1. THE petitioner is the owner of a vehicle bearing no. HP 12C 4659, which he had got insured with the opposite party, National Insurance Co. Ltd. for the period from 28.03.2011 to 27.03.2012. The vehicle met with an accident on 19.09.2011 and the matter was reported to the police. Intimation having been given to the Insurance Company, a Surveyor was appointed to assess the damage to the vehicle. According to the petitioner a sum of Rs. 3,44,992/ - was spent by him on repair of the vehicle. The claim, however, was rejected by the Insurance Company on the ground that though the petitioner had taken a claim from the previous insurer, ICICI Lombard General Insurance Co. Ltd. against the policy which expired on 20.03.2011, he while taking insurance from National Insurance Co. Ltd., claimed a No Claim Bonus amounting to Rs. 3,606.05/ - by making a false declaration that no claim against the vehicle in question had been taken. However, when National Insurance Co. Ltd. inquired with ICICI Lombard General Insurance Co. Ltd., it was informed that a claim had been taken against the damage of the vehicle.
2. BEING aggrieved from the rejection of his claim, the petitioner approached the concerned District Forum by way of a complaint. Vide order dated 24.06.2014, the complaint was dismissed on the ground that the complainant had made a false declaration while obtaining the insurance policy.
3. BEING aggrieved from the order passed by the District Forum, the petitioner approached the concerned State Commission by way of an appeal. The said appeal having been dismissed vide order dated 16.10.2014, the petitioner is before us, by way of this revision petition.
The learned counsel for the petitioner submits that it was the duty of the Insurance Company to verify the averments made by the petitioner before insuring the vehicle and had that been done, it would have come to know that in fact the petitioner had taken a claim against the above referred vehicle. He further submits that the petitioner cannot be made to suffer for the negligence on the part of the officials of the Insurance Company, in not verifying the aforesaid fact from the previous Insurance Company. He places reliance upon Section 27 (f) of the Indian Motor Tariff, which reads as under: -
"(f) In the event of the insured, transferring his insurance from one insurer to another insurer, the transferee insurer may allow the same rate of NCB which the insured would have received from the previous insurer. Evidence of the insured''s NCB entitlement either in the form of a renewal notice or a letter confirming the NCB entitlement from the previous insurer will be required for this purpose.
Where the insured is unable to produce such evidence of NCB entitlement from the previous insurer, the claimed NCB may be permitted after obtaining from the insured a declaration as per the following wording:"I / We declare that the rate of NCB claimed by me/us is correct and that no claim as arisen in the expiring policy period (copy of the policy enclosed). I/We further undertake that if this declaration is found to be incorrect, all benefits under the policy in respect of Section I of the Policy will stand forfeited."
Notwithstanding the above declaration, the insurer allowing the NCB will be obliged to write to the policy issuing office of the previous insurer by recorded delivery calling for confirmation of the entitlement and rate of NCB for the particular insured and the previous insurer shall be obliged to provide the information sought within 30 days of receipt of the letter of enquiry failing which the matter will be treated as a breach of Tariff on the part of the previous insurer. Failure of the insurer granting the NCB to write to the previous insurer within 21 days after granting the cover will also constitute a breach of the Tariff."
4. SECTION 18 of the Indian Contract Act defines misrepresentation as under: -
"Misrepresentation" means and includes - (1) the positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true;
(2) any breach of duty which, without an intent to deceive, gains and advantage of the person committing it, or any one claiming under him, by misleading another to his prejudice, or to the prejudice of any one claiming under him;
(3) causing, however innocently, a party to an agreement, to make a mistake as to the substance of the thing which is the subject of the agreement."
5. SECTION 19 of the said Act, inter -alia, provides that when consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. The illustration (a) to the said Section reads as under: -
"(a) A, intending to deceive B, falsely represents that five hundred maunds of indigo are made annually at A''s factory, and thereby induces B to buy the factory. The contract is voidable at the option of B."
In fact, the false declaration made by the petitioner also constitutes fraud within the meaning of Section 17 of Indian Contract Act, which to the extent it is relevant reads as under: -"17. ''Fraud'' defined. - ''Fraud'' means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into the contract: - (1) the suggestion, as a fact, of that which is not true, by one who does not believe it to be true; (2) the active concealment of a fact by one having knowledge or belief of the fact."
6. IN the case before us, by seeking a no claim bonus, the petitioner made an assertion that he had not taken any claim on the vehicle which he was seeking to insure with the National Insurance Company. Having taken a claim, he knew it very well that the aforesaid representation made by him was not correct. The aforesaid misrepresentation obviously was made with intent to deceive, so as to obtain a No Claim Bonus which National Insurance Company Ltd. would not have allowed, had the petitioner disclosed that he had already taken a claim against the aforesaid insurance policy from ICICI Lombard General Insurance Co. Ltd.
7. EVEN if there has been failure on the part of the officers of the Insurance Company in verifying the declaration made by the petitioner, while taking the policy, what cannot be a good ground for reimbursing him on the basis of a policy, which he obtained by misrepresentation to the Insurance Company. If we allow such a claim only on the ground that the officials of the Insurance Company should have verified the declaration made by the petitioner, and they having not done so, the insured cannot be denied his claim, that may result in a situation where pursuant to a connivance between the insurer and the officials of the Insurance Company the insured makes a misrepresentation and the officials in connivance with him does not verify the said representation. In such a case, the Insurance Company would be saddled with liability on the basis of a contract which has been entered on the basis of misrepresentation. We, therefore, reject the contention advanced by the learned counsel for the petitioner.
8. SINCE the consent of the Insurance Company to the Insurance Policy which is nothing but a contract between the insurer and the insured was obtained by misrepresentation and fraud, the said contract is voidable at the option of the Insurance Company. Consequently, the insurer was justified in repudiating the claim on account of the aforesaid misrepresentation made by the petitioner. For the reasons stated hereinabove, we find no merit in the revision petition. The revision petition is, therefore, dismissed.
