Madhya Pradesh High Court
National Insurance Co. Ltd. vs Kusum Devi Mishra And Ors. on 26 July, 1997
Equivalent citations: 1999ACJ1213, 1998 A I H C 3751, (1998) 1 MPLJ 676, (1998) 2 TAC 465, (1998) 4 RECCIVR 205, (1999) 2 ACJ 1213, (1998) 3 CIVLJ 914
Author: Rajeev Gupta
Bench: Rajeev Gupta
JUDGMENT S.K. Dubey, J.
1. This is an appeal under Section 173 of the Motor Vehicles Act, 1988 (for short 'the Act') against the award dated 16.1.1995 passed in Claim Case No. 82 of 1993 by 1st Additional Motor Accidents Claims Tribunal, Satna.
2. Facts giving rise to this appeal are thus. Respondent Nos. 1 to 5 are the legal representatives of the deceased Chokhelal, who had claimed compensation amount of Rs. 14,90,000 for the death of Chokhelal, caused in motor accident on 6.8.1992 at about 11.30 a.m. by truck No. MPJ 5588, driven by respondent No. 6, owned by respondent No. 7 and insured with the appellant. Respondent Nos. 6 and 7 filed their joint written statement denying their liability to pay compensation. Appellant in its separate written statement contended that the contract of insurance entered into between the appellant and the owner of the vehicle is void as he was minor and was not competent to contract. The policy was obtained by the father of respondent No. 7 by concealment and suppression of the material fact of minority of respondent No. 7.
3. The Tribunal after appreciation of evidence adduced by the parties, held that the accident was caused due to the sole negligence of the truck driver as a result of which motor-cyclist Chokhelal died. At the time of the accident the deceased was aged 38 years and was earning Rs. 5,000 per month by contractorship and from agriculture. After deducting 73rd amount towards the personal living expenses of the deceased, the annual dependency was estimated at Rs. 39,600, applying the multiplier of 11, the amount was worked out to Rs. 4,35,600, in that Rs. 10,000 was added towards consortium and Rs. 2,000 to each child for loss of company and love and affection. Thus award of Rs. 4,53,600 with interest at the rate of 12 per cent per annum from the date of application, that is, 2.9.1992, till realisation, was passed against the owner, driver and insurer.
4. The finding on issue No. 1 holding that the accident was caused due to sole negligence of truck driver resulting in the death of Chokhelal, has not been challenged before us.
5. Mr. R.P. Agrawal, learned Counsel for the appellant has submitted that the appellant cannot be made liable to pay as the policy was void from its inception, as at the time of entering into contract of insurance, Exh. D-1, the respondent No. 7 who is the insured was a minor. This material fact was suppressed by the father of the respondent No. 7 at the time of giving proposal form. The contract was void as respondent No. 7 was not competent to enter into contract in view of Section 11 of Indian Contract Act. Counsel cited Ma Hnit v. Hashim Ebrahim Meter, AIR 1919 PC 129 and Govind Ram v. Piran Ditta, AIR 1935 Lahore 561. Learned counsel for the appellant also challenged the quantum of compensation. It was submitted that Rs. 8,000 for love and affection to minor children could not have been awarded.
6. Mr. U.K. Sharma, learned Counsel for respondent No. 7, submitted that the Act does not prohibit a minor to be the owner of a motor vehicle. If the minor can be the owner of the vehicle which is to be used at a public place, such vehicle has necessarily to be insured. The contract of insurance was for the benefit of minor. If the contention of the appellant is accepted, in that case property of minor cannot be insured which is not the law. He cited Great American Ins. Co. Ltd. v. Madanlal Sonulal, AIR 1935 Bombay 353.
7. Mr. Y.P. Sharma, counsel for the respondents-claimants, has supported the award.
8. To establish the plea that the policy was obtained by suppressing material fact, the appellant examined Indrajeet Singh, Branch Manager, NAW 1, who stated that when the insurance was obtained in the name of the insured, he was a minor. He admitted that in the proposal form, there is no column wherein the age of the insured is to be declared and stated. On behalf of the owner, Premlal, NAW 2, father of the insured appeared as a witness and stated that he got the vehicle insured for third party risk on behalf of his son. The premium was accepted by the agent, Nigam. After accepting the premium, the appellant company issued the policy valid from 31.1.1992 to 30.1.1993. He further stated that he disclosed the age and the fact that his son is a student of class VI.
9. On the scrutiny of evidence and in the absence of non-examination of Nigam, the agent of the appellant and the non-production of the proposal form by the appellant before the Tribunal and even before this Court, it cannot be inferred that the fact of minority of the owner of the vehicle was suppressed. On the other hand, the adverse inference under Section 114(g) of the Evidence Act has to be raised against the appellant as it is well settled that a party in possession of the best evidence which would throw light on controversy withholding it, court ought to draw an adverse inference against him notwithstanding that onus of proof does not lie on him. [See A. Raghavamma v. A. Chenchamma, AIR 1964 SC 136 and Gopal Krishnaji Ketkar v. Mohammed Haji Latif, AIR 1968 SC 1413].
10. However, the fact remains that the insured/owner of the vehicle was a minor at the time when the appellant accepted the proposal of insurance. It is not in dispute that the respondent No. 7 was the registered owner of the vehicle and was entered as such in the certificate of registration as defined in Section 2(4) of the Act, which means the certificate issued by a competent authority to the effect that a motor vehicle has been duly registered in accordance with the provisions of Chapter IV. Section 2(30) of the Act defines 'owner' as a person in whose name a motor vehicle stands registered and where such person is a minor, the guardian of such minor, and in relation to a motor vehicle which is the subject of a hire-purchase agreement or an agreement of lease or an agreement of hypothecation, the person in possession of the vehicle under that agreement. Motor vehicle involved in the accident is a goods carriage registered as such in certificate of registration issued by the registering authority as defined in Section 2(37) of the Act. The vehicle is to be used at a 'public place' as defined in Section 2(34) of the Act, in accordance with the conditions of permit as defined in Section 2(31) of the Act. Chapter IV deals with the registration of motor vehicle. When a motor vehicle is to be used in a public place, it has to be necessarily insured against third party risks. Chapter XI of the Act corresponding to Chapter VIII of the Motor Vehicles Act, 1939, repealed by the Act (for short 'old Act'), deals with the insurance of motor vehicle against third party risks. Section 145 is a definition provision. Section 146 corresponding to Section 94 of the old Act (for short 'repealed Act') deals with necessity for insurance against third party risk. Sub-section (1) of Section 146 provides that no person shall use, except as a passenger, or cause or allow any other person to use, a motor vehicle in a public place, unless there is in force in relation to the use of the vehicle by that person or that other person, as the case may be, a policy of insurance complying with the requirements of Chapter XI of the Act, corresponding to Chapter VIII of the repealed Act. The Supreme Court in New Asiatic Insurance Co. Ltd. v. Pessumal Dhanamal Aswani, 1958-65 ACJ 559 (SC), after considering the object of Chapter VIII of the old Act observed thus:
Chapter VIII of the Act, it appears from the heading, makes provision for insurance of the vehicle against third party risks, that is to say, its provisions ensure that third parties who suffer on account of the user of the motor vehicle would be able to get damages for injuries suffered and that their ability to get the damages will not be dependent on the financial condition of the driver of the vehicle whose user led to the causing of the injuries. The provisions have to be construed in such a manner as to ensure this object of the enactment.
11. No provision of Chapter XI or any provision under the Act, prohibits that the policy of insurance cannot be issued to a registered owner of the vehicle who is a minor. On the other hand, a registered owner, who is minor or not, of a motor vehicle, which is to be used at a public place, such vehicle necessarily has to be insured against the third party risks under Section 146 of the Act. The authorised insurer as defined in Clause (a) of Section 145 of the Act, cannot refuse to insure the vehicle, certainly on acceptance of proposal form and payment of due premium, and has to issue a 'certificate of insurance' as defined in Clause (b) and policy of insurance as defined in Clause (d) of Section 145 of the Act, so as to cover the liability in accordance with the provisions of Section 147 of the Act.
12. In view of the above, the contention that the insurer is not liable to pay compensation and the policy is void due to suppression of material fact, has no merit. Even otherwise, there was no suppression of material fact. The agent of the insurance company knew fully well that the owner is a minor. He accepted the premium and the policy of insurance covering third party risks was issued in the name of the minor by the appellant. The said policy was never repudiated or cancelled. Besides to avoid the liability under Section 149(2) of the Act corresponding to Section 96 (2) of the old Act, the expression 'material fact' and 'material particular' in Sub-section (6) of Section 149 [Sub-section (5) of Section 96 of the old Act] should be of such a nature as to influence the judgment of a prudent insurer in determining whether he will take the risk, if so, at what premium and on what condition. The insurer while insuring the vehicle of a minor through the guardian cannot be said to have been influenced in his judgment as to the premium and other conditions merely because it is not disclosed that the minor was the real owner of the vehicle. Therefore, the contract of insurance cannot be said to be void on this ground which was obtained by the father of the owner. The appellant has failed to satisfy how this so-called non-disclosure would have influenced the judgment of a prudent insurer in determining whether the appellant will take the risk and, if so, at what premium and on what conditions. Therefore, also the contention is meritless. To say so, we take support from Automobile Transport (Rajasthan) Pvt. Ltd. v. Dewalal, 1977 ACJ 150 (Rajasthan) and Northern India General Insurance Co. Ltd. v. Kanwarjit Singh, 1973 ACJ 119 (Allahabad).
13. True, Section 11 of the Contract Act lays down that a minor is not competent to contract. Section 11 of the Contract Act provides that every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind, and is not disqualified from contracting by any law to which he is subject. The contract of insurance in the present case is in the nature of indemnity whereby the insurer has undertaken to indemnify the insured on the happening of an uncertain event by the use of motor vehicle which makes the insured liable to pay. The contract of insurance does not create any liability on the minor. Therefore, it would not be void. On the other hand, the contract of insurance is for the benefit of the minor; hence it would not be a void contract but it would be binding on appellant company to indemnify the insured/owner of the vehicle and to pay compensation under the award.
14. A Division Bench of the Bombay High Court in the case of Great American Insurance Co. Ltd. v. Madanlal Sonulal, AIR 1935 Bombay 353, considered a case where the guardian of minor effected an insurance against fire in respect of the minor's property. The company also knew that the minor was the owner of the said property. The property was burnt. A suit was filed by the minor through guardian to claim the loss. The company contended that the contract was void and could not be enforced. The court observed that the contract sued upon was not a contract which was made by a minor, although it was made on behalf of the minor and for his benefit and that he was entitled to sue on that. The court further observed that if the contention of the defendant is right, it means that property of minors cannot be insured. A great many joint family business descend upon minors, and such business are in practice managed by some adult member of the family in the name of the minor and if that member of the family cannot effect an insurance on behalf of the minor, the position is an extremely serious one particularly if insurance companies are going to do what they generally do not do, but what is done by the defendant company in this case, namely, set up a purely technical defence to the policy. As the agent and the company knew fully well and deliberately entered into the contract which was for the benefit of the minor and having insured the property, the premium having been accepted, the liability cannot be avoided.
15. As a result of the above discussion, we hold that the appellant cannot avoid its liability to pay compensation under the contract of insurance against third party risks. The decisions relied upon by the learned Counsel for the appellant are inappropriate which do not deal with the cases of motor insurance against third party risks under the Act.
16. Coming to the compensation AW 1 has admitted in her statement that the deceased used to give Rs. 4,000 per month for the family expenses which included expenses for education of children. The deceased was a contractor and was maintaining a motor cycle. In the circumstances, Rs. 1,000 is deducted towards personal living expenses of the deceased, the dependency would come to Rs, 3,000 per month, yearly Rs. 36,000, applying the multiplier of 11, the amount would work out to Rs. 3,96,000 in that Rs.40,000 is added towards consortium and Rs. 10,000 towards loss of estate and a further sum of Rs. 2,000 for the funeral expenses, the amount of compensation would come to Rs. 4,18,000 which the respondent Nos. 1 to 5 would be entitled with interest thereon at the rate of 12 per cent per annum from the date of application till realisation. Therefore, we direct the appellant company to deposit the amount with interest thereon at the rate of 12 per cent per annum from the date of application less the amount already deposited by it within a period of two months from the date of supply of certified copy failing which the interest shall be payable at the rate of 15 per cent per annum. On deposit the amount shall be disbursed keeping in mind the well settled guidelines.
17. In the result, the appeal is partly allowed. The award of the Tribunal shall stand modified as indicated hereinabove. However, the appellant shall bear its own costs and shall pay the costs to respondent Nos. 1 to 5. Counsel's fee Rs. 1,500, if pre-certified.