@JUDGMENTTAG-ORDER
Ajay Kumar Mittal, J.@mdashThe petitioner is an Insurance Company. It challenges the award passed by respondent No. 2 - Insurance Ombudsman, whereby the petitioner-Insurance Company has been held liable to pay Rs. 5.92 lacs on account of damage to the vehicle which was insured for Rs. 5 lacs. Brief facts as narrated in the petition may be noticed. Respondent No. 1 purchased a car on 31.5.2008 for an amount of Rs. 7,40,518/-. The said vehicle was insured for the period 2008-09 with New India Assurance Company and on expiry of the said insurance, respondent No. 1 approached the petitioner-Insurance Company for insuring his vehicle bearing registration No. CH04E 7502 for the next year i.e. from 4.6.2009 to 3.6.2010. The petitioner filled up the proposal form giving all the details of his previous policy and bonus etc. In column-8 of the proposal form, Insured''s Declared Value (IDV) was mentioned as Rs. 5 lacs by respondent No. 1. On 18.7.2009, the vehicle was stolen and respondent No. 1 reported the matter to the Insurance Company on 22.7.2009 and asked for increase in the value of the sum assured. After considering the matter, the petitioner-Insurance Company informed respondent No. 1 vide letter dated 10.9.2009, Annexure P.6 that the sum insured could not be increased once the claim had occurred. Feeling aggrieved, respondent No. 1 approached respondent No. 2. Vide order dated 6.11.2009 passed by respondent No. 2, the Insurance Ombudsman, Chandigarh directed the Insurance Company-petitioner that IDV of the vehicle should have been fixed at Rs. 5.92 lacs and on account of theft of the said vehicle, the Insurance Company should pay a sum of Rs. 5.92 lacs instead of Rs. 5 lacs which is the sum insured in the policy. Hence this petition.
2. Learned counsel for the petitioner submitted that u/s 64VB(1) of the Insurance Act, 1938, (in short, "the Act"), the Insurance Company was liable to pay only the agreed amount for which insurance had been carried out. Reliance was placed on judgment of the Hon''ble Supreme Court in
3. No one appeared for respondent No. 1. Opposing the prayer, counsel for respondent No. 2 submitted that the amount which was awarded was calculated as per Schedule in the Proposal Form duly filled by the insured whereby after allowing the depreciation, IDV was ascertained by respondent No. 2 and direction for payment of the said amount was given. He further urged that the order of respondent No. 2 is final and writ petition would not be maintainable.
4. After giving thoughtful consideration to the respective submissions, I find merit in the submissions of learned counsel for the petitioner.
5. The primary question that arises for adjudication is whether claimant-respondent No. 1 was entitled to receive an amount of Rs. 5.92 lacs on account of insurance claim as against the insured amount of Rs. 5 lacs as per Insurance policy.
6. The relevant portion of Section 64VB of the Act on which reliance has been placed reads thus:-
No risk to be assumed unless premium is received in advance.-- (1) No insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily payable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and until deposit of such amount as may be prescribed, is made in advance in the prescribed manner.
(2) to (6) xx xx xx xx xx xx xx
7. According to the aforesaid provision, Insurance Company assumes risk for the amount of insurance for which premium has been paid in advance by the insured.
8. The Constitution Bench in
11. In the premise, we hold that the view expressed by the Bench of three learned Judges in the case of Shanti Bai is correct and answer the question set out in the order of reference in the beginning as under:-
In the case of insurance company not taking any higher liability by accepting a higher premium for payment of compensation to a third party, the insurer would be liable to the extent limited u/s 95(2) of the Act and would not be liable to pay the entire amount.
9. Further, the Hon''ble Supreme Court in
26. Thus, it needs little emphasis that in construing the terms of a contract of insurance, the words used therein must be given paramount importance and it is not open for the court to add, delete or substitute any words. It is also well settled that since upon issuance of an insurance policy, the insurer undertakes to indemnify the loss suffered by the insured on account of risks covered by the policy, its terms have to be strictly construed to determine the extent of liability of the insurer. Therefore, the endeavour of the Court should always be to interpret the words in which the contract is expressed by the parties.
10. Adverting to the submissions of the learned counsel for the respondent, the Schedule given is for the purpose of determining the IDV after allowing depreciation. However, the claim would be restricted to that amount where the insured value exceeds the depreciated value. Further, order of respondent No. 2 being final only signifies that there is no other statutory remedy available to the aggrieved party but it does not curtail the writ jurisdiction of this Hon''ble Court.
11. In view of the above, it is concluded that in a contract of insurance, the rights and obligations are governed by the terms of the said contract. The parties are governed by the terms of a contract of insurance which have to be strictly construed and no exception can be made on the ground of equity. Any amount beyond the sum assured for which insurance policy is undertaken, no legitimate claim can be laid by the insured. Consequently, the writ petition is allowed. The Insurance Company is held liable to the extent of sum assured under the policy amounting to Rs. 5 lacs. Award passed by respondent No. 2 stands modified accordingly.
