Dilip and another vs State of Madhya Pradesh

The present Misc. Appeal under Section 173 of the Motor Vehicle Act, 1988 has been preferred by the appellant/Insurance Company against the award dated 31/07/2003 passed by Third Motor Accident Claims Tribunal (fast track), Dabra, District-Gwalior in Claim Case No.18/2003 wherein award of Rs.1,46,000/- has been passed in favour of the claimant/respondent No.1.

Fact of the case in brief are that due to an accident occurred on 31/10/2000 at about 10:30 am, victim-Sunny @ Sanjay sustained injuries and therefore, a claim case has been filed for compensation under the provisions of Motor Vehicle Act, 1988 (for short "Act of 1988).

The owner of vehicle (Sonalika Tractor) bearing Engine No.4095F2FO 1578, chassis No.00052221546 took the shelter of Insurance Company on the ground that on 30/10/2000, a cover note was issued by the Insurance Company and in pursuance to that vehicle (Tractor) was insured from 31/10/2000 to 30/10/2001. Because of the fact that cover note indicates the time at 4:40pm from 31/10/2000 therefore, according to counsel for appellant, insurance policy started w.e.f. 4:40pm on 31/10/2000 and as the accident/incident happened prior to 4:40pm on 31/10/2000, therefore, does not entail any liability over the Insurance Company and therefore, Insurance Company is not liable to pay any compensation in respect of injuries sustained by respondent No.1/victim.

According to counsel for the appellant/Insurance Company, accident took place at about 10:30am on 31/10/2000 and insurance policy was commenced w.e.f. 4:40pm on 31/10/2000 therefore, Insurance Company is liable to be exonerated. In support of his contention he referred the judgment of the Hon''ble Apex Court in the matter of J. Kalaivani and Other, 2002 ACJ 613.

Another argument learned counsel for the appellant raises in respect of breach of policy conditions; as according to him at the time of accident, driver of the vehicle did not carry valid licence and therefore, order to pay and recover passed by the tribunal ignores the said aspect and caused illegality.

Another ground learned counsel for the appellant raises is in respect of quantum. According to him, age of the injured was 8 years old at the time of accident and therefore, multiplier to be applied as per the Scheduled provided in the Act of 1988 is 15; whereas tribunal has taken the multiplier as 18 therefore, the calculation was not proper regarding compensation

On the other hand, learned counsel for respondent No.1/claimant opposed the prayer made by learned counsel for the appellant and submits that respondent No.1 suffered grievous injuries and sustained 50% permanent disability in the right leg and considering the expenses incurred in pain and agony and future prospects, the said award of Rs.1,46,000/- is on lower side. He referred the crossobjection preferred by him vide I.A. No.1286/2017 alongwith application under Section 5 of Limitation Act vide I.A. No.1287/2017 and submits that the awarded amount is liable to be enhanced looking to the future prospects of respondent No.1. He referred the judgment of the Hon''ble Supreme Court in the matter of United India Insurance Co. Ltd. Vs. B.S. Prasad and Another, 2012 ACJ 1476 as well as Zameer Ahamed Vs. B.R. Narayan Setty and Another 2012 ACJ 1322.

Learned counsel for respondents No. 2 and 3 (owner and driver) also opposed the prayer made by counsel for the appellant/Insurance Company and submits that there is no question of pay and recover exists in the present case because once the Insurance Company has issued a cover note, then it is the responsibility of the Insurance Company to bear the liability of the contract started then and there only. According to him, owner of the vehicle had paid premium on 30/10/2000 itself and the cover note was issued on 30/10/2000 and therefore, liability of the company starts from 30/10/2000 itself. He referred the judgment of the Hon''ble Apex Court in the matter of Oriental Insurance Co. Ltd. Vs. Dharam Chand and Others, 2010 (4) ACJ 2659.

On the point of breach of policy conditions, learned counsel for respondents No.2 and 3 referred para 19 of the impugned award and submits that tribunal has rightly shifted the onus to prove regarding breach of policy condition over the Insurance Company. The Insurance Company came out with the plea regarding breach of policy condition as according to Insurance Company, driver of the vehicle did not posses valid licence. This allegation was to be proved by the Insurance Company by adducing cogent evidence in this regard, but by not doing so, tribunal has rightly fasten the liability over the Insurance Company, therefore, once the plea of breach of policy condition has been refuted by the tribunal then in that condition, no case for pay and recover exists for respondents No.2 and 3.

Besides that; learned counsel for the respondents No.2 and 3 raises argument that alongwith an application under Order XLI Rule 27 CPC (I.A. No.1286/2017), driving licence of the driver of the vehicle was preferred and the said application is pending consideration. Documents appended with the application categorically establishes the fact that driver has valid licence at the time of accident, therefore, according to him, no mileage can be gained by the Insurance Company on the basis of plea of breach of policy conditions. In support of his contention, he referred the judgment rendered by Hon''ble Apex Court in the matter of Rukmani and Others Vs. New India Assurance Co. and Others, (1998) 9 SCC 160, Narcinva V. Kamat and Another Vs. Alfredo Antonio Doe Martins and Others, 1985 ACJ 397, Babu Vs. Kacharu and Others, 2000 (3) T.A.C 199, as well as Smt. Sham Kunwar and Others Vs. Kamal Singh and Others, 2000 (1) TAC 129, Mohammed Aynuddin Vs. State of A.P., Jagdish Vs. Rajkumar, 2001 (1) MPWN 166. He prayed for dismissal of the appeal of the Insurance Company alongwith appellant No.1 and prayed that appeal filed by the owner vide M.A. No.746/2004 be allowed.

Heard learned counsel for the parties and perused the record.

The first question for consideration before this Court is; whether insurer i.e. appellant/Insurance Company is liable to pay compensation in the light of the fact that the cover note specifically denotes the commencement of Insurance policy and its coverage w.e.f. 4:40 pm on 31/10/2000. Before adverting to the legal pronouncement in this regard Section 64(V)(B) and its effect is to be seen. The said provision categorically stipulates that no risk to be assumed unless premium is received in advance:- No insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily payable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and until deposit of such amount as may be prescribed, is made in advance in the prescribed manner. It further stipulates that in the case of risk for which premium can be ascertained in advance, the risk may be assumed not earlier than the date on which the premium has been paid by cash or the cheque to the insurer. The said provisions is further unfolded through explanation- Where the premium is tendered by postal money order or cheque sent by post, the risk may be assumed on the date on which the money order is booked or the cheque is posted, as the case may be.

Considering the contents of Section 64 (V)(B) of the Insurance Act 1938 (for short "1938 Act") as well as while considering the said provisions in relation to relevant provisions of Act of 1988 which are part of social welfare legislature, as well as judgments of Hon''ble Apex Court as referred above, the picture emerges regarding liability of the Insurance Company for compensation. Because considering the said provisions, the Hon''ble Apex Court in the matter of Oriental Insurance Company (supra) has held that insurance must be deemed to have commenced from the time, when cheque was received and insurance company is liable to pay compensation, in case accident took place after the receipt of cheque and before issuance of policy.

The Division Bench of Karnataka High Court in the matter of Zameer Ahamed Vs. B.R. Narayan Shetty, 2012 ACJ 1322 while considering the said aspect has also held that Insurance Company cannot postponed assumption of liability after receipt of premium on the pretext of verification of vehicle and documents which should be done before receipt of premium. "The coverage of insurance for a motor vehicle would virtually stand on a different footing unlike in other types of contract of insurance. It is mandatory that the third party risk should be covered when a vehicle has to ply in a public place. The insurance company being a State authority doing business of insurance is duty-bound to honour and implement the provisions of law. Section 64-VB declares that insurer can assume the risk only upon the receipt of premium. Maybe, that in other types of contracts where insurance is sought, the insurer may have the discretion to enter into a contract or not. But in respect of motor vehicles there is no discretion on the part of the insurer. The insurance company has to enter into the contract and issue policy in accordance with law, if proper premium is paid. In the context of the said factual and legal situation, it is to be held that in contract of insurance in respect of motor vehicles, the issuance of policy becomes effective when premium is received. The insurer cannot postpone the assumption of liability after receipt of premium. The necessary verification of vehicle and the documents should be done before receipt of premium. However, under the said pretext the insurer cannot postpone the assumption of risk, other than from the date and time of receipt of premium."

Similarly, in the matter of Oriental Insurance Company Vs. Dharmchandra the order has been passed on the graceful concession of counsel for the Insurance Company. The said graceful concession connotes wider ramifications.

This Court cannot ignore the important aspect that the provisions of Motor Vehicle Act, 1988 which govern third party compensation to victims is a piece of benevolent legislation and/or social welfare measure. Therefore, whole controversy has to be seen in that perspective also.

Judgment relied upon by counsel for the appellant in respect of renewal of policy wherein policy contains a particular time for becoming effective but in the present case, cover note Ex.D-1 contains the time as 4:40pm and the reference of time is missing in the policy Ex.D-2, therefore, in the present case, it appears that cover note Ex.D-1 contains the time and at that time amount of Rs.548/- have been paid by the insured to the insurer therefore, from perusal of cover note it is apparent that payment of premium has been received by the Insurance Company and therefore, by the effect of Section 64(V)(B) of the Insurance Act and Section 147 of Motor Vehicle Act 1988, the Insurance Company is liable to pay the compensation to the victim/injured.

Another question for consideration is; whether in the given facts and circumstances of the case, breach of policy condition has been proved or not. Perusal of the impugned award reflects that burden was on the Insurance Company to prove about the breach of policy condition, but neither any document has been submitted, nor any evidence was led including the evidence of transport authority to establish the fact regarding breach of policy conditions by way of nonavailability of driving licence of the driver. If the Insurance Company contains that the driver of the vehicle has not valid licence the burden is on the insurance company to establish it. The burden cannot be discharged by the insurance company in a slip shod manner.

This view is supported by judgment of the Hon''ble Apex Court in the matter of Narcinva Vs. Kamat (supra), Rukmani and Others (supra) as well as judgments of this Court in the matter of Smt. Sham Kunwar and Others (supra) and Mohammed Aynuddin (supra).

In view of the said legal pronouncements, it can be safely inferred that insurance company in the present set of facts could not discharge the liability and therefore, tribunal has erred in coming to the conclusion that the case involves the breach of policy conditions and caused illegality.

One more aspect needs consideration is that respondents No.2 and 3 in the present case has moved an application under Order XLI Rule 27 CPC vide I.A. No.1286/2017 wherein driving licence of the driver of the vehicle has been produced which cannot be submitted before the tribunal due to inadvertence. This fact also assumes importance and negates the claim of the appellant/Insurance Company.

Another question for consideration before this Court is regarding quantum; respondent No.1 has filed a crossobjection under Order XLI Rule 22 CPC alongwith an application for condonation of delay under Section 5 of the Limitation Act on the ground that at the time of accident respondent No.1-Sunny @ Sanjay was a minor and therefore, after attainment of majority, he preferred an application under Order XLI Rule 22 CPC which is barred by 225 days. The said objection is not tenable at such belated stage and without going into the legality and maintainability of the application at such belated stage, this Court finds that tribunal has suitably compensated respondent No.1. Although learned counsel for the appellant pressed for arguments regarding application for multiplier wherein he contends that instead of multiplier of 18, multiplier of 15 is in accordance with the schedule appended with the Act of 1988. Even if the multiplier of 15 in the fact situation of the case is applied even then a marginal difference of around 22,000/- would take place which is on the lower side therefore, while holding that the suitable multiplier in the present case was of 15 and therefore, the amount is reduced under this head from 1,46,000/- to 1,24,000/- approximately but this Court increases the amount around 22,000/- under the head of pain and agony suffered towards attendant charges, hospitalization and medicine expenses etc., cumulatively.

Thus, in totality of circumstances, it is inferred that the Insurance Company is liable to pay compensation instead of respondents No. 2 and 3 and in absence of any specific evidence (oral as well as documentary), order for pay and recovery is liable to be set aside because Insurance Company could not discharge the burden regarding breach of policy condition in absence of driving licence of the driver. Company did not lead evidence independently to establish breach of policy conditions.

Resultantly, appeal filed by the appellant/Insurance Company is hereby dismissed. However, quantum of amount of Rs.1,46,000/- is just and proper and that is to be paid by the Insurance Company to the claimant i.e., respondent No.1.

Appeal stands dismissed.