R.D. Shukla, J.
1. The appeal is directed against the judgment and Award dated 22-5-1989 of the Member, Motor Accident Claims Tribunal, Indore passed in Claim Case No. 72/87 whereby the claimant appellants have been awarded a compensation of Rs. 90,000/- for the death of Balwant Singh in a motor accident on 26-3-1983 at about 10 A.M. Balwantsingh was dashed by Motor-truck No. MPN 5323, owned by respondent No. 1 and driven by respondent No. 2 and died nearly 3-4 hours after the accident. Rajani, daughter of claimant No. 1 also died.
2. Claimants who are the heirs of Balwantsingh filed the claim petition for an award of Rs. 1,00,000/-. A separate petition for compensation on account of the death of Rajani was also filed. Respondents disputed the claim including the fact of rash and negligent driving. Respondent No. 3 further disputed its liability on the ground that the insurance was obtained by fraud.
3. Learned Tribunal found the accident having occurred due to rash and negligent driving of the vehicle by driver respondent No. 2 who was a licence-holder and awarded Rs. 90,000/- as compensation, after applying a multiplier of 15 and taking the age of deceased to be 38 years. However, respondent No. 3 Insurance Co., was exonerated from the liability of payment of compensation as the transfer of Insurance Policy was obtained by concealing the fact of accident. Hence this appeal by claimants for enhancement of compensation and for fixation of liability of payment on respondent No. 3 as well.
4. The contention of learned counsel for appellants is that after ascertaining the dependency and applying multiplier the deduction of 1/6th amount is wrong.
5. The second contention of learned counsel for appellants is that since the Insurance Policy is transferred in the name of respondent No. 1 and as the date starts from the previous night the Insurance Co. would be liable.
6. No-body appears for respondents Nos. 1 and 2. Shri M. L. Dhupar learned counsel for respondent No. 3 submitted that as there was concealment of material fact that transfer of certificate of insurance under section 103-A of Motor Vehicles Act, 1939, itself was invalid and, therefore, Insurance Co., has rightly been held not liable to make payments.
7. The first point that arises in the case is as to whether the amount of compensation is just and proper. We have perused the impugned judgment and evidence on record. Learned Tribunal in para 14 of its judgment has accepted the age of the deceased to be 37-38 years and dependency of family as Rs. 600/- per month. After applying multiplier of 15, learned Tribunal has made a deduction of 1/6th of the amount. The age of the deceased has not been disputed and, therefore, this court accepts the age to be 38 years.
Similarly, the pay and allowances of deceased to the extent of Rs. 985.80 Paise per month has also not been disputed and, therefore, this Court accepts that finding also.
8. Normally 1/3rd deduction is made for the personal expenditure. In this case, learned Tribunal has determined the dependency of the family to Rs. 600/- per month. In fact this ought to have been determined to nearly Rs. 650/- per month or at least Rs. 7,500/- per year.
9. Learned Tribunal has adopted a multiplier of 15 but looking to the age of the deceased as he was aged about 38 years the maximum multiplier of 13 ought to have been applied. Reference may be had to a case reported in 1994 MPLJ 520, General Manager, Kerala State Road Transport Corporation v. Susamma Thomas.
If a multiplier of 13 is applied an amount of compensation with Rs. 7,500/- per year as dependency would come to Rs. 97,500/-.
10. Learned Tribunal has awarded no amount for the loss of consortium and loss of love and affection. An additional amount of Rs. 5,000/- to Shyamabai and Rs. 8,000/- (Rs. 2,000/- each to other claimants) ought to have been awarded. Thus, the amount if calculated with this formula comes to Rs. 97,500/- + Rs. 5,000/- + Rs. 8,000/- = Rs. 1,10,500/-. However, the appellants have claimed Rs. 1,00,000/- and, therefore, in the opinion of this Court amount of Rs. 1,00,000/- ought to have been awarded. The judgment of learned Tribunal requires modification to that extent.
11. Now, the second point that arises for determination is as to whether Insurance Co., would be liable to make good the loss as the transfer of policy was made effective from 26-3-1983.
12. Section 103-A of the Motor Vehicles Act, 1939 makes a provision for transfer of certificate of - Insurance. It makes incumbent on the insured to make an application in the prescribed form to the insurer for the transfer of certificate of insurance and the policy described in the certificate in favour of the person to whom the motor vehicle is proposed to be transferred.
13. If refusal of permission is not intimated to the insured within 15 days the certificate of insurance will be deemed to have been transferred in favour of the transferee of the vehicle. Section 103-A(2) provides that Insurance Co., may refuse to transfer to the other person the certificate of insurance looking to the previous conduct of driver of the motor vehicle; holder of the policy, of insurance and such other factors where the insurer refuses to accept the transfer it shall refund to transferee the amount which he had to refund to the insured for the unexpired term of the policy.
14. Before dealing with this case further, we may observe here that now this provision stand amended and a new section 157 has been inserted in the Motor Vehicles Act, 1988 which provides that where the owner of the vehicle has been transferred the Certificate of Insurance and Policy of the certificate shall also be deemed to have been transferred in favour of the person to whom the motor vehicle is transferred with effect from its date of transfer.
15. The transferee is only required to supply information within 14 days from the date of transfer in the prescribed form to the insurer for making necessary changes and therefore, the provisions of section 103-A (old Act) would not be attracted if the accident had occurred after 14-10-1988 (i.e. enforcement of the date of Motor Vehicles Act, 1988).
16. This accident occurred much prior to the enforcement of Motor Vehicles Act, 1988 and therefore, provisions of section 103-A pf Motor Vehicles Act, 1939 shall be attracted in this case.
17. For analysing the effect and import of transfer of Insurance Policy the provisions of section 94 of the Old Act is required to be kept in mind. Section 94 of the Old Act provided compulsory insurance against third party risk which reads as follows :-
'94. No person shall use except as a passenger or cause or allow any other person to use a motor vehicle in a public place, unless there is in force in relation to the use of the vehicle by that person or that other person, as the case may be, a policy of insurance complying with the requirements of this Chapter.'
This provision has been made to ensure that the claim and interest of the third party suffering from or involved in the accident is not jeopardized in any way.
The law further provides for comprehensive insurance whereby the risk of the vehicle and the employees working in the vehicle is also covered.
18. Thus, a distinction is always required to be made between two types of insurance and the liability of the Insurance Co., covering the third party risk and the owner and user's risk.
19. Learned Tribunal has relied on a case reported in AIR 1962 SC 814, Mithoolal Nayak v. Life Insurance Corporation of India especially with respect to suppression of material fact. While discussing the effect and import of section 45 of Insurance Act, their Lordships have held as follows :-
The three conditions for the application of the second part of section 45 are -
(a) the statement must be on a material matter or must suppress facts which it was material to disclose,
(b) the suppression must be fraudulently made by the policy holder and
(c) the policy holder must have known at the time of making the statement that it was false or that it suppressed facts which it was material to disclose.'
20. It is on the basis of these principles that learned Tribunal has exonerated the Insurance Co., from the liability of payment of compensation taking it to be that material fact of accident on 26-3-1983 was suppressed. That was a case of personal insurance covering the risk of the person concerned. Here it is neither the case of personal insurance nor the insurance covering the risk of owner and his employees.
21. A third party who has suffered or sustained injuries in the accident cannot be denied its claim because of certain mistakes committed by owner of the vehicle and insurance co. or because of technical defects.
22. It is also noteworthy that in such cases the insurance is of the vehicle and not the person. It appears, it is for this reason that in the subsequent amendment i.e. in the Act of 1988 a specific provision of section 157 has been made whereby an automatic transfer of vehicle has been accepted.
23. A Division Bench of this High Court in a case reported in 1995 ACJ 292, Nanibai v. Ishaque Khan; relying on 1976 ACJ 320(AP) has held that Insurance coverage is that of vehicle and not of the insured; if the insurance company is aggrieved by the concealment of fact or misrepresentation or fraud, it may make a grievance before the appropriate forum separately.
24. While discussing the degree of proof required where Insurance Co., has taken stand of misrepresentation or fraud, the other Division Bench of this High Court as reported in 1995 MPL 139, AIR 1995 MP 171, The Oriental Fire and General Insurance Co. Ltd., Lashkar v. Ramsingh; held as follows :
'When Insurance Company takes stand of fraud or misrepresentation and seeks avoidance of the Policy on the ground of fraud or misrepresentation or concealment of a material fact, in order to entitle the insurer to avoid the policy, insurer has to prove that it has been procured by means of fraudulent misrepresentation as to matters material to the risk. A charge of fraud, naturally requires a high degree of probability. It must be established beyond all reasonable doubt and could not be based on suspicion and conjecture.'
25. This is not in dispute that the transfer of Insurance Policy was accepted by the officers of Insurance Co., on 26-3-1983.
26. Where a policy has been obtained on the date of accident it becomes operative from the previous midnight of the date of insurance and Insurance Co., would be liable as the effectiveness of the policy would commence from the commencement of the date i.e. immediately after the O'hour of midnight.
27. The Insurance Co., has accepted the transfer on 26-3-1983 may have been during office hours and therefore, it will be deemed that the transfer became effective from the midnight of 25th and 26th i.e. O'hour of 26th of March, 1983. Reference may be had to a Supreme Court decision as reported in 1990 ACJ 545 (Vol.II), New India Assurance Co. Ltd. v. Ramdayal.
28. In this case the Insurance Co., did not take the objection at the initial stage and added the same by subsequent amendment. This claim petition was filed on 22-8-1983. The written-statement on behalf of Insurance Co., was filed on 28-11-1983 no specific objection as to the misrepresentation and fraud was taken at the initial stage. This objection was raised after about two years vide an amendment in para 13 of the Written Statement on 10-4-1985 (i.e. almost after two years).
29. Insurance Co., even after coming to know about the accident and after receipt of notice from the Tribunal has taken no action against the owner it has not tried to cancel the Certificate of Insurance or repudiate the contract.
30. Learned counsel appearing for the Insurance Co., has then submitted that the employee and officer of the Insurance Co., may have been negligent but Insurance Co., being public-undertaking cannot be put to a loss because of the negligence of its officers. This Court is not in agreement with the contention of learned counsel for Insurance Co., as the officers and employees of the Insurance Co., work as agent and servant of the Company. The Insurance Co., would be vicariously liable for the breach or mistake committed by its agent or servants.
31. It is also noteworthy that no action has been taken by the Insurance Co., against erring officers or its employees. At least there is no evidence to show that after coming to know about transfer of policy on such misrepresentation, the management of Insurance Co., took any action against his erring employees or tried to repudiate the contract and, therefore, now the Insurance Co., cannot get exoneration of the liability of payment after such a lapse of time. The third party suffering from such accident cannot be compelled to overcome such technical difficulties. In such circumstances, where the policy have not been avoided or cancelled, nor the premium received has been returned, repudiating the liability within fifteen days of the insurance, it cannot be held that the policy was void from its inception because of the misrepresentation or fraud committed by the owner of the vehicle.
32. Learned counsel appearing for the Insurance Co., has then referred to two cases as reported in 1993 ACJ 568, Paragounda v. Bhimappa (Full Bench) and 1995 ACJ 288, Rikhi v. Sukrania, (Division Bench: P&H; High Court) and submitted that as the transfer of the vehicle was not intimated to the Insurance Co., the Insurance Co., was not liable to make good the loss.
33. In those cases the intimation of transfer of the vehicle was not given to the Insurance Co., but here the case is different. The transfer was intimated (though late) it was accepted by Insurance Co. Subsequently, in answer to the claim petition this plea of misrepresentation and fraud was not taken initially but was inserted by way of amendment in the written-statement after two years. No action repudiating the contract and cancellation of policy was taken immediately after coming to know about the alleged misrepresentation and fraud. No action has been taken against the allegedly erring employee and, therefore, in such a situation Insurance Co., cannot be absolved of its liability of covering the third party risk.
34. Learned counsel for respondent has drawn attention of this court to a case reported in 1994 ACJ 368 (D.B.), Bhanwarlal v. Hariram; and submitted that because of the transfer of the vehicle the policy lapsed and, therefore, there was no question of acceptance of transfer by acceptance of some premium on 26-3-1983.
35. In Bhanwarlal's case (supra) it was held that the transferee failed to intimate the fact of transfer and as such the Insurance Co. was held not liable for making payment of the compensation. Here the case is different. There was a subsisting insurance policy. The vehicle was transferred, intimation of transfer was not given in time but it was definitely given on 26-3-1983 and was accepted by the officers of the Company.
36. However, a fraud and misrepresentation has been alleged. This court has already observed in earlier paragraphs that the Insurance Co., has failed to take any action against its erring officers and regarding repudiation and cancellation of the policy after receiving the intimation from the court. So much so, that the fact of fraud and misrepresentation was pleaded after two years by way of an amendment. It was for this reason that 'as already observed in earlier paragraph' it was observed that the Insurance Co., is free to take an appropriate action for the alleged fraud and misrepresentation but the third party cannot be thrown out of the court and compelled to seek remedy only against the insured.
37. Learned counsel thereafter referred to a Single Bench decision of this court as reported in 1987 ACJ 209, National Insurance Co. Ltd. v. Purshotamdas Maheshwari whereby it was held that after the transfer of the vehicle the policy comes to an end and if it was transferred without the consent and permission of Insurance Co., the Insurance Co., would not be liable.
38. This court is not in agreement with the decision of learned Single Judge in view of the Division Bench decisions referred above.
39. In a recent decision, as referred by learned counsel for appellant passed in M.A. No. 425/94 vide order dated 31-1-1996 (Reported as 1996 MPLJ 863) the similar view regarding the misrepresentation and fraud alleged by Insurance Co. has been taken.
40. As a result appeal succeeds and is allowed with cost. The appellants are entitled to a compensation of Rs. 1,00,000/- with interest @ 12% per annum from the date of application till realisation of the same. Respondents including Insurance Co., are jointly and severally held liable for making payment.
However, this appeal remained pending in this High Court for about 6 years. The service on Insurance Co., could not be effected because of the laches on the part of the appellant for pretty long period and, therefore, the appellants would be liable to the interest only upto the first date of hearing after filing of appeal i.e. 23-7-1990.
41. Before parting with the case it is further directed that only 1/3rd amount would be paid in cash to the claimants through Shyamabai. The rest of the amount shall be equally distributed and kept in an interest paying scheme of fixed deposit with a Nationalised Bank for a period of ten years. No loan would be granted against such deposit. The claimants would be entitled only to quarterly interest. However, in case of necessity of marriage or starting of the business they may be allowed to withdraw half of the amount so deposited in their names, under orders of the Claims Tribunal.
Counsel fee Rs. 500/-.