National Insurance Company Limited v. Ashwani Kumari

Facts:

The appellant- National Insurance Company Limited, approached the Jammu and Kashmir High Court against the judgement passed by the Motor Accidents Claims Tribunal, Jammu dated 28^th April 2017. On 12-02-2013 at about 6:30 pm, the driver (respondent no.3) was rashly and negligently driving a motor vehicle (Nano car) bearing registration no- JK02BA-1085, near Nai Balla Camp and hit a scooter bearing no- JK02AA-5268 causing an accident. Due to the accident, respondent no.1- the claimant travelling on the scooter as a pillion rider was seriously injured and suffered permanent disability to the extent of 5%. Respondent no.1 filed a claim petition before the Tribunal claiming a compensation for the injuries and disability suffered by him due to the accident. The tribunal framed the following issues for determination:

1. Whether an accident took place on 12-02-2013 near the Nai Balla Camp due to rash driving of the vehicle bearing the no-JK02BA-1085 by its driver which caused the accident that injured the claimant and caused him permanent disability.
2. If the first issue is proved, is the petitioner (respondent mo.3) entitled to compensation? If so to what amount and from whom? 
3. Whether the driver of the Nano car drove it in a way which violated the insurance policy and if the insurance company is not liable.
4. Relief.

The claimant gave evidence as a witness and also examined another witness to support his claim, the insurance company examined the owner and driver of the vehicle as witnesses to discharge the burden of proof for issue no. 3. The Tribunal went through the evidence and position of law and decided issue no. 1 and 3 in favour of the claimant and directed the insurance company to pay a sum of Rs. 88,045/- along with a future interest @ 7.5% p.a. to the claimant. The appellant insurance company has thus approached the Jammu and Kashmir High Court against this order of the Tribunal. 

Issues:

• Whether the claimant is entitled to compensation from the insurance company for the injuries and disability suffered by him due to the accident.
• Whether the insurance company can escape liability for payment of compensation by proving the driver’s license was fake/invalid which is against the Insurance Policy.

Legal Provisions:

• Motor Vehicles Act, 1988 Section 163 A- Special provisions as to payment of compensation on structured formula basis.

Appellant’s Contention:

The counsel for the appellant submitted that the insurer had proved issue no.3 as it was proved that the license held by respondent no.3 at the time of the accident was fake and so the insurance company is absolved of the liability to pay compensation. They further submitted that despite this finding the Tribunal directing the insurance company to pay compensation to the claimant was not right. 

Observations of the Court:         

The matter was heard by the Jammu and Kashmir High Court, single-judge bench of Sanjeev Kumar, J. The court observed that there was no merit in the ground raised by the insurer for challenging the Tribunal’s award. The court further observed that thought the insurance company had proved that the license of respondent no.3 was fake it was not able to prove if the owner of the vehicle had engaged the services of respondent no.3 even after knowing that his license was fake/invalid. The court referred to the case of National Insurance Company Limited v. Swaran Singh and others (2004), where the three-judge bench of the Supreme Court dealt with the position of law raised in the present case, the apex court going through Chapter XI of the Motor Vehicles Act,1988 had observed that a mere absence of, or fake/invalid driver’s license, or disqualification of driver at the relevant time, are not in themselves relevant defences available to the insurer against the insured or the third parties. The insurance company has to prove that the insured was negligent or had failed to take reasonable care in fulfilling policy condition on use of vehicle by a duly licensed driver or one who was not disqualified, to absolve itself of the liability towards the insured. The insurance company has to not only establish all the available defences but must also establish breach on part of the owner of the vehicle, the burden of proof will then shift on the owner. The breach or breaches should be crucial so as to have contributed to the cause of accident. The court observed that in the evidence produced by the insurer before the Tribunal, it was not suggested that the insured was negligent or had failed to take reasonable care before engaging the service of respondent no-3 as driver to find if his license did not fulfil the lawful requirements. The court held that the present case was not one where the breach on condition of license was so crucial as to contribute to the cause of accident. 

Judgement:

The court found no merit in the appeal of the National Insurance Company Limited and so dismissed it along with the connected application. The judgement and award of the Tribunal was upheld, the court directed the compensation amount to be released in favour of the claimant according to the terms of the Tribunal’s award, after proper identification and verification.

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SURENDRA KUMAR BHILAWE VERSUS THE NEW INDIA ASSURANCE COMPANY LIMITED

Facts

1. The current case is a civil appeal against the judgment and order passed by the national consumer disputes redressal commission of New Delhi, on the 23rd of February 2015.
2. The appellant owned an Ashok Leyland truck covered by the policy of insurance issued by the respondent effective from 2nd of June of 2011 to the 1st of June 2012.
3. On 11th of November 2011, the truck was loaded with Ammonia Nitrate at Raipur to travel to Dhanbad and was driven by Driver, Rajendra Singh.
4. On 13th of November 2011, the truck met an accident near the Bhakuwa Toil Police Station, Gulma in Jharkhand.
5. On the 25th November, the Appellant lodged a claim with the Respondent through one Mohammad Illiyas Ansari. On receiving the information, the respondent appointed an independent Surveyor and loss Assessor, who conducted a spot survey and submitted a report on the 29th of November 2011.
6. The respondent, thereafter, appointed one Shri Gyan Chandra, Valuer, Surveyor, Loss Assessor and Investigator to conduct the final survey who submitted a report dated 25.1.2012 assessing the loss recoverable from the insurer at Rs.4,93,500/- after deduction of salvage value.
7. The respondent later issued a show-cause notice to the appellant to determine why the appellant should not be repudiated, as he had sold the truck to Mohammad Iliyas Ansari on 11th of April 2008 but the Appellant continued to be the registered owner of the said truck, on the date of the accident.
8. It was determined that Appellant purchased the truck with finance from ICICI bank and stood Hypothecated to ICICI bank and it cannot be transferred without the bank issuing a ‘no objection’, which had not been issued to the respondent. The Appellant had also not cleared to bank dues till the date of the accident.
9. The appellant had duly replied to the show cause notice and sent a legal notice to the respondent to which he received no reply. The respondent disputed the claim on the grounds that the show cause was submitted by Mohammad Iliyas Ansari and as they also delayed in filing the police complaint and reporting the accident to the respondent.
10. Aggrieved by the action on the respondent the appellant approached the district court. On the grounds that,
11. Even when that sale agreement with Mohammad Iliyas Ansari was dated 11.4.2008, the Appellant continued to pay instalments towards repayment of the loan obtained from ICICI Bank.
12. The Appellant had produced documents to show that he had paid the premium for the insurance policy after 11.4.2008.
13. The respondent had not produced any materials to show said that the insurance premium had not been paid by the Appellant but had been paid by Mohammad Iliyas Ansari.
14. The said truck was registered in the name of the Appellant and the permit for operating the said truck for the carriage of goods also stood in his name.
15. Mohammad Iliyas Ansari had not objected to releasing of compensation to the Appellant for damage caused to the vehicle, by reason of the accident.
16. The respondent had not established that Driver, Rajendra Singh was an employee of Mohammad Iliyas Ansari.

The district court ordered the respondent to pay Rs.4,93,500/- to the Appellant within a month along with interest @ 6% per annum from the date of filing of the complaint which is 6^th October 2012 and further asked the respondent to pay extra Rs. 5000 for the mental agony and 2000 for the cost of litigation.

1. The respondent applied to state commission, which was dismissed, then he further challenged the order of the state commission in the national commission.
2. The National commission allowed the revision petition and set aside the orders of the district forum and state commission on the grounds that the appellant had sold the truck to Mohammad Illiyas Ansari for a consideration of 1,40,000 and that he made a delay in filing the police complaint and the claim for reimbursement.

Issues

Whether transfer of possession is enough requirement to determine even the transfer of ownership of the Vehicle.

Judgement

The hon’ble judges observed that the national commission overlooked the definition of ‘owner’ according to the Section 2(30) of the Motor Vehicles Act, 1988 which is the person in whose name the motor vehicle stands registered. The court also stated that it is necessary to note the difference between definition of owner in Section 20(30) of the Motor Vehicles Act of 1988 and the definition of owner in the Motor Vehicles Act of the 1939 which has repealed and replaced the definition of owner from the person in possession of the motor vehicle to the person under whose name the vehicle has been registered.

The court determined that it is difficult to accept that a person who has transferred the ownership of the truck on receipt of consideration does not apply for transfer of registration or transfer of permit, and continue to incur the risks and liabilities of ownership of the vehicle under the provisions of law.

The court also held that the FIR was lodged within three days of the accident and as it was a major accident a slight delay on the part of the traumatized driver to lodge an FIR, cannot defeat the legitimate claim of the insurance.

The court held that absence of ‘No Objection’ from the financier bank although it was imperative for transfer makes the contract unlawful and void under section 10 of the Contract Act, 1872.

In view of the definition of ‘owner’ in Section 2(30) of the Motor Vehicles Act, the Appellant remained the owner of the said truck on the date of the accident and the Insurer could not have avoided its liability for the losses suffered by the owner on the ground of transfer of ownership to Mohammad Iliyas Ansari claim of the insured and as the insurance has not been rejected on the ground of the same not being covered by the policy of insurance, but on the ground of purported transfer to a third party by entering into a sale agreement it nullifies the ground and makes the judgement of the National commission Unsustainable.

The court ordered the respondent to pat the Appellant a sum of Rs.4,93,500/- as directed by the District Forum with the interest of 9% per annum from the date of claim till the date of payment, a sum of Rs.5,000/- for mental agony and the composite sum of Rs.1,00,000/- the agony and cost caused by court dues and the amounts is to be paid to the Appellant within six weeks from date of the judgment and order

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