Consumers beware!
Comply with Motor Vehicles Act

You can lose your right to an insurance claim in case of inability to register the vehicle or driving without a valid licence, writes Pushpa Girimaji

If you are to enjoy your rights as a consumer, you need to abide by the laws of the land. Or else, you lose your right as a consumer too. This is the message that comes across in a recent order of the apex consumer court.

The case pertains to an insurance claim for the loss of a motorcycle made by a consumer and the repudiation of the claim by the insurance company on the ground that (a) the vehicle was driven without a valid driving license  and (b) the vehicle was not even registered, as required under Section 39 of the Motor Vehicles Act.

In his complaint before the District Consumer Disputes Redressal Forum, the consumer argued that absence of a license was not a valid ground for repudiation as the vehicle was snatched away while it was parked and not while being driven.  As far as the registration was concerned, there was a delay because he wanted a number of his choice.

The insurance company, on the other hand, argued that the consumer had neither deposited the fee nor produced the vehicle for inspection by the transport department for registration.  And by driving the vehicle without registration, he had violated the Motor Vehicles Act and also the terms of the insurance policy.  Besides, in the absence of any registration number, the police could not even trace the vehicle.

Even though the District Forum held that the insurance company was not justified in rejecting the claim of the consumer, both the State Consumer Disputes Redressal Commission as well as the National Consumer Disputes Redressal Commission disagreed with this view.

In order to come to this conclusion, the apex consumer court (The National Commission) referred to Section 39 of the Motor Vehicles Act and said it was very clear from a reading of this Section that till a vehicle receives the certification of registration from the competent authority, it is not legally usable on roads. The complainant had violated this Section.  From his own  statements in his petition, it was clear that  the vehicle was used by him to drop his uncle to the railway station and the incident happened on his  return journey. This use of the motorcycle was in clear violation of the statutory requirement of registration, the Commission pointed out.

The commissionís remarks are highly relevant here. It said:  "We find ourselves in complete agreement with the state commission that use of the vehicle in violation of the  law itself will take it beyond the protection of the policy".  It, therefore, held that the insurer was right  in rejecting the claim of the policy holder (Kaushalendra Kumar Mishra vs The Oriental Insurance Company, RP No 4043 of 2008, decided on 16-2-2012) So when it comes to the vehicle insurance policy, always remember that any violation of the Motor Vehicles Act could well take away your right to claim your insurance amount from the insurance company. In fact, this point first came out loud and clear in the order of the Supreme Court in the case of Pradeep Kumar Jain vs Citibank. Here, the bank, which had financed the vehicle of Mr Kumar, had forgotten to renew the insurance policy, despite having collected the amount from Kumar. This resulted in the insurance company rejecting Kumarís claim, following an accident. Here, the National Commission held the bank guilty of negligence for failing to renew the policy  and said the bank was liable to make good the loss suffered by Kumar on account of repudiation of his claim by the insurance company. 

The Supreme Court, however, disagreed with this view. It pointed out that under Section 146 of the MV Act, it was obligatory on the part of a vehicle owner to take an insurance policy covering thirdparty risk. Driving a vehicle without such a policy was punishable under Section 196. Given these provisions in the law, the vehicle owner cannot absolve himself of the responsibility of renewing the policy by claiming that he had given the money to the bank, the Supreme Court held.

Following this decision, in a similar case involving a tractor, the National Commission held that the vehicle owner, Ram Saran, cannot hold the bank entirely liable for his losses on the ground that it had not renewed his insurance. He also had a responsibility in ensuring that he had a valid insurance policy covering third-party risk as required under the MV Act.