Whether insurance company is liable to pay claim even if vehicle stolen and unauthorisedly driven? Del HC decides

Delhi High Court: Sanjeev Sachdeva, J., considered the issue of whether the insurance company would be liable to pay amount in a case of a stolen vehicle and unauthorizedly driven?

Appellant impugned award dated 27-11-2021 to the limited extent that it grants recovery rights against the driver of the vehicle.

Counsel for 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.

Question for Consideration

Whether the insurance company is absolved of the liability to pay the amount in a case where the vehicle is stolen and unauthorizedly being driven by somebody else?

Analysis, Law and Decision

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

Further, in the present case, the insurance company could not show any breach on the part of the insured to avoid to liability.

“…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.”

Tribunal found that the vehicle was stolen and there was willful breach of the terms and conditions of the insurance policy by the insured.

Therefore, no infirmity in the impugned award whereby tribunal had directed the insurance company to make the payment of the compensation and thereafter recover the same from the driver who had stolen the vehicle.

In view of the above appeal was dismissed. [United India Insurance Co. Ltd. v. Anita Devi, 2022 SCC OnLine Del 139, decided on 17-1-2022]

Advocates before the Court:

For the petitioner: Sankar N. Sinha, Advocate

For the respondent: Somnath Parashar, Advocate for R-1 to 4

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