Supreme Court of India
BALBIR KAUR & ORS.versusNEW INDIA ASSURANCE COMPANY LTD. & ORS.
- Citation
- 2009 INSC 517
- Decided
- 15 April 2009
- Disposal
- Case Partly allowed
- Bench
- S B SINHA
Holding
The insurer was not liable as the policy was issued to take effect from a future date without the holder’s consent, and the Supreme Court, exercising its discretion under Article 142, directed that the insurer not recover the amount from the claimants, subject to its rights against the vehicle owner and driver.
Summary
The deceased Baljit Singh was killed when his scooter was hit by a bus on 18 March 1996. His family claimed compensation under Section 166 of the Motor Vehicles Act and the Tribunal awarded Rs 7.96 lakh. The insurer argued that the cover note was issued on 15 March 1996 but was to take effect from 19 March 1996, so it was not liable for the accident; the High Court accepted this view and set aside the award, ordering the amount to be refunded to the insurer. The claimants had already withdrawn the deposited amount, and the Supreme Court was asked whether, in view of the peculiar facts, it could direct the insurer not to recover the sum from them under its discretionary power under Article 142. The Court held that a policy issued to take effect from a future date must have the holder’s consent, which was absent, and therefore the insurer was not liable; moreover, in the interest of justice the insurer should not be permitted to recover the amount from the claimants, subject to its right against the vehicle owner and driver. The appeal was partly allowed, directing the insurer not to recover the amount from the claimants.
Issues considered
- Whether the insurance policy was in force at the time of the accident and thus whether the insurer was liable to pay compensation.
- Whether the Supreme Court can, under Article 142, direct the insurer not to recover the amount from the claimants given the withdrawal of the deposited sum.
Legislation cited
- Insurance Act, 1938s. 64VB
- Motor Vehicles Act, 1988s. 146, s. 147, s. 166
Subjects
insurance liabilitymotor vehicle accidentcompensationpolicy effective dateArticle 142Section 64VBthird party riskSupreme Court discretionary jurisdiction
Judgment
[2009] 6 S.C.R. 327
... .,
BALBIR KAUR & ORS. A
v.
NEW INDIA ASSURANCE COMPANY LTD. & ORS.
(Civil Appeal No.1838 of 2009)
APRIL 15, 2009
B
[S.B. SINHA AND P. SATHASIVAM, JJ.]
-· Constitution of India, 1950 - Article 142 - Fatal accident
- Tribunal awarded compensation holding insurer liable -
High Court set aside the award opining that accident took c
place a day before when policy to take effect, hence insurer
was not liable - Meanwhile claimants withdrew the amount
deposited by insurer - Held: In view of peculiar facts and
circumstances of the case, interest of justice would be
subserved if in exercise of discretionary jurisdiction under
.., Article. 142 of Constitution, insurer is directed not to recover
.
D
the amount from claimants - Motor Vehicles Act, 1988 -
s.166 - Insurance Act, 1948 - s.64VB
The deceased was riding on a two wheeler scooter
which was hit by a bus. As a result, he died. The Tribunal
awarded compensation of Rs.7.96 lacs to the claimants. E
High Court allowed the appeal of Insurance Company
and set aside the award of tribunal opining that the cover
note of the insurance was issued on 15.03.1996 but the
~
same was to take effect from 19.03.1996 and the accident
took place on 18.03.1996, the insurer was not liable F
therefor. The High Court, in its impugned judgment,
directed refund of the said amount to the Insurance
. Company. Hence the appeal.
A limited notice was issued to this Court, confining
... ..J to the question as to whether in the peculiar facts and G
circumstances of the case and, particularly, in view of the
fact that the appellants already withdrew the amount
deposited by the Insurance Company, this Court can
issue a direction to the Insurance Company to recover
327 H
328 SUPREME COURT REPORTS (2009] 6 S.C.R.
-~
A the amount from the owner and the driver in the same
proceedings.
Partly allowing the appeal, the 1Court
HELD: 1. Section 64 VB of the Insurance Act, 1938
8 merely provides that no insurer shall assume any risk in
India in respect of any insurance business on which
premium is not ordinarily payable outside India unless
and until the premium payable is received
I
by him or is
guaranteed to be paid by such persons in such manner
and within such time as may be prescribed or unless and
C until deposit of such amount as may be prescribed, is
made in advance in the prescribed manner. [Para 12)
[332-A-B]
2. A policy which is issued from a future date must
be with the consent of the holder of the policy. The
D insurance company cannot issue a policy unilaterally
from a future date without the consent of the holder of a
policy. Even the circular letter was not produced and/ or
no material was placed as to why the policy was issued
from a later date. Keeping in view the peculiar facts and
E circumstances of the case and in particular having regard
to the fact that the appellants have already withdrawn the
amount, the interest of justice would be subserved if this
Court in-exercise of its discretionary jurisdiction under
Article 142 of the Constitution of India direct the
insurance company not to recover the amount from the
F appellants subject of course to its right of recovery from
the owner and the driver of the vehicle. [Paras 13 and 15)
[332-C-G]
National Insurance Co. Ltd. v. Jikubhai Nathuji Dabhi
(SMT) and Ors. (1997) 1 sec 66 and J. Kalaiveni and Ors.
G v. K. Sivshankar and Anr. JT (2001) 10 SC 396, referred to.
Case Law Reference:
(1997) 1 sec 66 referred to Para 10
H JT (2001) 10 SC 396 referred to Para 10
BALBIR KAUR & ORS. v. NEW INDIA ASSURANCE 329
... ~
COMPANY LTD. & ORS .
CIVIL APPELLATE JURISDICTION : Civil Appeal No. A
1838 of 2009.
From the Judgment & Order dated 21.03.2007 of the High
Court of Delhi in MAC Appl. No. 64 of 2004.
Santosh Chaurihaa, Hari Shankar K, Vikas Singh Jangra B
and Pramod Kharwar for the Appellant.
Salil Paul (for Manjeet Chawla) for the Respondents.
- -.j
The Judgment of the Court was delivered by
5.8. SINHA, J. 1. Baljit Singh, deceased was riding on a c
two-wheeler (scooter) bearing Registration No. DAB 6529. The
said scooter was hit by a bus driven by one Ramesh Singh
Rawat. He suffered multiple grievous injuries in the said
accident. He was taken to Deen Dayal Upadhya, Hospital, New
Delhi where he was declared 'brought dead'.
D
41( 2. Appellants filed an application before the Motor
Accident Claim Tribunal, Deihi (Tribunal) under Section 166 of
the Motor Vehicles Act, 1988 (for short "the Act") claiming a
sum of Rs. 20,00,000/- towards compensation for death ~f Baljit
Singh inter alia on the premise that the accident was caused
by reason of rash and negligent driving of the said bus by its E
driver Shri Ramesh Singh Rawat.
3. In the said claim petition, the income of the deceased
was stated to be Rs. 4,000/- per month. He was aged 34 years
·-'.
on the date of accident. Indisputably, in relation to the said
accident, a criminal proceeding was also initiated under F
Sections 279 and 304A of the Indian Penal Code.
4. The Tribunal upon considering the materials brought on
record by the parties awarded a sum of Rs. 7,96,000/- to the
appellants. Respondent No. 1 preferred an appeal thereagainst
'
., -; before the High Court. By reason of the impugned judgment, G
the High Court set aside the award passed by the Tribunal
opining that as the cover note of the insurance had been issued
on 15.03.1996 but the same was to take effect from 19.03.1996
and the accident having taken place on 18.03.1996, the insurer
was not liable therefor. H
330 SUPREME COURT REPORTS [2009] 6 S.C.R.
_..
A 5. Appellants are, thus, before us. "'
6. By an order dated 13.08.2007, this Court issued a
limited notice to the following effect:
"Issue notice confined to the question as to whether in the
B peculiar facts and circumstances of the case and,
particularly, in view of the fact that the petitioners have
already withdrawn the amount deposited by the Insurance
Company, this Court can issue a direction as to whether ...
the Insurance Company may recover the amount from the
owner and the driver in the same proceedings."
c
7. Before adverting to the contentions raised before us, we
may notice that the High Court while issuing notice to the
appellants directed the respondent No. 1 herein to deposit the
awarded amount pursuant whereto the said amount has been
deposited. Appellants have also withdrawn the same.
D
However, the High Court, in its impugned judgment,
directed refund of the said amount to the respondent No. 1.
"'"
8. The Tribunal in the said claim petition inter a/ia
formulated the following issues:
E
"1. Whether the insurance cover in the present case was
effectively only from 19.3.96 to 10.3.97, replaced on behalf
of R-3 in their W070PR3.
2. Whether premium insurance policy referred to in above
F issue No. 1 was paid on 15.3.96 and if so to what effect?"
9. On the first issue, the Tribunal noticed that in the cover
note the policy was shown to have been issued with effect from
18.03.1996 in view of a circular issued by the insurance
company but it had not been given effect to. Having regard to
G the fact that a photocopy thereof had been produced, it was
:. '9
held:
" ... Besides the proposal form relating to the impugned
insurance policy has also not been produced to show as
to what were the terms and conditions on which the
H
BALBIR KAUR & ORS. v. NEW INDIA ASSURANCE 331
COMPANY LTD. & ORS. [S.B. SINHA, J.]
insurance policy was to be executed with regard to the A
offending vehicle. There is no material on record to show
that the insured was made aware of the office circular Ex-
R3W1 /B that if there was no other insurance policy in
operation with regard to the offending vehicle immediately
preceding 15.3.96 in these circumstances the insurance
policy covering third party interest would be issued three
B
days after the receipt of the proposal. The material on
record placed by both the petitioner as well as respondent
No. 3 in clear terms shows that the injured had made the
payment of the premium on 15.3.96 and there was no
reason for the insurance company to have issued the c
insurance policy covering third party interest w.e.f.
18.3.96... "
10. The High Court, on the other hand, having regard to
the decisions of this Court in National Insurance Co. Ltd. v.
Jikubhai Nathuji Dabhi (SMT) and Ors. [(1997) 1 SCC 66] D
and J. Kalaiveni and Ors. v, K. Sivshankar and Anr. [JT 2001
(10) SC 396], held:
"9. In view of the clear cut position of law explained by the
Supreme Court, it is clear that policy of insurance
commences risk coverage only in terms of the policy of E
insurance and if certificate of insurance has not been
issued, on the terms of the cover note."
11. Chapter XI of the Act provides for insurance of motor
vehicles against third party risks. Indisputably, the deceased
was a third party. In terms of Section 146 of the Act, an owner F
of a motor vehicle must take out an insurance in respect of a
third party risk. Section 147 of the Act provides that a policy of
insurance referred to in Section 146 thereof must be a policy
which satisfies the conditions under Clauses (a) and (b) of Sub-
section (1) thereof. Sub-section (5) of Section 147 reads as G
under:
"(5) Notwithstanding anything contained in any law for tile
time being in force, an insurer issuing a policy of insurance
under this section shall be liable to indemnify the person
or classes of persons specified in the policy in respect of H
332 SUPREME COURT REPORTS [2009] 6 S.C.R.
....
A . any liability which the policy purports to cover in the case "
of that person or those classes of persons."
12. Section 64 VB of the Insurance Act, 1938 merely
provides that no insurer shall assume any risk in India in respect
of any insurance business on which premium is not ordinarily
B payable outside India unless and until the premium payable is
received by him or is guaranteed to be paid by such persons
in such manner and within such time as may be prescribed or
unless and until deposit of such amount as may be prescribed, :.- --
is made in advance in the prescribed manner.
c 13. For the purpose of this case, we would assume that
an insurance policy, in law, could be issued from a future date.
A policy, however, which is issued from a future date must be
with the consent of the holder of the policy. The insurance
company cannot issue a policy unilaterally from a future date
D without the consent of the holder of a policy. Even the said
circular letter had not been produced and/ or no material was
placed as to why the policy was issued from a later date. It is,
...
however, not necessary for us to delve deep into the matter in
view of the limited notice issued by this Court.
E 14. Respondent No. 3, however, owner of the vehicle has
not questioned that part of the order passed by the High Court.
He, therefore, accepted the judgment of the High· Court.
Accordingly, liability to pay the awarded amount by him is not
in question.
).
F 15. Keeping in view the peculiar facts and circumstances
of the case and in particular having regard to the fact that the
appellants have already withdrawn the amount, the interest of
justice would be subserved if this Court in exercise of its
discretionary jurisdiction under Article 142 of the Constitution
of India direct the insurance company not to recover the amount
G from the appellants herein, subject of course to its right of
~ ... •
recovery-from the owner and the driver of the vehicle .
.. 16. The appeal is allowed to the aforementioned extent.
No costs.
H D.G. Appeal partly allowed.
Search Indian case law
Ask in plain English, not just keywords. 25,000 AI words free, no card.
Try "insurance liability"Sign in to search