Laliya Bai vs Ramesh and Others

P.C. Pathak, J.—This is an appeal u/s 110-D of the Motor Vehicles Act, 1939, by the claimant.

The appellant filed a petition claiming compensation of Rs. 40,000/- against the respondents on the allegation that her husband, deceased Galju, died on 18.10.1981 while he was going on a cycle on account of a violent dash given by truck No. MPJ 7314 driven by respondent Hajari and owned by Mohanlal Rajput, since deceased now represented by the respondent Nos. 1 to 5 in this appeal. The vehicle was insured in the name of Mohanlal with the insurance company, respondent No. 6. It was, therefore, prayed that the compensation be awarded jointly and severally against the driver, owner and the insurance company. The owner and the driver filed a joint written statement opposing the claim. They further submitted that on 12.1.1977, they had transferred the truck to Narendra Taneja and also handed over possession to him. Therefore, they are not liable to pay any compensation. While describing Mohanlal as late Mohanlal, they did not specifically deny Mohanlal''s death around June, 1978. The insurance company filed written statement opposing the claim. By amendment, it was pleaded that Mohanlal Rajput died on 21.6.1978. He could not obtain the insurance policy. The cover note has been obtained by misrepresentation and is void and ineffective. Therefore, the insurance company cannot be held liable since there was no contract subsisting between the deceased Mohanlal and the insurance company.

After recording evidence of the parties, the Tribunal awarded compensation of Rs. 20,500/- against the driver Hajari alone and declined to pass award against the respondents. Hence this appeal.

The documents placed on record show that the name of Mohanlal continues to be recorded as registered owner and even the registering authority has issued demands of goods tax in the name of Mohanlal. The registration book is Exh. P-1 which stands in the name of Mohanlal. The demand notices of goods tax are Exh. P-2 to Exh. P-5. Exh. P-6 is the certificate of insurance for the period 20.2.1984 to 19.2.1985 of truck No. MPJ 7314 and the name of the insured is Mohanlal Rajput. Exh. P-7 is the copy of the cover note standing in the name of Mohanlal Rajput and the date of expiry of insurance, commencing from 26.3.1981, is 25.3.1982. Thus, it is clear that even though Mohanlal died in the year 1978 but the name of Mohanlal as registered owner in the records of the registering authority and as insured owner of the truck in the records of the insurance company continues. It may also be mentioned here that in the claim petition, in para 2 (a), it was specifically pleaded that Mohanlal died in June, 1978. Yet, the insurance company continued to renew the policy in the name of Mohanlal and issued the cover note even after acquiring knowledge of his death.

The first question for decision is whether the respondent Nos. 1 to 5, who are legal representatives of Mohanlal Rajput, were rightly exonerated of their liability. The Tribunal disbelieved their defence that they had transferred the vehicle to Narendra Taneja. All the same, since Narendra Rajput as NAW 2 stated that he had purchased the truck from Narendra Taneja and that Hajari, NAW 3, was his driver, therefore, the respondent Nos. 1 to 5 were held not liable. This finding of the Tribunal is inconsistent. Once it disbelieved the sale to Narendra Taneja the Tribunal could not have accepted the statements of Narendra Rajput and Hajari that there was any genuine transfer to Narendra Rajput. It may be mentioned here that Narendra Taneja did not enter the witness-box. In my opinion, the story of transfer is pure concoction to avoid liability. Had there been any such transfer, the registration book could not continue in the name of the original owner. Section 31 of the Motor Vehicles Act prescribes certain essential steps to be taken by the transferor and the transferee. Since no proof has been adduced to that effect, it must be held that the vehicle was never transferred and the respondent Nos. 1 to 5 continued to be the owners as legal representatives of the deceased Mohanlal Rajput and Hajari was, in fact, their own driver on the date of accident. Therefore, the respondent Nos. 1 to 5 are jointly liable with the driver to pay compensation.

Next question for decision is whether the insurance company is not liable to indemnify the respondent Nos. 1 to 5. The question is squarely answered by a Division Bench decision in Zakaria and Others Vs. Naoshir Cama and Others, The court held as under:

When the policy clearly showing the coverage to be of the car and not of the insured is in force but the insured has died, even though his heirs have neither renewed the policy nor took it out in their name, it cannot be contended that despite the nonexpiry of the insurance period the liability of the insurer has come to an end. It is only the vehicle and its use that are made material in respect of third party risks. Death of the insured also is not one of the grounds of defence of insurer prescribed by Section 96 (2).

Further on the death of the insured his car passes to his heirs as his property. On principle then the insurance therefore is also property and consequently that policy with rights thereunder devolves on the heirs by operation of law. It follows that the heirs on the death of the insured become entitled to the benefits of the policy still in force. On this ground also the liability arising out of the use of the car in such a case has to be borne by the insurer when there is nothing in the policy to prevent his heirs to succeed to the car and the rights under the policy.

It was also agrued that the award of interest at the rate of 6 per cent per annum is too inadequate. This argument has to be accepted. It is held by the Supreme Court in several decisions that interest ought to be awarded at the rate of 12 per cent per annum.

The appeal is allowed. The award passed by the Tribunal is modified by directing that the compensation shall be paid jointly and severally by the driver and the respondent Nos. 1 to 6 with interest at the rate of 12 per cent per annum from the date of the petition to the date of realisation. The appellant shall also be entitled to the costs. Counsel''s fee according to schedule, if certified.