Allowed

National Insurance Company Ltd. v. Manoj (Minor) & Others

Kerala HC23 Sept 2021MACA/200/2011

Case brief

AI extract

What is this about?

The High Court of Kerala allowed appeals filed by an insurer challenging a Motor Accidents Claims Tribunal award. The Tribunal had directed the insurer to pay compensation and recover it from the vehicle owner after finding the owner used a privately insured jeep as a contract carriage vehicle. The Court held that such suppression of material facts voided the insurance policy, exonerating the insu

What did the court decide?

Appeals allowed; insurer exonerated from paying compensation; claimants directed to recover amounts from the vehicle owner.

National Insurance Company Ltd. Vs Manoj (Minor) & Others — Motor Accident Claims | Kerala HC (2021)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE C.S.DIAS

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THURSDAY, THE 23^RD DAY OF SEPTEMBER 2021 / 1ST ASWINA, 1943

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MACA NO. 200 OF 2011

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AGAINST THE COMMON AWARD DATED 13.08.2010 IN OPMV 2930/2004 OF MOTOR

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ACCIDENT CLAIMS TRIBUNAL,, THRISSUR

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APPELLANT/3RD RESPONDENT IN OP (MV) NO.2930/2004:

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NATIONAL INSURANCE COMPANY LTD

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

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BY ADV SRI.LAL GEORGE

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RESPONDENT/ PETITIONER AND RESPONDENTS 1 AND 2 IN OP(M.V)

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NO.2930/2004:

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

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

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

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

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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:

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MACA NOS. 200, 1566 & 1686 OF 2011

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE C.S.DIAS

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THURSDAY, THE 23^RD DAY OF SEPTEMBER 2021 / 1ST ASWINA, 1943

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MACA NO. 1566 OF 2011

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AGAINST THE COMMON AWARD DATED 13.08.2010 IN OPMV 2931/2004 MOTOR ACCIDENT CLAIMS TRIBUNAL , THRISSUR

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APPELLANT/3RD RESPONDENT IN OP(M.V) NO.2931/2004:

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NATIONAL INSURANCE COMPANY LTD

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

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BY ADV SRI.LAL GEORGE

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RESPONDENT/PETITIONER AND RESPONDENTS 1 AND 2 IN OP(M.V)

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NO.2931/2004:

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

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

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

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BY ADV SMT.R.KRISHNA

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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:

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MACA NOS. 200, 1566 & 1686 OF 2011

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE C.S.DIAS

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THURSDAY, THE 23^RD DAY OF SEPTEMBER 2021 / 1ST ASWINA, 1943

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MACA NO. 1686 OF 2011

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AGAINST THE COMMON AWARD DATED 13.08.2010 IN OPMV 2932/2004 OF MOTOR ACCIDENT CLAIMS TRIBUNAL, THRISSUR

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APPELLANT/3RD RESPONDENT IN O.P.(M.V) No.2932/2004:

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NATIONAL INSURANCE CO.LTD.

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

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BY ADV SRI.LAL GEORGE

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RESPONDENT/PETITIONER AND RESPONDENTS 1AND 2 IN OP(M.V)

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NO.2932/2004:

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

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

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

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BY ADV SRI.RAJESH SIVARAMANKUTTY

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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:

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MACA NOS. 200, 1566 & 1686 OF 2011

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COMMON JUDGMENT

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Dated this the 23^rd day of September, 2021

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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.

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The appellant-insurer is the 3^rd 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 1^st 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 2^nd 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

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MACA NOS. 200, 1566 & 1686 OF 2011

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three of them were travelling on a motorcycle bearing registration No. KL 8/Y 7001 through the ChelakkaraPazhayannur 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 1^st respondent and insured with the 3^rd respondent in all the three claim petitions. The jeep was driven by the 2^nd respondent in a negligent manner. The claimants sought compensation from the respondents.

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The respondents 1 and 2 did not contest the proceedings. The 3^rd respondent- insurer(appellant) filed a written statement and an additional written statement, inter alia, contending that the 1^st 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

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MACA NOS. 200, 1566 & 1686 OF 2011

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policy was rendered void under Section 149 (2) (b) of the Motor Vehicles Act, 1988. Hence,the 3^rd respondent was to be absolved of any liability.

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The Tribunal consolidated and jointly tried all the three claim petitions.

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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.

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The Tribunal after finding that the 1^st 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 1^st respondent-owner.

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Aggrieved by the direction to pay and recover the compensation, the 3^rd respondent-insurer has filed the

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MACA NOS. 200, 1566 & 1686 OF 2011

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above three appeals.

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8.Heard;Sri.Lal George the learned counsel appearing for the appellant - insurer, Sri. Krishna the learned counsel appearing for the 1^st respondent in the three appeals and Sri. C.A. Anoop the learned counsel appearing for the 3^rd respondent in the three appeals.

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The question that arises for consideration in these

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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 ?

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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 1^st respondent was the owner of the jeep

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MACA NOS. 200, 1566 & 1686 OF 2011

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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 1^st 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.

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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.

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The 3^rd respondent had examined RW1 its Assistant Manager, who deposed that in the investigation

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MACA NOS. 200, 1566 & 1686 OF 2011 9

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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 1^st 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 1^st respondent has suppressed materials facts falling within the purview of Section 149 (2) (b) of the Act.

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Sec.149 (2) (b) of the Act, states in unequivocal terms that an insurance policy is void, if it is obtained

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MACA NOS. 200, 1566 & 1686 OF 2011

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by non-disclosure of material facts or by representation of

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fact which was false in some material particular.

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Sub-Sections (2) and (6) of Section 149 of the Motor Vehicles Act, 1988, which are germane for the

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consideration of the appeal, reads as follows:

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“(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:-

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

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

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(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

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(b) for organized racing and speed testing; or

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

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

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(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

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

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(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

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MACA NOS. 200, 1566 & 1686 OF 2011

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(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”.

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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.

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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

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MACA NOS. 200, 1566 & 1686 OF 2011

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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:

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Facts Normally material

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

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

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

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

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(iv).All facts relating to the “moral hazard”.

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

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In the instant case, the insurer has proved through

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MACA NOS. 200, 1566 & 1686 OF 2011

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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 1^st 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.

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This Court in Julian v. Peethambaran [1997 (2) KLT 763], interpreting Section 94 of the Motor Vehicles Act,

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MACA NOS. 200, 1566 & 1686 OF 2011 14

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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.

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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 1^st 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 1^st 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,

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MACA NOS. 200, 1566 & 1686 OF 2011 15

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I set aside the direction in the impugned common award

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that the 3^rd respondent-insurer has to pay the compensation amount to the 1^st respondent in the three appeals/claimants before the Tribunal and then recover the amount from the 2^nd respondent/1st respondent/owner.

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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 1^st respondent in the appeals/ claimants. The 1^st 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 2^nd respondent in the appeals/1st respondent owner. In the facts and circumstances of the cases, the parties shall bear their respective costs.

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Sd/-

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C.S.DIAS, JUDGE

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rmm

National Insurance Company Ltd. v. Manoj (Minor) & Others

Case brief

What is this about?

What did the court decide?

National Insurance Company Ltd. v. Manoj (Minor) & Others

Case brief

What is this about?

What did the court decide?

What the court decided

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