Madhya Pradesh High Court
Case BriefsHigh Courts

Madhya Pradesh High Court: While dismissing an appeal filed under Section 173(1) of the Motor Vehicles Act, 1988 challenging award passed by Eighteenth Additional Motor Accidents Claims Tribunal, Jabalpur (MP), Vishal Dhagat, J. held that the present case is a case of misrepresentation on the part of legal representatives/driver/owner of vehicle in contracting with the appellant for purchase of policy in name of deceased owner.

An accident had occurred and the vehicle was insured by appellant-Company by issuing policy in favour of owner. One fateful day, vehicle was driven rashly and negligently, and it plunged into a pond which resulted in death of two persons by drowning. Appellant had challenged the award on ground that owner of said vehicle had died on 08-10-2010. Insurance policy was brought on 19-05-2013 in name of a dead person and there cannot be any contract between dead and living person and therefore, insurance policy is null and void and Claims Tribunal had committed an error in fixing liability on appellant/ Insurance Company to indemnify the owner and pay to legal representatives of deceased.

Counsel appearing for respondents supported the award and relied on the reasons given by Claims Tribunal.

The Court opined that in this case as owner has died before purchasing insurance policy, therefore, there was a misrepresentation on the part of legal representatives/driver/owner of vehicle in contracting with the appellant for purchase of policy in name of deceased owner.

Contract entered between the parties is not voidable as consent given by appellant for covering the risk on purchase of policy was given by misrepresentation or silence hiding the fact that owner has died as appellant had means to discover the truth with ordinary diligence.

Court held that Insurance Company made no efforts to find out why Insured did not appear and sign the application. Insurer could have discovered the truth by ordinary diligence following proper procedure for issuing of policy. Insurer received the money and had issued the policy. Insurer did not exercise ordinary care and diligence in the case.

The appeal was dismissed stating that under these circumstances, policy cannot be held to be voidable at option of appellant.

[National Insurance Co. Ltd. v. Guudi Bai, 2022 SCC OnLine MP 1440, decided on 21-06-2022]


Advocates who appeared in this case :

Ms. Amrit Kaur Ruprah, Advocate, for the Appellant;

Mr. Neeraj Ashar, Advocate, for the Respondent.


*Suchita Shukla, Editorial Assistant has reported this brief.

Case BriefsSupreme Court

Supreme Court: In a case where an Insurance Company had refused to settle an insurance claim on non-submission of the duplicate certified copy of certificate of registration of the stolen vehicle, the bench of MR Shah* and BV Nagarathna, JJ has held that while settling the claims, the insurance company should not be too technical and ask for the documents, which the insured is not in a position to produce due to circumstances beyond his control.

In the case at hand, a Truck was stolen and an FIR was registered on the very day of theft. The Insured also informed the Insurance Company about the theft on the same day and had also produced the photocopy of the certificate of registration and the registration particulars as provided by the RTO. However, the appellant could not produce either the original certificate of registration or the duplicate certified copy of certificate of registration of the Truck. When the appellant applied for the duplicate certified copy of the certificate of registration, the RTO denied to issue the duplicate certified copy on the ground that in view of information/report regarding theft of the vehicle, which has been registered with the RTO, the details regarding registration certificate on the computer has been locked. The Insurance Company, however, refused to settle the claim.

In such circumstances, the Supreme Court observed that when the appellant had produced the photocopy of certificate of registration and the registration particulars as provided by the RTO, solely on the ground that the original certificate of registration (which has been stolen) is not produced, non-settlement of claim can be said to be deficiency in service. Therefore, the appellant has been wrongly denied the insurance claim.

The Court was of the opinion that in many cases, it is found that the insurance companies are refusing the claim on flimsy grounds and/or technical grounds. It observed,

“The insurance company has become too technical while settling the claim and has acted arbitrarily. The appellant has been asked to furnish the documents which were beyond the control of the appellant to procure and furnish. Once, there was a valid insurance on payment of huge sum by way of premium and the Truck was stolen, the insurance company ought not to have become too technical and ought not to have refused to settle the claim on non-submission of the duplicate certified copy of certificate of registration, which the appellant could not produce due to the circumstances beyond his control.”

The Court, hence, directed the Insurance Company to pay Rs.12 lakhs insurance along with interest @7 per cent from the date of submitting the claim. The insurance company was also saddled with the liability to pay the litigation cost of Rs. 25,000/­ to the appellant.

[Gurmel Singh v. National Insurance Co. Ltd., 2022 SCC OnLine SC 666, decided on 20.05.2022]


*Judgment by: Justice MR Shah


Counsels

For Appellant: Advocate Anand Shankar Jha

For Insurance Company: Advocate Hetu Arora Sethi

Case BriefsSupreme Court

Supreme Court: The bench of Sanjiv Khanna and Bela M. Trivedi, JJ has held that an Insurance Company cannot repudiate a claim merely on the ground that there was a delay in intimating it about the occurrence of the theft of vehicle.

The Court was deciding a case relating to theft of a Truck that was insured with Oriental Insurance Company Limited. During the pendency of the complaint before the District Forum, the Insurance Company repudiated the claim of the complainant vide its letter dated 19.10.2010, stating that there was a breach of a condition of the policy which mandated immediate notice to the insurer of the accidental loss/damage, and that the complainant had intimated about the loss on 11.04.2008 i.e. after the lapse of more than five months and, therefore, the Insurance Company had disowned their liability on the claim of the complainant. While the District forum allowed the Complaint, the NCDRC reversed the said finding.

When the matter reached before the Supreme Court, it applied the ruling in Gurshinder Singh v. Shriram General Insurance Company Ltd., 2020 (11) SCC 612, wherein it was observed that

“On occurrence of an accidental loss, the insured is required to immediately give a notice in writing to the company. This appears to be so that the company can assign a surveyor so as to assess the damages suffered by the insured/vehicle.

….

In case of theft or criminal act which may be the subject of a claim under the policy, the insured shall give immediate notice to the police and cooperate with the company in securing the conviction of the offender. The object behind giving immediate notice to the police appears to be that if the police is immediately informed about the theft or any criminal act, the police machinery can be set in motion and steps for recovery of the vehicle could be expedited. In a case of theft, the insurance company or a surveyor would have a limited role. It is the police, who acting on the FIR of the insured, will be required to take immediate steps for tracing and recovering the vehicle. Per contra, the surveyor of the insurance company, at the most, could ascertain the factum regarding the theft of the vehicle.

When an insured has lodged the FIR immediately after the theft of a vehicle occurred and when the police after investigation have lodged a final report after the vehicle was not traced and when the surveyors/investigators appointed by the insurance company have found the claim of the theft to be genuine, then mere delay in intimating the insurance company about the occurrence of the theft cannot be a ground to deny the claim of the insured.”

In the case at hand, the FIR was lodged immediately on the next day of the occurrence of theft of the vehicle by the complainant. The accused were also arrested and chargesheeted, however, the vehicle could not be traced out.

“Of course, it is true that there was a delay of about five months on the part of the complainant in informing and lodging its claim before the Insurance Company, nonetheless, it is pertinent to note that the Insurance Company has not repudiated the claim on the ground that it was not genuine. It has repudiated only on the ground of delay.”

The Court, hence, concluded that when the complainant had lodged the FIR immediately after the theft of the vehicle, and when the police after the investigation had arrested the accused and also filed challan before the concerned Court, and when the claim of the insured was not found to be not genuine, the Insurance Company could not have repudiated the claim merely on the ground that there was a delay in intimating the Insurance Company about the occurrence of the theft.

The Court, hence, set aside the order of NCDRC.

[Jaina Construction Committee v. Oriental Insurance Company Ltd., 2022 SCC OnLine SC 175, decided on 11.02.2022]


*Judgment by: Justice Bela M. Trivedi


Counsels

For appellant: Advocate Avinash Lakhanpal

Case BriefsHigh Courts

Delhi High Court: Sanjeev Sachdeva, J., considered the issue of whether the insurance company would be liable to pay amount in a case of a stolen vehicle and unauthorizedly driven?

Appellant impugned award dated 27-11-2021 to the limited extent that it grants recovery rights against the driver of the vehicle.

Counsel for the appellant submitted that since the vehicle was stolen, and driver was a professional thief there was no liability on the insurance company to pay the amount.

Question for Consideration

Whether the insurance company is absolved of the liability to pay the amount in a case where the vehicle is stolen and unauthorizedly being driven by somebody else?

Analysis, Law and Decision

It was noted that Supreme Court in United India Insurance Company v. Lehru, (2003) 3 SCC 338, held that in order to avoid the liability, the insurer must establish that there was a willful breach on the part of the insured.

Further, in the present case, the insurance company could not show any breach on the part of the insured to avoid to liability.

“…if the proposition of the insurance company was accepted, it would militate against the very concept of a beneficial legislation for the victims of an accident. If such a finding were to be returned then the effect would be that even though a vehicle is insured but is stolen, not only would the insurance company be entitled to avoid its liability but the owner of the vehicle who has insured his vehicle against theft and accident would be saddled with a liability for no fault of his.”

Tribunal found that the vehicle was stolen and there was willful breach of the terms and conditions of the insurance policy by the insured.

Therefore, no infirmity in the impugned award whereby tribunal had directed the insurance company to make the payment of the compensation and thereafter recover the same from the driver who had stolen the vehicle.

In view of the above appeal was dismissed. [United India Insurance Co. Ltd. v. Anita Devi, 2022 SCC OnLine Del 139, decided on 17-1-2022]


Advocates before the Court:

For the petitioner: Sankar N. Sinha, Advocate

For the respondent: Somnath Parashar, Advocate for R-1 to 4

Case BriefsHigh Courts

Bombay High Court: Bharati Dangre, J., Whether the Insurance Company can be absolved of its liability to pay compensation under the Employees Compensation Act, 1923, if the employee who has succumbed to an accident which took place during the course of employment, is a minor?

Appellants filed a claim based on the premise that the deceased was aged 18 at the time of the accident and was receiving wages of Rs 5,500 per month and compensation of Rs 6,22,545 was assessed.

The insurer opposed the above-said claim before the Commissioner/Labour Court, and it was disputed that the accident suffered by the deceased arose out of or in the course of employment with the OP.

Further, it was denied that there was any nexus between the alleged injury and the alleged accident and since the police papers revealed the deceased’s age was 15 years, it was stated that the claim was not maintainable under the Workmen’s Compensation Act, 1923, hence the same shall be dismissed.

Analysis, Law and Decision

Workmen’s Compensation Act, 1923 does not prohibit payment of compensation to a minor.

There is no age limit for a person to be employed as an employee under the Workmen’s Compensation Act, though Article of the Constitution of India, employment of child labour before 14 years in any factory or mine or any hazardous employment, there are enactments in the form of Child & Adolescent Labour (Prohibition & Regulation Act), 1986 where engaging services of children below 14, in any hazardous avocation, is an offence.

Elaborating further, it was stated that Workmen’s Compensation Act is a beneficial piece of legislation and if a person engaged by an employer, as an employee is a minor and his appointment, though is prohibited by any law in existence, meet with an accident and sustain a disability which can be a total or partial disability, the moot question is:

Whether an employee should be denied the compensation merely on the ground that the employer had engaged him by contravening the law and he shall be kept out of the benefits which would have been otherwise available to him on account of an accident which he has suffered, which occurred in his workplace and out of the course of his employment or whether his family can be denied compensation on his death?

Bench expressed that the impugned decision took a harsh stand and refused to fasten liability of compensation on the Insurance Company by recording that the deceased was a minor and insurance company was not liable to pay compensation on the said ground.

The insurance policy in the present matter clearly covered two persons and the liability covered a person employed by the insured for operation and maintenance or loading/unloading which covered a cleaner.

Labour Court’s approach defeated the very spirit and rationale behind the Employees Compensation Act and the claimants who were the parents of the deceased were held entitled to recover compensation only from the employer with very negligible chance of recovering the compensation.

High Court disapproved the above approach of the labour court and opined that the Insurance Company cannot be absolved of its liability to pay compensation to the claimants, the dependents of the deceased. Therefore, the impugned judgment of the Commissioner was modified to the limited extent of fixing the liability jointly and severally upon the employer and the Insurance Company.

First Appeal No. 246 of 2015

In this matter, Insurance Company was aggrieved by the award of compensation to the parents of the deceased, who succumbed to the injuries in the accident.

Labour Court had directed the employer and the Insurance company jointly and severally liable to pay compensation.

Claimant 1 had set up a claim under the Workmen’s Compensation Act by filing the application claiming that his son was employed by the OP on his Motor Tempo as loader and the said tempo met with an accident due to which the son died.

High Court stated that when the written statement on oath before the Commissioner and the certificate issued by the employer is juxtaposed against his statement recorded by the police during the course of investigation, the statement recorded under oath, admitting that deceased Deepak was his employee, assumed importance.

Bench expressed that in view of the inconsistency in the statement given to the police by the employer, denying any employer-employee relationship on one hand and the statement on oath filed in the form of written statement before the Commissioner, the Commissioner has rightly given weightage to the statement on oath and accepted the employer-employee relationship.

In view of the above, Court found no reason to interfere with finding of the Commissioner. [Mohammed Ali Abdul Samad Khan v. Dawood Mohd. Khati, 2021 SCC OnLine Bom 6670, decided on 10-12-2021]


Advocates before the Court:

Mr. Amol Gatne i/b Ms. Swati Mehta for the appellants in First Appeal No.169 of 2014 and for the respondents in First Appeal No.246 of 2015.

Mr. D.R. Mahadik for the appellant in FA No.246/2015 and for respondent in FA No.169/2014.

Case BriefsHigh Courts

Bombay High Court: Noting that the Motor Accident Claims Tribunal Member did not properly determine just and proper compensation, V.M. Deshpande, J., while partly allowing the appeal enhanced compensation.

Instant appeal was filed by the claimants for enhancement of compensation.

Factual Matrix

Appellants were the widow, sons and daughters of the deceased. Deceased when proceeding to his house on foot after closing his shop was crushed to death by the offending vehicle. The offence was registered against the driver of the offending vehicle.

Further, the appellants had approached the Motor Accident Claims Tribunal by filing a petition under Section 166 of the Motor Vehicles Act. In the said petition, it was averred by the claimants that when the deceased met an untimely death, he was 40 years old and a self-employed person.

Claimants added that the monthly income of the deceased was Rs 10,000 and the aggregate compensation claimed was Rs 5,00,000 with interest at 12% pa from the date of the accident.

MACT passed the judgment and award holding that the claimants were entitled to total compensation of Rs 1,89,500/- inclusive of no-fault liability amount of Rs 50,000/- along with interest at the rate of 7.5% per annum from the date of filing of petition.

On being dissatisfied with the compensation amount that was awarded, present appeal was filed.

Issue

According to the counsel for the appellant, the Tribunal committed an error in determining the monthly income of the deceased as Rs 15000/-. She submitted that in any case, the income of the deceased was not less than Rs 10,000/- per month. She also submitted that the judgment of tribunal cannot stand to the scrutiny of law inasmuch as nothing is granted in favour of the claimants under the head of future prospects. Along with this, Tribunal had wrongly deducted 1/3rd amount towards personal expenses.

Did member of the MACT grant just and adequate compensation to the claimants?

Analysis, Law and Decision

In Court’s opinion, Member of the Tribunal had rightly reached the conclusion that at the time of the death, the age of the deceased was 45 years.

Adding to the above analysis, Court stated that there was no documentary evidence that could throw light on the daily income of the deceased.  However, from the evidence of the widow, it was clear that the deceased was engaged in repairing tubes and tyres of various vehicles and not the bicycles. In that view of the matter, the Judge had determined the daily income of the deceased on very lower side.

Once it is established that the deceased was not unemployed and he was engaged in the business of vulcanization, without there being any documentary proof about his income, his monthly income will have to be determined as notional income.

Moving further, High Court elaborated stating that in absence of any documentary evidence and keeping aside the exaggeration in respect of earning per month income of the deceased, looking to the nature of self-employment of the deceased, the Court reached the conclusion that monthly income of deceased was Rs 5,000.

Claimants were entitled to 25% towards future prospects.

In Court’s opinion, the Tribunal committed an error in deducting 1/3rd income. Seven persons were dependent on the deceased. Therefore, a proper deduction would be 1/5th.

The inadequate amount was granted in favour of the claimants on account of loss of consortium for which they were entitled at the rate of Rs 44,000/- per dependent in view of the law laid down in Magma General Insurance Co. Ltd v. Nanu Ram, (2018) 18 SCC 130. Similarly, less compensation was granted to the claimants in respect of the loss of estate and future expenses which appellants will be entitled. Therefore, the claimants were surely entitled to enhancement.[Sahana Khatoon v. New India Assurance Co. Ltd., 2021 SCC OnLine Bom 3695, decided on 28-10-2021]


Advocates before the Court:

Ms Mitisha Kotecha, Advocate for appellants.

Mr M. B. Joshi, Advocate for respondent 1.

None for respondents. 2 and 3, though served.

Case BriefsTribunals/Commissions/Regulatory Bodies

State Consumer Disputes Redressal Commission, Telangana: Justice MSK Jaiswal (President) and Meena Ramanathan (Member) upheld the District Commission’s Order observing the consequence of suppressing the material fact while taking an insurance policy.

If the insurer can show that prior to the date of declaration of being healthy, the insured was suffering with ailment which was within her knowledge but was suppressed, then the insurance company is well within its right to repudiate the claim on the ground of suppression veri.

Complainant had submitted that his wife has obtained new money back policy from the OPs with a duration of 20 years for an assured sum of Rs 10,00,000. At the time of accepting the policy, the OPs carried out mandatory medical tests on the proponent and issued the policy in question.

While the policy was in force, the holder died due to cardiorespiratory arrest.

Being the nominee, complainant made the claim with the OPs and to the utter shock and surprise, the OPs repudiated the claim on the ground that the deceased life assured was suffering from lung cancer and took treatment prior to obtaining the policy, hence the claim was repudiated.

Complainant prayed to direct the OPs to pay the amount.

It was stated that OPs investigated the matter, and it was revealed that the deceased life assured suppressed the material fact relating to her health condition giving incorrect answers in the proposal form.

Analysis, Law and Decision

Bench noted that OPs submission was that the insured was suffering from serious ailment viz., lung cancer and suppressed the said fact.

Commission reiterated the legal position that if the insured is found to have suppressed the information which was material for the insurer to decide about the issuance of the policy is made out, the insurance company cannot be made liable to indemnify the insured on the ground that contractual obligations between insured and insurer are based purely on good faith and if insured has knowingly failed to reveal the information which was within her exclusive knowledge, the insurer could not be said to be liable to indemnify the insured.

In the present case, the insurance company contended that even before taking the policy, the insured was suffering from a serious ailment and was undergoing treatment and evidence was placed on record with regard to the said contention.

Coram held that perusal of the crucial documents on record leaves no room for doubt that the insured was aware that she was suffering from a serious ailment for more than 6 months prior to taking the insurance policy and suppressing all those facts, she took the policy.

Therefore, District Commission’s Order holding that complainant was not entitled to any relief was upheld and the complaint was dismissed.[K.N. Vidyakarji v. Life Insurance Corporation of India, FA No. 402 of 2020, decided on 15-06-2021]


Advocates before the Commission:

Counsel for the Appellant: Karakot Nagekar Sai Kumar

Counsel for the Respondents: KRL Sarma

Case BriefsHigh Courts

Madras High Court: The Division Bench of Pushpa Sathyanaryana and S. Kannammal, JJ., revised the amount of compensation awarded to the claimant in a motor accident claim and enhanced it from Rs 30,89,430 to Rs 83,35,000.

Instant appeal was preferred challenging the decision and decree of the Motor Accident Claims Tribunal.

Deceased was proceeding in a two-wheeler, driver of the lorry drove the vehicle in a rash and negligent manner, dashed against two-wheeler. Due to the said impact, the deceased sustained injuries and died.

In view of the above, legal heirs – appellants/claimant of the deceased filed claim petition.

Insurance Company submitted that the accident occurred due to the carelessness and negligence on the part of the deceased and the deceased had not possessed any valid driving licence.

Tribunal, after considering the oral and documentary evidence, held that the accident had occurred due to the drunken driving of the deceased and also because of the rash and negligent driving of the driver of the first respondent and fixed the liability at 50:50.

Analysis, Law and Decision

High Court noted that in the post-mortem report no mention about the presence of alcohol was there.

Court added that having failed to prove that the accident occurred due to the drunken driving of the deceased, contributory negligence of 50% could not be attributed to the deceased.

From the sketch placed on the investigation report, it represented that the deceased was going from South to North on the left extreme of the road and the offending vehicle, namely, the lorry which was coming in the opposite direction hit the deceased and he died. Therefore, even on that ground, negligence cannot be attributed to the deceased.

For proving an offence under Section 185 of the Motor Vehicles Act, 1988, breath test is mandatory as per Section 203 of the MV Act.

Since the above was not satisfied, it was concluded that the deceased was not in a drunken state.

10% was deducted from the compensation on the ground that the deceased did not possess the valid driving licence

For the above contention, it was stated that he had only a learners licence. It is not the case of the second respondent that a person having LLR cannot ride on the road.

Though it is stated that a person having LLR and riding or driving should have an Instructor with them, it does not disqualify a person from riding a vehicle.

Award of the Tribunal was enhanced to Rs 83,35,000 from 30,89,430.[Kuralvani v. Kathirvelan, 2021 SCC OnLine Mad 2232, decided on 31-03-2021]


For Advocates before the Court:

For Appellants: Mr.I.Pinaygash

For R – 2 : Mr.B.Rajesh Saravanan

National Consumer Disputes Redressal Commission
Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): Dinesh Singh (Presiding Member) addresses matter regarding claiming of insurance cover.

Instant appeal was filed under Section 19 of the Consumer Protection Act, 1986 challenging the decision of the State Consumer Disputes Redressal Commission.

Factual Matrix

Late Jai Prakash, husband/father of the Complainant met an unnatural death, had obtained four insurance policies from the Insurance Company. It was stated that the Insurance Company did not query three of the four policies.

In respect of the 4th policy, it was objected that the claim was on the ground that the death was not accidental but a case of suicide, falling under the exceptions to the policy, and the claim was declined.

Insurance Company argued that the three policies were concealed while taking the fourth policy i.e. the subject policy.

Commission agreed with the appraisal and reasoning of the State Commission’s findings that in the instant case non-disclosure of the previous policies by the life assured was not fatal to the claim.

Another argument made by the Insurance Company was that the life assured had committed suicide which fell under the exception clause of the policy, that it was not a case of accidental death. Further, the insurance company reported that the injuries on the deceased were only possible in cases of a suicide death.

Police in its Inquiry Report had concluded that the cause of the accident due to rail accident could not be ruled out.

The insurance company had raised the objection of suicide based on the “medico-legal” report of a private agency, prepared on perusal of the documents on record, after about one year of the incident.

Inquest is conducted as mandated under the Cr.P.C., Post Mortem is conducted by the concerned government Medical Officer, Investigation is conducted by the Police (a private agency engaged by the Insurance Co. does not substitute for the Police).

 It was further noted that there was no evidence on record that the Insurance Company made a police complaint or filed a complaint before the competent judicial magistrate that a false case of accidental death had been made out for a wrongful gain when the death was by suicide, or that any remedial action in case of the other three policies settled earlier was subsequently undertaken, or any disciplinary action against its functionaries responsible for settling the earlier three policies was taken.

Commission stated that weighing the evidence in its totality, the eventuality of the death being accidental cannot be ruled out and the benefit of preponderance of probability goes to the complainants.

Hence, State Commission erred in placing reliance on the report of a private agency engaged by the Insurance Company while ignoring the complete spectrum of evidence in the matter.

Therefore, the Insurance Company wrongly withheld the claim in respect of the subject policy.

Bench directed the Insurance Company to settle the claim of the subject policy with interest at 9% per annum.

For the undue harassment and the loss and injury caused to the Complainants and for the inconsistency and arbitrariness in decision making, a cost of Rs. 1 lakh is imposed on the Insurance Co. through its chief executive, of which Rs. 50 thousand shall be paid to the Complainants and Rs. 50 thousand shall be deposited in the Consumer Legal Aid Account of the State Commission.

“…advised to inculcate and imbibe systemic improvements for future, in that there is no inconsistency or arbitrariness in decision-making in identical facts and same points of law.”

[Kamla Devi v. Tata AIG Life Insurance Corporation, 2021 SCC OnLine NCDRC 182, decided on 10-06-2021]


For the Appellant: Mr. Praveen Kumar Aggarwal, Advocate

For the Respondents No. 1 &2: Mr. S. Hari Haran, Advocate

Case BriefsHigh Courts

Allahabad High Court: The Division Bench of Dr Kaushal Jayendra Thaker and Ajit Singh, JJ., allowed the appeal of the claimants in a motor vehicle accident claim while dismissing the appeal of the insurance company.

Claimants and Insurance Company on being aggrieved by the award and decree passed by Motor Accident Claims Tribunal, filed the present appeal.

Claimants were the legal heirs namely widow and parents of the deceased who died in the vehicular accident.

Deceased was earning Rs 25,00,000 and claimants claimed a sum of Rs 3,40,50,000.

Respondent’s truck was being driven by Afzal Sekh and was insured with National Insurance Company Limited who had been saddled with the liability to make good the amount of compensation.

Due to the truck rash and negligent driving the motorcycle of the deceased was dashed by the truck.

Insurance Company challenged the award on the grounds that the deceased was a contributor to the accident having taken place, that income considered by the Tribunal was on the higher side and the same would not have been made the basis of compensation.

Claimants felt aggrieved as the tribunal did not consider the amount for future loss of income and did not even grant proper interest. Tribunal also erred in directing 2/3rd of the compensation to be paid to the parents and 1/3rd to the widow.

What is Negligence?

Negligence means failure to exercise care towards others which a reasonable and prudent person would in a circumstance or taking action which such a reasonable person would not. Negligence can be both intentional or accidental which is normally accidental.

More particularly, it connotes reckless driving and the injured must always prove that the either side is negligent. If the injury rather death is caused by something owned or controlled by the negligent party then he is directly liable otherwise the principle of “res ipsa loquitur” meaning thereby “the things speak for itself” would apply.

Contributory Negligence

It means that a person who either contributes or author of the accident would be liable for his contribution to the accident having taken place.

In the present set of facts and circumstances, Bench while referring to the recent decision of the Supreme Court in Md. Siddiqui v. National Insurance Co. Ltd (2020) 3 SCC 57 would come to the aid of the claimants as there was no colossal connection of the deceased having contributed to the accident.

What is Liability?

Liability of the Insurance Company.

While considering the issue of breach of policy condition under Section 149 of the Act Bench relied to elaborately sift the documentary evidence on record and whether the owner had taken proper care and caution to see that the driver was authorised to drive the vehicle or not.

High Court opined that the Insurance Company’s contention that the driver was not holding valid and effective driving licence could not be accepted.

While considering the case of the Insurance Company, can it be said that the driver did not have valid driving licence? This question has to be answered in favour of the claimants and owner.

Owner of the vehicle was satisfied, and it was proved that he had taken all care and caution that vehicle was being driven by a person who was authorised to drive the same which was even apparent from the fact that the owner had gone to the extent of producing evidence so as to bring home the fact that there was no breach of policy condition.

Hence, it was held that no breach of policy conditions was committed.

Compensation

It was submitted that the tribunal did not grant the proper amount under the head of non-pecuniary damages to the widow who became a widow at the age of 24 and who was not re-married.

Even the Insurance Company felt aggrieved and challenged the compensation.

Supreme Court held that in the case of motor accident compensation, guess work is inevitable.

Compensation payable to the appellants in view of the decision of the Supreme Court in National Insurance Company Ltd. v. Pranay Sethi, (2017) 16 SCC 680

With respect to the issue of rate of interest, it should be 7.5% in view of the Supreme Court decision in National Insurance Co. Ltd. v. Mannat Johat, 2019 (2) T.A.C 705 (S.C.)

Disbursement and Tax at Source

Claimants Counsel Ram Singh submitted that several years elapsed, parents are at the fag end of their lives, therefore, on additional deposit being made, this Court may not direct deposit of said amounts in fixed deposits and though this Court had time and gain directed the Insurance Companies not to deduct TDS, the same was being deducted.

Bench relied on the Supreme Court decision in A.V. Padma v. R. Venugopal, (2012) 3 SCC 378.

Further, Court stated that people even rustic villagers’ have bank account which had to be compulsorily linked with Aadhar, therefore, what is the purpose of keeping money in fixed deposits in banks where a person, who suffered injuries or lost his kith and kin, was not able to see the colour of compensation.

“..time is now ripe for setting fresh guidelines as far as the disbursements are concerned.”

Court expressed that the guidelines in General Manager, Kerala, SRTC, Trivandrum v. Susamma Thomas, (1994) 2 SCC 176, are being blindly followed causing more trouble these days to the claimants as the Tribunals are overburdened with the matters for each time if they require some money, they have to move the tribunal where matters would remain pending and the tribunal on its free will, as if money belonged to them, would reject the applications for disbursements, which is happening in most of the cases.

The parties for their money have to come to court more particularly up to High Court, which is a reason for our pain.

In High Court’s opinion, Tribunal may release the money with certain stipulations and that guidelines have to be followed but not rigidly followed as precedents.

Further, it was added that while sitting in Single Bench of this Court, Dr Justice Kaushal Jayendra Thaker held that the Insurance Company should not deduct any amount under T.D.S in the case of Sudesna v. Hari Singh, F.A.F.O. No.23 of 2001, decided on 26.11.2020, which should be strictly adhered to.

Hence, appeals by claimants were partly allowed and the appeal preferred by the Insurance Company was dismissed.

Respondents shall jointly and severally liable to pay the additional amount with an interest at the rate of 7.5%

Court directed that on deposit of amount, Tribunal shall disburse the entire amount by way of account payee cheque or by way of RTGS to the account of the claimants. [National Insurance Co. Ltd. v. Anuradha Kejriwal, 2021 SCC OnLine All 269, decided on 13-04-2021]


Advocates before the Court:

Counsel for Appellant: Kuldip Shanker Amist, Manoj Nigam

Counsel for Respondent: Manoj Nigam, Amit Kumar Sinha, Deepali Srivastava Sinha, Mata Pher, Ram Singh

Chhattisgarh High Court
Case BriefsHigh Courts

Chhattisgarh High Court: A Division Bench of P. R. Ramchandra Menon and Parth Prateem Sahu JJ. allowed the appeal and modified the impugned award.

The facts of the case are such that on 20-04-2010 Bhuvan Singh, Pramila and other persons were travelling on the offending vehicle and going to Manvari from Village Tilokhan. On the way at about 11.30 pm near crossing bridge at Charvahi Pasan Ghat, due to rash and negligent driving of NA1/driver, the offending vehicle met with an accident and overturned wherein Bhuvan Singh, and Pramila died. The legal representatives of both deceased individuals filed claims petition before Claims Tribunal which was partially granted and the liability was fastened on the Insurance Company to pay for it. Aggrieved by the same, appeal has been filed by the Insurance Company.

Counsel for the appellants submitted that vehicle in which deceased persons along with others were travelling was a goods vehicle. The policy issued for the offending vehicle for a period from was under the head “Goods Carrying Vehicle Package Policy wherein no premium was charged for any occupants/labourers etc. The Insurance Company cannot be held liable to satisfy the amount of compensation in absence of any coverage of risk for the gratuitous passengers travelling on the offending vehicle. It was further submitted that as per Section 147 of the Act of 1988, there is no statutory liability of the Insurance Company for covering the risk of any other persons than the employee or owner of the goods vehicle.

Counsel for the respondents submitted that the impugned award passed by the learned Claims Tribunal and submits that learned Claims Tribunal, based on the evidence and material available on record has passed the impugned award which does not call for any interference.

The Court observed that the Policy is issued under Section 147 of the Act, 1988, wherein the risk of gratuitous passenger travelling in goods vehicle is not covered, relied on judgment National Insurance Company Limited v. Chollety Bharatamma, (2008) 1 SCC 423 wherein it was held that that injury to any person used under Section 147(1) (b) would only mean third person and not a passenger gratuitous or other. It further observed that :

‘9. … The difference in the language of ‘goods vehicle’ as appearing in the old Act and ‘goods carriage’ in the Act is of significance. A bare reading of the provisions makes it clear that the legislative intent was to prohibit goods vehicle from carrying any passenger. This is clear from the expression ‘in addition to passengers’ as contained in the definition of ‘goods vehicle’ in the old Act. The position becomes further clear because the expression used ‘goods carriage’ is solely for the carriage of ‘goods’. Carrying of passengers in a goods carriage is not contemplated in the act. There is no provision similar to Clause (ii) of the proviso appended to Section 95 of the old Act prescribing requirement of insurance policy. Even Section 147 of the Act mandates compulsory coverage against death of or bodily injury to any passenger of ‘public service vehicle’. The proviso makes it further clear that compulsory coverage in respect of drivers and conductors of public service vehicle and employees carried in goods vehicle would be limited to liability under the Workmen’s Compensation Act, 1923 (in short ‘the WC Act’).

  1. The inevitable conclusion, therefore, is that provisions of the Act do not enjoin any statutory liability on the owner of a vehicle to get his vehicle insured for any passenger travelling in a goods carriage and the insurer would have no liability therefor.”
  2. It is now well settled that the owner of the goods means only the person who travels in the cabin of the vehicle.”

The Court thus held that the finding recorded by Claims Tribunal with regard to breach of a policy condition is contrary to law. Hence the insurance company was absolved from the liability to pay and the owner and driver of the offending vehicle were directed to pay the compensation.

In view of the above, the impugned award was set aside.[HDFC ERGO General Insurance Co. Ltd v. Sitaram, 2020 SCC OnLine Chh 1452, decided on 07-10-2020]


Arunima Bose, Editorial Assistant has put this story together

Case BriefsHigh Courts

Allahabad High Court: Dr Kaushal Jayendra Thaker, J., observed that if the insurance co. will not be liable to pay interest, then it will be against the spirit of taking an insurance policy, and the very object for introducing insurance policy will get frustrated.

Appeals in the instant matter are out of the decision and award passed by the Commissioner, Workmen’s Compensation Act, 1923 being Additional Labour Commissioner, Kanpur awarding a sum of Rs 6,30,062 with interest at the rate of 9% in favour the claimants.

The owner was saddled with the liability to pay interest.

Question of law in the instant case:

Whether in the given facts and circumstances of the case, the Commission has committed a manifest error of law holding that if the respondent has failed to deposit the awarded amount within 30 days from the date of judgment then only claimants are entitled to the interest at the rate of 9% from the date of award till the amount is deposited.

Owner’s Counsel submitted that the Commissioner committed patent error directing the owner to pay interest.

Counsel for the insurance Company tried to point out that the judgment and order impugned was just and proper as it was the duty of the owner to notify the insurance company about the accident which was not done and hence the owner was saddled with the payment of interest till the date of the decision.

While dealing with the above question of law, the Court found it appropriate to reproduce Section 4A of the Act. 

Section 4A. Compensation to be paid when due and the penalty for default.

Supreme Court’s decision in Oriental Insurance Company v. Siby George, 2012 (4) T.A.C 4(SC) wherein it was held that the payment of interest is a consequence of default and it has to be directed to be paid without going into the reasons for the delay and only in case where the delay is without justification, the employer might also be held liable to a penalty after giving him a show-cause notice. Thus, just because the owner had not intimated to the Insurance Company, it cannot be the reason for not directing the Insurance Company to pay the interest.

Hence, in the findings that the Insurance Company will not be liable for interest is against the spirit of taking the insurance policy and the very object for introducing insurance policy would get frustrated.

High Court in view of the several Supreme Court decisions partly allowed the appeals.

Hence Judgment and award of the Commissioner shall stand modified to the aforesaid extent namely to the extent that the Insurance Company shall deposit the decretal amount with interest at the rate of 12% from one month after the date of accident till the amount is deposited.

In the present matter, it is the parents who were demanding from one son for the death of another son and they have claimed from Insurance Company with whom the vehicle was insured to make payment. Therefore, the minimum penalty of Rs 10,000 would suffice on the Insurance Company. 

Appellants shall deposit a sum of Rs 10,000 which would be a substitution for the penalty. [Chanda Begum v. Shahnawaz, 2020 SCC OnLine All 1487, decided on 16-12-2020]

National Consumer Disputes Redressal Commission
Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): C. Vishwanath (Presiding Member), held that since the Insurance Company itself insured the complainant’s vehicle and the vehicle had been stolen during the currency of the Policy and the Police were informed immediately, the Insurance Company could not repudiate the claim.

The instant revision petition was filed under Section 21(b) of the Consumer Protection Act, 1986 against the Order passed by Rajasthan State Consumer Disputes Redressal Commission.

Facts of the case

Respondent obtained an Insurance Policy from the petitioner for his Car being temporary registration for a sum of Rs 6,17,800.

In the night of 28-07-2011, Complainant’s car was stolen from Geeta Guest House, Jodhpur. Police could not trace the vehicle and submitted a negative final report. Complainant submitted an insurance claim with the Opposite Party/Insurance Company. Petitioner/Opposite Party repudiated the claim, on the ground that intimation of theft of the vehicle was given to the Insurance Company with delay, which was in violation of the Policy condition and though temporary registration of the vehicle expired on 19-07-2011, the Complainant did not get the vehicle permanently registered. Thirdly, the Complainant left the vehicle unattended outside the guesthouse, in violation of the Policy condition.

District Forum dismissed the complaint stating “as at the time of the theft the vehicle is not registered, there was no deficiency in service on the part of the Opposite Party”.

Against the order of the District Forum, the Complainant preferred an Appeal before the State Commission and State Commission set aside the order of the District Forum while allowing the appeal.

Aggrieved by the State Commission’s Order, Opposite Party/Insurance Company preferred the present Revision Petition.

Analysis and Decision

Core issue for the adjudication was in regard to the registration of the vehicle after expiry of temporary registration.

Since the Petitioner/Insurance Company had received the insurance premium and there was no violation of any specific condition in the Insurance Policy, the Insurance Company was liable to indemnify the insured for the loss suffered by the insured.

Though plying a vehicle on road without registration is a violation of provisions of Motor Vehicle Act, the Competent Authority to take action against a non-registered vehicle is the Police and other Government authorities. Insurance Company after accepting the premium, cannot escape from its liability and repudiate the claim on this technical ground.

Commission in view of the instant matter stated that:

The temporary registration of the vehicle expired on 19-07-2011 and the car got stolen on 28-07-2011, mere 9 days later. The Motor Vehicle Act does provide for registration of vehicle after its expiry on payment of certain fee.

Commission held that when the Insurance Company itself insured the complainant’s vehicle and the vehicle had been stolen during the currency of the Policy and the Police was informed immediately, the Insurance Company cannot repudiate the claim of the Complainant on a technical ground.

In view of the above-discussion, State Commission’s Order was justified and the same did not suffer from any illegality, therefore revision petition was dismissed. [United India Insurance Co. Ltd. v. Sushil Kumar Godara, 2020 SCC OnLine NCDRC 494, decided on 11-12-2020]


Advocates for the parties:

For the petitioner: Ms Suman Bagga, Advocate

For the Respondent: NEMO

National Consumer Disputes Redressal Commission
Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): Dinesh Singh (Presiding Member) while addressing the instant first appeal upheld the State Commission’s Order in regard to a claim filed by the insured with the insurance company.

The instant appeal was filed under Section 19 of the Consumer Protection Act, 1986 challenging the Order passed by the State Consumer Disputes Redressal Commission, Maharashtra.

Complainant Firm took an insurance policy to cover its plant and machinery, electrical installations and stock-in-trade. The premium was paid for the valid policy. In 2005, an incident of fire took place and the insurance company was intimated after which survey was conducted.

The complainant had claimed an amount of Rs 17,00,000 but the surveyor assessed the loss at Rs 1,54,500. Since the Complainant Firm failed to submit the relevant record for verification, as mentioned in the Surveyor’s Report. Hence, Insurance Company filed the claim as ‘no claim’.

State Commission vide its impugned Order dated 22-09-2015 allowed the Complaint at the loss assessed by the Insurance Co.’s Surveyor i.e. at Rs 1,54,500 and awarded the said amount with interest at the rate of 9% per annum.

Complainant Firm appealed before this Commission for enhancement in compensation, specifically for accepting its claimed loss of Rs 17,00,000.

Analysis and Decision

Investigation and Survey by an insurance company are fundamental in determining the amount payable to the insured.

Bench observed that an insurance company is duty-bound to appoint its surveyor in accordance with the provisions of the Insurance Act, 1938 (Section 64 UM Surveyors or loss assessors specifically refers). A Survey cannot be disregarded or dismissed without cogent reasons.

Further, the Commission also observed that the onus,

[a] of showing that the Report of the Surveyor appointed by the Insurance Co. was flawed and

[b] of showing that actually, in fact, the loss was Rs 17,00,000, was on the Complainant Firm, which onus it failed to discharge.

Hence, in view of the above discussion, the Commission held that the State Commission had passed a reasoned order.

State Commission’s impugned order was upheld and confirmed.[Wilson Home Appliances v. New India Assurance Co. Ltd., 2020 SCC OnLine NCDRC 493, decided on 10-12-2020]


Advocates who appeared for the matter:

For the Appellant:  Ms Manisha T. Karia, Advocate

For Respondent 1: Mr S. M. Tripathi, Advocate

For the Respondent 2: Ex parte

Case BriefsHigh Courts

Allahabad High Court: Dr Kaushal Jayendra Thaker, J., directed the insurance company to indemnify the claimants of the deceased who died in an accident, subject, inter alia, to recovery/deduction of 10% of the amount since the present is a case of contributory negligence.

 Present appeal arose from the accident which injured the family of the deceased (late District Judge) and in which the sole bread earner of the family lost his life in the accident. It has been stated that both the driver of the car and owner of the car died whereas the driver of the truck also lost his life.

Claimants preferred the present appeal against the judgment and award passed by Additional District Judge/Motor Accident Claims Tribunal, Allahabad.

Insurance company challenged the grant of compensation in Durga Verma v. Ranno Devi, FAFO No. 1359 of 2001 and FAFO No. 1365 of 2001 whereby the insurance company challenged the judgments qua quantum and alleged breach of policy condition and have also challenged the finding of the tribunal as far as negligence attributed to the driver of the truck was concerned.

Facts that lead to the present appeals

Husband and father of the claimants respectively died in an accident which occurred in the year 1994. The car which the deceased was driving dashed with another vehicle (a truck) causing the death of drivers of both the vehicles who succumbed to injuries caused by the said accident.

The insurance company contested that the vehicle in which the Fiat car dashed was not involved in the accident and the insurance company was not liable and the driver was not having a valid driving license, hence there was a breach of a policy condition. Insurance company contended that it was a case of contributory negligence on the part of the driver of the car.

Insurance Company preferred two appeals against the award in favour of the heirs of driver of Fiat car and heirs of owner of Fiat car. The injured and heirs of both driver and owner have also filed appeals for enhancement.

Analysis & Decision

The Bench stated that it will advert to the principles of negligence: both contributory as well as composite negligence. Further, it added that it is a case of composite negligence but qua the driver of the Fiat car, it can be a case of contributory negligence.

Relying on the decision of Supreme Court in Pappu v. Vinod Kumar Lamba, (2018) 3 SCC 208 and Sant Lal v. Rajesh, (2017) 8 SCC 590, the Bench stated that the liability would arise if a number of the licence was given and issuing authorities whereabouts were given in absence of the same, the insurance company has to be granted recovery rights from the owner of the truck to recover subject to the procedure suggested in the above two cases.

Insurance company did not file any documentary evidence, however, subject to the fact that the driver of the truck did not possess a proper driving license, they are granted recovery rights from the owner.

Negligence

Negligence means failure to exercise the required degree of care expected of a prudent driver. Negligence is the omission to do something which a reasonable man, guided upon the considerations, which ordinarily regulate the conduct of human affairs, would do, or doing something which a prudent and reasonable man would not do. Negligence is not always a question of direct evidence. It is an inference to be drawn from proved facts.

What may be negligence in one case may not be so in another.

Well-Settled Law

At the intersection where two roads cross each other, it is the duty of a fast-moving vehicle to slow down and if the driver did not slow down at the intersection, but continued to proceed at a high speed without caring to notice that another vehicle was crossing, then the conduct of driver necessarily leads to the conclusion that vehicle was being driven by him rashly as well as negligently.

In the instant matter, the Bench observed that:

“Merely, because the driver of the truck was driving a vehicle on the left side of road would not absolve him from his responsibility to slow down vehicle as he approaches the intersection of roads, particularly when he could have easily seen, that the car over which deceased was riding, was approaching intersection.”

Court added that, even if courts may not by interpretation displace the principles of law which are considered to be well settled and, therefore, court cannot dispense with proof of negligence altogether in all cases of motor vehicle accidents, it is possible to develop the law further on the following lines; when a motor vehicle is being driven with reasonable care, it would ordinarily not meet with an accident and, therefore, rule of res-ipsa loquitor as a rule of evidence may be invoked in motor accident cases with greater frequency than in ordinary civil suits [per three-Judge Bench in Jacob Mathew v. State of Punjab, (2005) 6 SCC 1.

It was held that by the above process, the burden of proof may ordinarily be cast on the defendants in a motor accident claim petition to prove that motor vehicle was being driven with reasonable care or that there is equal negligence on the part the other side. In the present case, the vehicles are of unequal magnitude: one is a fiat car and the other a truck; the oral testimony of the witnesses go to show that the truck driver driving the vehicle at an exorbitant speed could not control itself, but at the same time if the driver of the Fiat car would also had been cautious, he would have averted the accident taking place and therefore he is held to be also “co-author” of the accident but to the tune of 10%.

Bench held that, it is case of composite negligence as far as the other inmates of Fiat car are concerned and therefore the insurance company will have to indemnify the claimants however it may recover the said amount to the tune of 10% from the owner-driver and insurance company of the Fiat car. As far as the claimant is concerned who is the widow of the driver of the Fiat car the compensation would be lessened to the tune of 10% as the driver has been held to be negligent to that effect. The driver of the Fiat car should have also taken proper caution and having not done so some negligence is attributed to him also.

Hence, the appeals preferred by the insurance company are decided likewise.

Appeals of claimants were partly allowed. [National Insurance Co. Ltd. v. Durga Verma,  2019 SCC OnLine All 6696, decided on 10-12-2019]

Case BriefsHigh Courts

Bombay High Court: S.M. Modak, J., examined the jurisdiction of the Motor Accident Claims Tribunal in regard to claim made by the insured/owner under a personal accident claim against the insurance company.

Liability of Insurance Company

The circumstance involved in the present appeal about the liability of the insurance company to pay as per clause ‘personal accident cover’ in the insurance policy.

Crux of the issue

What will be the extent of liability of the insurance company when the insured/owner of the Jeep was himself the driver-cum-deceased and when no other vehicle was involved?

Does Motor Accident Claims Tribunal have jurisdiction to decide the above-stated claim?

Legal representative of the deceased claimed compensation from the respondent-Insurance Company from the MACT by invoking the provisions of Section 163-A of the Motor Vehicles Act, 1988. Though MACT had denied the same.

The Insurance Company — respondent had denied their liability. The policy does not cover loss occasioned to the insured person, because he is not the third party.

Withdrawal of earlier claim petition under Section 166 of the M.V. Act and non-maintainability of a fresh petition under Section 163-A of the M.V. Act was also emphasized.

Trial Court held:

“the owner/insured cannot be said to be a third party and hence exonerated the company”.

The correctness of the above-stated decision was challenged.

Scope of the appeal:

1) Whether the Insurance Company is liable to reimburse under the caption personal accident of the insured?

2) Whether the MACT can award compensation?

Bench noted that the Question is always raised whether the registered owner can be said to be a ‘third party’. This question is no more res-integra. There are numerous judgments available in regard to the said issue.

Supreme Court had the occasion to decide the correctness of the decision of the High Court in the case of National Insurance Company Limited v. Ashalata Bhowmik, (2018) 9 SCC 801.

The insurance company was held responsible to pay to the legal representatives of the deceased to driver/owner of the vehicle. Supreme Court reiterated the law regarding the liability of insurance companies in case of the death of the owner/its own insured. When the insured is not liable, the question of liability of the insurer does not arise.

Insurance company relied on the following two decisions:

[Karnataka High Court] Sangeetha Subramani v. Sri Krishna Chari Puttachari,2018 SCC OnLine Kar 3835.

“Whether rider of a two-wheeler (who is not the owner) can claim compensation as a third party for an accident where no other vehicle is involved?”

Claimants were held not entitled to claim compensation under Sections 163-A or 166 of M.V. Act.

[Madras High Court] Cholamandalam MS General Insurance Company Ltd. v. Ramesh Babu,2020 SCC OnLine Mad 2164

A similar issue was involved in the said case regarding the liability of the insurance company to comply with the promises given as per the personal accident coverage clause of the package policy. MACT allowed the claim. Number of contentions were raised on behalf of the insurance company before the High Court. It includes the jurisdiction of M.A.C.T., entitlement to compensation (more than the maximum limit mentioned in the clause) under the phrase ‘just compensation’. All the contentions were answered in favour of the insurance company and the claim petition was dismissed.

Decision

Bench diverged from the view taken by the Karnataka and Madras High Court on the issue involved.

Supreme Court’s Decision in National Insurance Co. Ltd. v. Laxmi Narain Dhut, (2007) 3 SCC 700 was found to be relevant in the present matter.

Observation in the case of Laxmi Narain Dhut:

“21. Where the claim relates to own damage claims, it cannot be adjudicated by the insurance company, but it has to be decided by another forum i.e. forum created under the Consumer Protection Act, 1986 (in short “the CP Act”). Before the Tribunal, there were essentially three parties i.e. the insurer, the insured and the claimants. On the contrary, before the Consumer Forums there were two parties i.e. owner of the vehicle and the insurer. The claimant does not come into the picture. Therefore, these are cases where there is no third party involved”.

High Court stated that the Madras High Court’s view in Cholamandalam MS General Insurance Company Ltd. v. Ramesh Babu  2020 SCC OnLine Mad 2164 was restricted with the issue of jurisdiction of MACT.

Adding to its observations, Court stated that the provisions of Section 165 of the M.V. Act deal with the jurisdiction of MACT.

When certain conditions are fulfilled, MACT gets jurisdiction. They are:

a) Claim for compensation in respect of accidents.

b) Arising out of use of the motor vehicle.

Section 165 of the M.V. Act nowhere contemplates dealing with a claim only when the policy is obtained under Section 147 of the M.V. Act.

Court held that,

Petition before the MACT will be maintainable once the condition under Section 165 of M.V. Act are fulfilled. So, in the given case, there is a clause of personal accident coverage in case of motor accident, MACT can entertain the petition.

Bench also stated that it was fortified with the observations made in the followings cases:

Thiruvalluvar Transport Corpn. v. Consumer Protection Council, (1995) 2 SCC 479

Bajaj Allianz General Insurance Company Ltd. v. C. Ramesh, 2013 (1) TN MAC 325.

Concluding the decision, Court rejected the contention that MACT cannot entertain the claim made by the insured/owner under a personal accident claim against the insurance company.

The present appeal was allowed and the Insurance Company was directed to pay Rs 2,00,000 to the appellants with the interest @6%. [Mangala v. National Insurance Company Limited, 2020 SCC OnLine Bom 974, decided on 29-09-2020]


Also Read:

Madras HC | Can MACT deal with claims & policies other than Accident Claims provisions of MV Act? Contractual & Statutory liability cannot be equated: HC elaborates

Jammu and Kashmir and Ladakh High Court
Case BriefsHigh Courts

Jammu and Kashmir High Court: While deciding the instant appeals which raised objections concerning the jurisdiction of the J&K High Court to hear and decide appeals arising out of the orders passed by the Jammu and Kashmir State Consumer Disputes Redressal Commission, in view of the application of the Jammu and Kashmir Reorganization Act, 2019 which repealed the erstwhile Jammu and Kashmir Consumer Protection Act, 1987; the Division Bench of Ali Mohammad Magrey and Vinod Chatterji Koul, JJ., held that that all the pending proceedings/ appeals arising out of the orders or awards passed by the erstwhile Jammu and Kashmir State Consumer Disputes Redressal Commission will continue to be heard and decided by the High Court as if the un-amended provision/ Act is still in force.

However, the Bench clarified that from now on all the fresh proceedings concerning consumer complaints/ grievances/appeals shall be dealt with as per the mode and method prescribed in the newly changed scheme of law as provided in the Jammu and Kashmir Reorganization Act, 2019.

As per the facts of the case, the complainant owned a residential building which he had insured with both; the National Insurance Company Ltd. and the Oriental Insurance Company Ltd. On 23-09-2002, some terrorists sneaked into his house. In the gun battle that ensued between the terrorists and the security personnel, the insured/complainant’s house was heavily damaged and was eventually razed to the ground in order to eliminate the terrorists. Complainant claims to have approached both the Insurance companies to depute surveyors on the spot. National Insurance Company Ltd. deputed an investigator to the spot, who, after making spot inspection, asked for certain documents from the complainant which were provided; however the complainant received no further information. The Oriental Insurance Company Ltd., however, did not depute any Surveyor to the spot; instead, a communication was addressed by the Company to the complainant informing him that the policy stood terminated from the date of its inception. Therefore, the complainant approached the then Jammu and Kashmir State Consumer Disputes Redressal Commission for relief. As per the Commission’s assessment, the total liability was fixed to Rs. 15 Lakhs which was to be shared by both the Insurance companies. Complainant, being dissatisfied with the said order, has filed the appeal seeking enhancement of compensation in his favour. Hakim Suhail Ishtiaq, appearing on behalf of the complainant, submitted that the Commission, while passing the impugned order, did not appreciate the evidence on record in its true and correct perspective. J. A. Kawoosa, representing the National Insurance Company Ltd., argued that the impugned order passed by the Commission is contrary to law. Whereas N. H. Khuroo, appearing on behalf of the Oriental Insurance Company Ltd., challenged this Court’s jurisdiction to hear and decide these appeals in view of the application of the Jammu and Kashmir Reorganization Act, 2019. Counsels for both the Insurance companies contended that the insured/complainant had effected the insurance without disclosing vital material facts like the occupation of the premises by the terrorists as well as the existence of the simultaneous policy of insurance obtained from the other Insurance Company, thereby violating the principle of ‘uberrima fidei’.

Examining the facts of the case and the contentions raised by the parties, the Court observed that issue pertains to the nature of the disclosure made by the insured/ complainant in the proposal form and its impact on the entire process of invitation and acceptance of the offer. The relationship between an insurer and the insured is recognized as one where mutual obligation of trust and good faith are paramount. The Court upon perusing the evidences noted that the insured did make lapses in revealing certain vital information regarding the premises.

Thus, Bench held that the Commission had erred in properly appreciating the evidence on record, therefore its impugned order granting the compensation of Rs 15 lakhs to the complainant was set aside.[Sajad Ahmad Malik v. Divisional Manager, National Insurance Company Ltd., 2020 SCC OnLine J&K 299 , decided on 22-06-2020]

Tripura High Court
Case BriefsHigh Courts

Tripura High Court: Akil Kureshi, CJ., dismissed an appeal filed aggrieved by the order of the Motor Accident Claims Tribunal by the insurance company.

The original claimant had been travelling on a motorcycle as a pillion rider when the vehicle collided with a four-wheeler of TATA ACE make coming from the opposite direction and the claimant suffered serious bodily injuries. The doctors had opined that he had suffered permanent partial disability of 45% of the body as a whole and he would be seriously restricted in his movement and work. The Claims Tribunal had awarded total compensation of Rs 25,55,520 under various heads including the pain, shock and suffering, medical treatment, etc considering the fact that he was a private doorstep banking officer drawing a salary of Rs 12,592. The insurance company had mainly contested the computation of compensation for future loss of income and questioned him about the employment in the said bank. The Member Secretary-cum Locomotor Specialist at the District Disability Medical Board certified that claimant was suffering from locomotor disability in the right leg resulting into permanent disability of 45% and it was a non-progressive injury which meant that the patient would not be able to perform any physical activity standing up without any exterior support for the rest of his life.

The Court while dismissing the appeal and agreed with the view of the Tribunal that such disability had resulted into at least 50% reduction in the earning capacity of the claimant and his job was private one and did not have any security and his potential for reemployment had also come down thus the Tribunal had rightly applied the formula for future rise and multiplier as suggested by the Supreme Court the in case of Sarla Verma v. DTC, (2009) 6 SCC 121. [National Insurance Company Ltd. v. Chittu Das, 2020 SCC OnLine Tri 93, decided on 14-02-2020]

Case BriefsHigh Courts

Karnataka High Court: H.T. Narendra Prasad, J. while allowing the appeal in part and condoning the delay ordered that the claimant was not entitled to the interest for the delayed period of 358 days.

This Miscellaneous First Appeal was filed under Section 173(1) of Motor Vehicles Act, 1988 seeking enhancement of compensation as the Motor Accident Claim Tribunal granted the compensation of Rs 80, 340 with interest of 6% interest and fastened liability on the owner of the vehicle.

The claimants were on a two-wheeler motorcycle, in one moment a tempo driven in a rash and negligent manner coming from opposite side dashed against the motorcycle. Due to this, the claimant suffered grievous injuries.

Counsel for the appellant, Harish S. Maigur, referred a case of Rani v. National Insurance Company Limited, (2018) 8 SCC 492 in which was held that the insurance company has to pay award amount to the owner of the vehicle. After then, they can recover the same from the owner. The Counsel submitted in the light of this judgment that the Tribunal did not pay heed to this particular observation of the Supreme Court.

Counsel for Respondent 2-Insurance Company, G.N. Raichur, submitted that the permit of the Respondent 1 was not valid on the date of the accident. Hence, the Tribunal rightly passed the liability on the owner of the vehicle.

The Court agreed with the submissions of the parties but cited the aforesaid Judgment in which it was also held that even though the offending vehicle did not possess a valid permit to operate in the State concerned, the Insurance Company has to satisfy the award first. Thereafter, it can recover the same from the offending vehicle.

In view of the above, the Court modified the judgment and award of the Tribunal and directed the Insurance Company to pay the compensation with interest instead of the owner. Once, that is paid it can recover that amount from the owner of the vehicle. [Manjunath v. Mrityunjaya, 2019 SCC OnLine Kar 2098, decided on 16-10-2019]

Punjab and Haryana High Court
Case BriefsHigh Courts

Punjab and Haryana High Court: Lisa Gill, J. dismissed the appeal filed by insurance company challenging the amount of compensation granted by the Motor Accidents Claim Tribunal (‘MACT’).

In the present case, one Dalip Singh and Aslam (deceased), met with a motor vehicle accident which led to their fatal death. The MACT had awarded compensation to the families of both the deceased. Aggrieved thereby, the insurance company filed the present appeal stating that the said case did not fall under a motor vehicle accident and thus prayed for reducing the amount of compensation. Appeal was also filed by the claimants praying to increase the amount of compensation awarded.

In the appeal filed by the insurance company, the appellant contended that there was no evidence of a motor vehicle in the FIR, therefore, the respondents could not claim compensation for a motor accident. Also, the age of the deceased was wrongly concluded hence the amount of compensation must be reduced. Whereas in the appeal by the claimants, they contended for an increase in the compensation amount awarded by the Tribunal. However, they accepted the fact that the age of the deceased was wrongly concluded.

The Court after referring to all the facts, and hearing the witness with placed reliance on the judgment in Mangla Ram v. Oriental Insurance Company Ltd., (2018) 5 SCC 656 where it was opined that claimants in proceedings under the Motor Vehicles Act, 1988 have to prove their case on the touchstone of preponderance of probabilities and not beyond reasonable doubt.

It was held that the claimants had successfully proved the involvement of a vehicle and hence the judgment of the MACT was upheld. However, after analyzing the facts and the on consideration of a change in the age of the deceased, the Court reduced the amount of compensation.[IFFCO Tokio General Insurance Co. Ltd. v. Asha Devi, 2019 SCC OnLine P&H 1403, decided on 22-07-2019]