B.V. NAGARAJU versus M/S. ORIENTAL INSURANCE CO. LTD., DIVISIONAL OFFICE, HASSAN

Citation: [1996] SUPP. 3 S.C.R. 22 · Decided: 20-05-1996 · Supreme Court of India · Bench: M.M. PUNCHHI · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A 
B 
B.V. NAGARAJU 
v. 
M/S. ORIENTAL INSURANCE CO. LTD., 
DIVISIONAL OFFICE, HASSAN 
MAY 20, 1996 
[M.M. PUNCHHI AND K.S. PARIPOORNAN, JJ.] 
Motor Vehicles Act, 1988: Sections 147 and 149. 
C 
Insurance policyTenns of-Pe1111itted on!v celtain number of humans 
D 
E 
F 
in goods vehicle-Breach of carrying humans in goods vehicle more than the 
number pennitted---Held: not such a fundamental breach so as to deny 
inde111nification to the insurer unless sonte factors e.tisted ivhich conllibuted 
to causing accident-Exclusion tenn of the policy nlust be read down to serve 
the main pwpose of the policy. 
The appellant was the owner of an insured. truck which was covered 
by a comprehensive insurance policy issued by the respondent. The truck 
sustained major damages in an accident with a gas tanker on account of 
which repairs were necessitated. At the time of the accident the truck was 
carrying 9 persons while the insurance cover was limited to cal'rying 
passengers in the vehicle except employees (other than the Drivel') not 
exceeding 6 in numbers coming under the purview of Workmen's Compen-
sation Act, 1923. The appellant raised a claim with the respondent- Com-
pany for reimbursement of repair charges. However, the claim of the 
appellant was spurned by the respondent-Company. Thereafter, the appel-
lant moved the State Consumer Disputes Redressal Commission which 
allowed his claim to the extent of the respondent's Ollicial Surveyor's 
estimate of the repair charges. This order was upset by the National 
Consun1er Disputes Redressal Conuuission relying upon the above terms 
of the insurance policy. Being aggrieved, the appellant preferred the 
G present appeal. 
On behalf of the appellant it was contended that the terms of the 
insurance policy should be read down to carry out the main purpose of the 
policy as the presence of 9 persons (when upto 6 were permissible), 
irrespective of their being employees or not, had not contributed in any 
H manner to the occurring of the accident as also when the claim did not 
22 
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B.V. NAGARATU v. ORIENTALINSURANCE CO. 1;m 
23 
relate to any injuries to those 9 persons (who were owners of the goods A 
loaded) or any loss incurred by them; and that the claim pristinely relating 
to the damage caused to the vehicle insured, which could not have been 
denied in the facts and the circumstances. 
Allowing the appeal, this Court 
HELD : 1.1. It is plain from the terms of the insurance Policy that 
the insured vehicle was entitled to carry 6 workmen, excluding the driver. 
If those 6 workmen when travelling in the vehicle, are assumed not to have 
increased any risk from the point of view of the Insurance Company on 
B 
_,;. 
occurring of an accident, how could those added persons he said to have C 
contributed to the causing of it is the poser, keeping apart the load it was 
carrying. In the present case the driver of the insured velticle was not 
responsible for the accident. Merely by lifting a person or two, or even 
three, by the driver or the cleaner of the vehicle, without the knowledge of 
owner, cannot be said to be such a fundamental breach that the o\\'ller 
should, in all events, be denied indemnification. The misuse of the vehicle 
was somew·hat irregular though but not so fundamental in nature so as to 
put an end to the contract, unless some factors existed which, by themsel~ 
ves, had gone to contribute to the causing of the accident. [26· D-F] 
D 
Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan & Ors., [1987] 
E 
2 sec 654, relied on. 
Glynn v. Marger.wn & Co., (1983) AC 351 and Suissee At/antique 
Societe d' An11en1ent Ma1itbne SA. v. N. V. Rottcrdan1sche Kolen Centrale, 
(1967) l AC 361, cited. 
Carter: "Breach of Colltract", para 251, referred to. 
1.2. The exclusion term of the insurance policy must be read do\\n 
so as to serve the main purpose of the policy that is to indemnify the 
damage caused to the vehicle. [28-A] 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6296 of 
1995. 
F 
G 
From the Judgment and Order dated 30.11.94 of the National Con-
sumer Disputes Redressal Commission, New Delhi in F.A. No. 439 of 1993. H 
A 
B 
c 
D 
E 
F 
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SUPREME COURT REPORTS (1996] SUPP. 3 S.C.R. 
S.N. Bhat for the Appellant. 
Vishnu Mehra and K.M.K. Nair for the Respondent. 
The Judgment of the Court wa, delivered by 
PUNCHHI, J. In this appeal by special leave, the question of impor-
tance arising therein is whether the alleged breach of carrying humans i
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