In the context of the said factual and legal situation, it is to be held that in contract of insurance in respect of motor vehicles, the issuance of policy becomes effective when premium is received. The insurer cannot postpone the assumption of liability after receipt of premium. The necessary verification of vehicle and the documents should be done before receipt of premium. However, under the said pretext the insurer cannot postpone the assumption of risk, other than from the date and time of receipt of premium.
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
M.F.A. No. 11677 of 2005 (MV)
Decided On: 30.09.2010
Zameer Ahamed Vs. B.R. Narayana Shetty and Ors.
Hon'ble Judges/Coram:
N.K. Patil and H.S. Kempanna, J.
Author: N.K. Patil, J.
Citation: MANU/KA/1774/2010,2012 ACJ 1322(Karnataka).
1. This appeal is by the owner of the vehicle against the judgment and award passed in M.V.C. No. 2527 of 2001 on the file of the Fifth Additional M.A.C.T., Court of Small Causes, Metropolitan Area (SCCH-20), Mayo Hall Unit, Bangalore (hereinafter called for short 'the Tribunal'). The Tribunal, by its judgment and award, awarded a sum of Rs. 9,64,000 with interest at 6 per cent from the date of petition till the date of payment as against the claim of Rs. 20,00,000 on account of injuries sustained by the claimant in a road accident and fastened the entire liability on the owner of the offending vehicle. Aggrieved by the same, the owner of the vehicle has presented this appeal.
2. The respondent No. 1 herein filed a claim petition under section 166 of the Motor Vehicles Act claiming compensation of Rs. 20,00,000 for the injuries sustained in a road accident which occurred on 21.5.2001 at about 12.15 p.m. on M.G. Road, near Trinity Circle Signal, when the respondent No. 1 was travelling in a bus as a passenger bearing No. KA 07-7788 from Hoskote to Bangalore. The driver of the said bus drove the same in a rash and negligent manner which made the claimant to fall down on the road and the back wheel of the bus ran over the legs of the claimant, as a result of which he sustained grievous injuries. Immediately he was shifted to Bowring Hospital and then shifted to LNR Orthopaedica & General Hospital, Bangalore. He was treated for 255 days and both his legs were amputated. He was aged 50 years at the time of accident. The claimant was a general merchant and commission agent by profession and was earning about Rs. 20,000 per month.
3. The Tribunal considering the fact that both the legs of the claimant are amputated, the pain and agony he might have suffered and also the fact that he was unable to do the business as effectively as before and after evaluation of the oral and documentary evidence on record, allowed the claim petition in part and awarded a sum of Rs. 9,64,000 with interest at 6 per cent as compensation for the injuries sustained. The Tribunal held that the driver of the vehicle was rash and negligent and as he was responsible for the accident, it fastened the entire liability on the owner of the offending vehicle. Therefore, being aggrieved by the same, the owner of the offending vehicle is before this court in this appeal challenging the said judgment and award of the Tribunal.
4. Learned counsel for the appellant, Mr. K. Suryanarayana Rao, at the outset submits that fastening the entire liability on the owner of the offending vehicle by the Tribunal cannot be sustained and the same is liable to be set aside. To substantiate his submission, he relied on the judgment of the Division Bench of this court in the case of National Insurance Co. Ltd. v. Bhadramma, MANU/KA/0393/2009 : 2010 ACJ 1687 (Kar), wherein the judgment of the Apex Court in the case of New India Assurance Co. Ltd. v. CM. Jaya, MANU/SC/0031/2002 : 2002 ACJ 271 (SC), has been referred to, which states that the liability of the insurer is strictly in accordance with the terms of the policy. The learned counsel further pointed out that the insured had paid the premium and was issued with the receipt as also the policy to that effect. Therefore, he submitted that fastening the entire liability on the appellant owner cannot be sustained and is liable to be set aside.
5. On the contrary, the learned counsel appearing for respondent No. 2-insurer, Mr. B.C. Seetharama Rao, contended that the judgment passed by the Tribunal, fastening the liability on the insured-owner, is just and proper and the insurer is not liable to satisfy the award passed by the Tribunal. Knowingly the appellant has not insured the liability before the expiry of the earlier policy period. As such there is default on the part of the insured, the liability cannot be fastened on to the insurer on the ground that he has paid the premium and got the receipt. Mere issuance of policy and payment of premium does not give any right to fasten the liability on the insurer. Therefore, he contended that interference by this court is not called for.
6. After careful consideration of the submission of the respective counsel, the only point that arises for consideration in this appeal is:
Whether fastening of entire liability on the owner of the vehicle is sustainable in law?
7. As a matter of fact, the appellant has insured the vehicle and paid the premium for which he has been issued with the receipt. As on the date of the accident the policy was in force. As pointed out by the learned counsel, this court had an occasion to consider the said question in the case of National Insurance Co. Ltd. v. Bhadramma, MANU/KA/0393/2009 : 2010 ACJ 1687 (Kar), wherein it is held that the insured had also paid premium. The insurer had issued a receipt to that effect and also the policy. Therefore, the question was whether the insurer can defer the assumption of risk at a later point of time other than from the date and time of receipt of the premium. This court relied on the judgment of the Apex Court in Oriental Insurance Co. Ltd. v. Sunita Rathi, MANU/SC/0840/1998 : 1998 ACJ 121 (SC), where it also lays down the salutary principle of law that the liability of the insurer would commence from the date of the policy and if any time is mentioned in the policy, from that time the liability becomes effective and not earlier to that. The coverage of insurance for a motor vehicle would virtually stand on a different footing unlike in other types of contract of insurance. It is mandatory that the third party risk should be covered when a vehicle has to ply in a public place. The insurance company being a State authority doing business of insurance is duty-bound to honour and implement the provisions of law. Section 64VB declares that insurer can assume the risk only upon the receipt of premium. Maybe, that in other types of contracts where insurance is sought, the insurer may have the discretion to enter into a contract or not. But in respect of motor vehicles there is no discretion on the part of the insurer. The insurance company has to enter into the contract and issue policy in accordance with law, if proper premium is paid. In the context of the said factual and legal situation, it is to be held that in contract of insurance in respect of motor vehicles, the issuance of policy becomes effective when premium is received. The insurer cannot postpone the assumption of liability after receipt of premium. The necessary verification of vehicle and the documents should be done before receipt of premium. However, under the said pretext the insurer cannot postpone the assumption of risk, other than from the date and time of receipt of premium.
8. During the course of the argument, the learned counsel also relied on the judgment of the Supreme Court in the case of Oriental Insurance Co. Ltd. v. Dharam Chand, 2010 ACJ 2659 (SC), wherein it is held that insurance must be deemed to have commenced from the time of the accident or four hours later when the vehicle met with the accident and the owner must be deemed to have been covered by the insurance policy. Hence, it dismissed the appeal filed by the insurance company. Having regard to the various judgments referred to above, we are of the opinion that insurance company is liable to satisfy the award passed by the Tribunal. Therefore, the impugned award is liable to be set aside insofar as it relates to fastening the liability on the owner of the vehicle. Accordingly, we pass the following order:
(i) The appeal is allowed.
(ii) The judgment and award of the Tribunal passed in M.V.C. No. 2527 of 2001 on the file of Fifth Addl. M.A.C.T., Court of Small Causes, Metropolitan Area (SCCH-20), Mayo Hall Unit, Bangalore, is hereby set aside insofar as it relates to fastening liability on the appellant owner of the offending vehicle.
(iii) The liability is fixed on the respondent No. 2 insurance company and is directed to satisfy the judgment and award passed by the Tribunal, as expeditiously as possible, at any rate within a period of four weeks from the date of receipt of the copy of this judgment and award.
(iv) The statutory amount deposited by the appellant shall be refunded to the appellant immediately.
(v) The jurisdictional Tribunal is also directed to refund the amount that is deposited by the appellant by virtue of the interim order dated 10.2.2006 immediately after the deposit made by the respondent No. 2 insurance company.
Office to draw the award accordingly.
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