Madhya Pradesh High Court
Agrawal Construction Co. vs Veer Sati And Ors. on 9 November, 1997
Equivalent citations: II(1998)ACC221, 1999ACJ1477
JUDGMENT Tej Shankar, J.
1. M.A. Nos. 339 to 346 of 1996 and M.A. No. 348 of 1996 have been preferred by Agrawal Construction Co., the owner of the truck involved in the accident, whereas M.A. Nos. 322, 370 to 375 of 1996 have been preferred by the claimants. These appeals have been preferred against the order dated 21.8.1996 passed by Mr. A.K. Shrivastava, Motor Accidents Claims Tribunal, whereby a sum of Rs. 25,000 was awarded by the Tri-bunal to the claimants against the owner, Agrawal Construction Co. The insurer has been exonerated. As all the appeals raise a common question of law on the basis of which these appeals have been preferred, they have been heard together and are being disposed of by this common judgment.
2. The facts briefly narrated are that on 8.8.1991 truck No. CPW 7506 met with an accident with Tempo No. MPG 9946 in which 9 passengers had lost their lives and other 9 received injuries. Out of this accident in all 13 claim petitions were separately filed by the claimants. The allegations were that Agrawal Construction Co. was the owner of truck No. CPW 7506 which was insured, vide cover note No. 043501 for the period 25.6.1991 to 24.6.1992 with United India Insurance Co. Ltd. It was further claimed that the truck was further insured on 8.8.1991 with the National Insurance Co. Ltd. vide cover note No. 225433 for the period 8.8.1991 to 7.8.1992. The claimants moved an application on 23.4.1992 purporting to be under Section 140 of the Motor Vehicles Act for interim compensation. The Tribunal had passed an order against respondent Nos. 1 and 4 and against that order a writ petition was preferred before this Court (M.P. No. 895 of 1992) which was allowed and the order was set aside on 28.8.1992. The Tribunal was directed to determine the liability of Agrawal Construction Co. and National Insurance Co. Ltd. Later on, a review petition was preferred in this Court on behalf of Agrawal Construction Co. (M.C.C. No. 336 of 1992) in which it was directed that it was not open to reopen the order dated 28.8.1992 but if the petitioner (Agrawal Construction Co.) wanted to file additional evidence it could do before the disposal of application under Section 140 of Motor Vehicles Act and it was directed to be disposed of in accordance with law. Agrawal Construction Co. thereafter moved an application on 14.1.1.1992 alleging that truck was insured with United India Insurance Co. Ltd. and the premium amount was paid through cheque on 24.6.1991. It had sufficient amount in various banks detailed in the application itself. The vehicle was also previously insured with the same company. It further alleged that the said cheque dated 25.6.91 was dishonoured on 5.8.1991 in spite of the fact that there was sufficient money in account of Agrawal Construction Co. with the bank. It was further alleged that from 6.8.1991 to the date of accident, i.e., 8.8.1991 the cheque remained lying with the insurance company. On 9.8.91 an intimation that the insurance policy has been terminated was sent by the insurance company to Agrawal Construction Co. on 14.8.1991. On 12.8.1991 Agrawal Construction Co. sent the amount of premium by insured parcel which was refused by the United India Insurance Co. Ltd. on 14.8.1991. It was, therefore, prayed that in view of the facts narrated in the application the United India Insurance Co. Ltd. was liable for all the liabilities arising out of the accident dated 8.8.1991 and it was liable to pay the amount payable under Section 140 of the Motor Vehicles Act. The application was opposed and it was asserted by the United India Insurance Co. Ltd. that the cheque dated 25.6.1991 was of UCO Bank, Morena which was sent by the insurance company to its bankers, the State Bank of Indore, Morena, on 26.6.91. The insurance company received back the cheque as it was bounced on 8.8.91 and intimation was sent to Agrawal Construction Co. It was, therefore, prayed that the insurance company was not liable as the insurance policy had already been terminated on account of non-payment of premium. It was prayed in the application that non-applicant (United India Insurance Co. Ltd.) and the driver were liable for all the liabilities. Admittedly, the truck was insured with National Insurance Co. Ltd. also on 8.8.1991. It is claimed that later on, on 9.8.1991 a letter was sent by a partner of Agrawal Construction Co. to the National Insurance Co. Ltd. which was received by the company on 12.8.1991 to the effect that the insurance was wrongly got made because it was already insured with the United India Insurance Co. Ltd. Agrawal Construction Co. claimed that on the date of accident, i.e., 8.8.1991 the truck was also insured with National Insurance Co. Ltd. and by that time the policy was in existence. Hence it was also liable. It may be mentioned here that Agrawal Construction Co. was the owner of the truck and Lochan was the driver. The matter was heard by the Tribunal and after hearing the parties it passed an order and awarded a sum of Rs. 25,000 against the owner alone, hence Agrawal Construction Co. has preferred M.A. Nos. 339 to 346 of 1996 and M.A. No. 348 of 1996 and the claimants have preferred M.A. Nos. 322 and 370 to 375 of 1996 with respect to Claim Petition Nos. 127, 130, 121, 118, 114, 123 and 126 all of 1996.
3. Mr. N.K. Modi, learned Counsel for the owner contended that an application has been moved under Order 41, Rule 27 read with Section 151, Civil Procedure Code for permission to file some papers as these papers are necessary. One of the papers shows that cover note was seized and it is a seizure memo. Other documents are copies of certain applications. He, however, contends that the fact that there was insurance policy of National Insurance Co. Ltd. which is dated 8.8.1991 and of the United India Insurance Co. Ltd. dated 24.6.1991 is not disputed. To my mind, in view of the fact that there was an insurance policy, these documents are not relevant. Consequently the application is rejected.
4. On merits Mr. N.K. Modi contended that so far as the liability of National Insurance Co. Ltd. is concerned it was to be decided by the Tribunal in view of the order passed by a Division Bench of this Court arising out of the same accident in Writ Petition No. 895 of 1992. So far as the United India Insurance Co. Ltd. is concerned he contended that after the decision by the Division Bench a review application was moved which was disposed of and in the order the court observed that review was not maintainable in proceedings under Article 227 of the Constitution of India. However, if the petitioner wanted to place additional evidence to support its case, he was at liberty to file additional evidence before the Tribunal stating reasons as the Tribunal had to pass an order under Section 140 of the Act. It was further observed that the Tribunal had to dispose it of in accordance with law. In view of this observation of the court the learned Counsel contended that in spite of the fact that in the main judgment the Division Bench held that United India Insurance Co. Ltd. was not liable that question was still left to be decided in the light of the observations made in the order disposing of the review application. So far as the liability of the National Insurance Co. Ltd. is concerned, the contention is that admittedly cover note shows that the policy was taken on 8.8.1991. Later on, a letter was given for cancellation of the policy on 9.8.1991 which was received on 12.8.1991. The learned Counsel contended that in spite of this letter the liability of the National Insurance Co. Ltd. existed on the date when the accident had taken place, i.e., 8.8.1991 and this company cannot be absolved of the liability by a subsequent cancellation of. policy retrospectively. As far as the liability of the United India Insurance Co. Ltd. is concerned, he argued that a cheque had been given and it remained with the insurance company and no intimation of the fact that it was dishonoured was given prior to the date of accident and intimation in this regard was sent on 9.8.1991 which reached appellant company on 14.8.1991 but in the meantime on 12.8.1991 the amount was sent. Thus the policy with the United India Insurance Co. Ltd. also subsisted on the date of accident. Consequently, both the insurance companies are liable for the amount payable by the owner. He referred to large number of cases which do not appear to be relevant with respect to the controversy involved under the circumstances of the case as shown hereinafter.
5. Mr. V.K. Bharadwaj, appearing for some claimants argued that he adopted arguments of Mr. N.K. Modi. He also referred to Section 152 and Section 146. Mr. N.D. Singhal, representing claimants, referred to the provisions of Section 149 and Section 156 of the Motor Vehicles Act.
6. Mr. B.N. Malhotra, representing the United India Insurance Co. Ltd., argued that it is not disputed that a cover note was issued and a cheque with respect to the premium was given to the insurance company on 25.6.1991. It has been contended for Agrawal Construction Co. that the company had sufficient funds with it and as such the cheque could not be bounced. The cheque had actually been bounced and the company had no amount to its credit in the bank account furnished by the construction company itself and contended that on 25.6.91 the company had already taken overdraft of Rs. 15,07,269.52 and on 25.6.1991 it had deposited a sum of Rs. 8,000 thereby reducing the overdraft to Rs. 14,99,269.52. In this way there was no amount to the credit of Agrawal Construction Co. and as there was no amount to the credit of the construction company in the UCO Bank the cheque was bounced. As the amount was not paid under the terms of the contract there was no existence of any insurance policy. Consequently, the United India Insurance Co. Ltd. is not liable. The learned Counsel also contended that the matter was considered by a Division Bench of this Court in the above-mentioned citation which was a case arising out of the same parties and same matter and it was held therein that the United India Insurance Co. Ltd. was not liable. The order passed on the review application did not review that finding and as such it is not open for the construction company to contend that the United India Insurance Co. Ltd. is liable.
7. Mr. Hemant Sharma, representing the National Insurance Co. Ltd. contended that it is not disputed that on 8.8.1991 a cover note was issued and the premium was paid by the construction company. He, however, contended that on 9.8.1991 a letter was sent by the construction company rescinding the contract that there is already an insurance policy and as such due to ignorance of that fact the premium was deposited with the insurance company. It was prayed that it be returned. As a consequence of this letter the amount of premium was returned on 12.8.91 without any deduction and thus, the contract stood revoked. Thus, the National Insurance Co. Ltd. cannot be held liable for claim under their policy as there was no contract.
8. Mr. V.K. Bharadwaj in his reply contended that irrespective of the fact as to which of the two insurance companies is liable for the award the claimant is entitled to payment. If the insurer and insured collude the third party cannot be deprived of its rights.
9. Mr. N.K. Modi argued that it has incorrectly been contended on behalf of the United India Insurance Co. Ltd. that there was no amount with the bank to the credit of the construction company. The learned Counsel demonstrated that irrespective of the fact that balance was shown in favour of the bank, cheques issued by the construction company were honoured for huge amounts even. He referred to entry of 8.7.1991 relating to an amount of Rs. 35,000 and it appears that cheque was issued for that amount which was honoured and the amount was added towards the balance. He, therefore, contended that there was an amount and the cheque ought to have been honoured. He further contended that it is also not correct that the liability of the United India Insurance Co. Ltd. has extinguished in view of the judgment passed by the Division Bench. He argued that the matter was left open to be decided as pointed out earlier in view of the observations made in the order disposing of the review application. He referred to National Insurance Co. Ltd. v. Thaglu Singh, 1995 ACJ 248 (MP) and contended that at the stage of interim compensation the only defence available to the insurance company is that there was no contract of insurance at all. Here in the case in hand, the dispute is whether the amount of premium was paid or not. Mr. Modi further contended that merits cannot be decided at this stage.
10. The main controversy between the parties is with respect to the liability of the two insurance companies for payment of the amount awarded. As far as the question relating to the liability of the United India Insurance Co. Ltd. is concerned, I may repeat that the United India Insurance Co. Ltd. preferred a writ petition before this Court contesting its liability and the matter was decided by the Division Bench of this Court in United India Insurance Co. Ltd. v. Ratansingh, 1993 ACJ 1219 (MP). After considering the entire material on record and the law on the subject, this Court took the view that the award passed in all the cases directing the petitioner United India Insurance Co. Ltd. to pay limited amount awarded could not be sustained and was quashed. As far as the liability of the owner of the truck as well as the National Insurance Co. Ltd. was concerned no opinion was expressed and the matter was remanded to the Tribunal with a direction that it shall hear the parties and decide under Section 140, fixing the liability jointly and severally. After the decision of this case a review petition was presented which was rejected with certain observations. The contention of the learned Counsel for the owner of the truck concerned is that under order passed on the review application the matter was re-opened and hence it cannot be argued for the United India Insurance Co. Ltd. that the decision of this Court has become final. In order to go through this question, we have to look to the order passed by this Court on the application for review. A perusal of the order shows that the court specifically held that it was not possible to review the order passed on 28.7.1992. However, it was observed that in case the petitioner wanted to give additional evidence it could produce it before the Tribunal and the application under Section 140 be disposed of in accordance with law. This order, to my mind, is clear and does not go to show that the findings given by the court in the original order disposing of the writ petition were at all upset or reversed. In the teeth of the findings given therein it cannot be held that the United India Insurance Co. Ltd. is liable. I, therefore, agree with the findings of the Tribunal that the United India Insurance Co. Ltd. is not liable.
11. The next question for determination relates to the liability of the National Insurance Co. Ltd. which was untouched by this Court in the decision passed in the earlier writ petition presented by the United India Insurance Co. Ltd. The learned court below has directed that the amount of interim compensation be paid by non-applicant No. 1, Agrawal Construction Co., in all the cases and has thus exonerated both the insurance companies. As mentioned in the earlier part of this order, it has been contended for the owner, i.e., the construction company, that the National Insurance Co. Ltd. is liable because on the date when the accident had taken place, i.e., 8.8.1991 the contract was in existence. Even if the construction company had written for the cancellation of the insurance policy on 9.8.1991 and the insurance company had cancelled the said policy and refunded the amount it will not absolve the National Insurance Co. Ltd. from its liability. Admittedly the truck was insured and the cover note shows that the policy was taken on 8.8.1991. Later on a letter was given for cancellation of the policy on 9.8.1991 which was received on 12.8.1991 and amount of premium was returned on 12.8.1991 without any deduction. The contention of the learned Counsel appearing for the National Insurance Co. Ltd. is that as the contract stood revoked on the request of the construction company itself and the amount of premium was refunded on 12.8.1991, the National Insurance Co. Ltd. cannot be held liable. Thus, a careful consideration of the arguments advanced by the parties show that admittedly the truck was insured with the National Insurance Co. Ltd. and premium had been paid on the date of the accident, i.e., 8.8.1991, the contract was in existence. It was got revoked by the insured by means of a letter dated 9.8.1991, i.e., after the accident and the amount was refunded on 12.8.1991. In this view of the matter it can safely be said that on the date when the accident had taken place the contract was in existence. If the insurer and insured enter into a contract after the accident had taken place in any manner deciding the contract, it cannot be said that the insurer is absolved from its liability under the contract which existed on the date when the accident had taken place. If such a view is taken it will not be in the interest of justice inasmuch as the sufferer will be the third party who is completely innocent and ignorant about such a subsequent development. The learned Presiding Officer of the Tribunal dealt with the liability of the National Insurance Co. Ltd. in para 14 of its order and observed as the non-applicant No. 1, i.e., the construction company itself got the premium refunded and got the cover note cancelled and the policy was rescinded right from the inception, hence the National Insurance Co. Ltd. was not liable for any compensation. This reasoning, to my mind, does not appear to be correct in view of what has been said above. I am, therefore, of the view that in view of the fact that the contract was in existence on the date when the accident had taken place, the National Insurance Co. Ltd. cannot be absolved of its liability under the contract. I, therefore, hold that the National Insurance Co. Ltd. is jointly and severally liable for the payment of the award amount along with the owner of the truck. All the appeals are, therefore, decided accordingly. Costs of these appeals shall, however, be borne by the parties. Let a copy of this order be placed on the record of all the appeals.