Manjeet Singh vs National Insurance Company Ltd. & Anr

Facts of the case

The case involved the appellant’s hiring purchase of a secondhand vehicle. The respondent’s insurance company supplied vehicle insurance. On one of his journeys, a passenger requested that he pull over and give him a lift. As soon as he came to a halt, the passenger attacked the driver and took the vehicle with him. A police report was filed, and the responding financing business was contacted with. However, the firm denied the claim for reimbursement, alleging a breach of the insurance policy’s conditions. He sued the District Consumer Disputes Forum, the State Commission, and the National Commission for compensation. Each judge rejected the cases. Finally, he approached the Supreme Court.

Arguments advanced in the lower courts

Respondants argued that the insurance company was not obligated to pay the appellants for the damages caused by the truck theft.

The insurance company maintained its defense that the driver of the car broke the provisions of the policy by providing a ride to the passengers; as a result, there was a breach of policy and the insurance company was not accountable. This argument was deemed acceptable by the District Forum.

The appellants’ appeal was denied by the state commission, and the national commission denied their revision.

Evolution of Consumer Protection Act

After more than three decades, the 1986 Consumer Protection Act was amended and reformulated as the Consumer Protection Act, 2019. The Act took effect on 20th July 2020 and attempts to overhaul the settlement and administration processes by imposing harsher penalties on violators. Thus, the Consumer Protection Act, 2019 was passed with the intention of broadening the scope of consumer rights to include e-commerce, direct selling, tele-shopping, and other multi-level marketing in this age of digitalization.

According to Section 2(7) of the 2019 Act, a consumer is defined as a person who purchases things or obtains services for a consideration and includes all users except those who obtain such services or commodities for resale or commercial use.

According to the Oxford Dictionary, a ‘consumer’ is a person who purchases products or other services. In other terms, a ‘consumer’ is a person who acquires property, whether mobile or immovable, or who engages a service at his or her choice.

However, in today’s socio-economic environment, a customer is a victim of several unfair and unethical business practises. As a result, a naive customer has little chance against a businessman who offers goods and services in a systematic manner, and the consumer is frequently exploited.

The customer, long dubbed ‘King of the market,’ has become a victim of it. He is not adequately informed about the qualities and performance of a large number of consumer goods and suffers as a result of the unfairness of several one-sided common forms of contract.

Modern times and improved techniques have significantly altered the concept of ‘contract freedom,’ turning it into a subject of fantasy and anxiety for many customers. Consumers want legal protection when goods do not live up to their promises or cause damage.

Tortious remedies are accessible to consumers in addition to the various consumer protection legislation.

Contractual remedies are not available under tort law since the parties, especially the customer and seller, lack contractual privity. Nonetheless, consumers have recourse especially against wrongdoers.

Tortious remedy extends all the way back to the Donoghue v. Stevenson (1) decision, which established the notion that a producer has a reasonable duty of care to the consumer of his goods and authorised the customer to sue the maker. Additionally, it provided that the customer was entitled to compensation for any loss incurred as a result of the following circumstances –

  1. On the basis of the defendant’s carelessness.
  2. When the defendant defrauds the plaintiff or does a willful conduct.
  3. An aggrieved party may obtain damages for the defendant’s deception.

The Verdict of the Supreme Court

The Supreme Court went through the verdicts given by various other courts and granted a leave to the Appellant.

The court remarked that the primary defence advanced by respondent insurance company, was that the driver of the car broke the terms of the policy by providing a ride to the passengers; as a result, there was a breach of policy and the insurance company was not accountable. This location was deemed acceptable by the District Forum. The claimant’s appeal to the State Consumer Disputes Redressal Commission (affectionately referred to as ‘the State Commission’) was denied, as was the claimant’s revision to the National Consumer Disputes Redressal Commission. The Supreme Court opined that the District Forum did not adequately comprehend the policy’s extent and ambit. The violation of the requirement should be sufficiently egregious that the claimant is barred from claiming anything. Concerning the violation of carrying passengers, this has been consistently held not to be a fundamental breach, as evidenced by this Court’s judgments in National Insurance Co. Ltd. v. Swaran Singh (2), National Insurance Co. Ltd. v. Nitin Khandelwal (3), Lakhmi Chand v. Reliance General Insurance (4), and B.V. Nagaraju v. Oriental Insurance Co. Ltd.(5)

In favour of the appellant, the apex court held that he, who is also the owner, was not at fault in this case. His driver assisted a few passengers. Carrying such passengers may constitute a breach of the policy, but it cannot be considered to constitute such a fundamental breach as to invalidate the insurance coverage and cause it to be terminated. On a frigid winter night, the driver provided a lift to several people standing on the road. It was a charitable act. It cannot be stated that this is a material infraction that renders the policy null and void. Without a sure, these passengers rebelled against the driver and took the truck, although this could not have been predicted by the driver. In the aforementioned circumstances, such claims involving a breach of policy have been considered as non-standard claims and instructed to be resolved at a 75 percent discount.

The court also remarked that it fails to understand how the arbitration procedures between the financer and the insurer over loan repayment may in any way invalidate the insured’s rights against the insurance company.

The Supreme Court granted the appeal, cancelling the lower courts’ orders, and ordered thw respondent insurance company to pay 75% of the insured amount of Rs.7,28,000/-, along with an interest at the rate of 9% per annum from the date of filing the claim petition until the amount is deposited. Additionally, the insurance firm was also ordered to pay a settlement of Rs.1,00,000/-. Since the financer was also a party to the petition, the amount was ordered to be deposited with the District Forum, and if the financer’s claim was not resolved in accordance with the arbitration award, the deposited amount was to be used to pay the awarded amount first, with any remaining funds going to the appellant.


The Supreme Court did not find any fault in the conduct of the appellant. They Supreme Court also established a principle that there might be a minor policy breach, but to terminate a policy and terminate the insurance coverage, the breach must be significant. The theory of foreseeability of events was also introduced by the court.


1 – [1932] UKHL 100

2 – (2004) 3 SCC 297

3 – (2008) 11 SCC 255

4 – (2016) 3 SCC 100

5 – (1996) 4 SCC 647

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.


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