Rajasthan High Court - Jaipur
New India Assurance Co. Ltd. vs Prabhu Ram And Ors. on 11 October, 2001
Equivalent citations: I(2002)ACC292, II(2002)ACC644, 2002ACJ292, 2002WLC(RAJ)UC356
Author: H.R. Panwar
Bench: H.R. Panwar
JUDGMENT H.R. Panwar, J.
1. This appeal is directed against the judgment and award dated 3.8.96 passed by Motor Accidents Claims Tribunal No. 2, Udaipur (hereinafter for short 'the Tribunal') whereby the Tribunal awarded a compensation of Rs. 40,000 in favour of respondent-claimant and against the appellant and respondent Nos. 2 and 3 jointly and severally.
2. Being aggrieved by the impugned award, the appellant insurer has filed this appeal.
3. I have heard the learned Counsel for the parties. Perused the record.
4. The only point argued by the learned Counsel for the appellant is that the owner of the truck involved in the accident obtained the cover note in backdate without disclosing the material fact that the vehicle met with an accident. The appellant seeks exoneration from the liability only on this ground.
5. Brief facts, which are relevant for the purpose of decision of this appeal are that on 26.3.1986 at about 9.30 a.m., the respondent-claimant was proceeding on his cycle from village Juntari to village Karchha. At that relevant time, he was hit by a truck bearing No. RSM 1099 from behind, which was driven rashly and negligently by its driver, the respondent No. 2. Due to this accident, the respondent-claimant sustained various injuries on his person including fracture of clavicle bone (shoulder). At the time of the accident, the age of the respondent-claimant was 14 years and he was a student of class IX. Due to this accident, he could not undertake his studies for at least one year. The injuries resulted in permanent disablement. The claimant has incurred expenses on treatment, attendants, nourishment and diet as also suffered physical pain and mental agony. Under these heads, the claim was made for Rs. 84,800 before the Tribunal.
6. By the impugned judgment and award, the Tribunal reached to the conclusion that the said accident was a result of rash and negligent driving of the truck by its driver respondent No. 2. The Tribunal also reached to the conclusion that at the relevant time, the said truck was owned by respondent No. 3 and was validly insured with the appellant insurance company and passed an award of Rs. 40,000 in favour of the respondent-claimant holding the driver, owner and the appellant liable jointly and severally.
7. Learned counsel for the appellant contended that the said accident took place on 26.3.1986 at 9.30 a.m. and the owner of the truck respondent No. 3 without disclosing the fact of the accident, obtained the cover note in respect of the truck in question commencing for the period from 24.3.1986 to 23.3.1987. According to the learned Counsel for the appellant the said cover note No. 375189 was not issued on 24.3.1986 but in fact it was issued after 29.3.1986. It was further contended that the amount of premium received by the agent of the appellant insurance company, was deposited with the insurance company on 31.3.1986 and, therefore, he contended that the appellant can only be held liable from the date it actually received the premium in its office and not from the date when the premium was received by the agent of the appellant insurance company.
8. Learned counsel for the respondent-claimant has supported the judgment and award impugned. He contended that the said accident took place on 26.3.1986 at 9.30 a.m. whereas truck No. RSM 1099 involved in the accident was under a valid insurance commencing for the period with effect from 24.3.1986 to 23.3.1987 and as such, on 26.3.86, the said truck was under a valid insurance and, therefore, by virtue of provisions of Section 95(5) and Section 96(1) of the Motor Vehicles Act, 1939 (for short 'the Act'), the appellant insurer is liable for the compensation.
9. The appellant filed written statement before the Tribunal wherein it was pleaded that it appears from the cover note that the owner of the vehicle obtained the cover note from the backdate. It was pleaded that the amount of premium was received in the office of the appellant insurance company after 26.3.86 and, therefore, the said cover note is ab initio void. It was also pleaded that unless it is established by official receipt as to when the amount of premium against the said cover note was actually deposited in the office of the insurance company, the appellant would not be liable for compensation. The Tribunal framed issue Nos. 3, 4 and 5 on the basis of pleadings of the appellant. The appellant insurance company issued the insurance policy in respect of truck No. RSM 1099 vide Exh. 12 covering risk for the period w.e.f. 24.3.1986 to 23.3.1987. In the policy, the date of proposal is shown to be of 24.3.86 as also the cover note No. 375189 is shown to have been issued on 24.3.86. The commencement of the policy is also shown to be w.e.f. 24.3.1986. Undisputedly, the appellant has not cancelled the policy. There is no evidence on record to suggest that the appellant has made any correspondence with the owner of the vehicle with regard to the policy being obtained from backdate. Had the cover note been obtained after the accident from the backdate, there was no occasion for the appellant insurance company to have issued the policy for the period commencing from 24.3.1986 to 23.3.87. It appears that the insurance company has taken the plea of obtaining the cover note from the backdate only in order to avoid its liability for the compensation to the claimant. Even otherwise, the claimant being third party has acquired right to receive compensation from the appellant insurance company on issuance of the cover note Exh. 11 and the policy Exh. 12. In Oriental Insurance Co. Ltd. v. Inderjit Kaur 1998 ACJ 123 (SC), the Hon'ble Supreme Court held as under:
Despite the bar created by the Section 64VB of the Insurance Act, the appellant, an authorised insurer, issued a policy of insurance to cover the bus without receiving the premium therefor. By reason of the provisions of Sections 147(5) and 149(1) of the Motor Vehicles Act, the appellant became liable to indemnify third parties in respect of the liability which that policy covered and to satisfy awards of compensation in respect thereof notwithstanding its entitlement (upon which we do not express any opinion) to avoid or cancel the policy for the reason that the cheque issued in payment of the premium thereon had not been honoured.
10. It was further held that the policy of insurance issued by the appellant was a representation upon which the authorities and third parties were entitled to act. The appellant insurer was not absolved of its obligations to third parties under the policy because it did not receive the premium.
11. In New India Assurance Co. Ltd. v. Rula 2000 ACJ 630 (SC), the Hon'ble Supreme Court reiterated the same view and held as under:
The contract of insurance in respect of motor vehicles has, therefore, to be construed in the light of the above provisions. Section 146(1) contains a prohibition on the use of the motor vehicle without an insurance policy having been taken in accordance with Chapter XI of the Motor Vehicles Act. The manifest object of this provision is to ensure that third party, who suffers injuries due to the use of the motor vehicle, may be able to get damages from the owner of the vehicle and recoverability of the damages may not depend on the financial condition or solvency of the driver of the vehicle who had caused the injuries.
12. It was further held that any contract of insurance under Chapter XI of the Motor Vehicles Act, 1988 (corresponding to Chapter VIII of the Motor Vehicles Act, 1939) contemplates a third party who is not a signatory or a party to the contract of insurance but is, nevertheless, protected by such contract. In New Asiatic Insurance Co. Ltd. v. Pessumal Dhanamal Aswani 1958-65 ACJ 559 (SC), the Hon'ble Supreme Court held that the rights of the third party to get indemnified can be exercised only against the insurer of the vehicle. The Hon'ble Apex Court further held in New India Assurance Co. Ltd. v. Rula 2000 ACJ 630 (SC), that the third party is not concerned and does not come into the picture at all in the matter of payment of premium. Whether the premium has been paid or not is not the concern of the third party who is concerned with the fact that there was a policy issued in respect of the vehicle involved in the accident and it is on the basis of this policy that the claim can be maintained by the third party against the insurer. The Hon'ble Supreme Court further held that even if the insurance policy is cancelled on the ground that the cheque through which premium was paid was dishonoured, would not affect the rights of the third party which had accrued on the issuance of the policy on the date on which the accident took place. If, on the date of accident, there was a policy of insurance in respect of the vehicle in question, the third party would have a claim against the insurance company and the owner of the vehicle would have to be indemnified in respect of the claim of that party. Subsequent cancellation of the insurance policy on the ground of non-payment of premium would not affect the rights already accrued in favour of the third party. In the cases of Oriental Insurance Co. Ltd. v. Inderjit Kaur 1998 ACJ 123 (SC) and New India Assurance Co. Ltd. v. Rula (supra), the amount of premium was paid by the insured by cheque, which was ultimately dishonoured and as such against the insurance policy, no premium was received by the insurance company, even then the Hon'ble Supreme Court held that so far as the third party is concerned, right of realising the compensation accrues in favour of the third party on issuance of the policy and it is a concern between the insured and the insurance company and the right of third party to recover compensation from insurer would not be affected in the way so far as compensation to third party is concerned. In the instant case, from the record it is obvious that the cover note, Exh. 11, was issued on 24.3.86, premium was received by the agent of the insurance company on 24.3.86 and on the basis of this, the insurance company issued the policy Exh. 12 for the period from 24.3.1986 to 23.3.1987 and undisputedly neither the insurance company cancelled the policy nor refunded the premium received from the insured and as such, the policy Exh. 12 was subsisting for the period from 24.3.1986 to 23.3.1987 and as such, on the date of the accident, i.e., 26.3.1986, the insurance policy Exh. 12 was very much in existence and subsisting and as such, by virtue of the above noticed provision of the Motor Vehicles Act, 1939, the insurer cannot wriggle out from its liability. The Tribunal has considered the entire material in right perspective while deciding issue Nos. 3, 4 and 5. In my considered opinion, the Tribunal was justified in fastening the liability on the appellant insurer. In this view of the matter, I find no error in the judgment impugned.
13. In view of the aforesaid discussion, there is no merit in this appeal. Accordingly, it fails and is hereby dismissed. There will be no order as to costs.