IFFCO Tokio General Insurance Company Ltd Vs. Pearl Beverages Ltd. [April 12, 2021]

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INTRODUCTION

This case was decided by the Hon’ble Supreme Court of India on 12^th April, 2021. The case dealt with the possibility that if the insurance provider can ascertain it from the evidences that the driver was under the influence of alcohol at the time of the accident, then it would not be deprived of the rights to eliminate the policy reward merely on the basis that the scientific tests for the presence of alcohol were not carried out. In this case the car that was involved in the mishap was of respondent company i.e., Pearl Beverages Ltd. and the appellant company i.e., IFFCO Tokio General Insurance Company Ltd. was the insurance provider. On 12^th April, 2021 the Hon’ble Supreme Court held that an insurer will not have to waive an accident policy claim based on drunk driving if they have not submitted to a breath analyzer or blood test as required under the Motor Vehicles Act.

FACTS OF THE CASE

An accident took place 22^nd November, 2007 involving a Porsche car owned by the respondent company which was insured with the appellant company, has resulted in this appeal against the order of the National Consumer Disputes Redressal Commission (NCDRC). The car was completely damaged. Though it was completely mentioned in Clause (2c) of the Insurance Contract that they will not be held liable to pay if the driver was under the influence of any intoxicating liquor, or drugs. In response to a decision made by the National Consumer Disputes Redressal Commission, which held the insurer accountable for eliminating policy liabilities resulting from drunk driving, the insurance company filed a plea with the court. The State Commission dismissed the respondent’s complaint, concluding that there was proof the driver of the car had ingested alcohol and was under the influence of it. The NCRDC on the other hand found that there is no material evidence to show that, in the terms of the Exclusion Clause, the driver of the vehicle was impaired by alcohol. In accordance with the National Consumer Disputes Redress Commission and Section 185 of the Automobiles Act, the insurer was required to state that the alcohol level was higher than 30 mg/100 ml of blood.  The NCDRC maintains that, as required by Sections 203 and 204 of the Motor Vehicles Act, 1988, the insurer cannot avoid liability without providing scientific proof of the alleged alcohol level through breath analyzer and blood sample findings. 

ISSUES

1. Whether the NCDRC is right to rule that the appellant cannot rely on the protection of Clause (2c) of the Insurance Contract, which states that the insurer was not responsible if the driver of the vehicle was impaired by drugs or alcohol?
2. Whether the IFFCO Tokio General Insurance Company Ltd. was liable to compensate Pearl Beverages Ltd. for the damage sustained by the Porsche car in the accident? 

CONTENTIONS

APPELLANT’S CONTENTIONS

1. The learned counsel for the appellant contended that in this case it can be clearly noted that the driver was under the influence of the alcohol, because the high speed and the manner in which the accident took place or the car hitting against the pole and then turning and catching fire are all the clear indicatives of the same. Moreover, when the FIR was lodged, it was mentioned that the driver smelt of alcohol.
2. The significance of the accident, which left the vehicle completely wrecked, is emphasized to highlight the conditions that allowed the appellant to be released from the heavy financial burden in accordance with an Exclusion Clause that was expressly stated.
3. It was further contended that the driver was negligently and rashly driving the vehicle on high speed.

RESPONDENT’S CONTENTIONS

1. The learned counsel of the respondent contended that the fact that the driver was negligent and rash while driving the vehicle is false.
2. He then complained that the NCDRC made a grave mistake in stating that the insurer had to provide evidence of the driver’s blood alcohol content. He then pointed that it is sheerly impossible for the insurer to prove so.
3. In the FIR it was revealed that the investigator was present at the scene early morning when the accident took place, but still no steps were taken by the investigator to ascertain the levels of alcohol in the blood of the driver.
4. He then contended that the rash and negligent driving will be covered under section 279 of Indian Penal Code but the controversial clause is regarding section 185 of the Motor Vehicles Act which is not invoked/ proved against the driver.
5. The learned counsel for the respondent also pointed out that the car caught fire because the fuel tank of the car is located in the front.

JUDGMENT

1. A Division Bench comprising Justice Uday Umesh Lalit, Justice Indira Banerjee, and Justice KM Joseph observed that in the case where the insurer can determine from the facts that the driver at the time of accident was under the influence of alcohol then it will not lose the ability to reject the insurance benefit just because the scientific tests for the presence of alcohol were not conducted. 
2. If the circumstances in which the accident took place clearly shows that the driver was under the influence of alcohol then even if the precise alcohol content present in the body was not determined then also the insurer can invoke the Exclusion Clause within the policy contract.
3. The case before the Hon’ble Supreme Court was of the order passed by the National Consumer Disputes Redressal Commission that found the insurance company guilty of omitting policy coverage due to drunk driving, and the insurance company filed an appeal against the decision. 
4. As required by Section 185 of the Motor Vehicles Act, 1988, the insurer was required to prove that the alcohol content was higher than 30 mg/100 ml of blood, according to the National Consumer Disputes Redressal Commission. The National Consumer Disputes Redressal Commission ruled that an insurer cannot disclaim obligation unless it can demonstrate the presence of the authorized alcohol level as specified by the MV Act’s Sections 203 and 204 by the scientific results of breathalyzer and blood test results. 
5. By ordering so the National Consumer Disputes Redressal Commission reversed the order passed by the State Consumer Disputes Redressal Commission which had rejected the complaint of the insured against the denial of the policy.
6. The Hon’ble Supreme Court observed that the facts of the case state that the driver of the car involved in the accident was smelling of alcohol. Even the MLC report of the driver said the same. The Supreme Court observed that the need of Section 185 is in the context of a criminal offense.
7. On 12^th April, 2021 the Hon’ble Supreme Court held that an insurer will not have to waive an accident policy claim based on drunk driving if they have not submitted to a breath analyzer or blood test as required under the Motor Vehicles Act.
   

ANALYSIS

The case of IFFCO Tokio General Insurance Company Ltd. vs. Pearl Beverages Ltd., decided on April 12, 2021, has significant implications for the corporate and insurance industries. The core of the case revolves around a dispute over insurance coverage. IFFCO Tokio General Insurance Company Ltd. was the insurer company which denied to compensate the Pearl Beverages Ltd. for the Porsche car involved in the accident on the grounds that the driver was under the influence of alcohol at the time of the accident. But no scientific tests were taken at the time to determine the alcohol content in the blood of the driver, but the FIR and the MLC report of the driver was smelling of alcohol. The court concluded that the insurance company will not lose its ability to reject the coverage based just on scientific tests for alcohol presence if it can ascertain from the facts that the motorist was intoxicated at the time of the collision. The financial stakes involved in insurance disputes are often high. This case underscores critical aspects of insurance law, corporate risk management, and the interpretation of contractual obligations between insurers and insured parties. The judgment rendered in this case carries significant implications for both the insurance industry and businesses, potentially setting precedents that shape future legal and commercial practices.

CONCLUSION

According to a recent Supreme Court ruling, an insurer may reject an accident coverage claim on the grounds of drunk driving without requiring a breathalyzer test or blood test, as permitted under the Motor Vehicles Act of 1988. The court further concluded that the insurance company will not lose its ability to reject the coverage based just on scientific tests for alcohol presence if it can ascertain from the facts that the motorist was intoxicated at the time of the collision. The requirement under Section 185 of the Motor Vehicles Act should not be confused with the definition of driving while intoxicated as stated in the insurance policy when filing an own damage claim. Consideration will be given to the nature of the collision, any indication that the driver was intoxicated prior to or during the trip, and the effect this had on the driver. 

REFERENCES

1. https://www.sci.gov.in
2. https://www.lawyersclubindia.com › Judiciary › Others
3. https://indiankanoon.org › doc

This Article is written by Manherleen Kaur Bhangoo student of G.H.G. Institute of Law, Sidhwan Khurd, Ludhiana, Punjab; Intern at Legal Vidhiya. 

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