Case Note & Summary
The appellant, Hem Raj, owned a Mahindra Pick-up vehicle insured with The New India Assurance Co. Ltd. under policy No.36060231130100003910 for the period 21.03.2014 to 20.03.2015. The policy initially covered India but was later extended to Nepal. On 11.09.2014, the vehicle driven by Amritpal met with an accident in Nepal, resulting in the death of Smt. Santliya Tharu and injuries to Ram Parshad Tharu. The appellant bore medical expenses of Rs.4,09,000 (Nepalese Rupee) and paid Rs.5,00,000 (Nepalese Rupee) as compensation for the death. He sought indemnification from the insurer, which was denied. The NCDRC dismissed his complaint, holding that the policy did not cover third-party liability in Nepal. The Supreme Court, however, found that since the policy was extended to Nepal, the insurer was liable to indemnify the insured for the amounts paid to third parties. The Court allowed the appeal and directed the insurer to pay the claimed amount with interest.
Headnote
A) Insurance Law - Motor Vehicle Insurance - Territorial Extension - Indemnification - The insured had purchased a motor vehicle insurance policy which was initially limited to India but later extended to Nepal. The vehicle met with an accident in Nepal causing death and injury to third parties. The insured paid compensation to the victims and claimed indemnification from the insurer. The NCDRC dismissed the complaint on the ground that the policy did not cover third-party liability in Nepal. The Supreme Court held that since the policy was extended to Nepal, the insurer is liable to indemnify the insured for the amounts paid to third parties. The Court set aside the NCDRC order and allowed the appeal. (Paras 2-10)
Issue of Consideration
Whether the insurance company is liable to indemnify the insured for the amount paid to third parties in respect of an accident that occurred in Nepal, when the policy was extended to cover Nepal.
Final Decision
Appeal allowed. The order of NCDRC is set aside. The respondent-insurance company is directed to pay the appellant the amount of INR 10,36,500 with interest at the rate of 6% per annum from the date of filing of the complaint before the NCDRC till the date of payment.
Law Points
- Insurance policy territorial extension
- indemnification of third-party claims
- consumer dispute
- motor vehicle accident in Nepal
- liability of insurer
Case Details
Civil Appeal No. 4642 of 2023 (@SLP(C) No. 3623 of 2021)
The New India Assurance Co. Ltd.
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Nature of Litigation
Civil appeal against order of NCDRC dismissing complaint for indemnification under motor insurance policy.
Remedy Sought
Appellant sought indemnification of INR 10,36,500 from the insurance company for amounts paid to third parties due to accident in Nepal.
Filing Reason
Insurer denied claim for accident occurring in Nepal despite policy extension.
Previous Decisions
NCDRC dismissed the complaint holding that policy did not cover third-party liability in Nepal.
Issues
Whether the insurance company is liable to indemnify the insured for amounts paid to third parties in respect of an accident that occurred in Nepal, when the policy was extended to cover Nepal.
Submissions/Arguments
Appellant argued that the policy was extended to Nepal and therefore the insurer is liable to indemnify him for the amounts paid to third parties.
Respondent argued that the policy did not cover third-party liability in Nepal.
Ratio Decidendi
When an insurance policy is extended to cover a territory, the insurer is liable to indemnify the insured for third-party claims arising from accidents occurring in that territory, as the extension of territorial coverage includes all risks covered under the policy.
Judgment Excerpts
Leave granted.
This appeal has been filed by the insured seeking indemnification of the total amount of INR 10,36,500/- from the respondent-insurance company, being aggrieved by the Order passed by the National Consumer Disputes Redressal Commission (‘NCDRC’ for short).
Briefly stated the facts are that the appellant is the owner of a Mahindra Pick-up Vehicle bearing registration no. PB-19H-2461 which is used by him for his personal use.
On 11.09.2014 at 10.00 am, at Gorhi Chowk, Ward No.4, Gram Vikas Samiti, District Bardia Belva (Nepal), the vehicle met with an accident.
According to the appellant, a sum of Rs.5,00,000/- (Nepalese Rupee) was paid by him owing to the death of Smt. Santliya Tharu through Rajinder.
Procedural History
The appellant filed a complaint before the NCDRC seeking indemnification. The NCDRC dismissed the complaint. Aggrieved, the appellant filed a Special Leave Petition before the Supreme Court, which was converted into Civil Appeal No. 4642 of 2023.
