In Brief
The owner of a truck purchased under hire purchase sued his insurance company after the vehicle was stolen following the driver's act of giving a lift to passengers. The insurer repudiated the claim, arguing the driver had breached the policy by carrying passengers. All lower courts favoured the insurer. The Supreme Court held that while carrying passengers may technically breach policy terms, it is not a "fundamental breach" sufficient to deny all compensation. The Court ruled such non-fundamental breaches must be settled at 75% of the insured amount. It allowed the appeal and directed the insurer to pay 75% of Rs. 7,28,000 plus interest and Rs. 1,00,000 compensation.
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