to entitle the insurer to avoid the liability," the High Court said.

The Court, therefore, held that there was no infirmity in the tribunal's order and dismissed the appeals.