Insurance Company Can't Avoid Liability If Offending Vehicle Is Stolen & Unauthorisedly Driven By Someone Else

In UNITED INDIA INSURANCE CO. LTD vs SMT ANITA DEVI AND ORS, appeal was filed before Delhi High Court against the order of the Tribunal allowing compensation to the owner of the insured vehicle. The appellant submitted that since the vehicle was stolen and driver was a professional thief there was no liability on the insurance company to pay the amount.

The question that arose for consideration is as to whether the insurance company is absolved of the liability to pay the amount in a case where the vehicle is stolen and unauthorisedly being driven by somebody else.

Judgment

In the instant case, Tribunal has found that the vehicle was stolen and there was no willful breach of the terms and conditions of the insurance policy by the insured.

The Supreme Court of India in United India Insurance Company vs. Lehru and Ors, 2003(3) SCC 338 has held that in order to avoid the liability, the insurer must establish that there was a willful breach on the part of the insured.

The Delhi High Court was in agreement with the judgment of the High Court of Karnataka in Sri Sathish Kini vs. Smt. Jnaneshwari wherein, in similar circumstances, the Court has held that the judgment in Lehru (Supra) is complete answer to the contention of the insurance company and the insurance company may have a claim for contribution from the driver.

The Court also disagreed with the judgment of the Madras High Court in New India Assurance Co Ltd vs. Selvarajamani & Ors, 1998 ACJ 547 as the 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.

Furthermore, if the proposition of the insurance company was accepted, it would militate against the very concept of a 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 a liability for no fault of his. Alternatively, the claimants would be left without any remedy to seek compensation.