United India Insurance Co. Ltd vs Nirmala Kwatra & Ors.
2012 Latest Caselaw 3141 Del

*        IN THE HIGH COURT OF DELHI AT NEW DELHI

                                      Reserved on: 16th February, 2012
                                       Pronounced on: 11th May, 2012
+        FAO 131/1999

         UNITED INDIA INSURANCE CO. LTD. .... Appellant
                       Through: Mr. Vineet Malhotra, Adv.

                     versus

         NIRMALA KWATRA & ORS.       .... Respondents
                      Through: Mr. Ashok Popli, Adv. for the
                               Claimants.
                               Mr. P.K. Seth, Adv. for R-7.
+        FAO 412/1999

         NIRMALA KWATRA & ORS.           .... Appellants
                     Through: Mr. Ashok Popli, Adv

                     versus

         RISHI RAJ & ORS.                    .... Respondents
                        Through:       Mr. P.K. Seth, Adv. for R-2.
                                       Mr. Vineet Malhotra, Adv. for
                                       R-6.
         CORAM:
         HON'BLE MR. JUSTICE G.P.MITTAL
                       JUDGMENT

G. P. MITTAL, J.

1. These are two Cross Appeals, FAO 131/1999 has been preferred by the United India Insurance Company Limited; the Insurer of the vehicle No.DEA-5703 involved in the accident. FAO 412/1999 has been preferred by Smt. Nirmala Kwatra and Ors; the Claimants before the Claims Tribunal for enhancement

of compensation.

2. In FAO 131/1999, Respondents No.1 to 5 are the Claimants, Respondent No.6 is the driver of the offending vehicle, Respondent No.7 is the registered owner and Respondents No.8 to 10 are stated to be the rightful owners. The dispute is with regard to the liability to pay the compensation and on the quantum of compensation.

3. For the sake of convenience, the Appellant shall be referred to as the Insurer. Respondents No.1 to 5 as the Claimants, Respondent No.6 as the driver, Respondent No.7 as the registered owner and Respondents No.8 to 10 by their respective names.

4. On the night intervening 05-06.09.1983, S.P. Kwatra (the deceased) who was working as Commodore in Indian Navy, was proceeding to his home in Greater Kailash Enclave after attending an official meeting at Hotel Hyatt Regency. When he was passing through IIT-Mehrauli Crossing, a car No.DEA- 2703 driven by Respondent No.6 in a rash and negligent manner struck against the right middle portion of the car driven by the deceased. The deceased suffered injuries which proved to be fatal.

5. The Claims Tribunal by the impugned judgment dated 18.01.1999 found that the accident was caused on account of rash and negligent driving of the car No. DEA-2703 by its

driver Respondent No.6. The car was owned by Nafe Singh (the registered owner). On the date of the accident, the offending vehicle was insured with the Insurer.

6. The Claims Tribunal made an addition of 50% in the deceased's income towards future prospects, applied the multiplier of 12 to compute the loss of dependency as `3,58,464/-.

7. The ground of challenge by the Insurer is that the cheque towards the Insurance premium having been dishonoured, there was no Insurance policy on the date of the accident. The Insurance Company, therefore, had no liability to pay the compensation.

8. In FAO 412/1999 preferred by the Claimants, it is stated that the 4th Pay Commission was implemented w.e.f. 1986 and the 5th Pay Commission was implemented w.e.f. 1996. The Claimants were, therefore, entitled to the said benefit and a compensation of `10,00,000/- with interest @ 12% ought to have been awarded.

9. On behalf of the Insurer, it is contended that no policy was in existence on the date of the accident as the validity of the cover note expired 15 days before the accident. It was urged that the cheque issued towards the premium was dishonoured and, therefore, there was no contract of Insurance between the Insurer and the registered owner. It is urged that as stated by the registered owner (Respondent No.7), the offending vehicle

was being used as a taxi by Respondent No.8. Thus, the Insurance Company had no liability to indemnify the Insured on account of the breach of the policy condition.

10. All the contentions raised on behalf of the Insurer are misconceived.

11. It is important to note that initially the Claim Petition was filed against the driver (Respondent No.6) and the registered owner (Respondent No.7). The Respondent No.7 disclosed that Respondents No.8 to 10 were the rightful owners, consequently, they were also impleaded. It was also brought on record that the vehicle was Insured with the United India Insurance Company Limited, thus it was also impleaded by an order dated 14.01.1994. Sufficient opportunities were granted to the Insurer (the Appellant) to file the written statement. The written statement, however, was not filed. Consequently, on 13.07.1995, the defence of the Appellant was struck off. Subsequently, an application under Section 151 CPC was moved for setting aside the order dated 13.07.1995. The said application was dismissed by the Claims Tribunal by order dated 06.11.1997. The Appellant Insurance Company preferred not to challenge the said order. There is no gainsaying that between 14.01.1994 to 13.07.1995 sufficient opportunities were given to the Appellant to file its defence that having been not availed, the application under Section 151 CPC was also rightly dismissed by the Claims Tribunal by an order dated 06.11.1997.

A copy of the cover note No.586254 was placed on record whereby a premium of `1418/- was paid by the Insured. The cover note nowhere mentions that the payment was received by cheque.

12. There was inter se dispute between Respondents No.7 and Respondents No.8 to 10 as to who was the actual owner of the vehicle involved in the accident. Respondent No.7 pleaded that Respondent No.8 and one Mahender Singh (husband of Respondent No.10) were the Transporters and used to deal in taxi service. They had purchased a number of vehicles in the name of various persons and the offending vehicle was also being used as a taxi by them. It was not a case of the Respondent No.7 that at the time of the accident, the vehicle was being used as a taxi. Respondent No.8 examined himself as RW-2/1. He testified that he did not pay any price towards the purchase of the vehicle No.DEA-2703 and he did not obtain the Insurance Policy for it. It was also proved on record that although the vehicle was registered in the name of Respondent No.7 at the time of purchase on 16.03.1983, it was transferred in the name of Respondent No.8 on 05.02.1984. Respondent No.7 also produced other evidence to show that Respondents No.8 and 9 purchased some other vehicles in the name of other persons. Thus, I would not have subscribed to the finding reached by the Claims Tribunal that Respondent No.7's pleas that he was not the actual owner, was not tenable. The same,

however, loses significance in view of the fact that Respondent No.7 admittedly was the registered owner and the Appellant's defence having been struck off and it having not been proved that the registered owner was informed of the dishonour of the cheque before the date of the accident, the Appellant Insurance Company could not escape the liability.

13. Oriental Insurance Company v. Vinod Kumar, 2007 (96) DRJ 483 relied upon on behalf of the Appellant is of no consequence as it is not proved by the Appellant that the premium towards the Insurance was not paid.

14. I have already stated earlier that from the cover note it is not born out that any cheque was issued towards the payment of the premium. In the circumstances, presumption would be that the premium of `1483/- was paid in cash. The case is squarely covered by the judgment of the Supreme Court in Deddappa & Ors. v. Branch Manager, National Insurance Company Limited, (2008) 2 SCC 595; where it was held that the Insurance Company could avoid liability, if the cheque is dishonoured and the registered owner and the RTO are informed about the dishonour of the cheque and cancellation of the policy.

15. In my view, in the absence of any proof that there was dishonour of the cheque or breach of the terms of policy, the Insurance Company could not avoid its liability to indemnify the Insured i.e. Respondent No.7. Consequently, the Appeal

preferred by the Appellant Insurance Company being FAO 131/1999 is devoid of any merit; the same is accordingly dismissed.

FAO 412/1999

16. Now, I shall turn to the Appeal for enhancement filed by the Claimants. It was proved on record that the deceased was aged 48 years. He was working as a Commodore in Indian Navy and was getting a salary of `3880/- per month. The Claims Tribunal, as stated hereinabove, made an addition of 50% towards future prospects and after deducting the liability towards income tax, applied the multiplier of '8'. It was proved on record that deceased S.P. Kwatra left behind five dependents. Thus, deduction of one-fourth was required to be made towards the personal and living expenses as against one-third made by the Claims Tribunal. Since he was 48 years, the addition would be 30% instead of 50% taken by the Claims Tribunal (Sarla Verma (Smt.) & Ors. v. Delhi Transport Corporation & Anr., (2009) 6 SCC 121). On the deceased's age, the appropriate multiplier to be adopted would be '13' instead of '8' taken by the Claims Tribunal. The loss of dependency thus works out as `4,31,875/- (3880/- x 12 - 12,487/- (Income Tax) + 30% x 3/4 x 13).

17. Considering that this accident occurred in the year 1983, I would make a provision for `10,000/- towards loss of love and affection and `5,000/- each towards funeral expenses, loss of

consortium and loss to estate. The overall compensation thus comes to ` 4,56,875/-.

18. The overall compensation is thus enhanced from `3,58,464/- to `4,56,875/-. The enhanced amount of `98,411/- shall carry interest @ 12% per annum from the date of filing of the Petition till the date of award i.e. 18.01.1999 and then @ 7.5% per annum from 19.01.1999 till the date of payment.

19. The execution of the award was stayed subject to deposit of `2,50,000/- by the Appellant Insurance Company by an order dated 22.03.1999. The remaining award amount was directed to be deposited by an order dated 21.10.2009. Some amount was ordered to be released by order dated 25.02.2003.

20. The amount awarded by the Claims Tribunal shall be released in favour of the Respondents No.1 to 5 (the Claimants) in terms of the order passed by the Claims Tribunal.

21. The enhanced amount of ` 98,411/- along with proportionate interest shall enure for the benefit of the first Respondent in FAO No.131/1999.

22. The Appeal is allowed in above terms.

(G.P. MITTAL) JUDGE MAY 11, 2012/ vk