Another aspect in need of consideration is as to whether the liability of the Insurance Company under the insurance certificate/policy granted by it would cover the incident. This is in reference to the question as to the date and time from when the concerned vehicle would be deemed to be covered by the policy. In the present case, the incident occurred on 11.04.2017 at 14:15 hrs, whereas the insurance policy discloses that insurance was obtained at 15:54 hrs on 11.04.2017. In this regard, on facts, the MACT has found that the premium was paid/given prior to the accident and it was the internal procedure, due to which the policy was issued the next day and, thus, coverage under the policy would begin from the day the money (i.e. premium) was received by the Insurance Company. {Para 11}
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOs. 15016-15017 OF 2024
NATIONAL INSURANCE COMPANY LTD. Vs MAYA DEVI AND OTHERS
Author: AHSANUDDIN AMANULLAH, J.
Citation: 2024 INSC 1050.
Leave granted.
FACTS:
2. These appeals arise from the common Final Judgment and Order
dated 05.10.2018 rendered by a learned Single Judge of the High Court
of Punjab and Haryana at Chandigarh in F.A.O. Nos.2921/2018 (O&M)
and 2922/2018 (O&M) whereby, while dismissing the appeals preferred
by the Petitioner-Insurance Company, the High Court upheld the
compensation awarded to the claimants i.e., Respondents No.1 and 2
herein vide Award dated 01.02.2018 passed by the Motor Accidents
Claim Tribunal at Gurdaspur, Punjab (hereinafter referred to as the
‘MACT’) in the claim petitions1
filed by the Respondents No.1 and 2. The
MACT had awarded compensation to the tune of Rs.67,50,000/- and
Rs.8,70,000/- with interest @9% per annum to the Respondent No.1,
being the mother of Sh. Om Prakash and mother-in-law of Smt. Asha
Rani, and Respondent No.2, being the daughter of Sh. Om Prakash and
Smt. Asha Rani, who expired in an unfortunate road accident on
11.04.2017. The MACT assessed and quantified the compensation as
under:
1
MACT Cases No.09/2017 and 10/2017.
3
MACT Case No.09/2017
(On account of
Sh. Om Prakash’s
death)
No.10/2017
(On account of
Smt. Asha Rani’s
death)
Age of
Deceased
>45 y/o 41-45 y/o
Occupation of
Deceased
Havaldar in the
Indian Army and
was doing
agriculture work.
Homemaker &
used to do
stitching and
tailoring.
Income of
Deceased
Rs.46,129/- p.m.2 Rs. 5,000/- p.m.
Future
Prospects
30% Nil
Deductions
towards
Personal
Expenses
1/3rd Nil
Multiplier 14 14
Loss of
Dependency
Rs.67,20,000/- Rs.8,40,000/-
Loss of Love
and Affection
Rs.15,000/- Rs.15,000/-
Funeral
Expenses
Rs.15,000/- Rs.15,000/-
Total
Compensation
Awarded
Rs.67,50,000/-
R1/MotherRs.17,50,000/-
R2/DaughterRs.50,00,000/-
Rs.8,70,000/-
R1/MotherRs.70,000/-
R2/DaughterRs.8,00,000/-
2 Abbreviation for per mensem/per month.
4
3. The MACT held Respondent No.3, Respondent No.4 and the
Petitioner, being driver, owner and insurer, respectively, as jointly and
severally liable to pay the awarded compensation to the claimants. The
MACT specifically observed that the Petitioner-Insurance Company
could not avoid its liability to indemnify Respondent No.4, owner of
tractor bearing registration No.PB-06-Q-6846 and thus, held it liable to
pay compensation to the claimants.
4. The High Court, while considering the appeals preferred by the
Petitioner-Insurance Company and in view of the position on record,
particularly the evidence of the claimants and Ex. R-5, the proposal
form and Ex. R-6, the insurance policy, having gone unrebutted,
concluded that there was no reason to disbelieve the findings recorded
by the MACT after appreciation of evidence. It upheld the MACT’s
Award.
5. Aggrieved by the concurrent findings of the High Court and the
MACT, the Appellant (hereinafter referred to as the ‘Insurance
Company’) is before us.
5
SUBMISSIONS, ANALYSIS, REASONING AND CONCLUSION:
6. Having heard and considered the submissions advanced by
learned counsel for the parties and the facts and circumstances of the
case, we find that the present petitions are misconceived.
7. First and foremost, the basic contention put forth by the Insurance
Company is that the vehicle which was insured with it, was not involved
in the accident and some other vehicle was mentioned in the initial
Written Statement filed before the MACT. On this point, there is a
detailed discussion in the Award of the MACT itself which explains that
various witnesses have stated that it was the vehicle as described in
the complaint which was involved in the accident and further, that one
witness produced by the Insurance Company had only raised some
doubt with regard to the vehicle as claimed by the complainants, but not
with the make of the vehicle involved in the accident as the difference in
number was that instead of the vehicle that the complainants claimed
bore Registration No.PB-06-Q-6846, it was actually a vehicle bearing
Registration No.PB-06-Q-6847. But even this witness has stated that
both vehicles were there and he was not sure as to which vehicle was
actually involved in the incident. On scrutiny, we are of the view that this
6
would not help the Insurance Company’s case or go against the
respondents-claimants.
8. Moreover, the MACT has rightly observed that eventually in crossexamination, no suggestion was given to any of the witnesses
produced by the complainants that the vehicle as claimed by the
complainants was not the vehicle, which was involved in the accident
and that it was some other vehicle.
9. One further aspect which this Court cannot shut its eyes to is the
fact that post-investigation, the Final Report under Section 173 of the
Code of Criminal Procedure, 1973 also stated that the vehicle as
claimed by the complainants was the vehicle involved in the accident.
Therefore, the onus was on the Insurance Company or Respondents
No.3 and 4 to get the same disproved by either calling the Investigating
Officer as a witness or by any other means to establish a factual
position to the contrary. Admittedly, this was not done.
10. The Court, through Para 110(iv) of Swaran Singh (supra). learned Judges, categorically held in
National Insurance Co. Ltd. v Swaran Singh, (2004) 3 SCC 297, that
‘Insurance companies, however, with a view to avoid their liability must not only establish the available defence(s) raised in the said
proceedings but must also establish “breach” on the part of the owner of the vehicle; the burden of proof wherefor would be on them.’
It was also stated that ‘The Court cannot lay down any criteria as to how the said burden would be discharged, inasmuch as the same would depend on the facts and circumstances of each case’. Para 110(v) of Swaran Singh (supra).
In the above analysis, the Insurance Company cannot be said to have established its defence.
11. Another aspect in need of consideration is as to whether the liability of the Insurance Company under the insurance certificate/policy granted by it would cover the incident. This is in reference to the question as to the date and time from when the concerned vehicle would be deemed to be covered by the policy. In the present case, the incident occurred on 11.04.2017 at 14:15 hrs, whereas the insurance policy discloses that insurance was obtained at 15:54 hrs on 11.04.2017. In this regard, on facts, the MACT has found that the premium was paid/given prior to the accident and it was the internal procedure, due to which the policy was issued the next day and, thus, coverage under the policy would begin from the day the money (i.e. premium) was received by the Insurance Company.
12. In Oriental Insurance Co. Ltd. v Dharam Chand, (2010) 15
SCC 141, the Court noted ‘When this appeal was taken up, the counsel
for the Insurance Company very fairly stated that since the cheque for
the premium amount was received by the Company at 4.00 p.m. on 7-
5-1998, the insurance must be deemed to have commenced from that
time and four hours later when the vehicle met with the accident, the
owner must be deemed to have been covered by the insurance policy.
We appreciate the fairness shown by the counsel for the Insurance
Company.’
Clearly, Dharam Chand (supra) did not entail any
examination of the law due to the fair stand taken by the insurer therein.
However, herein we have examined the ‘Certificate of Insurance cum
Policy Schedule’ which states ‘PERIOD OF INSURANCE From:
11/04/2017 To: midnight of 10/04/2018’. It also records ‘Date of
commencement of risk : 11/04/2017’. In this factual backdrop, we have
no hesitation to hold that the vehicle was insured when the accident
took place. As such, currently, we need not dwell on the law, except to
5 Para 3 of Dharam Chand (supra).
reiterate the view in National Insurance Co. Ltd. v Sobina Iakai
(Smt), (2007) SCC 786 [considering the position, and change, in law
enunciated in New India Assurance Co. Ltd. v Ram Dayal, (1990) 2
SCC 680; National Insurance Co. Ltd. v Jikubhai Nathuji Dabhi,
(1997) 1 SCC 66; Oriental Insurance Co. Ltd. v Sunita Rathi, (1998)
1 SCC 365; New India Assurance Co. v Bhagwati Devi, (1998) 6
SCC 354; New India Assurance Co. Ltd. v Sita Bai, (1999) 7 SCC
575; National Insurance Co. Ltd. v Chinto Devi, (2000) 7 SCC 50
and J Kalaivani v K Sivashankar, JT (2001) 10 SC 396] that ‘…the
effectiveness of the insurance policy would start from the time and date specifically incorporated in the policy and not from an earlier point of time.’
13. The Insurance Company has not been able to prove that it had
not received the money/premium prior to the accident and the only
stand taken was that the insurance was fraudulently obtained. The law is very clear – fraud vitiates everything, but merely alleging fraud does not amount to proving it. For, it has to be proven in accordance with law by adducing evidence etcetera, the onus of which would also lie on the
6 Para 19 of Sobina Iakai (Smt) (supra).
10
person alleging fraud. Long ago, 5 learned Judges in Bishnudeo
Narain v Seogeni Rai, 1951 SCR 458, had laid down:
‘… Now if there is one rule which is better established
than any other, it is that in cases of fraud, undue influence
and coercion, the parties pleading it must set forth full
particulars and the case can only be decided on the
particulars as laid. There can be no departure from them
in evidence. General allegations are insufficient even to
amount to an averment of fraud of which any court ought
to take notice however strong the language in which they
are couched may be, and the same applies to undue
influence and coercion. See Order 6 Rule 4, Civil
Procedure Code.’
(emphasis supplied)
14. Of much more recent vintage, is the decision in Bhaurao Dagdu
Paralkar v State of Maharashtra, (2005) 7 SCC 605, wherein it was
explained as under:
‘9. By “fraud” is meant an intention to deceive; whether it
is from any expectation of advantage to the party himself
or from ill will towards the other is immaterial. The
expression “fraud” involves two elements, deceit and
injury to the person deceived. Injury is something other
than economic loss, that is, deprivation of property,
whether movable or immovable or of money and it will
include any harm whatever caused to any person in body,
mind, reputation or such others. In short, it is a noneconomic or non-pecuniary loss. A benefit or advantage
to the deceiver, will almost always cause loss or detriment
to the deceived. Even in those rare cases where there is
a benefit or advantage to the deceiver, but no
11
corresponding loss to the deceived, the second condition
is satisfied. [See Vimla (Dr.) v. Delhi Admn. [1963 Supp
(2) SCR 585: AIR 1963 SC 1572] and Indian
Bank v. Satyam Fibres (India) (P) Ltd. [(1996) 5 SCC 550]
]
10. A “fraud” is an act of deliberate deception with the
design of securing something by taking unfair advantage
of another. It is a deception in order to gain by another's
loss. It is a cheating intended to get an advantage.
(See S.P. Chengalvaraya Naidu v. Jagannath [(1994) 1
SCC 1].)
11. “Fraud” as is well known vitiates every solemn act.
Fraud and justice never dwell together. Fraud is a conduct
either by letters or words, which induces the other person
or authority to take a definite determinative stand as a
response to the conduct of the former either by words or
letters. It is also well settled that misrepresentation itself
amounts to fraud. Indeed, innocent misrepresentation
may also give reason to claim relief against fraud. A
fraudulent misrepresentation is called deceit and consists
in leading a man into damage by wilfully or recklessly
causing him to believe and act on falsehood. It is a fraud
in law if a party makes representations, which he knows
to be false, and injury ensues therefrom although the
motive from which the representations proceeded may
not have been bad. An act of fraud on court is always
viewed seriously. A collusion or conspiracy with a view to
deprive the rights of others in relation to a property would
render the transaction void ab initio. Fraud and deception
are synonymous. Although in a given case a deception
may not amount to fraud, fraud is anathema to all
equitable principles and any affair tainted with fraud
cannot be perpetuated or saved by the application of any
equitable doctrine including res judicata. (See Ram
Chandra Singh v. Savitri Devi [(2003) 8 SCC 319] .)
12. In Shrisht Dhawan v. Shaw Bros. [(1992) 1 SCC 534],
it was observed as follows: (SCC p. 553, para 20)
“Fraud” and collusion vitiate even the most solemn
proceedings in any civilised system of jurisprudence. It is
a concept descriptive of human conduct. Michael Levi
likens a fraudster to Milton's sorcerer, Camus, who
exulted in his ability to, “wing me into the easy-hearted
man and trap him into snares”. It has been defined as an
act of trickery or deceit. In Webster's Third New
International Dictionary “fraud” in equity has been defined
as an act or omission to act or concealment by which one
person obtains an advantage against conscience over
another or which equity or public policy forbids as being
prejudicial to another. In Black's Law Dictionary, “fraud” is
defined as an intentional perversion of truth for the
purpose of inducing another in reliance upon it to part with
some valuable thing belonging to him or surrender a legal
right; a false representation of a matter of fact whether by
words or by conduct, by false or misleading allegations, or
by concealment of that which should have been
disclosed, which deceives and is intended to deceive
another so that he shall act upon it to his legal injury.
In Concise Oxford Dictionary, it has been defined as
criminal deception, use of false representation to gain
unjust advantage; dishonest artifice or trick. According
to Halsbury's Laws of England, a representation is
deemed to have been false, and therefore a
misrepresentation, if it was at the material date false in
substance and in fact. Section 17 of the Contract Act,
1872 defines “fraud” as an act committed by a party to a
contract with intent to deceive another. From the
dictionary meaning or even otherwise fraud arises out of
the deliberate active role of the representator about a fact,
which he knows to be untrue yet he succeeds in
misleading the representee by making him believe it to be
true. The representation to become fraudulent must be of
fact with knowledge that it was false. In a leading English
case i.e. Derry v. Peek [(1886-90) All ER Rep 1: (1889) 14
13
AC 337: 61 Lt 265 (HL)] what constitutes “fraud” was
described thus : (All ER p. 22 B-C)
“Fraud is proved when it is shown that a false
representation has been made (i) knowingly, or (ii) without
belief in its truth, or (iii) recklessly, careless whether it be
true or false.”
But “fraud” in public law is not the same as “fraud” in
private law. Nor can the ingredients, which establish
“fraud” in commercial transaction, be of assistance in
determining fraud in administrative law. It has been aptly
observed by Lord Bridge in Khawaja v. Secy. of State for
Home Deptt. [(1983) 1 All ER 765: 1984 AC 74 : (1982) 1
WLR 948 (HL)] that it is dangerous to introduce maxims
of common law as to the effect of fraud while determining
fraud in relation of statutory law. “Fraud” in relation to the
statute must be a colourable transaction to evade the
provisions of a statute.
“‘If a statute has been passed for some one particular
purpose, a court of law will not countenance any attempt
which may be made to extend the operation of the Act to
something else which is quite foreign to its object and
beyond its scope.’ Present day concept of fraud on statute
has veered round abuse of power or mala fide exercise of
power. It may arise due to overstepping the limits of
power or defeating the provision of statute by adopting
subterfuge or the power may be exercised for extraneous
or irrelevant considerations. The colour of fraud in public
law or administrative law, as it is developing, is assuming
different shades. It arises from a deception committed by
disclosure of incorrect facts knowingly and deliberately to
invoke exercise of power and procure an order from an
authority or tribunal. It must result in exercise of
jurisdiction which otherwise would not have been
exercised. That is misrepresentation must be in relation to
the conditions provided in a section on existence or nonexistence of which power can be exercised. But nondisclosure of a fact not required by a statute to be
disclosed may not amount to fraud. Even in commercial
transactions non-disclosure of every fact does not vitiate
the agreement. ‘In a contract every person must look for
himself and ensure that he acquires the information
necessary to avoid bad bargain.’ In public law the duty is
not to deceive.” (See Shrisht Dhawan v. Shaw
Bros. [(1992) 1 SCC 534], SCC p. 554, para 20.)
13. This aspect of the matter has been considered
recently by this Court in Roshan Deen v. Preeti
Lal [(2002) 1 SCC 100 : 2002 SCC (L&S) 97] , Ram
Preeti Yadav v. U.P. Board of High School and
Intermediate Education [(2003) 8 SCC 311] , Ram
Chandra Singh case [(2003) 8 SCC 319] and Ashok
Leyland Ltd. v. State of T.N. [(2004) 3 SCC 1]
14. Suppression of a material document would also
amount to a fraud on the court.
(See Gowrishankar v. Joshi Amba Shankar Family
Trust [(1996) 3 SCC 310] and S.P. Chengalvaraya Naidu
case [(1994) 1 SCC 1].)
15. “Fraud” is a conduct either by letter or words, which
induces the other person or authority to take a definite
determinative stand as a response to the conduct of the
former either by words or letter. Although negligence is
not fraud but it can be evidence on fraud; as observed
in Ram Preeti Yadav case [(2003) 8 SCC 311].
16. In Lazarus Estates Ltd. v. Beasley [(1956) 1 QB 702:
(1956) 1 All ER 341: (1956) 2 WLR 502 (CA)] Lord
Denning observed at QB pp. 712 and 713 : (All ER p. 345
C)
“No judgment of a court, no order of a minister, can be
allowed to stand if it has been obtained by fraud. Fraud
unravels everything.”
In the same judgment Lord Parker, L.J. observed that
fraud vitiates all transactions known to the law of however
high a degree of solemnity. (p. 722) These aspects were
recently highlighted in State of A.P. v. T. Suryachandra
Rao [(2005) 6 SCC 149: (2005) 5 SCALE 621].’
15. An interesting passage on fraud can be found in Reddaway
(Frank) & Co. Ltd. v George Banham & Co. Ltd., 1896 AC 199,
where the House of Lords stated:
‘But fraud is infinite in variety; sometimes it is audacious
and unblushing; sometimes it pays a sort of homage to
virtue, and then it is modest and retiring; it would be
honesty itself if it could only afford it. But fraud is fraud all
the same; and it is the fraud, not the manner of it, which
calls for the interposition of the Court.’
16. From the record, we do not find that the Insurance Company has
discharged its onus to prove the alleged fraud. Therefore, the Insurance Company’s liability under the issued insurance certificate/policy to cover the incident, cannot be escaped by alleging fraud.
17. Thus, on an overall circumspection, the Court does not find any
merit in the present appeals, which, accordingly, stand dismissed. No
order as to cost.
7 Quoted approvingly in Venture Global Engineering v Satyam Computer Services Limited, (2010) 8 SCC 660.
16
18. The Insurance Company shall deposit the monies as per the Award
passed by the MACT, if not already done, latest by 15.01.2025. The
same shall be distributed forthwith to the claimants by the MACT.
………………..........................J.
[SUDHANSHU DHULIA]
…………………..................…..J.
[AHSANUDDIN AMANULLAH]
NEW DELHI
SEPTEMBER 02, 2024
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