Madhya Pradesh High Court
Hussain Khan vs National Insurance Co. Ltd. on 3 July, 1997
Equivalent citations: I(1998)ACC747, 2000ACJ484
Author: J.G. Chitre
Bench: J.G. Chitre
JUDGMENT J.G. Chitre, J.
1. The appellant is hereby assailing the correctness, propriety and legality of the decree which has been passed by the VIIth Addl. District Judge, Indore in the matter of Civil Suit No. 16-B of 1988 by which the suit filed by the appellant (original plaintiff) has been dismissed.
2. The appellant claimed compensation to the tune of Rs. 28,000 plus interest Rs. 4,515 plus notice expenses Rs. 500 totalling Rs. 33,015 with interest at the rate of 18 per cent per annum. The truck bearing No. CPF 7449 is the cause. The appellant had approached one Malviya, the agent of the insurance company for insuring the said truck on 22.11.1983. After contacting Malviya, the appellant asked his brother Vali Suleman to get the proposal formulated from Malviya and to make necessary compliance in this context and to get the said truck insured. Malviya filled in the form necessary in this context and thereafter told Vali Suleman to send the form by post and to approach his Ujjain office for getting the said truck insured. After telling this, the appellant as per his averment went to his duty by driving the said truck and the said truck was involved in an accident on A.B. Road, near Dewas during the night of 25 and 26.11.1983. The damage to truck was valued to the tune of Rs. 28,000. A notice was issued to the insurance company for demanding the compensation in respect of the said accidental damage. Insurance company refused to pay and, therefore, appellant filed the suit which stood dismissed.
3. The insurance company contended that the policy in question was obtained by fraud and, therefore, insurance company is not liable to pay any amount to the appellant.
4. The insurance company contended that the fact of accident was not disclosed to the insurance company officers and by concealing this material fact the policy in question was obtained.
5. Learned trial judge recorded the evidence and after appreciating it held that the said policy was obtained by fraud played by the appellant and his brother and, therefore, insurance company was not liable to pay any compensation to the appellant. That finding along with others and impugned judgment and decree is the subject-matter of challenge in this appeal.
6. Mr. H.G. Shukla, counsel appearing for the appellant pointed out the evidence of appellant and his brother Vali Suleman as well as the evidence of Rameshchandra Jain, DW 2. He argued that Rameshchandra Jain issued the policy to the appellant in respect of the said truck by relying on the proposal which was sent by the agent of the insurance company, named Malviya. He submitted that the said form has been written by Malviya and the evidence on record also shows that at the earliest date the information in respect of the said accident was given to Malviya. He submitted that the said proposal along with documents were sent by Vali Suleman by post as instructed by Malviya and inward register on record shows that those documents were received in Ujjain office of the insurance company on 30.11.1983. Mr. Shukla further argued that the said policy has been issued after getting the payment of deficit amount and, therefore, now the insurance company cannot deny the liability of paying the amount which has been claimed by the appellant by the suit.
7. Mr. A.H. Khan, learned counsel for the insurance company argued that the evidence of appellant, Vali Suleman, Malviya, Ramesh Jain shows that very cleverly the fraud has been played by him and his brother. Mr. Khan submitted that there was no need for Vali Suleman to despatch the document of proposal by post. He further submitted that it was duty of the appellant to disclose the information in respect of said accident but by deceitful means concealed that information and by concealing the important facts approached the insurance company and, therefore, his suit has been rightly dismissed by the trial court.
8. Mr. Khan also submitted that the proposal was received in Ujjain office and the full amount of premium was also not paid by the appellant and that also caused infirmity in his contention and claim. Mr. Khan submitted further that when already said truck was insured for third party risk, there was no propriety to insure it through the respondent insurance company. Mr. A.H. Khan justified the impugned decree as correct, proper and legal.
9. The evidence on record proves that Malviya happens to be the duly appointed Insurance Inspector of the respondent insurance company and when the proposal in question was despatched to Ujjain office, he was working as such. He happens to be the agent of insurance company and, therefore, the insurance company is bound by the acts of its agent Malviya. It is pertinent to note here that it has come in the evidence of Rameshchandra Jain, DW 2, that he issued the insurance policy certificate in favour of the appellant effective from 23.11.1983 by placing reliance on proposal Dl which was handwritten by Insurance Inspector Malviya. Not only that but his evidence shows that he did not find any infirmity in proposal Dl as well as there was endorsement of Branch Manager Bajaj to issue such policy in favour of the appellant which was effective from 23.11.1983. It is pertinent to note at this juncture that when Rameshchandra Jain issued such policy in favour of appellant, he had permitted his brother Vali Suleman to pay deficit amount in context with the proposal. After accepting that deficit amount, said proposal was accepted by Rameshchandra Jain and Branch Manager Bajaj. When that was so, the submissions which have been advanced by Mr. A.H. Khan speaking of the infirmity in the said proposal loses all the significance.
10. Mr. A.H. Khan submitted that the appellant played fraud and by playing the fraud obtained the said insurance cover. I do not find any force in it because the said proposal Dl was written by none else but Malviya, who was acting as Insurance Inspector. He had asked Vali Suleman to despatch it by post to Ujjain office and the inward register which was produced by respondent shows that it was duly received by Ujjain office on 30.11.1983 and it was dealt with by DW 2 Rameshchandra Jain who had authority to issue the insurance policy to the person in whose favour the proposal was made, i.e., the appellant in this case. Not only that but the said proposal was endorsed by Branch Manager Bajaj. The said proposal was verified by Rameshchandra Jain as well as Branch Manager Bajaj. It is the evidence of Rameshchandra Jain that he did not find any infirmity in the said proposal Dl. Had there been force in the submissions which have been advanced on behalf of respondent by Mr. A.H. Khan, either Ramesh Jain or Bajaj would have suspected of it and there would not have been endorsement from Bajaj instructing to accept the proposal and the act from Rameshchandra Jain for issuance of the policy in favour of the appellant. The said proposal was in the handwriting of Malviya, Insurance Inspector, it was verified by concerned officer of Ujjain office, and, thereafter said proposal was accepted and that too with effect from 23.11.1983. At this juncture it is important to note that policies bearing Nos. PI 1 to P17 are on record which show that such different policies have been issued by insurance company in favour of others also and DW 3 Bajaj has also spoken about this.
11. Mr. A.H. Khan submitted that the behaviour of the appellant was not above board and he is guilty of concealing the material fact from the notice of the concerned officers of the insurance company before the policy was issued in his favour. Mr. Shukla argued that the appellant cannot be blamed for concealment of the accident which took place in the night between 25 and 26.11.83 because it has come in the evidence of Malviya that he was informed about the said accident orally. Mr. Khan pointed out that said information was given by the appellant after 15 days of the accident and, therefore, he cannot be permitted to make capital out of it. I do not uphold the submissions of Mr. Khan because it is the matter of experience that very few persons are in fit state of mind to give the information of the accident to the insurance company or its officers immediately after its occurrence. The span of 15 days in this case will not be sufficient enough to throw the appellant (original plaintiff) out of the court, so far the present suit is concerned. When that information was given to Malviya who was acting as agent of the insurance company in this matter, it was the duty of Malviya to give the information of that to concerned officer of Ujjain Branch well in time so as to prevent issuance of policy in favour of the appellant effective from 23.11.1983. Malviya has not done so and, therefore, the insurance company has to blame its agent for such default. Malviya was staying at Shujalpur at the relevant time. As informed by learned counsel, Shujalpur is a commercial town and well connected with important towns, with telephone facilities, including Ujjain. Malviya could have booked urgent call or lightning call for the purpose of passing that information to the concerned officers. When the insurance proposal is in the handwriting of its agent and it reaches its office as if channelised by its agent and thereafter the said proposal happens to be accepted by the officer or officers who are empowered in that context, insurance company cannot disown its responsibility when the remaining amount of premium is accepted before insurance policy is effected. Insurance cover can be made effective from earlier date also because after all it is a contract. The principal has to ratify the acts of the agents in such situation.
12. Mr. A.H. Khan had also submitted that when said truck was already insured with New India Assurance Co. Ltd., it was not necessary to have insured it again with the present insurance company two days earlier of the said accident. According to Mr. A.H. Khan said behaviour and acts are suspicious, exposing the mala fide intention of the appellant. Mr. H.G. Shukla submitted by referring to the record that Exh. D-4A shows that investigation was done in the matter by Lt. Col. Prem Verma who was appointed in that context by the present insurance company. The said report shows that the said truck was belonging to one Devendra Pal Singh s/o Dilipsingh and it was sold to present appellant. That also shows that when the said truck was belonging to Devendra Pal Singh, it was insured by third party insurance policy. Mr. Shukla argued that in the present matter the truck was insured with comprehensive insurance policy and not third party risk. Mr. Shukla further argued that in view of provisions of Motor Vehicles Act, 1939, the insurance cover used to be over after sale of the vehicle unless there was a transfer endorsement from the insurance company in favour of new purchaser. I find force in the submissions of Mr. Shukla in this context. A new purchaser would be definitely interested in getting wider and broader cover than the previous owner had in context with the vehicle. Apart from that, the new purchaser would be having the choice of having insurance cover for extended period. He cannot be prevented, nor the insurance company can be prevented from accepting such responsibility when the changed new owner is ready to pay higher premium and insurance company is ready to shoulder the said responsibility of providing wider insurance cover. After all it is a contract and when the contract is not void, parties cannot be prevented from accepting contracted liabilities and advantages.
13. It is further important to note at this juncture that the insurance cover which Devendra Pal Singh, the previous owner was having was to continue only up to 17.1.1984, that means when the cover was only for two months at the most, in such a situation it is well possible that the appellant might have gone for a wider and broader insurance cover than one which Devendra Pal Singh was having in respect of the present truck.
14. Thus, the learned trial court has lost sight of all these important facets of the matter and, therefore, landed in error by coming to the conclusion that the said policy was obtained by the appellant by playing fraud with concerned insurance officer. .Learned trial court had, therefore, landed in error by coming to the conclusion that the suit brought by the appellant deserves to be dismissed. That will have to be set aside and the suit of the appellant will have to be decreed.
15. Mr. H.G. Shukla, counsel for the appellant submitted that the interest needs to be awarded at the rate of 18 per cent per annum because the evidence of the appellant has not been challenged by the insurance company. Mr. Khan submitted that the rate of interest at 18 per cent per annum would be too excessive. He submitted that even the compensation awards to legal heirs of victims dying in the motor accidents are given with interest at the rate of 12 per cent per annum. He submitted that the insurance companies do business for larger interest of the society and the money involved is public money. I uphold the submissions advanced by Mr. Khan in this context. Therefore, the appellant would be entitled to get compensation of Rs. 28,000 with the interest at the rate of 12 per cent per annum from the date of filing of the suit.
16. Thus, the appeal is allowed with costs throughout. The respondent to pay Rs. 28,000 (Twenty-eight thousand) + Rs. 500 (Five hundred) as notice charges with interest at the rate of 12 per cent per annum from the date of filing of the suit. Counsel's fee as per schedule. Decree be drawn accordingly.