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Judgment
Radhakrishna Rao, J.—Respondents 1 to 6 herein who are the wife and minor children of one Nandyala Amrutha Reddy, who died in an accident that took place on 5-5-1988 filed a claim petition before the Motor Accidents Claims Tribunal, Nalgonda, claiming a compensation of Rs. 3,00,000/-.
The deceased was a Class ''A'' contractor and also an agriculturist and he was aged 36 years at the time of the accident. On 5-5-1988 he boarded a jeep bearing No. ABR 1814 at Koppal village to go to Nakrekal. At about 8-30 A.M. when the jeep reached the bus station of Nakrekal, a lorry AAW 8938 belonging to the 8th respondent herein and driven by the 7th respondent herein came in a rash and negligent manner and hit the jeep on the back side due to which the deceased received serious head injury and multiple injuries on the body and subsequently he succumbed to injuries and died.
These facts are not disputed. A complaint also was lodged with the Police at Nakrekal Police Station and in the FIR Ex.A-2 the same facts have been mentioned.
On a consideration of the entire evidence on record, the learned District Judge came to the conclusion that the accident took place due to the rash and negligent act of the driver and awarded a sum of Rs. 1,32,000/-as compensation and accordingly passed an award in favour of the claimants against the respondents therein i.e., the Insurance Company, the owner of the lorry and the driver, jointly and severally with interest at 9% p.a. from the. date of petition till payment.
Aggrieved against the award fixing the liability on the Insurance Company also, the 3rd respondent-Insurance Company filed this appeal contending inter alia that there is no valid cover of Insurance Policy subsisting at the time of the accident and, therefore, the Insurance Company is not liable to pay the compensation.
The factum of rash and negligent driving of the lorry by the driver resulting in the death of the deceased has been clearly established by the evidence on record. The same also has been supported by the statement contained in the FIR which was given at the earliest point of time to the Police at Nakrekal Police Station, and the owner and the driver also have not filed any appeal against the award of compensation. Hence the finding of the Tribunal that the accident was due to the rash and negligent act of the driver alone is confirmed.
Now the crucial point that requires resolution in this case is whether there is valid cover of the Insurance Policy for the vehicle at the time of the accident and if so whether the Insurance Company is also liable to pay the compensation.
The main contention of the learned Standing Counsel for the appellant is that there is no valid cover subsisting at about the time of the accident and therefore the Insurance Company is not liable to pay the compensation amount. It is also further contended that the learned District Judge having found in paragraph 14 of his Order that there was no insurance coverage at the time of the accident, ought not to have fixed the liability on the Insurance Company.
On the other hand, the learned counsel for the claimants-respondents 1 to 6 argues that since there was a valid policy upto 22-12-1987and the same having been renewed by payment of the premium on 5-5-1988, the renewal dates back from the date of the expiry of the previous term and hence there was a valid policy subsisting at the time when the accident took place. It is also further contended that since the policy was issued on 5-5-1988, the date on which the accident took place, it must be deemed that the policy related back from the mid-night of 4/5-5-1988 i.e., the commencement of the day at the mid-night hours and therefore the Insurance Company cannot escape from its liability.
The observations made by the learned Judge in Paragraph 14 of the Order are as follows:
"In this case the accident took place at about 8-30 A.M. on 5-5-1988 and by which time obviously there was no insurance policy for the lorry AAW 8938. There appears truth in what R.Ws.1 and 2 have stated and corroborated by Exs.B-3 to B-5 that the respondent No. 2 obtained policy after 1.00 P.M. whereas the accident took place in the morning at 8-30 A.M. without informing the Manager about the lorry having been met with an accident. There appears truth in the evidence of R.W.2 corroborated by Exs.B-3 to B-5 that if the premium was received before 1-00 P.M. they would have remitted into the bank on the same day, but in this case because the amount was received after 1-00 P.M. it was remitted in the bank on the next day. Obviously before 10-00 A.M. at any rate prior to 8-30 A.M. the Manager would not have received the premium and issued policy. Therefore, there is absolutely no doubt to hold that at a time when the lorry was met with an accident there was no insurance coverage."
The Supreme Court in New India Assurance Co. Ltd. v. Ram Dayal 1990 (2) ALT 25 it was held that when a policy is taken on a particular date, its effectiveness is from the commencement of that date. On that facts of that case it was held:
"The insurance policy obtained on the date of the accident became operative from the commencement of the date of insurance i.e., from the previous midnight and since the accident took place on the date of the policy, the insurer was liable in terms of the Act to meet the liability of the owner under the award of compensation."
Admittedly the accident in this case took place at 8-30 A.M. on 5-5-1988 and the policy was renewed after the commencement of the office hours i.e., 10-30 A.M. on 5-5-1988 and the amount was remitted in the Bank on the next day.
In an identical situation, this Court had occasion to deal with a case in Gandham Nagesh Vs. Pokala Nageswara Rao and Others, . In that case also the accident was occurred at about 9-20 A.M. and the vehicle was insured with the insurance company at 10-10 A.M. on the date of accident. In that case the Tribunal itself fixed the liability on the owner and the driver of the vehicle holding that there was no valid cover at the time of the accident, and this Court affirmed the view of the Tribunal holding that suppression of ;material fact about the accident is a fraud on the insurance company. In that connection the expressions ''material fact'' and ''material particular'' as defined in Section 96(5) of the Motor Vehicles Act have been considered.
It is necessary to read Section 96(2)(c) of the Motor Vehicles Act, which is as follows:
"96. Duty of insurers to satisfy judgments against persons insured in respect of third party risks:
(1) xxx xxx
(2) (a) & (b) xxx xxx
(c) that the policy is void on the ground that it was obtained by the nondisclosure of a material fact or by a representation of fact which was false in some material particulars."
This section is in pari materia with Section 149 of the Motor Vehicles Act, 1988.
It is also a case where a material fact was not disclosed that the accident took place prior to the payment of the premium. The evidence of R.Ws. 1 and 2 is clear on this aspect that the premium has been paid only after the accident without disclosing the fact.
In Oriental Fire & General Insurance Co. Ltd. v. Tippanna Gadageppa Kundgol 1982 ACJ 102 (Karnataka) the date of the motor accident was 11-12-1978 and by that time the period of earlier insurance had expired. The insurance company though received the premium only on 13-2-1978 from the owners, issued the insurance policy covering the risk for a period of one year from 10-2-1978. It is in that view of the insurance company issuing a policy with effect from 10-2-1978 i.e., a day earlier to the accident, the Karnataka High Court held that the insurance company could not escape the liability. I am afraid that decision is not applicable to the facts of our case. The ratio of that decision would have covered this case if the insurance company in the instant case issued the policy to be effective earlier to 5-5-1988. But the insurance company has renewed the policy effective from 5-5-1988 as per Ex.B-2.
The effect of the words ''renewal policy'' were also considered by the Karnataka High Court in Asma Begum v. Nisar Ahmed, 1990 ACJ 832 (Karnataka) wherein it was observed:
"The words ''renewal policy'' were only to indicate that the vehicle was insured earlier with the same company and for the purpose of giving rebate in the amount of premium and that by itself would not have the effect of the policy being effective from the date of expiry of the previous policy and of filling ;up the gap and foisting the liability arising out of an accident which had taken place at a time when the policy was not in existence, on the insurance company." (emphasis is mine)
The effectiveness of the policy has to be judged from the evidence that has been adduced by the parties and provisions of Section 64V(b) of the Insurance Act. The evidence of R.Ws.1 and 2 clearly discloses that though the policy was renewed on 5-5-1988 the amount was paid at 1 P.M. on that day. In any case the amount would not have been received by the Insurance Company before the start of the office hours i.e., 10-30 A.M. Had it been received before 1 P.M. the amount would have been remitted in the Bank on the same day. The finding of the Tribunal basing on this evidence is just and correct.
The relevant part of Section 64V(b) of the Insurance Act reads as follows: "
64-V(b). No risk to be assumed unless premium is received in advance: (1) 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.
(2) For the purpose of this section, in the case of risks 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 in cash or by cheque to the insurer."
A combined reading of Section 96(2)(c) of the Motor Vehicles Act, 1939 and Section 64V(b) of the Insurance Act, would clearly disclose that so far as the accident that occurred at 8-30 A.M. concerned, it has to be construed that there was no coverage of policy at that time and the policy renewed on 5-5-1988 is a void policy on the ground that it was obtained by non-disclosure of a material fact viz., that the accident took place at 8-30 A.M. No material evidence has been let in on behalf of the claimants to show that the particular fact of accident was brought to the notice of the Insurance Company and the insurance Company having noticed the same issued the policy. On the other hand, the witnesses examined on behalf of the insurance company whose evidence has been accepted by the Tribunal lends more credible support to the contention of the insurance company that the payment of the premium or the issuance of the policy is only subsequent to the accident in question. When the payment is made subsequent to the accident, which has been established beyond doubt on the evidence on record, it cannot be said that the insurance company is liable to pay the compensation.
The learned counsel for the respondents argues that even for arguments sake it is a fraud, that fraud has not been pleaded by the insurance company and such a plea cannot be raised for the first time in this Court. It is not a case of fraud but it is a case of suppression of fact about the accident that has been spoken to by the witnesses with reference to the records and the same ground has been taken in the additional counter. Filing of an additional counter and adducing evidence by the insurance company by examining R.Ws.1 and 2 is only to support their contention that the insurance company is not liable as there is suppression of material fact. The insurance company has not pleaded in any unequivocal terms that there was fraud committed by the owner of the vehicle in not disclosing the fact of accident. But it was detected by the Tribunal on the evidence on record. In order to arrive at the conclusion as to whether there is any suppression of fact, this Court has to go through the evidence to fix the liability duly taking into account the provisions contained in the Motor Vehicles Act and the Insurance Act. If no evidence has been let in by the Insurance Company and the plea with regard to the suppression of fact remains as it is without any proof, the general principle that the date mentioned in the policy dates back to the commencement of the day is correct. But if the evidence establishes that the premium was paid on a particular date and at a particular time, the mere fact that time has not been mentioned in the policy cannot be taken advantage of by the policy holder and it is the duty of the Court to scrutinise the evidence and come to a definite finding. The Tribunal has arrived at a definite finding in paragraph 14 of the judgment that the policy was renewed and amount was paid after 1 P.M. on 5-5-1988 and on a reappreciation of the entire evidence this Court finds no difficulty in affirming the view taken by the Tribunal.
The Tribunal while arriving at the finding on issue No. 2 as to from which of the respondents the claimants are entitled for compensation, the Tribunal had to consider the plea of the Insurance Company and the evidence that has been let in to find out whether the Insurance Company is liable or not. Fraud need not be specifically pleaded and need not be decided while deciding the liability aspect. Had the time of payment been mentioned by the Insurance Company in the policy, this controversy would not have been arisen. To avoid such controversies, it is always desirable that the Insurance Companies should mention the time and date of payment and commencement of the risk with time and date clearly in the policy itself. Suppression of fact and obtaining the policy cannot be taken advantage of by the claimants on the ground that they are third parties to the policy.
In the result, the finding of the Tribunal below that the Insurance Company is liable to pay the compensation is set aside and the appeal is allowed accordingly. No costs.