National Insurance Co.Ltd vs Sreekanth
2021 Latest Caselaw 19803 Ker

                IN THE HIGH COURT OF KERALA AT ERNAKULAM
                                 PRESENT
                   THE HONOURABLE MR.JUSTICE C.S.DIAS
     THURSDAY, THE 23RD DAY OF SEPTEMBER 2021 / 1ST ASWINA, 1943
                           MACA NO. 200 OF 2011
AGAINST THE COMMON AWARD DATED 13.08.2010 IN OPMV 2930/2004 OF MOTOR
                  ACCIDENT CLAIMS TRIBUNAL,, THRISSUR
APPELLANT/3RD RESPONDENT IN OP (MV) NO.2930/2004:

NATIONAL INSURANCE COMPANY LTD EAST FORT COMPLEX, FORT MAIDAN, PALAKKAD-670 013,, REPRESENTED BY ITS MANAGER, REGIONAL OFFICE,, M.G.ROAD, ERNAKULAM.

BY ADV SRI.LAL GEORGE

RESPONDENT/ PETITIONER AND RESPONDENTS 1 AND 2 IN OP(M.V) NO.2930/2004:

1 MANOJ (MINOR) & OTHERS REPRESENTED BY FATHER & GUARDIAN MOHANAN,, THEKKINKADU COLONY, P.O.SOUTH KONDAZY,, TRISSUR-679106.

     2     C.P.NARAYANANKUTTY NAIR HEMA NIVAS
           P.O.PAZHAYANNUR, TRISSUR-680 587.

     3     SUBAIR SO.ASSANAR PUTHANPURAKKAL
           HOUSE, POTTA, PAZHAYANNOOR-680 587.

           BY ADVS.
           SRI.C.A.ANOOP
           SMT.R.KRISHNA

THIS MOTOR ACCIDENT CLAIMS APPEAL HAVING COME UP FOR ADMISSION ON 23.09.2021, ALONG WITH MACA.1566/2011, 1686/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

MACA NOS. 200, 1566 & 1686 OF 2011

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE C.S.DIAS THURSDAY, THE 23RD DAY OF SEPTEMBER 2021 / 1ST ASWINA, 1943 MACA NO. 1566 OF 2011 AGAINST THE COMMON AWARD DATED 13.08.2010 IN OPMV 2931/2004 MOTOR ACCIDENT CLAIMS TRIBUNAL , THRISSUR APPELLANT/3RD RESPONDENT IN OP(M.V) NO.2931/2004:

NATIONAL INSURANCE COMPANY LTD EAST FORT COMPLEX, FORT MAIDAN, PALAKKAD-670 013,, REPRESENTED BY ITS MANAGER, REGIONAL OFFICE,, M.G.ROAD, ERNAKULAM.

BY ADV SRI.LAL GEORGE

RESPONDENT/PETITIONER AND RESPONDENTS 1 AND 2 IN OP(M.V) NO.2931/2004:

1 P.K.PRAMOD S/O KUMARAN P.V,PLAYIKKAL HOUSE,P.O PAZHAYANNUR,TRISSUR-680587

2 C.P NARAYANANKUTTY NAIR HEMA NIVAS,P.O PAZHAYANNUR,TRISSUR-680587

3 SUBAIR S/O ASSANAR,PUTHANPURAKKAL HOUSE,POTTA,P.O PAZHAYANNOOR-680587

BY ADV SMT.R.KRISHNA

THIS MOTOR ACCIDENT CLAIMS APPEAL HAVING COME UP FOR ADMISSION ON 23.09.2021, ALONG WITH MACA.200/2011 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: MACA NOS. 200, 1566 & 1686 OF 2011

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE C.S.DIAS THURSDAY, THE 23RD DAY OF SEPTEMBER 2021 / 1ST ASWINA, 1943 MACA NO. 1686 OF 2011 AGAINST THE COMMON AWARD DATED 13.08.2010 IN OPMV 2932/2004 OF MOTOR ACCIDENT CLAIMS TRIBUNAL, THRISSUR APPELLANT/3RD RESPONDENT IN O.P.(M.V) No.2932/2004:

NATIONAL INSURANCE CO.LTD.

EAST FORT COMPLEX, FORT MAIDAN,, PALAKKAD-670 013, REPRESENTED BY ITS MANAGER, REGIONAL OFFICE, M.G.ROAD, ERNAKULAM.

BY ADV SRI.LAL GEORGE

RESPONDENT/PETITIONER AND RESPONDENTS 1AND 2 IN OP(M.V) NO.2932/2004:

    1       SREEKANTH, S/O RAJAN
            VANNERY HOUSE, P.O.KALLEPPADAM,
            PAZHAYANNUR-680 587.

    2       C.P.NARAYANANKUTTY NAIR

`HEMA NIVAS', P.O.PAZHAYANNUR, TRISSUR-680 587.

    3       SUBAIR S/O.ASSANAR
            PUTHANPURAKKAL HOUSE, POTTA,
            PAZHAYANNOOR-680 587.

            BY ADV SRI.RAJESH SIVARAMANKUTTY


     THIS   MOTOR   ACCIDENT   CLAIMS    APPEAL   HAVING   COME   UP   FOR

ADMISSION ON 23.09.2021, ALONG WITH MACA.200/2011 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: MACA NOS. 200, 1566 & 1686 OF 2011

COMMON JUDGMENT

Dated this the 23rd day of September, 2021

As these appeals arise out of the common award in

O.P.(M.V) Nos.2930, 2931 and 2932 of 2004 of the Motor

Accidents Claims Tribunal, Trissur, they are being disposed

of by this common judgment.

2. The appellant-insurer is the 3rd respondent in the

above claim petitions. O.P.(M.V) No.2930/2004 was filed by

a minor child named Manoj, O.P.(M.V.) No.2931/2004 was

filed by one Pramod and O.P.(M.V) No.2932/2004 was filed

by one Sreekanth. The 1st respondent in all the three

appeals are the respective claimants in the claim petitions

and the respondents 2 and 3 in the appeals are the 1 st and

2nd respondent before the Tribunal. The parties are for the

sake of convenience referred to as per the status in the

claim petitions. The common case of the claimants in the

three claim petitions that, on 31.08.2004, while all the MACA NOS. 200, 1566 & 1686 OF 2011

three of them were travelling on a motorcycle bearing

registration No. KL 8/Y 7001 through the Chelakkara-

Pazhayannur public road, a jeep bearing registration No.

KDE 1409 (jeep) hit the motorcycle and all three of them

sustained injuries. The jeep was driven by the 2 nd

respondent, owned by the 1st respondent and insured with

the 3rd respondent in all the three claim petitions. The jeep

was driven by the 2nd respondent in a negligent manner.

The claimants sought compensation from the respondents.

3. The respondents 1 and 2 did not contest the

proceedings. The 3rd respondent- insurer(appellant) filed a

written statement and an additional written statement,

inter alia, contending that the 1st respondent (owner of the

jeep) had suppressed the material fact and particular that

the jeep was used as a contract carriage vehicle. The 1 st

respondent had availed the insurance policy stating that

the jeep was a private vehicle. Therefore, the insurance MACA NOS. 200, 1566 & 1686 OF 2011

policy was rendered void under Section 149 (2) (b) of the

Motor Vehicles Act, 1988. Hence,the 3rd respondent was

to be absolved of any liability.

4. The Tribunal consolidated and jointly tried all the

three claim petitions.

5. The claimants produced and marked Exhibits A1 to

A16 series in evidence. The 3 rd respondent examined its

Assistant Manager as RW1 and marked Exhibits B1 to B6

in evidence.

6. The Tribunal after finding that the 1st respondent

had suppressed the material fact that the jeep was used as

a contract carriage vehicle, directed the 3 rd respondent to

pay the compensation amount to the three claimants and

recover the amount from the 1st respondent-owner.

7. Aggrieved by the direction to pay and recover the

compensation, the 3rd respondent-insurer has filed the MACA NOS. 200, 1566 & 1686 OF 2011

above three appeals.

8.Heard;Sri.Lal George the learned counsel appearing

for the appellant - insurer, Sri. Krishna the learned counsel

appearing for the 1st respondent in the three appeals and

Sri. C.A. Anoop the learned counsel appearing for the 3 rd

respondent in the three appeals.

9. The question that arises for consideration in these

appeals is whether the direction of payment and recovery

ordered by the Tribunal, after finding that the 1 st

respondent had suppressed material facts and obtained the

insurance policy, is sustainable in law or not ?

10. The accident occurred on 31.08.2004. The specific

case of the claimants in the three claim petitions was that

the accident occurred due to the negligence of the 2 nd

respondent as evidenced by Exhibit A2 final report filed by

the Pazhayannoor Police in Crime No.222/2004.

Undisputedly, the 1st respondent was the owner of the jeep MACA NOS. 200, 1566 & 1686 OF 2011

on the date of the accident. Even though the 3 rd

respondent - insurer had admitted the insurance policy of

the jeep, it had taken a specific contention in the written

statement that the jeep was used as a contract carriage

vehicle by the 1st respondent after availing the insurance

policy for a private vehicle. Therefore, Exhibit 'B1' policy

was rendered void. Hence, the 3 rd respondent was to be

exonerated of its liability.

11. Exhibit 'B1' policy, is an 'Act policy' which was

issued for the period from 23.03.2004 to 22.03.2005 shows

that the jeep was a private vehicle. Exhibit 'B1' policy was

issued based on Exhibits B3 to B6 insurance policies. In

fact the initial policy was issued by the United India

Insurance Company Limited, wherein also the jeep is

shown as a private vehicle.

12. The 3rd respondent had examined RW1 its

Assistant Manager, who deposed that in the investigation MACA NOS. 200, 1566 & 1686 OF 2011

conducted by the insurer, it was found that the vehicle was

used as a contract carriage vehicle. Exhibit A5 report of

the Assistant Motor Vehicles Inspector clearly reveals that

the jeep was used as a contract carriage vehicle as on the

date of accident. The respondents 1 and 2 have not

contested the cases or controverted or discredited the oral

testimony of RW1. They have also not let in any contra

evidence. Exhibit A5 read with Exhibits B1 to B6 prove

beyond any reasonable doubt that the jeep was used as a

contract carriage vehicle, though the 1st respondent had

availed the insurance policy and renewed it subsequently

showing the vehicle as a private vehicle. Hence, the 3 rd

respondent has proved that the 1st respondent has

suppressed materials facts falling within the purview of

Section 149 (2) (b) of the Act.

13. Sec.149 (2) (b) of the Act, states in unequivocal

terms that an insurance policy is void, if it is obtained MACA NOS. 200, 1566 & 1686 OF 2011

by non-disclosure of material facts or by representation of

fact which was false in some material particular.

14. Sub-Sections (2) and (6) of Section 149 of the

Motor Vehicles Act, 1988, which are germane for the

consideration of the appeal, reads as follows:

"(2) No sum shall be payable by an insurer under sub-section (1) in respect of any judgment or award unless, before the commencement of the proceedings in which the judgment or award is given the insurer had notice through the Court or, as the case may be, the Claims Tribunal of the bringing of the proceedings, or in respect of such judgment or award so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such proceedings is so given shall be entitled to be made a party thereto and to defend the action on any of the following grounds namely:-

(a) that there has been a breach of a specified condition of the policy, being one of the following conditions, namely:-

(i) a condition excluding the use of the vehicle--

(a) for hire or reward, where the vehicle is on the date of the contract of insurance a vehicle not covered by a permit to ply for hire or reward, or

(b) for organized racing and speed testing; or

(c) for a purpose not allowed by the permit under which the vehicle is used, where the vehicle is a transport vehicle, or

(d) without side-car being attached where the vehicle is a motor cycle; or

(ii) a condition excluding driving by a named person or persons or by any person who is not duly licensed, or by any person who has been disqualified for holding or obtaining a driving license during the period of disqualification; or

(iii) a condition excluding liability for injury caused or contributed to by conditions of war, civil war, riot or civil commotion; or

(b) that the policy is void on the ground that it was obtained by the non disclosure of a material fact or by a representation of fact which was false in some material particular.

xxx xxx xxx xxx MACA NOS. 200, 1566 & 1686 OF 2011

(6) In this section the expression "material fact" and "material particular" means, respectively a fact or particular of such a nature as to influence the judgment of a prudent insurer in determining whether he will take the risk and, if so, at what premium and on what conditions, and the expression "liability covered by the terms of the policy" means a liability which is covered by the policy or which would be so covered but for the fact that the insurer is entitled to avoid or cancel or has avoided or cancelled the policy".

15. It is trite, that utmost good faith is one of the basic

and general principles in a contract of insurance which is

termed in Latin as "uberrimae fidei", which means that

each party is entitled to rely on the representations of the

other and each party should have a reasonable expectation

that the other is acting in good faith without attempts to

conceal or deceive.

16. The learned author E.R Hardy Ivamy in the 4 th

Edition of his book on General Principles of Insurance Law,

in the Chapter Non-Disclosure, has stated that, it is the

duty of the assured to disclose all material facts relating to

the insurance and his presumed knowledge, which he

proposes to effect, but he must make no misrepresentation

regarding such facts. Usually, however, these duties are MACA NOS. 200, 1566 & 1686 OF 2011

modified by the terms of the contract. The burden of

proving that there was a breach of duty on the part of the

assured rests on the insurer. Various tests have been

adopted by the Courts in order to ascertain what facts are

to be regarded as material. The test which is usually

adopted is whether the non-disclosure of the facts would

influence a prudent insurer. The learned Author has

classified the material facts as follows:

Facts Normally material

In general rule, it can be said that the following facts will usually be held to be material:

(i).All facts suggesting that the subject-matter of insurance is exposed to more than ordinary danger from the peril insured against.

(ii).All facts suggesting that the proposed assured is actuated by some special motive.

(iii). All facts showing that the liability of the insurers might be greater than would normally be expected.

(iv).All facts relating to the "moral hazard".

(v).All facts which to the knowledge of the proposed assured are regarded by the insurers as material.

17. In the instant case, the insurer has proved through MACA NOS. 200, 1566 & 1686 OF 2011

RW1 r/w Exhibit A5 and Exhibits B1 to B6 that the 1 st

respondent had availed the insurance policies from the 3 rd

respondent by showing that the jeep was a private service

vehicle. However, as per Exhibit A5, it is proved that the

vehicle was a contract carriage vehicle. Therefore, the 1 st

respondent with a dishonest intention of saving the

differential amount in the premium between a private

vehicle and a contract vehicle has obtained the insurance

policy. The conduct of the 1st respondent falls within

illustration (iii) and (iv) extracted above, which is a

material fact going to the roots of the matter. Had the first

respondent revealed the fact that the jeep was a contract

carriage vehicle, the insurer would have levied higher

premium from him, as the risk was higher. The first

respondent has obviously acted in bad faith.

18. This Court in Julian v. Peethambaran [1997 (2) KLT

763], interpreting Section 94 of the Motor Vehicles Act, MACA NOS. 200, 1566 & 1686 OF 2011

1939, the corresponding provision to Section 149 of the

present Act, held that when an insurance policy is availed

by the insured showing the vehicle as a private carriage,

but it is used as contract carriage, the insurance policy

stands repudiated and the insurer is not liable to pay the

compensation. The same view has been reiterated by this

Court in MACA Nos.979/2005 and 1766 of 2009.

19. In the light of the language in Section 149 (2) (b)

and 6 of the Act; the law referred to above and the fact that

the 1st respondent had suppressed the fact that the jeep

was a contract carriage vehicle at the time of availing and

recovering the insurance policy, I have no doubt in my

mind that the 1st respondent availed Exhibit 'B1'

insurance policy in utmost bad faith, which has rendered

Exhibit B1 contract for indemnification void. Since the

insurance policy has become non-existence, the insurer

stands exonerated and absolved of any liability even

against third parties. In the above factual and legal matrix, MACA NOS. 200, 1566 & 1686 OF 2011

I set aside the direction in the impugned common award

that the 3rd respondent-insurer has to pay the

compensation amount to the 1st respondent in the three

appeals/claimants before the Tribunal and then recover the

amount from the 2nd respondent/1st respondent/owner.

In the result, the appeals are allowed, exonerating the

appellant/3rd respondent- insurer of its liability to pay the

compensation amount as per the impugned common

judgment to the 1st respondent in the appeals/ claimants.

The 1st respondent in the three appeals/claimants would be

at liberty to recover the compensation amount awarded in

their respective claim petition as per the common award

from the 2nd respondent in the appeals/1st respondent

owner. In the facts and circumstances of the cases, the

parties shall bear their respective costs.

Sd/-

C.S.DIAS, JUDGE rmm