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Citation Codes
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Case Number
Attorney(S)
  • Mr. Ram Lal Sharma
  • Advocate.
  • Mr. V.P. Gandhi
  • Advocate.
Judges
  • Pritam Singh Pattar, J.
Acts
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Cites
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Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • Mr. Ram Lal Sharma
  • Advocate.
  • Mr. V.P. Gandhi
  • Advocate.
Judges
  • Pritam Singh Pattar, J.
Acts
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Smart Summary

Structured Summary of the Court's Opinion (P.S. Pattar, J.)

Factual and Procedural Background

On September 22, 1966, a scooter (No. WBN—3904) driven by Ram Pal with Kishan Chand Dhiman as pillion was struck by truck No. DLJ—6470 driven by Chanchal Singh near the Police Training Centre, Phillaur. Both Ram Pal and Kishan Chand Dhiman died as a result of the collision. Two claim applications were filed and consolidated by the Motor Accidents Claims Tribunal:

  • Claim No. 346 of 1966 by Shrimati Meena Sharma (widow of Ram Pal) and the minor children, claiming Rs. 3,00,000 under section 110-A of the Motor Vehicles Act; and
  • Claim No. 347 of 1966 by Devki (widow of Kishan Chand Dhiman) and other dependants, claiming Rs. 1,50,000 on similar grounds.

The respondents initially named as parties included Amritsar Transport Company Pvt. Ltd. (respondent No. 1) as owner, Chanchal Singh (driver) and the Oriental Fire and General Insurance Company (insurer). During the proceedings it transpired that the truck had originally been insured by Victory Transport Company (respondent No. 4); Victory Transport Company was added as a respondent but refused service and was proceeded against ex parte.

The Tribunal framed four issues, found that the truck driver was rash and negligent, and awarded compensation: Rs. 50,000 to Meena Sharma and others (claim No. 346) and Rs. 20,000 to Devki and others (claim No. 347). The Tribunal held the Oriental Fire & General Insurance Company liable to indemnify only to limited extents (Rs. 14,000 in the first claim and Rs. 6,000 in the second), and entered awards accordingly. The insurer (Oriental Fire) appealed (F.A.O. Nos. 135 & 136 of 1967) challenging primarily the finding on issue No. 3 (liability of the insurance company). The Amritsar Transport Company also filed appeals, which were subsequently disposed of by compromise.

Legal Issues Presented

  1. Was the accident due to negligent act of the driver of the truck, that of the deceased, or both, and with what effect?
  2. What is the quantum of compensation due and from whom to whom?
  3. Is the insurance company liable to pay compensation for any reason?
  4. Relief.

Arguments of the Parties

Appellant (Oriental Fire and General Insurance Company) — Principal Arguments

  • The insurer raised a preliminary objection that the truck had been insured by Victory Transport Company and not by Amritsar Transport Company on the date of the accident; therefore, according to the insurer, the policy had lapsed as a result of transfer of the vehicle and the insurer was not liable to pay compensation.
  • The insurer relied on Exhibit RW5/1 (a copy of the insurance policy) showing that truck No. DLJ 6470 was insured by Victory Transport Company for Rs. 20,000 for the period from August 25, 1966 to August 24, 1967.
  • The appellant argued that, by admissions in the claim petitions and in written statements, the owners on the date of the accident were Amritsar Transport Company Limited; therefore the policy relating to Victory Transport Company could not be invoked to make the appellant liable.

Respondents / Claimants (Shrimati Meena Sharma, Devki and others) — Principal Points

  • The claim petitions alleged rash and negligent driving by the truck driver and sought damages under section 110-A of the Motor Vehicles Act (amounts as pleaded in each petition).
  • The claim petitions stated that the owner of the truck on the date of the accident was Amritsar Transport Company Limited; that factual admission was relied upon in the proceedings.
  • During appellate proceedings the claimants applied under Order 41, Rule 27 CPC for permission to produce additional evidence to prove the date of transfer of the vehicle from Victory Transport Company to Amritsar Transport Company Limited; this application was allowed, but the claimants ultimately failed to produce the additional evidence when directed to do so.

Amritsar Transport Company and Driver — Principal Pleadings

  • Amritsar Transport Company and the driver admitted that the truck was owned by Amritsar Transport Company and that it was insured with the Oriental Fire and General Insurance Company (as pleaded in their written statement), while denying other allegations.
  • They pleaded that the scooter had been driven rashly and negligently by the deceased, and that the truck was not driven rashly or negligently by the driver.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
South India Insurance Co. Ltd. v. Purna Chandra Misra, 1973 ACJ 46 Authority for the proposition that insurance is a contract of indemnity and that a policy ceases to be effective if the insured parts with interest in the vehicle (policy lapses on transfer in absence of express stipulation). The Court referenced this authority as part of the settled law to support the conclusion that the policy lapsed on transfer of the truck.
M.S. Vijayalakshmi, 1966 ACJ 1 Used to illustrate the settled principle regarding the contract of indemnity nature of motor insurance and consequences of transfer of the insured vehicle. Relied upon to reinforce the legal principle that an insurer is not liable once the insured has parted with the vehicle absent express continuance clause.
Nanu Mal v. Inder Singh, 1971 ACJ 88 Authority confirming that an insurance policy is tethered to the owner's interest and lapses on transfer unless otherwise provided. Applied to support the conclusion that the insurer's liability did not survive the transfer of the vehicle.
Insurance Company Limited v. Rajalkashmi Ammal, 1970 ACJ 104 Authority cited for the principle that insurers cannot be compelled to accept liability for third parties who are unknown to the contract of insurance and that the policy is effective only for the insured named. Invoked to justify the court's approach that the insurer was not liable after transfer to a different owner.
Lal Bhalla v. Sudesh Kumar, 1968 ACJ 63 Support for the established rule that the insurer's liability is confined to the vehicle and owner specified in the policy and generally lapses on alienation absent express provision. Used by the court as supporting authority when holding that the insurance policy had lapsed and that the insurer was not liable for the awards.

Court's Reasoning and Analysis

The court's reasoning proceeded in the following steps, based only on the record and admissions contained in the opinion:

  1. Proof of Insurance: Exhibit RW5/1 (the insurance policy) showed that the truck (No. DLJ 6470) was insured by Victory Transport Company for Rs. 20,000 for the period August 25, 1966 to August 24, 1967.
  2. Admissions Regarding Ownership: The claim petitions (paragraph 16) stated that the owner of the truck on the date of accident was Amritsar Transport Company Limited; this fact was admitted by Amritsar Transport Company in its written statement.
  3. Absence of Evidence of Transfer Date: There was no express allegation in the claim petitions identifying the date of transfer from Victory Transport Company to Amritsar Transport Company, and the claimants did not produce the additional evidence they had been permitted to file under Order 41, Rule 27 CPC when directed to do so on the adjourned dates.
  4. Inference Drawn From Admissions and Timeline: Given the insurance policy was effective from August 25, 1966 in favour of Victory Transport Company, and the claim petitions admitted that Amritsar Transport Company was the owner on September 22, 1966 (date of the accident), the court concluded that the transfer from Victory to Amritsar must have occurred after August 25, 1966 and before September 22, 1966.
  5. Legal Principle Applied: The court reiterated the settled legal principle invoked in several precedents that a motor insurance policy is a contract of indemnity and, in the absence of an express stipulation in the policy preserving cover upon transfer of ownership, the policy lapses upon the insured parting with the vehicle.
  6. Application to the Facts: Because there was no express stipulation in the policy preserving cover after transfer, and because the claimants failed to prove or produce evidence establishing a transfer date that would keep the policy operative at the time of the accident, the court held that the insurance policy had lapsed prior to the accident.
  7. Conclusion on Issue No. 3: On that basis the court concluded that the Tribunal's decision on issue No. 3 (liability of the insurance company) was incorrect and reversed it.

The court's analysis focuses narrowly on the ownership/insurance relationship and the absence of any express clause in the policy preserving cover on transfer; it does not re-open or re-evaluate the Tribunal's findings on negligence or quantum of compensation except insofar as they affect insurer's liability.

Holding and Implications

Holding (core ruling): The appeals are accepted; the impugned awards against the appellant-insurance company are set aside and the claims petitions against the Oriental Fire and General Insurance Company are dismissed.

Direct consequences and implications for the parties:

  • The Tribunal's finding that the insurer was liable (issue No. 3) was reversed.
  • The awards requiring payment by the Oriental Fire and General Insurance Company (Rs. 14,000 in claim No. 346 and Rs. 6,000 in claim No. 347, as set by the Tribunal) have been set aside; the insurer is not required to pay those amounts.
  • The appeals by the insurer (F.A.O. Nos. 135 and 136 of 1967) are allowed; the claims against that insurer are dismissed.
  • The parties were ordered to bear their own costs.

The opinion does not purport to set out any broader or novel precedent beyond applying the established principle that a motor insurance policy, being a contract of indemnity, lapses when the insured parts with the vehicle in the absence of an express stipulation to the contrary. The court relied on existing authorities to reach its conclusion; the text does not state that a new principle of law was established.

Show full summary ...

    M/S. Oritnetal Fire & General Insurance Co. Ltd. Chandigarh v. Smt. Meena Sharma And Others

    P.S Pattar, J.:— By this judgment, the following two first appeals which are directed against the order dated June 21, 1967, of the Motor Accidents Claims Tribunal, Punjab (Chandigarh) will be decided:

    1. Oriental Fire and General Insurance Company v. Shrimati Meena Sharma, F.A.O No. 136 of 1967; and

    2. Oriental Fire and General Insurance Company v. Shrimati Devki, F.A.O No. 135 of 1967.

    2. The facts of this case are that on September 22, 1966, Ram Pal deceased along with Kishan Chand Dhiman was going from Phagwara to Ludhiana on Scooter No. WBN—3904, and at that time, the scooter was being driven by Ram Pal deceased while Kishan Chand Dhiman was sitting on the pillion. When they reached near the Police Training Centre, Phillaur, truck No. DLJ—6470, came from the opposite direction which was being driven rashly and negligently by Chanchal Singh, driver, who swerved to the wrong side of the road and struck against the scooter driven by Ram Pal. The scooter was damaged and it was dragged along with the truck which stopped at a distance of about 50 karams from the place of impact. Both Ram Pal and Kishan Chand Dhiman died and their dead bodies were thrown on the kacha portion of the road. The claim application No. 346 of 1966 was filed by Shrimati Meena Sharma, widow of Ram Pal deceased, Rameema Sharma daughter and Bawa son, minor children of Ram Pal deceased through their mother, under section 110—A of the Motor Vehicles Ac, against Amritsar Transport Company Limited, Amritsar, the owners of the truck, Chanchal Singh, the driver of the truck at the time of the accident, and the Oriental Fire and General Insurance Company Limited with which the truck had been insured. They claimed Rs. Three lacs as compensation. It was alleged that the accident took place due to rash and negligent driving of the truck by its driver Chanchal Singh, respondent No. 4, that the monthly income of Ram Pal deceased was Rs. 1,000/- and that respondent No. 1, Amritsar Transport Company Limited, Amritsar, its owners, Chanchal Singh, driver and the insurance company were liable to pay them Rs. Three lacs as compensation. The second claim application No. 347 of 1966, was filed by Devki, widow of Kishan Chand Dhiman, Joginder Kumar and Janak Rani, minor children of Kishan Chand Dhiman deceased and Kishan Dai, the mother of Kishan Chand Dhiman deceased, on similar allegations. They alleged that the monthly income of Kishan Chand Dhiman was Rs. 500/- and they claimed Rs. 1,50,000/- as compensation on similar grounds. Since both these applications pertained to the same accident, these were consolidated by the Motor Accidents Claims Tribunal (hereinafter called the Tribunal) and were disposed of by one judgment. The proceedings were recorded in claim application No. 346 of 1966.

    3. In both these petitions, the name of the respondent insurance company was not mentioned. The Amritsar Transport Company Pvt. Limited, respondent No. 1, and Chanchal Singh, driver, respondent No. 3, admitted in their written statement that the truck was owned by respondent No. 1 and that it was insured with the Oriental Fire and General Insurance Company, Limited, Bombay. The other allegations made in the petitions were denied. It was pleaded that the truck was not driven rashly or negligently by Chaachal Singh, driver, that the scooter was driven by the deceased rashly and negligently and they struck against the truck and died Later on, it transpired during the pendency of the cases before the Tribunal that the original owners of this truck were Victory Transport Company, and, therefore, on the application of the petitioners, that company was added as respondent Page: 524No. 4, Notices were issued to the Victory Transport Company, but it refused to accept service and was proceeded against ex parte.

    4. The Oriental Fire and General Insurance Company in its written statement raised a preliminary objection to the effect that this truck was insured with them by Victory Transport Company and on the day of the accident Amritsar Transport Company Private Limited, were not the insured and, therefore, this insurance Policy had lapsed and they were not liable to pay any compensation to the claimants. It was pleaded that even according to the pleadings of the claimants, the owners of the vehicle, on the day of the accident, were Amritsar Transport Company. The other allegations made in the petition were denied. On these pleadings of the parties, the following issues were framed by the Tribunal:

    1. Was the accident due to any negligent act on the part of the driver of the truck involved or that of the deceased or that of both and with what effect?

    2. What is the quantum of compension due and from whom to whom?

    3. Is not the insurance company liable to pay compensation for any reason?

    4. Relief.

    5. The Tribunal held that the accident took place due to the rash and negligent driving of the truck by Chanchal Singh driver and decided issue No. 1 in favour of the claimants. On issue No. 2, it was held that at the time of the accident, Ram Pal deceased was 30 years of age and his monthly income was Rs. 400/-. The Tribunal, therefore, held that Shrimati Meena Sharma the widow of the deceased and his two minor children, namely, Remeema Sharma and Bawa, were entitled to Rs. 50,000/- as compensation in the other compensation application. Kishan Chand Dhiman was held to be 40 years of age at the time of his death and his monthly income was fixed by the Tribunal at Rs. 250/- per mensem. The Tribunal held that Devki, the widow and other dependants of Kishan Chand Dhiman deceased, were entitled to Rs. 20,000/- as compensation from the respondents, and issue No. 2 was decided accordingly. It was held that Oriental Fire and General Insurance Company was liable to indemnify the insured to the extent of Rs. 20,000/- only. The Tribunal awarded Rs. 50,000/- as compensation in favour of Shrimati Meena Sharma and others in claim application No. 346 of 1966 with costs against the respondents and it was ordered that out of this amount only Rs. 14,000/- plus costs will be recoverable from the insurance company Oriental Fire and General Insurance Company. In the other case Shrimati Devki and others were awarded Rs. 20,000/- as compensation with costs against the respondents with the direction that the Oriental Fire and General Insurance Company will be liable to pay Rs. 6,000/- only. Feeling aggrieved, the Oriental Fire and General Insurance Company filed these appeals Nos. 135 and 136 of 1967, against the order dated June 21, 1962, of the Tribunal, alleging that the decision of the Tribunal is wrong, and incorrect and it may be set aside and the petitions of the claimants may be dismissed against them. The Amritsar Transport Company, respondent No. 1, filed two separate appeals, F.A.Os Nos. 142 and 143 of 1967, against the claimants alleging that the decision of the Tribunal is wrong and incorrect and it may be set aside and the petitions Page: 525??? was arrived at between the Amritsar Transport ??? Limited and Shrimati Devki and others, respondents ??? No. 143 of 1967. On the same day, a compromise was also ??? between the said company and Shrimati Meena Sharma and ??? respondents in F.A.O No. 142 of 1967, and both these appeals ??? disposed of in terms of the compromise.

    6. The appellant has contested the decision of the Tribunal on ??? No. 3, only. It was firstly alleged that the onus on this issue was ??? placed on the appellant in view of the admission made by the ??? in their claim petitions that the owners of the truck were the ??? Transport Company, Amritsar.

    7. Exhibit RW5/1, the copy of the insurance policy shows that truck No. DLJ 6470, was insured by Victory Transport ??? for Rs. 20,000/- for a period of one year from August 25 ??? to August 24, 1967, with the appellant-Oriental Fire and General ??? Company. Bombay. Thus on August 25, 1966, the owners his truck were Victory Transport Company, Delhi. In paragraph 16 of the claim petitions, the claimants had mentioned the owners of this truck were Amritsar Transport company limited. Amritsar, and this company was impleaded respondent being the owner of the truck. This fact was ??? by Amritsar Transport Company Limited, Amritsar, in ??? 16 of their written statements. The case of the appellant ??? company is that according to the admission made by the ??? in their claim applications the owners of the truck on the of the accident viz., September 22, 1966, were Amritsar Transport Company Limited, Amritsar and therefore, they were not liable to ??? amount in respect of that insurance policy. According to them, ??? was the Victory Transport Company which appeared to have ??? this truck before September 22, 1966, to the Amritsar Transport Company Limited, Amritsar, and therefore, this insurance ??? and they were not liable to pay any amount.

    8. It is well settled law that a contract of insurance is nothing but tract of indemnity. The policy issued is with reference to a ??? vehicle owned by the policy holder and consequently the ??? effective while the policy holder retains an interest in ??? In the absence of any express stipulation to the contain the policy, the moment the insured parts with the car, the relating to it lapses. The insurance policy being a contract of ??? indemnity, the insurers cannot be compelled to accept ??? in respect of a third party, who may be quite unknown to vide South India Insurance Co. Ltd. v. Purna Chandra Misra, 1973 ACJ 46 ??? v. M.S Vijayalakshmi 1966 ACJ 1, Nanu Mal v. Inder Singh 1971 ACJ 88, ??? Insurance Company Limited v. Rajalkashmi Ammal 1970 ACJ 104 and ??? Lal Bhalla v. Sudesh Kumar 1968 ACJ 63 In the instant the truck in dispute ??? belonged to the Victory Transport ??? Delhi, on August 25, 1966, and this company insured the with the appellant insurance company for a period of one year Page: 526with effect from August 25, 1966, to August 24, 1967, vide copy of the insurance policy, Exhibit R.W 5/1. In the claim petitions filed by the respondents-petitioners, it was stated in para No. 16 that the owners of this truck were Amritsar Transport Company Limited, Amritsar, and this fact was admitted by the appellant company in its written statement. There was no mention in the claim petitions of any date of transfer of this truck by victory Transport Company, Delhi, in favour of Amritsar Transport Company. However, the petitioners admitted that the owner of the Struck was Amritsar Transport Company Limited and they claimed compensation from it.

    9. During the course of arguments, the claimants-respondents made an application under Order 41, rule 27, Civil Procedure Code, for permission to produce additional evidence to prove the date of transfer of this vehicle by Victory Transport Company in favour of Amaitsar Transport Company Limited, Amritsar. This application was contested by the appellant-insurance company. However, by order dated March 31, 1975, this application was accepted and the claimants-respondents were permitted to produce the additional evidence on April 18, 1975. The appellants-company was also directed to produce its rebuttal evidence on that day. No evidence was produced by the claimants respondents on April 18, 1975. Neither any witness was summoned nor was present on that day. The counsel for the respondents stated that one adjournment may be given to enable them to produce their evidence at their own responsibility and no further adjournment may be given. In the interest of justice, this request was accepted and the case was then adjourned to May 2, 1975, with a direction that the respondents shall produce all their evidence on that day at their own responsibility However, they could get the witnesses summoned through Court, but they were made responsible for the service and production of the witnesses and no further opportunity was to be granted to them. No witness was either summoned or was present today. The respondents did not produce any evidence today. No further opportunity was granted to the respondents and their evidence was closed. In their claim petition, the respondents-claimants admitted that on the date of the accident, the owner of the trunk in dispute was Amritsar Transport Company Limited, Amritsar; Therefore, it follows that the transfer of the truck in favour of Amritsar Transport Company Limited Amritsar was made by the Victory Transport Company after August 25, 1966, and before September 22, 1966. There is no express stipulation in the policy that the policy will not lapse in case the truck is transferred. Consequently, this insurance policy lapsed on the date of the transfer of the truck and, therefore, the appellant company is not liable to pay any compensation to the respondents-claimants and the award against it is liable to be set aside. The decision of the Tribunal on issue No. 3 is incorrect and the same is reversed.

    10. As a result, both the appeals are accepted and the impugned awards passed by the Accidents Claims Tribunal, Punjab, against the appellant-company are set aside and the claims petitions against the appellant-company are dismissed. Under the circumstances of the case, the parties are left to bear their own costs.

    11. Appeals accepted.

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    Comments

    M/S. Oritnetal Fire & General Insurance Co. Ltd. Chandigarh v. Smt. Meena Sharma And Others
    (May 2, 1975)