Summary
A truck was stolen by persons to whom its driver had given a lift. The Court held that this policy breach was not fundamental enough to extinguish insurance liability and ordered non-standard settlement at75percent of insured value. Loan-recovery arbitration did not defeat the insured’s claim, though an unpaid financier award had priority in distribution.
Issues
- Whether giving a lift to passengers justified complete repudiation of the truck-theft claim.
- Whether financing arbitration barred insurance recovery and how the proceeds should be distributed.
Held
- To avoid all liability, the insurer must establish a breach fundamental enough to terminate the contract. In these circumstances the driver’s humanitarian lift, followed by an unforeseeable attack and theft, did not nullify the policy; non-standard settlement at75percent was appropriate. (¶ 5–7)
- Arbitration relating to recovery of the financed loan did not negate the insured’s right against the insurer. The financier’s unpaid award could instead be satisfied first from the sum deposited before the District Forum. (¶ 8–9)
Result
Appeal allowed; rejection orders set aside. Insurer to deposit75percent ofRs7,28,000 plus9percent annual interest from claim-petition filing to deposit, andRs1,00,000 compensation. District Forum to satisfy any unsettled financier award first and release the balance to appellant; pending applications disposed of.