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Radheshyam v. Nasir Hussain

Madhya Pradesh High Court

Oct 30, 1990

Judgment

Subsequent
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Factual and Procedural Background

The appellants challenged an award dated 22 July 1988 by the Member, Motor Accidents Claims Tribunal, Mandsaur in Claim Case No. 21 of 1986. The petitioners (appellants) are claimants for compensation arising out of the death of Abhay Kumar, aged about 10 years, who on 7 January 1986 around 12:15 p.m. was struck and crushed by bus No. MPF 7789 on Laduna Road at Sitamau while going with schoolmates. The bus was admitted to belong to respondent No. 1 and to have been driven by respondent No. 2. The claimants sought Rs. 1,00,000 as compensation for loss, mental agony and loss of future prospects.

At the lower Tribunal four issues were framed. The Tribunal found that the death was caused by negligent driving attributable to the bus, and that the vehicle was insured with respondent No. 3; it assessed compensation at Rs. 36,500. However, the Tribunal dismissed the claim petition on the ground that it was not proved that the vehicle was being driven by an authorised driver (respondent No. 2). The appellants appealed this dismissal. The insurance company (respondent No. 3) filed a cross-objection challenging the Tribunal's finding that the vehicle was insured on the date of the accident, arguing that the insurance transfer had been effected after the accident and by suppression of material facts, rendering the policy void.

Legal Issues Presented

Whether the lower Tribunal erred in dismissing the claim petition on the ground that it was not proved that the vehicle was being driven by an authorised driver (respondent No. 2), notwithstanding the owner's admission that respondent No. 2 was driving and was in his employment.
Whether the insurance policy in the name of respondent No. 1 is binding on the insurance company, or whether the transfer/issuance of the policy is void due to suppression of material facts (i.e., the policy being taken or transferred after the accident).
Whether the findings of negligence and the quantum of compensation (Rs. 36,500) by the lower Tribunal are supported by the evidence on record.

Arguments of the Parties

Appellants' Arguments

The Tribunal erred in dismissing the petition based solely on the written statement of respondent No. 2, who did not enter the witness-box to deny that he was driving the vehicle.
Respondent No. 1 (owner) admitted that respondent No. 2 was driving the bus and was in his employment; the Tribunal should not have ignored that admission.
The claimants were not in a position to prove the driver's lack of a valid licence; the burden to prove absence of licence lay on the party asserting it (the insurer).

Respondent No. 1 (Owner)

Admitted ownership of bus No. MPF 7789 and that respondent No. 2 was driving the vehicle and in his employment (admission recorded in pleadings).

Respondent No. 2 (Driver)

In his written statement, denied that he was driving the bus on the relevant date and denied being in the employment of respondent No. 1, asserting false implication in a criminal case. (He did not give oral evidence to support this denial.)

Respondent No. 3 (Insurance Company)

Contended that at the time of the accident the bus was not insured in the name of respondent No. 1 because the vehicle had been transferred to respondent No. 1 and the transfer of the policy occurred after the accident.
Asserted that the transfer was effected by suppressing the fact of the accident and that therefore the transfer certificate/policy is void; also relied on documents and witness DW 1 to show transfer took place at 3 p.m. on 7.1.1986 (after the accident).
Argued that the owner had not complied with disclosure obligations, invoking precedents where policies were vitiated for suppression of material facts.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Jaddoo Singh v. Malti Devi, 1983 ACJ 747 (Allahabad)	Where ownership of a bus is admitted and an accident is proved to be caused by the bus, the owner is liable unless he proves the bus was driven by an unauthorised person without his consent.	The court relied on this authority to hold that the admission of ownership and of the driver's employment meant the owner was vicariously liable; the court applied this ratio to conclude the vehicle was being driven by an authorised person and the owner is liable to compensation.
Mithoolal Nayak v. Life Insurance Corporation of India, AIR 1962 SC 814	Under Section 45 of the Insurance Act, 1938, a policy obtained by fraudulent suppression of material facts is vitiated.	The insurance company's counsel cited this authority to argue the transfer was void for suppression. The court considered it but found the facts did not show suppression by the insured, so the authority did not assist the insurer in this case.
British India General Insurance Co. Ltd. v. Seth Ramnath, AIR 1962 MP 368	An insurer may disown liability where there was failure to disclose material facts (example: transfer of possession under an agreement to sell) at the time of securing renewal/transfer.	The insurer cited this case to support disavowal of liability. The court examined the surrounding documents and endorsements and concluded the insurer could not rely on this principle in the present circumstances.
New India Assurance Co. Ltd. v. Ram Dayal, 1990 ACJ 545 (SC)	When a policy has been obtained on the date of the accident, its effectiveness is from the commencement of that date (previous midnight); insurer cannot escape liability by saying the policy was taken after the accident.	The court relied on this Supreme Court authority to hold that the insurance in favour of respondent No. 1 became operative from the previous midnight of the date of accident, supporting the Tribunal's finding that the insurer was liable.

Court's Reasoning and Analysis

The court proceeded through the following analytical steps, grounded in the facts and the record:

Ownership and driver's employment: The court observed that respondent No. 1 admitted ownership of the bus and admitted that respondent No. 2 was driving the vehicle and was in his employment. The court emphasised that knowledge of who was driving was in the special knowledge of the owner.
Proof of licence: The record contained no evidence to show that respondent No. 2 did not hold a valid driving licence at the time of the accident. The court reiterated the principle that the burden of proving absence of a valid licence lay on the party asserting it (here, the insurer), and that the claimants had no means to prove lack of licence.
Credibility of respondent No. 2's denial: Respondent No. 2 did not enter the witness-box to deny he was driving. The eyewitness PW 2 (Kailashchand) initially misidentified the driver but later learned the driver was Ratansingh; nevertheless, the court treated the owner's admission as significant and unrebutted by evidence.
Application of precedent on vicarious liability: Relying on Jaddoo Singh v. Malti Devi, the court concluded that where the owner admits ownership and the accident is caused by the bus, the owner must be held liable unless it is shown that the bus was driven without his consent by an unauthorised person. Applying that ratio, the court held the vehicle was driven by a person authorised to do so and the owner is vicariously liable.
Insurance-transfer and suppression contention: The insurance company produced evidence (DW 1) to show that the transfer of the insurance policy into respondent No. 1's name occurred at 3 p.m. on 7.1.1986 and relied on documents including a letter from respondent No. 1 taking responsibility for events prior to 3 p.m. The court examined the documentary record: the application for transfer did not show a time endorsement, the policy was nevertheless issued effective from 7.1.1986 (with no time qualification), and the owner's additional letter indicated he did not seek coverage for the period before 3 p.m.
Evaluation of insurer's authorities: The court considered the insurer's authorities (including Mithoolal Nayak and British India General Insurance Co. v. Seth Ramnath) but found them inapplicable on the facts because the insured had furnished a letter taking responsibility for prior events and the insurer's office had issued a policy effective from the date of 7.1.1986 without any time endorsement that would limit coverage to after 3 p.m.
Reliance on Supreme Court authority: The court relied on New India Assurance Co. Ltd. v. Ram Dayal to hold that a policy obtained on the date of accident is effective from the commencement of that date (previous midnight). Applying that principle, the court concluded the insurance was effective on the date of the accident and the insurer could not escape liability by claiming the transfer occurred after the accident.
Negligence and quantum: On negligence and the amount of compensation, the court found no ground to interfere with the Tribunal's findings. The Tribunal's conclusions were founded on the evidence of PW1 (Radheshyam Trivedi), PW2 (Kailashchand) and PW3 (Dr. B.L. Chaturvedi), and the court found PW2's unrebutted statement regarding rash and negligent driving sufficient to confirm the findings.
Conclusion regarding lower Tribunal's dismissal: Because there was no evidence contradicting the owner's admission and no proof that the driver lacked a licence, the court held the lower Tribunal had erred in dismissing the claim petition on the ground that the vehicle was not being driven by an authorised driver.

Holding and Implications

APPEAL ALLOWED

Holding (direct effect on the parties):

The appeal by the appellants is allowed and the lower Tribunal's dismissal of the claim petition is set aside.
An award of Rs. 36,500/- is given in favour of the appellants against the respondents (matching the compensation assessed by the Tribunal).
The claimants-appellants are entitled to interest on the award amount at the rate of 12% per annum from the date of the claim application until recovery.
The cross-objection filed by respondent No. 3 (the insurance company) is disallowed.
The parties shall bear their own costs as incurred.

Implications:

The court confirmed the Tribunal's findings on negligence and quantum but reversed the Tribunal's dismissal that had rested on the absence of proof that the authorised driver was driving. The court also held that the insurance policy was operative on the date of the accident and the insurer remained liable; the insurer's contentions of suppression were not accepted on the facts. The opinion applies established principles on vicarious liability and on the effectivity of policies taken on the date of accident, and does not purport to lay down a new legal principle beyond applying existing authority.

Show all summary ...

1. This appeal has been filed being aggrieved by the award dated 22nd July, 1988 passed by the Member, Motor Accidents Claims Tribunal, Mandsaur in Claim Case No. 21 of 1986, whereby the application of the appellants filed under Section 110-A of the Motor Vehicles Act has been dismissed by the learned Tribunal.

2. The facts leading to this petition, in short, are that one Abhay Kumar, aged about 10 years, met with an accident on 7.1.1986 at about 12.15 p.m. on Laduna Road at Sitamau. The said Abhay Kumar was the only son of the claimants. According to the applicants-appellants on 7.1.1986 at about 12.15 p.m. when Abhay Kumar was going with his schoolmates from his school to Argada playfield for attending some function, bus No. MPF 7789, belonging to respondent No. 1 and being driven by the respondent No. 2 at a high speed rashly and negligently, dashed against Abhay Kumar and crushed him under the rear and front wheels as a result of which Abhay Kumar received injuries and succumbed to them. Abhay Kumar was immediately taken to the Sitamau Hospital where he was declared dead. The incident was reported at the police station, Sitamau, by Kailashchand, PW 2, who is the solitary eye-witness in the case. According to the claimants the deceased was a very intelligent child and they had high hopes of the boy settling in high position. Because of the sudden death of their son they have lost all hopes of the future and have undergone great suffering and mental agony. Therefore, on the count of mental agony and suffering, loss of future expected earning from the deceased, the applicants made a claim of Rs. 1,00,000/- to be awarded as compensation.

3. The respondent No. 1 admitted that bus No. MPF 7789 belonged to him on the date of the accident and it was being driven by the respondent No. 2 and that the bus was insured with the respondent No. 3. However, it was denied that the bus was being driven rashly and negligently by the driver. According to respondent No. 1, the deceased was author of his own misfortune and it was due to his negligence that he met with the accident. The respondent No. 2, the driver, has denied the claim on the ground that on the relevant date he was neither driving the bus nor he was in the employment of respondent No. 1. According to him, he has been falsely implicated in a criminal case. The respondent No. 3, insurance company, took a defence that on 7.1.1986 when the accident took place Nasir Hussain, the owner of the bus, was not the person insured with the company. The bus formerly belonged to one Hastimal Kothari and it was insured in his name. The insurance was valid for a period of one year from 29.1.1985. During the continuance of this insurance Hastimal transferred the vehicle to the present respondent No. 1 and it was after the accident at about 3 p.m. on 7.1.1986 that the respondent No. 1 applied to the insurance company for the transfer of the insurance in his name and accordingly the insurance was transferred in his name at 3 p.m. The fact of the accident was suppressed from the respondent No. 3 and, therefore, the transfer certificate is void because of the suppression of the material fact. It has also been pleaded that Nasir Hussain has given in writing to the insurance company that he would be liable for all the facts prior to the insurance. It was also pleaded that the vehicle was not being driven by a person holding a valid licence and the driver was also not in the employment of respondent No. 1.

4. Four issues were framed by the lower Tribunal for deciding the claim petition. The learned Tribunal held that on the date of the accident the deceased died due to the negligent driving of the driver of the vehicle. It was also held that the bus was insured on the date of the accident with the respondent No. 3 and that the compensation in the claim case would be Rs. 36,500/-. However, the claim petition was dismissed on the ground that it has not been proved that the vehicle was being driven by an authorised driver, the respondent No. 2. The appellants aggrieved by the dismissal of the petition have preferred this appeal.

5. The insurance company has filed a cross-objection challenging the finding of the learned Tribunal holding that the vehicle was insured on the date of the accident with the insurance company. According to the respondent No. 3, the court should have held that the insurance having been obtained by the respondent No. 1 by suppressing the material facts, the insurance was void and the insurance company was, therefore, not liable for any compensation.

6. The learned counsel for the appellants, Mr. Kirtane, has argued that the learned Tribunal has erred in dismissing the petition only on the basis of the written statement filed by the respondent No. 2. Actually the respondent No. 2 did not enter the witness-box to say that he was not driving the vehicle on the date of the accident, whereas the fact that it was the respondent No. 2 who was driving the vehicle while in the employment of respondent No. 1 on the relevant date has been admitted by the respondent No. 1 himself. Therefore, the learned Tribunal could not go beyond the pleadings in the case and give a finding that the vehicle was not being driven by an authorised driver holding a valid licence.

7. Now, it cannot be disputed that the vehicle with which the deceased met with the accident was owned by the respondent No. 1 and this fact was in the special knowledge of the owner as to who was driving the vehicle on the date of the accident and whether he had a licence to drive the vehicle. The respondent No. 1 has admitted that the vehicle was being driven by the respondent No. 2, who was in the employment of respondent No. 1. There is nothing on the record to show that the respondent No. 2 did not have a valid licence at the time of the accident. It was for the party who alleged that the respondent did not have a valid driving licence to prove that he did not possess the valid driving licence. The claimants had no means to prove this fact. Therefore, if the insurance company wanted itself to be absolved of the liability on this ground it had to prove by leading cogent evidence that Ratansingh was not holding a valid driving licence. Therefore, the finding of the lower Tribunal on this point is not supported by any evidence on record. On the contrary, the admission of respondent No. 1 supports the case of the claimants-appellants.

8. PW 2, Kailashchand who is an eyewitness of the accident, states that he had seen the incident and he had lodged the report Exh. P-1 at Police Station, Sitamau. The report Exh. P-1 is a part of the record in Criminal Case No. 132 of 1986 in the court of JMFC, Sitamau. In that case the respondent No. 2 is an accused in respect of the incident in question. The respondent No. 2 has not entered the witness-box to say that he was not driving the vehicle at the time of the incident. According to PW 2 he had not properly seen the driver who was driving the vehicle. Therefore, he had named Salim, but later on he came to know that it was Ratansingh who was driving the vehicle. As such the statement of PW 2 Kailashchand does not help the case of the claimants on the point that it was Ratansingh who was driving the vehicle. But the averments in the petition have been accepted by the respondent No. 1 who was the owner of the bus and who had the knowledge as to who was driving the vehicle at the time of the accident. There is no rebuttal of this admission by any evidence on the record. Therefore, the learned Tribunal had clearly erred in dismissing the claim case of the appellants on that ground. When a vehicle is being driven rashly and negligently and dashes against a victim, then it is not necessary for the victim to prove as to who was the driver of the vehicle. The only requirement for holding the owner vicariously liable is that the driver should be in the employment of the owner of the vehicle. The owner has admitted this fact. Therefore, the lower Tribunal could not ignore the admission of the owner and hold that the vehicle was not being driven by a person in the employment of the owner at the time of the accident.

9. The Allahabad High Court had an occasion to consider this question in the case of Jaddoo Singh v. Malti Devi 1983 ACJ 747 (Allahabad). In para 12 of the aforesaid judgment the court has held that when the ownership of the bus was admitted by the owner and the accident having been proved to have been caused by the bus he must be held liable unless he is able to show that the bus was being driven by some unauthorised person without his consent or permission. Whosoever was driving the bus, whether A or B, both were licensed drivers and, therefore, the owner cannot escape the liability. In the light of the aforesaid ratio, with which I respectfully agree, it has to be held that the vehicle was being driven at the time of the accident by a person authorised to drive the vehicle and the owner of the vehicle is vicariously liable to pay the compensation to the claimants.

10. As discussed above, the owner has admitted that it was the respondent No. 2 who was driving the vehicle and no evidence has come on record to show that the vehicle was not being driven by the respondent No. 2 Ratansingh and it has also not come on record that he was not holding a valid licence. Ratansingh has not entered the witness-box to deny this fact that he was not driving the vehicle. Therefore, in the circumstances the Tribunal should have held that it was Ratansingh who was driving the vehicle at the relevant time and had a valid licence to drive the vehicle.

11. Now, the question which remains for decision is whether the transfer of the insurance in the name of respondent No. 1 by the insurance company is not binding on the insurance company, being void due to suppression of material facts. The insurance company has examined DW 1 Sudesh Kilewala, the Development Officer of the insurance company, to prove that the transfer of the insurance was made after the accident. This witness says that the insurance was transferred in the name of respondent No. 1 at 3 p.m. on 7.1.1986 and the accident had taken place before the actual transfer. It has also been stated by this witness that the respondent No. 1 had given in writing that he is responsible for anything which happened before 3 p.m. This document is a letter dated 7.1.1986 in addition to the application for transfer of the insurance. The letter for transfer of the insurance Exh. D-5C does not mention at what time this application was made and there is no endorsement from the office of the insurance company also about the time at which it was received. However, the letter Exh. D-6C shows that at 3 p.m. this letter was issued on the letter-head of respondent No. 1 showing that for all the acts done before 3 p.m. the responsibility shall be of the owner and thereafter another letter dated 30th July, 1986 was also obtained wherein the responsibility of any accident has been taken by the owner of the vehicle. On the basis of these statements and documents Mr. Dandwate, learned counsel for the insurance company, argued that the transfer of the insurance policy has been obtained by suppressing material facts and, therefore, the policy is void. In support of his argument he had cited the case of Mithoolal Nayak v. Life Insurance Corporation Of India. AIR 1962 SC 814, wherein in view of the statutory provision contained in Section 45 of the Insurance Act, 1938, the court had held that when a policy is obtained by fraudulent suppression of material facts the policy is vitiated. Attention has also been drawn to the judgment in the case of British India General Insurance Co. Ltd. v. Seth Ramnath AIR 1962 MP 368, wherein it was held that the insurance company was entitled to disown its liability under the policy by reason of failure of defendant No. 1 to disclose the fact that he had parted with the possession of the vehicle in pursuance of an agreement to sell, to be used by the defendant No. 2 in any manner he liked at the time when he secured renewal of the policy in his name.

12. In the instant case, however, it is manifest that when the application for transfer of the policy was made another application on the letter-head was subsequently given by the respondent No. 1 wherein he took the responsibility for any event before 3 p.m. Nobody had entered the witness-box to disclose as to why this letter was obtained from the respondent No. 1 or why the respondent No. 1 had given this letter. When the policy was to come in force from 3 p.m. onwards it should have been endorsed in the policy or the policy could have been issued with effect from the next date 8.1.1986. Despite this fact the policy was issued being effective from 7.1.1986 with no reference to time. Therefore, it cannot be said to be a case of suppression of any material fact because after 3 p.m. no accident occurred and, therefore, the owner himself took the responsibility of any incident up to 3 p.m. on 7.1.1986. Now, despite this letter from the owner of the vehicle if the insurance company instead of issuing a policy effective from 7.1.1986 at 3 p.m. issued a policy effective from 7.1.1986, then it cannot be said that the policy was obtained by suppressing any material fact. On the contrary, the submission of another letter in addition to the application for transfer clearly shows that the insured did not want a policy to be issued covering the risk for a period before 7.1.1986 3 p.m. However, when despite the request of the respondent No. 1 the respondent No. 3 issued the policy being effective from 7.1.1986 they cannot now escape the liability on the ground that the policy has been obtained by suppression of facts. The issuing officers have not even cared to put an endorsement of time either on the application or on the policy. The learned Tribunal has, therefore, rightly held that the vehicle being insured with the insurance company on the date of the accident the insurance company is liable to pay the compensation. Therefore, in my opinion, the aforesaid authorities cited by Mr. Dandwate do not help the insurance company.

13. In a recent case New India Assurance Co. Ltd. v. Ram Dayal 1990 ACJ 545 (SC), the Supreme Court has held that when the policy has been obtained on the date of the accident and the insurance company repudiates its liability on the ground that the policy had been taken after the accident, still when a policy is taken on a particular date its effectiveness is from the commencement of that date. Therefore, the insurance company cannot escape its liability on the ground that the policy having been obtained after the accident the insurance company is not liable. As such the lower Tribunal has rightly held that the insurance in favour of respondent No. 1 had become operative from the previous midnight of the date of the accident and there is no case for interfering with the finding of the learned lower Tribunal on this issue.

14. As regards the negligence of the driver and the quantum of compensation, nothing has been demonstrated to show that the finding of the lower Tribunal on these two issues is against the record or based on improper appreciation of the evidence. The finding on these two issues is based on the evidence of PW1 Radheshyam Trivedi, PW 2 Kailashchand and PW 3 Dr. B.L. Chaturvedi and taking into consideration the age of the victim, the status of the applicants and other factors. The statement of PW 2 Kailashchand about the rash and negligent driving of the vehicle which caused the death of the deceased is also unrebutted. Therefore, the findings of the lower Tribunal on these issues are confirmed.

15. In the result the appeal of the appellants is allowed. The award of the lower Tribunal, dismissing the claim petition of the appellants, is set aside. Instead award of Rs. 36,500/- as compensation is given in favour of the appellants against the respondents. The claimants-appellants are also entitled to get interest on the award amount from the date of the claim application till the recovery of the same at the rate of 12 per cent per annum. The cross-objection filed by the respondent No. 3 is disallowed. The parties shall bear their own costs as incurred.