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 BriefsSupreme Court

Supreme Court: The bench of Sanjay Kishan Kaul and R. Subhash Reddy, JJ has issued directions with respect to motor vehicle accident claims and has said that the said “directions will apply across the country so that a uniform practice is followed.”

Here are the detailed directions:

  1. Accident Information Report- The jurisdictional police station shall report the accident under Section 158(6) of the Motor Vehicles Act, 1988(Section 159 post 2019 amendment) to the tribunal and insurer within first 48 hours either over email or a dedicated website.
  2. B. Detailed Accident Report- Police shall collect the documents relevant to the accident and for computation of compensation and shall verify the information and documents. These documents shall form part of the Report. It shall email the Report to the tribunal and the insurer within three months. Similarly the claimants may also be permitted to email the application for compensation with supporting documents, under Section 166 to the tribunal and the insurer within the same time.
  3. The tribunal shall issue summons along with the Report or the application for compensation, as the case may be, to the insurer by email.
  4. The insurer shall email their offer for settlement/response to the Report or the application for claim to the tribunal along with proof of service on the claimants.
  5. After passing the award, the tribunal shall email an authenticated copy of the award to the insurer.
  6. The insurer shall satisfy the award by depositing the awarded amount into a bank account maintained by the tribunal by RTGS or NEFT. For this purpose the tribunal shall maintain a bank account and record the relevant account details along with the directions for payment to the insurer in the award itself.
  7. Each tribunal shall create an email ID peculiar to its jurisdiction for receiving the emails from the police and the insurer as mentioned above. Similarly, all insurer throughout India shall also create an email ID peculiar to the jurisdiction of each claim tribunal. These email IDs would be prominently displayed at tribunal, the police stations and the office of the insurers for the benefit of the claimants. Similarly, these email IDS shall also be prominently displayed on the website maintained by the tribunal and the insurer.
  8. Insurers shall appoint nodal officers for each tribunal and provide their contact details, phone and mobile phone numbers, and email address to Director Generals of State Police and the tribunals.

The Court was also of the opinion that the Central Government shall develop an online platform accessible to the tribunals, police authorities and insurers throughout India, as each State having an independent online platform for submission of accident reports, claims and responses to claims, will hamper efficient adjudication of claims, especially where the victim of the accident is not a resident of State where accident has occurred. It, however, refrained from passing any directions on the same for the time being after the ASG submitted that some more time may be required to work out the time period within which they can be implemented and the necessary infrastructure for the same created for which some more discussions are required.

The Court is due to take up the matter again after the summer break.

[Bajaj Allianz General Insurance Company Private Ltd. v. Union of India, 2021 SCC OnLine SC 418, order dated 16.03.2021]

Amicus Curiae: Mr. Narasimhan Vijayaraghavan, AC, Mr. Vipin Nair, AOR

For Petitioner(s): Ms. Meenakshi Arora,Sr. Adv.

Mr. Siddharth, AOR

Mr. Amit Kumar Agrawal, Adv.

Ms. Mamta Meghwal, Adv.

For Respondent(s):  Mr. J.K. Sud, Ld. ASG

Ms. Garima Prashad, Adv.

Mr. Bhuvan Mishra, Adv.

Mr. Navanjay Mahapatra, Adv.

Ms. Sanya Sud, Adv.

Mr. Randeep Sachdeva, Adv.

Mr. Harish Nadda, Adv.

Mr. Raj Bahadur Yadav, Adv.

Mr. G.S. Makker, Adv.

Mr. B.V. Balram Das, Adv.

Case BriefsHigh Courts

Allahabad High Court: Dr Kaushal Jayendra Thaker, J., held the employer and the insurance company liable to pay interest on the amount which was awarded by the Labour Commissioner to the claimants under the Employees’ Compensation Act, 1923, but which was not paid by the employer and the insurance company within one month from the date when it felt due.

The High Court admitted the appeal on the limited question of law framed as follows:

Whether the Commissioner has committed an error of law in not granting any interest despite the fact that the claimants were held entitled to compensation?

The appeal

The present appeal was filed by the claimants challenging the judgment and award dated 16-3-2020 passed by the Commissioner, Employees Compensation Act and the Assistant Labour Commissioner, Muzaffarnagar, in an Employees Compensation Case, awarding a sum of Rs 8,47,160. Since the facts, quantum and liability have attained finality, the appeal was heard and decided only on the question of law mentioned above.

The claimants were represented by Satya Deo Ojha, Advocate; while Pawan Kumar Singh, Advocate, appeared for the respondent-insurer.

Analysis and decision

At the outset, it was noted by the High Court that the employer and the insurance company had not deposited the amount nor it paid the amount within one month from when it feel due. The Court stated:

The Tribunal could have exonerated them for penalty but should the insurance company and the owner be not made liable for payment of interest on the amount accrued after one month of payment is the question posed to decision for not granting interest.

After noting the submission of claimants that no reasons were assigned by the Comissioner for not awarding the interest, the High Court answered that in Section 4-A (“compensation to be paid when due and penalty for default”) of the Employees’ Compensation Act, 1923, the word used is “shall” and therefore amount awarded shall carry 12% interest as per the statute. It was directed that the amount be deposited on or before 20-2-2021.

The Commissioner too was directed to be more vigilant in future and if they feel, interest is not to be granted, they shall record reasons for the same and if they come to the conclusion that amount has been paid on the date of award, the same shall carry interest as per statute. The present order is directed to be circulated to all the Commissioners in State of Uttar Pradesh. [Miskina v. HDFC Ergo General Insurance Co. Ltd., First Appeal from Order No. 1538 of 2020, decided on 26-11-2020]

Case BriefsHigh Courts

Madras High Court: In the instant case where the issue revolved around the applicability of TDS on interest in Motor Accident Claims; the Single Judge Bench of N. Anand Venkatesh, J., while observing that the issue has become complicated owing to the fact that there are conflicting decisions on the same, decided that the matter must be referred to a larger Bench for resolution and clarity, as all the stakeholders have serious interests requiring immediate attention.

As per the facts, the present appeal was filed against an award for Rs 10, 46,200 with interest at 9% p.a. from date of claim, in favour of the victim/ claimant who suffered grievous injury. The appellants drew the attention of the Court to their dilemma regarding the applicability of TDS under Section 194 A of the Income Tax Act, 1961. It was contended by the appellants that while satisfying the award, the interest liability would be subject to Tax Deducted at Source (TDS) under the aforementioned statutory provision. It was brought before the Court that the legal position in Tamil Nadu suggests that in cases where the insurer satisfies the award and deducts TDS, they face the prospect of attachment by way of execution petitions. On the other hand, if the insurer does not apply TDS, they run the risk of facing penalty under Section 201 of Income Tax Act, 1961. Therefore the appellants sought the guidance of the Court in getting them out of this “between the devil and the deep sea” situation and to make it clear as to which of the two courses they should embrace in this case.

The Court sought the assistance from R. Sankaranarayanan, V. Lakshminarayanan, M.B. Raghavan and N.P. Vijayakumar, all acting in the capacity of amicus curiae. The Court referred to it’s previous decision in New India Assurance v. Mani 270 (2004) ITR 394 Mad, where the order of attachment and direction to pay the TDS amount were set aside. Then in TNSTC v. Chinnadurai, 2016 SCC OnLine Mad 3494, ruled that TDS in Motor accident claims was inapplicable; however the Income Tax Department which had a vital interest in the issue was not heard in the case. The Court also took into consideration the decisions of other High Courts and pointed out that there was a lack of consistent application of the law. The Court noted the submissions made by the Income Tax Department counsel J.Narayanaswamy that there was no judgment of a larger bench on this tax issue and clarity is required with regard to the interpretation and applicability of Section 194 A, as it would help not only the claimants but also the respective insurance companies, other entities and also the Income Tax department for a consistent and uniform approach.

Observing the stakes involved and lack of uniformity in the application of Section 194 A, the Court was convinced that the matter needs to be resolved by a Larger Bench of this Court. The Court also put forth a suggestion for the Larger Bench to consider the changes introduced by the Parliament, in Chapter XI of the Motor Vehicles Act, 1988 for the benefit of the accident victims. Keeping in mind the peculiar circumstances of the case, the Court directed the insurance company to deposit the entire award sum without applying any TDS; and that all pending Execution Petitions in Tamil Nadu relating to issue of TDS under Section 194 A, irrespective of their stage, shall stand stayed to await orders from the larger bench on the issue.[Cholamandalam General Insurance Co. Ltd. v. M. Ashok Kumar, 2020 SCC OnLine Mad 1011, decided on 14-05-2020

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]

Patna High Court
Case BriefsHigh Courts

Patna High Court: S. Kumar, J. dismissed the appeal filed by the insurance company on the grounds that the parties were liable severally as well as jointly. Although the company had the right to recover such compensation paid from the other party involved in the accident for which insurance was being claimed.

A miscellaneous appeal was filed under Section 173 of Motor Vehicle Act by the appellant against the Judgment and Award passed by the 1st Additional District Judge-cum-Motor Accident Claim Tribunal, Saran at Chapra in Claim Case No. 22 of 2002, by which the learned Claims Tribunal directed the appellant to pay a sum of Rs 3,50,000 to the claimant with interest @ 6 % per annum from the date of claim case till its realization.

The claimant was the husband of one Parwati Devi who died in a motor accident while travelling on a Commander Jeep which collided with another Commander Jeep on 19-09-2001 at about 10:00 PM The deceased was seriously injured and while she was being taken to hospital she succumbed to the injuries. An FIR was instituted under Sections 279, 338 and 304-A of the Penal Code against the drivers of both the vehicles and after investigation the police found the case to be true against drivers of both vehicles.

The appellant had appeared and had filed their written statement in which they denied the claim of claimants. The tribunal, after having examined the material brought on as evidence, held that the deceased died due to rash and negligent driving by the drivers of both vehicles and there was composite negligence on part of both the drivers. The Tribunal had further held that it was a case of composite negligence and the claimant was entitled to claim the compensation amount from either the owner or the insurer of the vehicle and had directed the appellant who was the insurer, to pay compensation.

High Court did not find any error or infirmity in the order passed by the tribunal and as such present appeal was dismissed as a liability to pay the compensation was joint and as well as several. However, since there was a specific finding of the tribunal that there was composite negligence on part of drivers of both the vehicles as such the appellant was entitled to recover 50% of the compensation amount paid to the claimant from the owner /insurer of the other offending vehicle.

In view of the above noted facts, the instant appeal was dismissed with the directions that the insurance company had to pay the balance claim amount with interest @ 6% from the date of presentation of claim till its realization within one month from the receipt of a copy of order passed by the court with a right of recovery of 50% of the compensation amount so paid from the owner /insurer of the other offending vehicle.[New India Assurance Co. Ltd v. Kanchan Bhagat, 2019 SCC OnLine Pat 1737, decided on 02-09-2019]

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]

Punjab and Haryana High Court
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]

Kerala High Court
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]

Kerala High Court
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]

National Consumer Disputes Redressal Commission
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]