Case BriefsHigh Courts

Rajasthan High Court: P.K. Lohra J., in an appeal under Section 173 of the Motor Vehicles Act, 1988 upheld the decision of the impugned judgment and directed the insurer to first pay the compensation amount to the claimants and then recover from the insured.

In the present case, the appellants being Megma HDI General Insurance Company Limited had appealed before the High Court challenging the judgment and award passed by the Motor Accident Claims Tribunal, Jodhpur. The Tribunal had absolved the appellants herein from the liability to pay compensation to the claimants and the onus was on the owner of the vehicle. However, it had directed the appellants to pay the compensation to the claimants first and thereafter claim the amount from the owner of the vehicle, the insured.

Challenging this above order, the counsel representing the appellants, Dhanpat Choudhary, placed reliance on the Supreme Court judgment National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297 and submitted that the tribunal erred in ordering the appellants to first pay the compensation to the claimants and thereafter recover it from the insured party.

The High Court, after perusal of the Tribunal’s order, referred to the Supreme Court judgments in Pappu v. Vinod Kumar Lamba, (2018) 3 SCC 208 and Amrit Paul Singh v. Tata AIG General Insurance Co. Ltd., (2018) 7 SCC 558 wherein it was held that in case of any loss to the third party, the insurer is first required to pay compensation to the claimants and then recover the same from insured. It stated that the Tribunal had absolved the appellants from the duty due to the insured party not complying with the insurance policy but in order to mitigate the hardship of the claimants, the Tribunal directed the appellants to recover the compensation amount from the insured after paying the same to the claimants. The appeal was dismissed.[Megma Hdi General Ins. Co. Ltd. v. Likhama Ram, 2019 SCC OnLine Raj 1292, decided on 05-07-2019]

Case BriefsHigh Courts

Himachal Pradesh High Court: Jyotsna Rewal Dua, J., partly allowed an appeal and declared that insurance company does not have the right to absolve itself from payment of compensation in absence of valid registration number.

In the present case, due to rash and negligent driving of respondent, an individual named Shri Ram Krishan died on the spot and the other passengers suffered injuries. The family members of the deceased filed for a claim petition under the Motor Vehicles Act, 1988 (‘Act’). The Learned Motor Accidents Claims Tribunal had awarded the claimants a compensation amount and the respondents did not challenge the award hence the award was pronounced ex parte. The tribunal had taken note of the fact that the driver was carrying a valid driving license at the time of the accident and thereby directed the insurance company to satisfy the award fastened upon the insured. The Insurance Company had submitted a reply stating that the vehicle did not have a registration certificate at the time of the accident; thereby the company shall be absolved from the onus of payment of compensation amount due to violation of the insurance policy. However, the issue was not argued before in the lower court and thus due to the issue involving questions of law and evidence the High Court has dealt the matter at length.

The counsel representing the appellant/Insurance Company, Jagdish Thakur submitted that the vehicle was unregistered according to the Chapter IV of the Act thus they were not liable to discharge the compensation amount as awarded by the Tribunal. The appellant placed reliance on Narinder Singh v. New India Assurance Company Ltd., (2014) 9 SCC 324 in support of his argument that plying of vehicle without valid registration number amounts to a fundamental breach in policy. The appellant had also questioned the computation of the award, stating that there were no documentary evidences to the income of the deceased and thus the learned tribunal erred in assuming the income.

The counsel representing the respondents, G.S. Palsra contended on this point that the precedent referred to by the appellants shall not be applicable in the present case due to the present matter dealing with third party liability.

The High Court upon perusal of the impugned judgment, award and the evidences produced, stated that an Insurance Company cannot exonerate itself from its duty to pay the compensation amount simply because the vehicle did not bear a permanent registration number in the cases of third-party liability. The Court stated that the Supreme Court decision in Narinder Singh dealt with cases of claims made by the owner of the vehicle, whereas the present case dealt with claimants being the dependents of the deceased-third party. It pointed out that “when the vehicle was insured towards third party liability, it was done so on the basis of engine number and chassis number. These numbers were duly mentioned in the insurance policy. The insurance is a contract between the insured and the insurer. It was not insured on the basis of temporary registration number or the permanent registration number.” The Court also noted that there was no connection between the cause of the accident and the registration/non-registration of the vehicle. However, placing reliance on the decisions in Shamanna v. Oriental Insurance Co. Ltd., (2018) 9 SCC 650 and Amrit Paul Singh v. TATA AIG General Insurance Co., (2018) 7 SCC 558, the present bench stated that the Insurance company can recover the compensation amount from the insured through the principle of “pay and recover” as laid down in the above precedents.   With regard to the issue of income of the deceased, the Court, due to lack of evidence, took into consideration the minimum wages of the year of the accident and accordingly delivered the calculation.[National Insurance Company Ltd. v. Kamal Kishore, 2019 SCC OnLine HP 932, decided on 05-07-2019]

Case BriefsHigh Courts

Bombay High Court: Sunil K. Kotwal, J., allowed SBI Insurance Co. (insurer) to recover, from the owner of the offending bus (insurer), the amount paid to a third party claimant) under a policy which was cancelled by the insurer on account of non-payment of the premium amount by the insured.

An accident occurred between a motorcycle and the offending bus, as a result of which the driver of the motorcycle passed away. A claim petition was filed by the claimants under which an award was passed by the Motor Accident Claims Tribunal. The insurer paid the claim amount in the discharge of its liability towards the claimant. It, however, claimed to recover the said amount from the insured. Insurer’s case was that the insured issued a cheque in his favour towards payment of the insurance premium for the policy taken on 10-11-2015. The accident occurred on 19-11-2015. Pertinently, the cheque issued by the insured towards payment of premium got dishonoured by the bank and, therefore, the insurer cancelled the policy on 14-12-2015. As such, the insurer claimed recovery of the amount paid to the third party.

After perusing the authorities cited, the High Court was of the opinion that in such type of cases, if the policy is cancelled before the accident occurs, then the insurer is not liable to pay compensation to the claimant. However, if the policy is cancelled after the accident happens, then he is so liable. But, in the latter category of cases, the insurer is entitled to recover the amount so paid to the claimant from the insured. It was observed that a contract of insurance between an insurer and an owner of the offending vehicle includes reciprocal promised by both the parties. In such view of the matter, the owner of the offending bus (insured) was directed to pay back the amount of the award to the insurer along with interest thereon. [SBI Insurance Co. v. Madhubala, 2019 SCC OnLine Bom 639, decided on 15-04-2019]

Case BriefsHigh Courts

Delhi High Court: I.S. Mehta, J. dismissed an appeal filed by the claimant against an award of compensation granted in a motor accident’s claim by the Presiding Officer, Motor Accidents Claim Tribunal-2 (Central), Tis Hazari Courts.

Bhagwat Prasad was crossing a road when he was hit by a motorcycle. He filed a claim petition against the driver of the motorcycle as also the insurer. The Tribunal awarded a compensation of Rs 1,46,572 plus interest to Bhagwat Prasad. Not satisfied with the quantum of compensation, he filed the present appeal.

D.S. Bhandari, Advocate for Bhagwati Prasad challenged the award on various grounds including that the Tribunal did not award any compensation towards loss of income due to inability. Per contra, Pankaj Gupta for Suman Bagga, Advocates representing the insurer supported the Tribunal’s order.

The High Court noted that Bhagwat Prasad relied upon his disability certificate of 42% which was not permanent disability. This, according to the Court, disentitled him for compensation towards loss of income. In view of the Court, the same also disentitled him for compensation towards future treatment. As far as the plea regarding the loss of disfigurement is concerned, the Court observed, “the same losses its significance, as, the injuries on the person is a temporary fracture…As such fracture on the ankle is not permanent in nature and is curable. The same cannot be classified as disfigurement injury which could be a stigma in the society and a factor to lower down his position in the society. Therefore, appellant is not entitled to any compensation towards disfigurement.”Finding no infirmity in the impugned award passed by the Tribunal, the Court dismissed the present appeal. [Bhagwat v. Laxman, 2019 SCC OnLine Del 7339, decided on 26-02-2019]

Case BriefsHigh Courts

Punjab and Haryana High Court: This appeal was filed before a Single Judge Bench of Lisa Gill, J., by the Insurance Company challenging its liability to pay compensation to the claimants which was awarded by the Motor Accident Claims Tribunal.

Facts of the case were that the claim petition was filed under Section 166 of the Motor Vehicles Act, 1988, by the claimant-respondent and the same was decided by the Tribunal and compensation of Rs 2,89,012 along with interest at the rate of 6% per annum was awarded on account of injuries received by respondent in the motor vehicle accident. Appellant i.e. the insurance company contended that the Tribunal erred in holding that a valid driving license was present with the driver of the offending vehicle. Offending vehicle being a bus. It was further submitted that ‘unladen weight’ and ‘gross vehicle weight’ are distinct from each other. And according to the driving license he was not entitled to drive the bus.

High Court observed that the driving license found with the offending vehicle’s driver was valid for a transport vehicle. The appellant had failed to show that the driving license was valid for driving of Light Motor Vehicle Non-Transport, Transport Vehicle and Light Motor Vehicle CAB. It was also observed that the distinction between the ‘unladen weight’ and the ‘gross vehicle weight’ was irrelevant. Since appellant had failed to show that respondent was carrying an invalid driving license the appeal should be dismissed. Therefore, on finding no ground to interfere in the impugned order, this appeal was dismissed. [United India Insurance Co. Ltd. v. Gurchain Singh, 2018 SCC OnLine P&H 2723, decided on 20-12-2018]

Case BriefsHigh Courts

Kerala High Court: A Full bench comprising of V. Chitambaresh, P.B. Suresh Kumar and Sathish Ninan, JJ. while answering a reference ruled that the burden to prove non-receipt of insurer’s letter of cancellation of insurance lies on the insured.

The liability of an insurer to indemnify third parties subsists unless the insurance coverage is cancelled by him (for reason such as dishonour of cheque given by insured towards premium) and intimation of cancellation has reached the insured and the registering authority.

The sole question referred to the Full Bench for determination was as to on whom does the burden lie to prove that the insurer has intimated about cancellation of insurance. Is it sufficient if it is proved that the insurer has sent intimation about cancellation of insurance coverage to the insured and the registering authority; or is it necessary to prove that the addressees have received the same?

The Court remarked that the fundamental difference between speed post and registered post was that while the former was address specific and time bound, the latter was addressee specific. Thus, the surest way to prove that intimation about cancellation of insurance had been sent by the insurer was to dispatch it by registered post with or without postal acknowledgment. Since Section 27 of the General Clauses Act, 1897 raises a presumption in favour of the sender for a properly addressed and prepaid post, therefore production of the receipt evidencing dispatch by registered post raises a presumption in favour of the insurer that the intimation has been sent to the addressee for secured delivery.

In view of the above, the reference was answered holding that the burden to rebut the presumption in favour of insured by conclusive evidence lay on the addressee. It was for the addressee/ insured to prove that he did not receive insured’s letter of cancellation and that the same was not a case of deliberate avoidance.[Prasanna B. v. Kabeer P.K.,2018 SCC OnLine Ker 4929, Order dated 31-10-2018]

Case BriefsHigh Courts

Kerala High Court: A Full Bench of Kerala High Court comprising of CJ Hrishikesh Roy P.R. Ramachandra Menon, A.K. Jayasankaran Nambiar, Anil K. Narendran and Devan Ramachandran, JJ. while a reference held that non-possession of a valid fitness certificate for a vehicle constitutes fundamental breach of insurance policy, entitling the insurer to exercise ‘pay and recover’ option in compensation cases arising out of accidents caused by such vehicles.

The five-judge bench was considering the correctness of a three-judge bench judgment in Augustine v. Ayyappankutty, 2015 SCC OnLine Ker 14898 where it was held that absence of permit/ fitness certificate to a transport vehicle is only a technical breach.

The Court went through the provisions of the Motor Vehicles Act, 1988 (MV Act) dealing with requirement of permits and/ or fitness certificate and discerned the intention of Legislature behind incorporating the said provisions.

It was noted that as per Section 149(2)(c) of MV Act, an insurer is not bound to pay the insured amount in case the vehicle being used does not have a valid transport permit. Section 66 stipulates that any registered motor vehicle must have a valid permit in order for putting the same on road. The necessity of having a ‘certificate of fitness’ is prescribed under Section 54, and Section 56 of the MV Act also states that a transport vehicle will not be deemed as validly registered if it does not possess a certificate of fitness. Section 84 prescribes general conditions attached to all permits; and Rule 47(1)(g) of the Central Motor Vehicles Rules, 1989 stipulates that an application for registration of a vehicle must be mandatorily accompanied by a road worthiness certificate.

The Bench observed that “Certificate of Registration, existence of valid Permit and availability of Fitness Certificate, all throughout, are closely interlinked in case of a transport vehicle and one requirement cannot be segregated from another”. It was
noted that the abovementioned provisions clearly substantiated the importance and necessity of having a fitness certificate to a transport vehicle at all times. Assurance of a vehicle being completely fit to be plied on the road assumes importance in relation to the life and limb of people traveling in the vehicle, pedestrians, and other vehicles.

Relying on the aforesaid reasoning and judgment of the Apex Court in Amrit Paul Singh v. TATA AIG General Insurance Co. Ltd., (2018) 7 SCC 558 the High Court held that any lapse by the owner of the vehicle in relation to possession of a valid fitness certificate would amount to a fundamental breach enabling the insurer to recover the relevant amount from the insured. On that holding, the judgment in Augustine v. Ayyappankutty, 2015 SCC OnLine Ker 14898 was set aside. [Ramankutty v. Pareed Pillai,2018 SCC OnLine Ker 3542, decided on 09-10-2018]

Case BriefsHigh Courts

Delhi High Court: A Single Judge Bench comprising of Sunil Gaur, J. allowed an appeal filed against the order of the Motor Accident Claims Tribunal whereby the compensation awarded was ordered to be recovered from the appellant – owner of the insured vehicle involved in an accident.

Brief facts of the case are that on the fateful day, one Manoj Sharma was driving his motorcycle when he was hit by a water tanker being driven in a rash and negligent manner. The said water tanker was owned by the appellant. As a result of the accident, said Manoj Sharma died. On filing of the claim petition by the claimants under Sections 166 and 140 of the Motor Vehicles Act 1988, the Tribunal awarded a compensation of Rs 11,83,400 (which was subsequently increased to Rs 23,79,000 in an appeal connected with the instant appeal). The owner of the insured vehicle challenged the order on the ground that the Tribunal had erroneously granted recovery rights to the insurer.

The High Court perused the record and found that the insured vehicle was granted contract for watering of plants by the Delhi Government. The Court also referred to Section 66 of the Act. In view of the Court, since the insured vehicle was plying for the purpose of watering plants and for conservancy purpose in pursuance of the contract awarded to the owner, so, in light of sub-section 3(b) of Section 66, the requirement of obtaining permit was dispensed with. In such circumstances, the grant of recovery rights to the insurer could not be sustained. The order impugned was accordingly modified while putting full liability on the insurer to pay the compensation. The appeal was disposed of in the terms above. [Jagjeet Singh v. United India Insurance Co. Ltd., MAC Appeal No. 228 of 2013, dated 20-08-2018]

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): A Singh Member Bench of V.K. Jain, Member, dismissed a revision petition filed against the order of the U.P. State Commission, whereby petitioner-company was directed to pay the claim amount to the Respondent 1.

The main issue that arose before the Commission, in this case, was whether the petitioner company was liable to pay the entire insurance claim to the respondent even though there was a delay in filing of claim.

The Commission observed that from bare perusal of the insurance policy it becomes clear that the amount of insurance claim that the respondent was entitled to receive was Rs. 2 lacs and not Rs. 50,000. Further, the Commission observed that though the claim was to be filed within 30 days or at best 45 days from the death of Respondent 1’s husband, however, the respondent was not given a chance to explain the delay caused in submitting the claim.

The Commission held that as per Circular No. IRDA/HLTH/MISC./CIR/216/09/2011, issued by the Insurance Regulatory and Development Authority (IRDA), a genuine claim cannot be outrightly rejected on the ground of delay. The Commission further held that the insurer is required to enquire from the claimant as to what was the reason for the delay in submission of the claim and the claim should be rejected only where the insurer finds that it was liable to be rejected even if it had been submitted in time. Since no such opportunity was granted to the respondent, the decision of the State Commission was upheld and the revision petition was dismissed. [National Insurance Co. Ltd. v. Hukam Bai Meena,2018 SCC OnLine NCDRC 328, Order dated 01-08-2018]

Case BriefsSupreme Court

Supreme Court: A.M. Khanwilkar, J. delivered the judgment for CJ Dipak Misra and himself whereby the matter concerning the liability of the insurer to pay compensation in a motor accident claim was remanded back to the Allahabad High Court.

Respondents 1-5 filed a claim before the Motor Accident Claims Tribunal consequent to the death of one Sanoj Kumar. The deceased was going for morning walk when he was hit by a Bolero loader driven in a rash and negligent manner. The Tribunal absolved the liability of the insurer – Oriental Insurance Co. – on the finding that the driver of the said vehicle did not have a valid driving licence. However, the insurer was directed to compensation amount as determined with a liberty to recover the same from the owner and driver of the vehicle The said decision was affirmed by the High Court. Being aggrieved, the appellant – owner of the vehicle – filed the instant appeal.

The question before the Supreme Court was that ‘whether the Tribunal was right in holding that the insurer was not liable as the driver had a fake licence?’ The Court referred PEPSU Road Transport Corpn. v. National Insurance Co., (2013) 10 SCC 217 and Premkumari v. Prahlad Dev, (2008) 3 SCC 193. It was observed to be well established that if the owner was aware of the fact that the licence was fake and still permitted the driver to drive the vehicle, then the insurer’s liability would stand absolved. However, the mere fact that the driving licence is fake, per se, would not absolve the liability of the insurer. It was noticed that, in the present case, neither the Tribunal nor the High Court made any attempt to analyse as to whether the appellant was aware of the fake driving licence possessed by the driver. In such circumstances, the Court deemed it appropriate to relegate the parties before the High Court for fresh consideration of the matter only on question of liability of the owner or of the insurer to pay compensation. The appeal was disposed of in the terms above. [Ram Chandra Singh v. Rajaram,2018 SCC OnLine SC 959, dated 14-08-2018]