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Delhi HC: Insurance company liable to pay claim even if vehicle stolen and unauthorisedly driven

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Delhi High Court Law Insider

Munmun Kaur

Published On: January 20, 2022 at 11:15 IST

Recently, the Delhi High Court held that the insurance company is liable to pay compensation to the family of the deceased in the scenario if the offending vehicle was stolen and driven unauthorizedly by some other person.

The Delhi High Court was hearing an Appeal challenging the Order of the Tribunal, filed by United Insurance. The Tribunal in its Order had granted recovery rights against the driver of the vehicle in question.

Advocate Sankar N Sinha, appearing for United Insurance, had argued that the vehicle was stolen and was being driven by a professional thief and, therefore, there was no liability on the insurance company to pay the amount. To which the Tribunal made an observation that although the vehicle was stolen by one Niraj, a complaint was already lodged with the Police station in Narela regarding the offending vehicle being stolen.

The counsel for the Appellant relied on the Judgment of Madras High Court in New India Assurance Co Ltd vs. Selvarajamani & Ors, 1998 ACJ 547. Justice Sachdeva hearing the appeal respectfully disagreed with the said Judgment and said, “Said judgment does not consider the proposition as laid down by the Supreme Court in United India Insurance Company vs. Lehru and Ors as to whether there is a willful breach on the part of the insured or not so as to entitle the insurer to avoid the liability”.

While holding the insurance company liable, Justice Sanjeev Sachdeva observed that the insurance company can escape the liability only if it is able to show that there was a willful breach of policy on the part of the insured.

Therefore, the Delhi High Court upheld the Tribunal’s Order and dismissed the Appeal.