United India Insurance Co. Ltd. vs Master Varun

THIS appeal is directed against the order of the District Forum, Solan, dated 22.8.1996, whereby the appellant/opposite party (hereinafter to be referred to as the Insurance Company) has been directed to pay to the respondents/complainants (hereinafter to be referred to as the complainants) a sum of Rs. 1,00,000/- alongwith interest @ 12% per annum from the date of repudiation of the claim i.e. from29.11.1994 till the date of payment and costs of Rs. 1,000/-.

THE facts which are not in dispute are that one Shri Vinod Kumar was the registered owner of vehicle No. HP-03-0744 and the policy of insurance was obtained in the name of Shri Vinod Kumar for the period from 27.10.1992 to 26.10.1993 although Shri Vinod Kumar had died on 13.7.1990 more than two years before the insurance. In the Cover Note of insurance, the full particulars of the vehicle insured have been shown. THE insurance cover stipulates that the Insurance Company will indemnify the insured against loss or damage to the Motor Car against fire, theft and certain other contingencies and situations. During the period when the insurance policy was in force, on 8.6.1993, the vehicle was said to have been stolen from a place where it was parked by the complainants. THE FIR regarding the theft of the vehicle was lodged at the Police Station, Dharampur and the Insurance Company was also informed about the theft. THE claim, however, of the complainants was repudiated by the Insurance Company on the ground that the insurance policy was obtained by the complainants by mis-representation of facts in the name of a dead person for the period from 27.10.1992 to 26.10.1993 where as Shri Vinod Kumar Jain had died on 13.7.1990. This fact, according to them, was concealed from the Insurance Company while getting the insurable interest in favour of Shri Vinod Kumar and there cannot be any contract between the dead person and the Insurance Company. There is no dispute that the premium for the insurance policy was paid regularly in the years 1990-91,1991-92 and 1992-93 and also for the period of insurance cover when the theft of the vehicle took place and that the policy was in force at that time. The policy was renewed from time to time after the expiry of the insurance policy and even after the death of Shri Vinod Kumar.

In rejoinder, to which there is no rebuttal, the complainants have stated that the payment of premium was made by Smt. Anita, the complainant No. 5 who is the wife of Shri Vinod Kumar and one of his legal heirs, which was duly regularly accepted by the Insurance Company and she had become the owner of the car after the death of Shri Vinod Kumar alongwith other legal heirs who have been arrayed as complainant Nos. 1 to 4 and are minors. The payment of premium was made by Smt. Anita after inspection of the vehicle by the Insurance Company.

HOWEVER, the question that requires consideration in the present case is whether the Insurance Company can repudiate the claim of the complainants on the ground that Shri Vinod Kumar had died much before taking the insurance policy and that the contract of insurance was obtained fraudulently on the name of Shri Vinod Kumar and by suppression of material facts and is a nullity and cannot be enforced against the Insurance Company. It is well settled that a contract of motor insurance like fire and marine insurance is a contract of indemnity and the subject matter of the insurance forms the basis of the contract. In this context we may refer to the observations of the Bombay High Court in a case Vijayakumar Motilal v. New Zealand Insurance Co. Ltd., AIR 1954 Bombay 347, which are reproduced below: xxx xxx xxx "It is true that the description of the subject matter of insurance forms the basis of the contract. Proper description of the subject- matter of the contract would certainly be essential for the purpose of identification of the goods. All that is required of the assured is that the description should be adequate, that is, it must substantially describe the property which is to be insured. I am unable to see how a statement as to the ownership of the goods or the nature and extent of interest of the assured in the subject-matter can be called "description of the goods insured".

It is true that a policy or insurance can be vitiated by any breach of warranty, fraud or mis-representation. But failure on the part of the assured to disclose the nature of his interest in the goods cannot be said to amount to a breach of warranty. All that is required is that the assured should have insurable interest in the subject-matter. Even the interest of a bailee is sufficient to establish an insurable interest and it is not disputed that an unpaid vendor of the goods has an insurable interest in the property which i s the subject-matter of the contract of insurance".

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FROM the insurance cover note, it is evident that the complete description of the Motor Vehicle has been given and in view of the basic principle of contract of insurance of vehicles, it is the vehicle which forms the basis of insurance contract. The complainant No. 5, widow of the deceased Vinod Kumar has paid the premium on behalf of her husband and has renewed this policy from time to time before and after his death after the inspection of the vehicle by the Insurance Company. Merely mentioning the name of the deceased Shri Vinod Kumar as insured will not vitiate the contract. Even otherwise, the contract of insurance of the vehicle cannot be termed void on the ground that Shri Vinod Kumar at the time of contract of insurance was dead, as contended by the Insurance Company. As already stated above, it cannot be disputed that complainant No. 5, widow of the deceased Shri Vinod Kumar who has paid the premium regularly at the time of contract of insurance on behalf of her deceased husband and renewed this policy from time to time before and after his death which was duly and always accepted by the Insurance Company after inspection of the vehicle. It is settled principle of law that the wife has insurable interest in the property other husband and in the present case, in the vehicle which once belonged to her husband. After death, Smt. Anita, complainant No. 5 and complainant Nos. 1 to 4 who are the minors and who have filed the complaint through their mother Smt. Anita, are the legal heirs of Shri Vinod Kumar deceased. All the complainants, therefore, have become owners by operation of law and have acquired insurable interest in the motor vehicle. In the aforementioned circumstances, it has become evident that Smt. Anita, widow of Shri Vinod Kumar in terms of the contract of insurance has paid the premium on behalf of her husband and has discharged all obligations in terms of the insurance policy and nothing more was required to be done by her. The fact that the insured was dead person, was not of much consequence. In these circumstances, it would not be incorrect to say that the contract of insurance between the complainants and the Insurance Company in respect of this motor vehicle has come into existence, although the name of the insured Vinod Kumar has been wrongly mentioned in the insurance cover note. It appears to us that either the name of Shri Vinod Kumar was inadvertantly mentioned in the insurance policy or presumably his name was mentioned therein, as registration of the vehicle might have been in the name of Shri Vinod Kumar. There is nothing to show that Smt. Anita, complainant No. 5 or other complainants have taken undue benefit of the contract and as such in the aforementioned circumstances, it cannot be said that the complainants in any way have obtained the contract of insurance fraudulently and by suppression of material facts. We are supported by a decision of the Punjab and Haryana High Court in a similar case Om Prakash and Another v. Rajbir and Others, reported as 1997 ACJ 547. The observations of the High Court in paras 8 & 9 of the judgment are reproduced below : xxx xxx xxx "8. In this case, the Insurance Company continued to renew the policy in the name of registered owner and had been issuing the cover note. I am not inclined to accept the arguments of learned Counsel for the Insurance Company that the owner of the truck had died and the premium was being paid on his behalf by some body else and as such, the Insurance Company is not liable to pay compensation. The Insurance Companies should not accept the premium with dosed eyes. A duty is cast upon the Insurance Company to verify whether the owner of the vehicle is alive or not and also to verify the credentials of the person offering premium. 9. In this case the offending truck was duly insured with the Insurance Company and the Insurance Company had received the premium. As such, the mere fact that the owner of vehicle had died cannot absolve the Insurance Company from its liability to pay compensation for the reason that it is the vehicle which is being insured and not the owner of the vehicle".

xxx xxx xxx In this context we may also refer to another decision of the Division Bench of Patna High Court in a case Smt. Kiran Sinha v. Life Insurance Corporation of India & Others, AIR 1983 Patna 142 in a case of life insurance policy, wherein it has been held by that Court that in the event of acceptance of payment of premium by the Life Insurance Corporation before or after the death of assured after the policy had lapsed, the Corporation is estopped from raising a plea of lapse of policy. According to the Patna High Court, the acceptance of premium by the Life Insurance Corporation after the death of the assured amounts to waiver of a legal right that policy stood lapsed and that the Corporation is precluded from raising such a plea of lapse of policy. The fact that the payment was received with or without knowledge of death of the assured is immaterial. With the Corporation accepting the payment of premium, the claim of lapse of policy disappears. There is no distinction between the acceptance of payment before death or after the death. This principle equally applies in the facts and circumstances of the present case as well. Since the premium was regularly paid by the widow Smt. Anita on behalf of her husband and has been accepted from the complainant No. 5 by the Insurance Company before and after the death and for the period during which the insurance policy was in force, it amounts to waiver of legal right, if any, and the Insurance Company is precluded from raising plea that the policy has been taken on the name of a dead person.

IN this context we may further note down the observations of the Patna High Court which equally apply in the present case as well: xxx xxx xxx "The Corporation would be expected to refrain from behaving like an ordinary litigant resisting the claim arising out of a policy by unjustified methods. IN fact, in the circumstances of this case, when the premium due was paid and actually accepted, the Corporation would have been well advised to refrain from taking refuge behind the unjustified technicalities and meet its obligation in paying to the nominee, the full payment due under those policies".

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IN the result, we are of the considered opinion that the claim has been arbitrarily repudiated and that there is clearly deficiency on the part of the INsurance Company in repudiating the claim of the complainants and we are in agreement with the findings given by the District Forum. There is no force in this appeal and the appeal is accordingly dismissed.

There is no orders as to costs in the appeal. Appeal dismissed.