Overloading Can't Be Fundamental Breach Of Insurance Policy, NCDRC Directs Bharti Axa To Pay Partial Amount

Brief Facts:

The Complainant owned an 'Eicher Van', which was insured with Bharti Axa General Insurance Company (“Insurance Company”). During the subsistence of the policy, the vehicle was involved in an accident. After the accident, it was inspected by a motor vehicle inspector, who prepared an inspection report. Within a week, the Complainant raised a claim of Rs. 5,14,205/- with the Insurance Company by submitting all necessary documents. However, the claim was repudiated on the ground that at the time of the accident, the vehicle was carrying 11.2 tonnes of load (as against the permitted capacity of 9.2 tonnes). The Complainant sent a legal notice to the Insurance Company. However, the claim was still not processed.

Feeling aggrieved, the Complainant filed a consumer complaint before the District Consumer Disputes Redressal Commission, Coimbatore (“District Commission”). She contended that the Insurance Company falsely repudiated the claim, and the vehicle was carrying the normal load at the time of the accident.

On the other hand, the Insurance Company contended that the vehicle was carrying around 11,880 kg of goods when the accident occurred. It was exceeding the permitted capacity by 2.5 tonnes. The insurance policy specified the limits of the 'Gross Vehicle Weight' and 'Unladen Weight' amounting to a carrying capacity of 9,200 kgs. Even though the surveyor qualified the claim at Rs. 2,51,723/-, the Insurance Company justified repudiation based on the fundamental breach of the policy.

The District Commission dismissed the complaint and held that the Complainant breached the policy terms by carrying an excessive load at the time of the accident. Dissatisfied by the order of the District Commission, the Complainant filed a first appeal before the State Consumer Disputes Redressal Commission, Tamil Nadu (“State Commission”). The State Commission held that carrying excess weight is not a fundamental breach to absolve the Insurance Company of its liability. It directed the Insurance Company to disburse Rs. 2,51,723/- (as assessed by the surveyor) in favour of the Complainant.

As a result, the Insurance Company filed a revision petition before the National Consumer Disputes Redressal Commission (“NCDRC”).

Observations of the NCDRC:

The NCDRC referred to Ashok Kumar vs New India Assurance Co. Ltd. [2023 LiveLaw (SC) 587], in which the Supreme Court held that only a fundamental breach of the policy terms can justify a full repudiation. The Supreme Court awarded 75% of the claim amount on a non-standard (an extra-contractual method of partial settlement awarded in proportion to the breach) basis.

The NCDRC observed that the vehicle was duly registered with the owner and had a valid insurance policy at the time of the accident. The driver of the vehicle also had a valid driving license. The only contention between the Complainant and the Insurance Company was regarding the carrying capacity. There was nothing on record to suggest that the overloading of the vehicle contributed to the accident in any manner.

The NCDRC held that the overloading of the vehicle itself does not constitute a fundamental breach. As a result, the Insurance Company was directed to pay 75% of the net loss assessed by the surveyor, that is Rs. 1,88,792 (75% of 2,51,723/-) along with 7% interest per annum from the date of repudiation till the date of final payment, within 2 months from the date of the order. In case of delay in payment, the simple interest would increase to 10% per annum.

Case Title: M/s Bharti Axa General Insurance Co. Ltd. vs K. Subbulakshmi

Case No.: Revision Petition No. 599 of 2019

Advocate for the Insurance Company: Mr S.M. Tripathi

Advocate for the Original Complainant: Mohd. Aman Alam

Date of Pronouncement: 12th June 2025

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