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The Vanguard Insurance Co. Ltd. Vs. Padma and anr. - Court Judgment

LegalCrystal Citation
SubjectMotor Vehicles
CourtChennai High Court
Decided On
Reported in(1973)2MLJ276
AppellantThe Vanguard Insurance Co. Ltd.;k. Padma
RespondentPadma and anr.;ambalal and anr.
Cases Referred and Tattersall v. Drysdale
- .....marine insurance, because different considerations apply in marine insurance nor am i dealing with life insurance, which is not really insurance in the proper sense of the term at all i am dealing with burglary, fire, accident, and so forth--i do not think you can assign the policy so as to make of what is a contract of personal indemnity to a, into a contract of personal indemnity to b. i hope, i have made that clear. you cannot thrust a new assured upon a company against its will. if you do that, you must have a novation. you must have the release of the assured and the acceptance of a new assured. it is not a question of assigning a chose in action, such as a debt, a right to recover money. a little reflection, i think, will show what serious state of affairs might otherwise exist......

S. Maharajan, J.

1. Both these appeals are directed against the judgment of the Motor Accidents Claims Tribunal, Madras, awarding Rs. 6,000 as compensation to the mother of one Dhandapani, who was killed in a motor accident on 15th April, 1966. Dhandapani, who was aged 14 years and was studying in the 9th standard in the Hindu High School, Triplicane, was going in a cycle along the Mount Road near Elphinstone Theatre, while he was knocked down by car MSP 6788. As a result of the accident the victim sustained fractures and multiple injuries and died a little later. The driver of the car was one Ambalal who claimed to be owner of the car and who denied that he had driven it in. a rash or negligent manner, and who pleaded that the accident was due to sudden and unanticipated failure of the brakes of the car. The Vanguard Insurance Co., with which the car had been insured, pleaded that as the assured had sold his car on 12th April, 1965 and had no insurable interest in the car on the date of the accident (15th April, 1965), the insurance company was not liable for the claim of the mother of the victim.

2. The Tribunal held that the death of Dhandapani was the result of rash and negligent driving on the part of Ambalal and fixed the compensation payable at Rs. 6,000. The Tribunal further held that as the alleged transfer of the car had not been entered in the Registers maintained by the Traffic Department, the policy issued in favour of Ambalal continued in force on the date of the accident, and the insurance company would consequently be liable for the damages awarded.

3. The insurance company has preferred C.M.A. No. 444 of 1969 attacking the order in so far as it made the insurance company liable. The mother of the victim has preferred C.M.A. No. 106 of 1972 attacking the quantum of compensation as inadequate and claiming a compensation of Rs. 30,000.

4. The first point that arises for determination is whether the death of Dhandapani was due to the rash and negligent driving of Ambalal. Exhibit P-4 is the plan of the scene prepared by P.W. 8, the Investigation Traffic Sub-Inspector. It is seen from the plan that the accident occurred at a point 183 feet south of Elphinstone theatre, 7 feet east of the western pavement. P. W. 5, who is a Reserve Sub-Inspector attached to the D-1 Traffic Police Station and who was on traffic duty at Round Tana from 9 A.M. on 15 th April, 1965, says that at about 9-30 A. M. he saw the car MSP 6788 coming from south and going in a northerly direction at a good speed and hitting the rear portion of the cycle on which Dhandapani was riding beside the western margin of the road. He also says that after the impact, the boy was thrown off the cycle and he fell down on the guard railings adjoining the pavement. The boy was taken in a semi-conscious condition to the General Hospital, where P.W. 4 the casualty medical officer, examined him. The boy died at 9-45 A. M. Autopsy held the next day showed complete fracture of both the bones of the right forearm, left collar bone, the 7th rib on the right side of chest on the back portion, 2nd to 8th ribs of the chest on the right side in the front portion, and injury to the liver and lungs. There were also abrasions over the right arm, right elbow; right knee, right leg and ankle and left leg and knee. According to the medical opinion, the deceased must have died of multiple injuries caused by being knocked down by a fast moving vehicle. According to Ambalal, who was examined as R.W. 2, he was driving the car with his two daughters inside, that the car was going at a slow speed of five miles per hour, that he switched off the engine and stopped the car near Chellarams, but he could not stop it because of the failure of the brakes and that when the car stopped he got down and saw that the boy had fallen to the let of his car in front. The Tribunal was right in accepting the evidence of P. W. 5 and holding that the car was driven at a good speed. The nature of the injuries suffered by the victim and the nature of the damage suffered by the car on the left front mudguard and both the tyres on the left side, showed that the car must have been driven at a speed which was certainly dangerous in relation to the locality through which it was passing. The hypothesi of Ambalal that the accident was due to the sudden failure of brakes is incompatible with the report of P.W. 3, the Motor Vehicles Inspector, who examined the car and found the brakes efficient. I, therefore, agree with the Tribunal and hold that the death of the deceased was due to the rash driving of Ambalal.

5. The next question that arises for consideration is, what is the quantum of compensation payable for the death of Dhandapani. P. W. 1, the mother of the deceased, testified that Dhandapani was her only son. P. W. 2, the teacher of Dhandapani, deposed that he was a bright and intelligent boy studying in the 9th standard in the Hindu High School. The boy was 14 years old at the time of his death. The boy's father is an accountant in the United Commercial Bank Ltd. Had not the life of the boy been cut short by the accident, there was a reasonable prospect of his passing his S.S. L.C. and getting at least a clerk's post in the United Commercial Bank on a salary of at least about Rs. 300 per month.

6. In Perumal and Anr. v. State of Madras 1971 A.C.J. 144, I have considered at some length the difficulties involved in fixing compensation in such cases and stated:

The question raised before me has vexed many Courts in India and England and has provoked some Judges to embark upon metaphysical investigation into the value of human life and ultimately to exclaim that the answer to the question is far from simple. In Benham v. Gambling 1941 A.C. 157, Vicount Simon, L. C., said:

Such a problem might seem more suitable for discussion in an essay on Aristotelian ethics than in the judgment of a Court of law, but in view of the earlier authorities, we must do our best to contribute to its solution. The noble Lord disagreed with the view that human life is on the whole good and preferred to award damages in respect of the shortened life of a given individual on the basis of the length of life that was lost. This view is in ill accord with Indian thought, which regards human life as precious, as much for the joy it brings as for the sufferings it inflicts. Whichever view is sound, the difficulty of measuring its worth in terms of money is real. There are some aspects of human life, which are susceptible of monetary measurement, but the totality of human life is, like the beauty of the sunrise or the splendour of the stars, beyond the reach of the monetary tape measure.I also held in that case that the death of an infant may be fixed at Rs. 5,000 though other peculiar circumstances in a given case might influence the Court to reduce or enhance this amount. That was a case in which a girl, 8 years old, lost her life. But, in this case, Dhandapani had survived the vicissitudes of childhood, and was 14. years at the time of his death. Having regard to the status of the family in which he was born and his academic attainments and age as well as to the uncertainties of human life, and having regard also to the fact that his mother was only 35 years old at the time of his death and he might have maintained her at least for 25 or 30 years, if alive, I think it right to enhance the compensation awarded to Rs. 10,000. It is true that the appellate Court is slow to interfere with the quantum of compensation awarded by the trial Court, unless it shocks the conscience of the appellate Court. The compensation awarded by the Tribunal is, in my view, startlingly inadequate and has been arrived at without taking into consideration the relevant facts. Hence this enhancement.

7. The last question that arises for consideration is whether the Vanguard Insurance Co., Ltd., is liable to pay the compensation. The accident, it may be recalled, took place on 15th-April, 1966. Admittedly, Ambalal had taken out from the Vanguard Insurance Co., Policy No. P. T. 1920 dated 15th November, 1962 and was renewing it every year, the last of such renewals being on 17th October, 1961. The policy would normally be in force upto 17th October, 1965. But on 12th April, 1965, Ambalal wrote a letter as per Exhibit R-3 to the Vanguard Insurance Co., Ltd., in the following terms:

Ref : Transfer of Insurance--M.S.P. 6788. As I have sold out my above car to M/s. Pungka & Co., 14, Kondi Chetti Street, G. T. Madras, I request you to transfer the Insurance certificate to their name and oblige. I am herewith surrendering the old certificate and Rs. 7 towards the transfer fee. Thinking You, Yours faithfully.

M/s. Pungka & Co., is no other than a partnership firm of which Ambalal was a partner till 1966. According to the Insurance Company, by virtue of this transfer to Pungka & Co., three days before the accident, the insurance policy became automatically lapsed, and the company was no longer liable to cover any third party risk incurred after 12th April, 1966. It is true that a Division Bench of this Court in M. Bhoopathy v. M.S. Vijayalakshmi 1966 A.C.J. 1, has held that in the absence of an express stipulation to the contrary in the policy, the moment the insurer parts with his vehicle, the policy relating to it lapses. This Division Bench ruling itself is based on three English authorities. The first is Rogerson v. Scottish 'Automobile and General Insurance Co., Ltd. (1931) 48 T.L.R. 17 : (1931) 146 L.T. 26, where it was held that if the insured parts with ownership of the insured car, the policy of the insurer relating to it lapses at once. Lord Buckmaster in the House of Lords expressed his view thus:

To me this policy depends upon the hypothesis that there is, in fact, an insured car. When once the car, which is the subject of this policy is sold, the owner's rights in respect of it cease and the policy so far as the car is concerned is at an end.

The second decision was Tattersall v. Drysdale 1935 All. E.R. 112, where Goddard, J., held:

The policy insured the plaintiff in respect of the ownership and user of a specified car, and when he divested himself of his interest in that car the extension clause ceased to have effect.

The learned Judge further proceeded to observe:

The true view, in my judgement, is that the policy insures the assured in respect of the ownership and user of a particular car, the premium being calculated, as was found in Rogerson's case (1931) 48 T.L.R. 17 : (1931) 146 L.T. 26, partly on value and partly on horse power...To construe this policy otherwise would be to hold in effect that two distinct insurances were granted one in respect of the scheduled car, and another wholly irrespective of the ownership of any car.

8. The third decision relied on by the Division Bench was Beters v. General Accident Fire & Life Assurance Corporation Ltd. (1937) 4 All. E.R. 628. There Goddard, J., had to deal with a case where the accident took place after one Mr. Coomber, the owner of the insured car, had sold it to one Mr. Pope The accident took place while Mr. Pope was driving the car. Referring to this aspect of the matter Goddard, J. observed as follows:

Can it be said here, by any stretch of imagination, that Mr. Pope was driving by the order or with the permission of Mr. Coomber It seems to me that it is quite impossible to say that. He bought the car, it was his own car, and he was driving his own car, not by Mr. Coomber's permission, and certainly not under his order. He was driving it because it was his own car, and I think that, following Ro-gersons case (1931) 146 L.T. 26, and Tattersall v. Drysdale 1935 All E.R. 112, I am bound to hold that, when Mr. Coomber parted with his car, his insurance qua that car lapsed, and that there was no insurance. Therefore I decide, first of all, that there was no insurance at all in force on the car at this time. It is quite impossible to say that a person who is driving his own car, which he has bought and the property in which is in him is driving it by the permission or on the order of the person who sells the car.

The learned Lord added:

In all contracts of insurance--I am not dealing with marine insurance, because different considerations apply in marine insurance nor am I dealing with life insurance, which is not really insurance in the proper sense of the term at all I am dealing with burglary, fire, accident, and so forth--I do not think you can assign the policy so as to make of what is a contract of personal indemnity to A, into a contract of personal indemnity to B. I hope, I have made that clear. You cannot thrust a new assured upon a company against its will. If you do that, you must have a novation. You must have the release of the assured and the acceptance of a new assured. It is not a question of assigning a chose in action, such as a debt, a right to recover money. A little reflection, I think, will show what serious state of affairs might otherwise exist. The proposal form in this case, as in every case of motor insurance, asks questions with regard to the previous driving history of the proposer. The company want to know whether he is a man whose record is such that they can take him, and, if so, in what premium. His driving history or his driving experience must, I think, be a material fact. The moral factor, as it has been called, enters into these matters very considerably, not only in motor insurance, but also in most classes of insurance of this description. If you sell your car, you cannot, merely by handing over your car and saying : Take this policy and do what you can with it, I assign it to you, put the underwriters under an obligation to indemnify the purchaser, when they have agreed only to indemnify the vendor.

9. A review of the three English cases, upon which the Division Bench ruling of this Court is founded, shows that because a contract of motor insurance is a contract of personal indemnity, the moment the insured person sells his car to another and loses all insurable interest therein, the insurance policy comes to an end automatically. In other words, the sale of an insured car has been held to be an end of the contract of insurance, not because the sale ipso facto has a disruptive influence upon the insurance-contract, but because the sales in those particular cases had the effect of depriving the insured person of all interests in the insured car and of taking the car outside the ambit of the contract of personal indemnity entered into between the insurance company and the original owner. In this case, however, the sale effected by Ambalal, the assured, did not have this effect. It was a sale in favour of a partnership, of which the vendor was himself a member. Even after the sale, Ambalal continued to have an insurable interest in the car. It may be that the insurable interest which he had in the car before the sale was wider in amplitude than the insurable interest which he had in the car after the sale for Ambalal, the exclusive owner of the car, became, by virtue of the sale, a joint owner thereof along with his partners. It may be that if at the time of the accident, any partner of the vendee firm other than Ambalal had been driving the car, the insurance company might well complain, 'You are not the person with whom we entered into a contract of indemnity. We do not know anything about your previous driving history. Nor do we know whether you are a man whose record is such that we could have issued a policy to you. Had we known your character, we would not have agreed to indemnify you.' But that is not the position here. The company, after ascertaining that MSP 6788 was a Singer made car with a saloon body JO horse-power 1946 manufacture and seating capacity of four, and after satisfying that Ambalal's driving history was satisfactory, entered into a contract of personal indemnity with him. At the time of the accident, the same assured Ambalal was driving the same assured car ' Singer 'MSP 6788. Despite the sale he had effected on 12th April, 1965 he continued to have an insurable interest in that car. Whatever the effect of the sale of the car might be, in the eye of the law, it did not 'alter, to the prejudice of the insurance company, the terms of the contract of personal indemnity it had concluded with Ambalal. This being the effect of the sale by Ambalal, I refuse to hold that the sale put an end to the contract of insurance automatically and in so far as it related to the liability of the company so long as Ambalal was driving the car and involved himself in an accident. I am told at the Bar that the position arising in this case is not covered by authority. Having regard to the rationale behind the decisions cited supra and assimilating the same to the facts of this case, I think it right in equity and in law to hold that the liability of the insurance company under the policy issued to Ambalal to indemnify Ambalal has not ceased by virtue of the sale effected by Ambalal in favour of a partnership consisting of himself and some others. This point is answered accordingly.

10. In the result, G. M. A. No. 444 of 1969 will stand dismissed with the costs of the first respondent Padma. The second respondent will bear his own costs. G. M. A. No. 106 of 1972 is allowed in part, and the compensation enhanced to Rs. 10,000. The respondents 1 and 2 will pay the appellant Padma her proportionate costs.

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