THE NEW INDIA ASSURANCE CO LTD vs DHARAM PAL & ORS

* IN THE HIGH COURT OF DELHI AT NEW DELHI % Judgment reserved on : 19th January 2024 Judgment pronounced on : 5th March, 2024 + MAC. APP. 156/2018 THE NEW INDIA ASSURANCE CO LTD. ….. Appellants Through: Mr. Anshum Jain, Advocate. versus DHARAM PAL & ORS. ….. Respondent Through: Mr. Mukul Kumar, Advocate for R-5. CORAM: HON’BLE MR. JUSTICE DHARMESH SHARMA J U D G M E N T
1. This judgment shall decide the present appeal preferred by the appellant Insurance Company under Section 1731 of the Motor Vehicle Act 19882, assailing the Impugned judgment-cum-order dated 03.11.2017 passed by the learned Presiding Officer, Motor Accident Claims Tribunal3, Dwarka Court, New Delhi, in Dharam Pal & Ors. v.

1 173. Appeals. – (1) Subject to the provisions of sub-section (2), any person aggrieved by an award of a Claims Tribunal may, within ninety days from the date of the award, prefer an appeal to the High Court: Provided that no appeal by the person who is required to pay any amount in terms of such award shall be entertained by the High Court, unless he has deposited with it twenty-five thousand rupees or fifty per cent. of the amount so awarded, whichever is less, in the manner directed by the High Court: Provided further that the High Court may entertain the appeal after the expiry of the said period of ninety days, if it is satisfied that the appellant was prevented by sufficient cause from preferring the appeal in time. (2) No appeal shall lie against any award of a Claims Tribunal if the amount in dispute in the appeal is less than [one lakh] rupees. 2 MV Act 3 MACT

Rohitash & Ors. bearing MACP No. 163/2017, thereby allowing the claim of the Respondent Nos. 1 to 3/claimants.

FACTUAL BACKGROUND:
2. Briefly stated, it was the case of the claimants (Respondents No. 1 to 3 herein) that on 19.06.2017, the deceased Ajay Kumar aged 22 years, was travelling on his motorcycle bearing Registration No. RJ-40-SC-9121, when at the Mega Highway Village, Maharajpura, he was hit by the offending vehicle (truck) bearing Registration No. RJ-23-G-3338. The offending vehicle was being driven in a rash and negligent manner by Respondent No. 4. Resultantly, the victim boy sustained multiple total injuries and died on the spot. An FIR bearing No. 0355 of 2017 dated 20.06.2017 was registered at P.S. Tijara, Alwar, Rajasthan – 301411. The deceased was the sole breadwinner of the family, leaving behind his parents and younger sister as his dependants. As a result, the claimants filed a claim petition seeking compensation.

PROCEEDINGS BEFORE THE MACT AND IMPUGNED ORDER:
3. During the course of proceedings before the learned MACT, it was established that the truck involved in the accident was evidently insured with the appellant/insurance company. There was no issue as regards the driver/respondent No. 4, who was having a valid driving license at the time of the accident. However, respondent No. 5/owner of the offending vehicle, deposed before the learned MACT that he sold the offending vehicle to Sh. Imran on 03.10.2016, and at the time of the accident, the offending truck was in possession of Bhawani

Singh, who was then the owner of the offending truck and that the intimation of the sale was sent to the appellant. The appellant had contended that no evidence of the sale has been brought on record, and no intimation of the sale had been received by them or by the concerned officer of the Regional Transport Office4 for amending the name of the ownership.

4. The appellant before the learned MACT argued that the offending vehicle did not possess a fitness certificate at the time of the accident, thereby violating the terms of the insurance policy and the appellant is not liable to pay the compensation. Sh. Manjeet Singh, an Independent Investigator on behalf of the appellant/insurance company, deposed on 11.10.2017 as R3W1 and as per his investigation report, the fitness certificate of the insured vehicle was issued from 15.02.2016 to 14.02.2017 and from 11.07.2017 to 10.07.2018, and therefore, it was brought to the fore that the fitness certificate was not valid on the date of the accident.

5. The learned MACT based on the pleadings of the parties, on 30.08.2017, framed the following issues: –

4 RTO

“Issue No. 1 Whether Ajay Kumar @ Pintu sustained fatal injuries in a motor vehicle accident dt. 19.06.2017 due to rash and negligent driving of vehicle (Truck) no. RJ 23G 3338 being driven by Rohitash, owned by Ram Kumar Olha and Insured by the New India Assurance Co. Ltd.? OPP. Issue No. 2 Whether the petitioners are entitled to claim compensation, if so, what amount and from whom? ….. OPP Issue No. 3 Relief.”
6. The learned MACT decided Issue No. 1 holding that respondent No. 4, was driving the offending vehicle in a rash & negligent manner and caused fatal injuries to the deceased Ajay Kumar. As regards Issue No. 2, the learned MACT took the income of the deceased as Rs. 19,500/- per month, added 50% towards future prospects, deducted 1/3rd towards personal expenses and applied the multiplier of 18 to compute the loss of dependency as Rs.42,12,000 /-. The learned MACT awarded Rs. 1,00,000/- towards loss of love and affection, Rs. 15,000/- towards loss of estate and Rs. 15,000/- towards funeral expenses, and thus, awarded total compensation of Rs.43,42,000/- with interest @ 9% per annum from the date of filing of the petition i.e. 27.07.2017 till realization.

7. As regards liability to pay compensation, the learned MACT fastened liability upon the appellant/insurance company, and the relevant portion of the judgement-cum-award is reproduced below:

“22. It has been argued by Insurance company that offending vehicle did not possess fitness certificate hence it was violation of insurance policy and company is not liable to pay the compensation on the other hand it is argued by Ld. Counsel for Rl and R2 that policy terms could not be proved by company and even if there was no fitness certificate still Insurance Company can not avoid payment of a award by MACT. R3Wl Sh. Manjeet Singh, Independent Investigator on behalf of Insurance Company deposed that he carried out the investigation and as per investigation report the fitness of the insured vehicle was issued on 15.02.2016 to 14.02.2017 and 11.07.2017 to 10.07.2018 and therefore as per particular of the fitness available it was not valid on the date of accident.
R3W2 Ms. Nili Niranjanl, AO (Legal) has also deposed that at the time of accident offending vehicle was not having valid permit and in view of these it is clear that the offending vehicle was not having a valid fitness certificate and permit, hence the insured has violated
the terms and conditions of the insurance policy and Insurance company is not liable to pay the compensation amount. 23. It has been held by the Hon’ble High Court of Delhi in MAC APP No. 520/2010 titled as The New India Assurance Co. Ltd. Vs. Kumud Devi & in para (3) that “Even if the vehicle did not possess any fitness certificate on the date of accident, none of the sub-clauses extracted above empowers the Insurance Company to avoid any judgment or award passed by the claims Tribunal. The first contention is without any substance and the same is accordingly rejected”. In facts of the present case the fitness certificate of vehicle was valid for 15.02.2016 to 14.02.2017 and 11.07.2017 to 10.07.2018 and accident took place on 19.06.2014. Hence in view of Judgment The New India Assurance Co. Ltd. Vs. Kumud Devi (Supra), the contention of Insurance Company has to be rejected. 24. Further, it has been held in Sachin Singh Vs. Reliance General Ins. Co. (Supra) in para 10 & 11 that: (10) A close reading of Section 149 (2) of the M.V. Act makes it crystal clear that there is twin obligation on the insurer to prove the breach. First, it must prove that there is a breach as is mentioned in Section 149 (2) (a) (I) (a) (b) (c) (d) or Section 149 (2) (ii) (iii) of the M.V. Act. Second, these conditions must be part of the contract of Insurance. In other words, an insurer is entitled to avoid the contract of Insurance only by specifying the conditions as laid in Section 149 (2) of the M.V. Act. (11) In the instant case, the insurance policy was not proved by the Respondent Insurance Company. The Appellants, however, proved the cover note as Ex.R2Wl/2 which does not contain any condition that if the vehicle was used for the purpose not allowed by the permit for which the vehicle is used, the Insurance Company would be entitled to avoid the contract of Insurance. The Insurance policy having not been proved by the Respondent Insurance Company and the cover note Ex.R2Wl/2 failing to show that there was any such condition as is claimed to have been breached by the insured, the Respondent Insurance Company will not be permitted to avoid the contract of Insurance. Hence, the contention of Insurance Company with regard to permit is hereby rejected. New India Assurance Co. Ltd. shall pay the awarded amount.” GROUNDS OF APPEAL:
8. The impugned judgment-cum-award has been assailed inter alia on the grounds that the appellant is not liable to pay the compensation

as the offending vehicle did not have a valid fitness certificate at the time of the accident, and there was a breach of the insurance policy Therefore, it is prayed that the impugned judgment be set aside.

9. Further, the appellant/insurance company has challenged the compensation amount of Rs. 43,42,000/- awarded to the claimants on the ground that the learned MACT has erred in making a deduction of only 1/3rd from the income of the deceased at the time of calculating the compensation, instead of 1/2 in view of the fact that the deceased was a bachelor at the time of the accident and failed to consider the judgment passed in National Insurance Company Limited v. Pranay Sethi5. However, this ground of the appellant was decided by way of the oral judgment dated 02.08.2019 passed by this Court, wherein the compensation amount was reduced from Rs. 43,42,000/- to Rs. 31,89,000/- along with interest @ 9% per annum from the date of the institution of the claim petition i.e. 27th July, 2017, as the personal expenses of the deceased was reduced from 1/3 to 1/2 and the Rs. 1,00,000/- awarded towards loss of love and affection was no more a permissible head as per Pranay Sethi (supra).

5 (2017) 16 SCC 680

ANALYSIS & DECISION:
10. I have given my thoughtful consideration to the submissions advanced by learned counsels for the rival parties at the Bar. I have also perused the relevant record of the case, including the digitized Trial Court record.

11. Reference can be invited to the decision in Surendra Kumar Bhilawe v. New India Assurance Company Ltd.6, wherein it was held that as long as a person is the registered owner in terms of Section 2(30)7 of the MV Act and transfer of the insurance policy has not been effected under Section 157 of the Act, the registered owner remains liable to make good the compensation in an accident involving the offending vehicle. A similar view was also taken by a Co-ordinate Bench of this Court in MAC. APP. 288/2021 titled as „Gurmeet Singh v. The New India Assurance Company Ltd.8

12. Evidently, the offending vehicle was insured for third-party risks. However, since the accident occurred on 19.06.2017 and the fitness of the vehicle was valid from 15.02.2016 to 14.02.2016 and 11.07.2017 to 10.07.2018 (Ex. R3W1/1). Undoubtedly, the offending vehicle insured was not having a fitness certificate.

13. Another issue that needs to be addressed is that R2W1, Ram Kumar Olha, was evidently the registered owner of the offending vehicle bearing registration No. RJ-23G-3338. In his affidavit tendered in evidence (Ex. R2W1/A), he acknowledged that he had sold the said offending vehicle by virtue of ikrarnama /Agreement dated 03.10.2016 to Imran, S/o Zamil Khan resident of Ward No.27, Sikar Tehsil, District Alwar, Rajasthan for a total consideration of Rs.5,28,000/- (Ex. R2W1/1). He also deposed that he had intimated

6 (2020) 18 SCC 224 7 2(30) “owner” means a person in whose name a motor vehicle stands registered, and where such person is a minor, the guardian of such minor, and in relation to a motor vehicle which is the subject of a hire-purchase, agreement, or an agreement of lease or an agreement of hypothecation, the person in possession of the vehicle under that agreement; 8 2023 SCC OnLine Del 6269

the insurance company about the sale of the offending vehicle vide letter dated 03.10.2016 (Ex.R2W1/3). Evidently, no intimation was sent to the RTO where the vehicle was registered in terms of Section 50(1)(a)(i)9 of the MV Act. R2W1, in his cross-examination, failed to produce any postal receipt or acknowledgement with regard to such letter (Ex. R2W1/3).

14. At the cost of repetition, he acknowledged that he had not sent any intimation to the RTO. It was also brought out in his cross-examination that the insurance premium pertaining to the offending vehicle was paid in his name on 11.01.2017, thereby making the insurance effective from 06.01.2017 to midnight of 05.01.2018. No application during the course of trial was moved by respondent No.2/Ram Kumar Ohla, registered owner, for impleadment of the buyer of the offending vehicle. Therefore, by virtue of being the registered owner of the vehicle on the date of accident, the respondent No.2 cannot escape from his liability.

15. The long and short of the aforesaid discussion is that since on the date of accident, i.e. 19.06.2017, the offending vehicle was not having a fitness certificate and thus, not having a valid permit, there was a violation of the terms of the insurance policy. However, the appellant/Insurance Company cannot avoid its liability to pay compensation to the claimants. At the same time, they would be

9 Section 50(1)(a) (i) in the case of a vehicle registered within the same State, within fourteen days of the transfer, report the fact of transfer, in such form with such documents and in such manner, as may be prescribed by the Central Government to the registering authority within whose jurisdiction the transfer is to be effected and shall simultaneously send a copy of the said report to the transferee;

entitled to seek recovery rights as against the respondent No.4/driver and respondent No.5/registered owner of the offending vehicle.

16. In view of the foregoing discussion, the impugned judgment dated 03.11.2017 is modified to the effect that the liability to pay compensation to the claimants shall be upon the shoulders of the appellant/Insurance Company. However, the appellant/Insurance Company shall be entitled to recover the amount of compensation paid to the claimant with interest @ 9% p.a. from the date of filing of the claim petition till realisation. The amount of compensation, if not already released to the respondents No.1 to 3/claimants, be released forthwith.

17. The appeal is disposed of accordingly.

DHARMESH SHARMA, J. MARCH 05, 2024/ck