CIVIL APPEAL 1136 of 2006 on 2 December 2005

ORDER

Surya Kant, J.- (Oral):

This order shall dispose of FAO Nos. 1136, 1137, 1138, 1139,1140, 1141, 1142, 1143, 1144, 1145, 1231 and 1232 of 2006 and CivilRevision No.2638 of 2006 which have been preferred by the NationalInsurance Co. Ltd. Against a common award dated 2.12.2005 passed by theMotor Accident Claims Tribunal, Gurgaon whereby 13 claim petitionsarising out of a motor vehicular accident, which took place on 31.10.2001at Ferozepur Jhirka to Sohna Road, District Gurgaon, have been decided.

For brevity, the facts are being taken from FAO No.1136 of

2006.

The brief facts culminating into these appeals/revision petitionare that on 31.10.2001, Tayab, aged about 35 yeas and employed as a driveron the Tata Sumo bearing registration No. HR-20-G-1514, was driving thesaid vehicle from Ferozepur Jhirka to Sohna side at a moderate speed and assoon as he crossed the Badela Ki Mor at about 1 p.m., a dumper bearingregistration No.HR-47-5738 came from Sohna side allegedly at a very highspeed and struck against the Tata Sumo due to which, besides Tayab – thedriver of the Tata Sumo, the other occupants also received multiple injuries.While eight occupants of Tata Sumo, including its driver – Tayab,unfortunately died as a result of the injuries, the remaining 5 occupantssurvived though with multiple injuries. Five injured as also the dependentsof seven of the deceased filed 12 claim petitions. The owner of the TataSumo also filed a separate claim petition to compensate the damage causedto his vehicle. All the 13 claim petitions have been decided by the Tribunalvide a common award, holding that the accident was caused due to rash andnegligent driving by the dumper. It has also been held that the driver of theTata Sumo was not at fault. As a result of the said finding, the driver,owner and the insurance company of the dumper bearing registration No.HR-47-5738 have been held jointly and severely responsible to pay thecompensation to the claimants.

The issue which was hotly debated before the Tribunal and isthe bone of contention in these appeals also, pertains to the liability of theappellant insurance company to indemnify the awards. While the owner andthe driver of the offending dumper have pleaded that at the time of accident,the vehicle was insured with the appellant company, the appellant insurance company took the following objection in its written statementdated 8.11.2002:-

“1. That the vehicle bearing the registration No.HR-47/5738was not insured with National Insurance Co. Ltd. at the timeand date when alleged accident took place. The prime fact isthat respondent No.2 who is the owner of the vehicle bearingregistration No.HR-47/5738 has not come before the courtwith clean hands. Respondent No.2 obtained the insurancecover by concealing the most material fact that the vehiclehas already met with an accident. The cover note taken byrespondent No.2 from the representative of respondent No.3was also totally done with mala fide intention to get theinsurance cover fraudulently. More so, the same cover notewas also forged and furnished to the police after theaccident. The same forged cover note has been filed by thepetitioner and is a part of the record of this Hon'ble Tribunal.Thus respondent No.2 is wrongfully trying to conceal andshirk off his liability with the help of forged document tosave himself from the liability towards the third parties.

2. It is reiterated that the vehicle bearing registration no.HR-47/5738 was not insured with National Insurance Co. Ltd. atthe time and date when alleged accident took place. Underthese circumstances answering respondent is not liable forpayment of any compensation to the petitioner and as well asto proforma respondent no.4-6. As per the contents of FIRNo.290 dated 31/10/2000 lodged with Police Station, Sohna, the alleged accident took place at 1.00 p.m. and at that timevehicle bearing registration no. HR-47/5738 was not insuredwith respondent No.3, National Insurance Co. Ltd. The brieffacts are that initially the cover note bearing No.0874077was issued by representative of respondent No.3 at 5.00 p.m.on 31/10/2001. This cover note was not deposited in theoffice of respondent no.3 due to its subsequent cancellationfor non receipt of premium. However the original cover notewas never returned by respondent No.2 to the answeringrespondent in spite of the best efforts. The same cover notehas been used by respondent No.2 after forging the time andissue of the cover note from 5.00 pm to 8.00 am. The covernote register discloses that cover note bearing no.0874076was issued at 11.00 am on 31/10/2001 which pertain tovehicle Honda City in the name of Radhe Sham. The covernote under dispute bearing the no.0874077 pertaining to thealleged vehicle was issued at 5.00 p.m. on 31/10/2001 in thename of Noor Mohammad. When cover note bearingno.0874076 had been issued at 11.00 am, the next cover notebearing No.0874077 could not have been issued at 8.00 a.m.The carbon copy of cover note 0874077 maintained byrespondent no.3 discloses that vehicle bearing registrationHR-47/5738 was issued only at 5.00 p.m. on 31/10/2001after the occurrence of the accident. Since no premium wasreceived by respondent no.3, this cover note was cancelledfor non payment of premium. The answering respondent never issued any insurance policy of the vehicle torespondent No.2.”

The Tribunal accordingly framed issue No.3 as to “whethervehicle HR-47-5738 was not insured with respondent No.3 – NationalInsurance Co. Ltd. at the time and date of accident?”.

The Tribunal has held that there is no over-writing orinterpolation of the words “A.M.” in the Cover Note, Ex.P-58 nor somehand-writing expert has been produced by the appellant company to provesuch over-writing/interpolation. The Tribunal has further held that theoffending vehicle was insured at the time of the accident and the appellantcompany along with the driver and owner of the offending vehicle is alsoliable to pay the compensation amount.

It may be noticed here that according to the appellant company the subject cover-note (Ex.P-58) was got issued by the owner of the dumper(Noor Mohammad) fraudulently through one Devender Kumar who used toprovide business to the concerned agent of the appellant insurance co. Thecover note was allgedly got issued at 5 p.m. on 31.10.2001, i.e., after theaccident had taken place at about 1 p.m., however, it was tampered with andthe timing of '5 p.m.' was interpolated as '8 a.m'.

In support of the aforesaid plea, the most crucial witnessproduced by the appellant company is Manjit Singh (RW2) who is the FieldOfficer of the company and had issued the disputed cover-note allegedly at5 p.m. on 31.10.2001 and handed over the same to Devender Kumar – anemployee of the Installment Supply Limited, New Delhi who was hiscorporate client. The witness admits that as soon as he came to know thatthe insured vehicle “had already met with an accident”, he called Devender Kumar and handed over him a letter on 2.11.2001 regarding the cancellationof the cover note. He also claims to have informed the Senior DivisionalManager of the appellant company on 2.11.2001 itself regardingcancellation of the cover note. He also made a complaint on 5.9.2002 to thepolice station at Connaught Place, New Delhi, i.e., after about one year. Inorder to substantiate his plea that the cover note was issued at 5 p.m., ManjitSingh has deposed that another cover-note bearing Sr. No.0874076 wasissued by him on 31.10.2001 at 11 a.m., therefore, the disputed cover notewhich bears the next serial number could, in no circumstance, be issued at 8a.m.

In addition to the statement of Manjit Singh, the appellantcompany has relied upon the certified copies of some statements, affidavits,as also certified copy of the award dated 22.7.2004 passed by the MACT,Delhi in a claim petition titled as “Smt. Prem Lata v. Akbar Hussain &Ors.”, arising out of the same accident.

At this stage, a reference to the award dated 22.7.2004 passedby the Tribunal at Delhi (Ex.R-24) may also be made. Therein also, thedeceased Nand Kishore was travelling in the ill-fated Tata Sumo No.HR-20G-1514 and he too lost his life in the same accident. In view of theidentical objection raised on behalf of the appellant company that the timingon the insurance cover note was tampered with by converting '5 p.m.' to '8a.m.', an issue to this effect was framed. Besides Manjit Singh, theappellant company also produced one Amit Chopra, its AdministrativeOfficer as R3W2 as well as Devender Kumar as R3W3 before the MACT,Delhi. The original record pertaining to the refund of the premium amountto Devender Kumar were also produced. Most importantly, the carbon copy, namely, the original copy of the insurance cover-note retained byManjit Singh was also produced. After consideration of the said evidence,the Tribunal in Delhi held as follows:-

“24. Shri Anil Chopra, AO, National Insurance Co., whohas appeared as R3W2 has further clarified that theAccounts Section shuts at 3.00 p.m. though the agent canreceive the payment upto 5.30 pm. It is further deposed byhim that there is no mention of serial number in premiumregister though the collection number is in series and that itis not possible to make any correction subsequently andobtain a new computer sheet. It was further explained byhim that any correction in the sheet can be made only byway of endorsement.

25. The cover note Ex.RW1/1 coupled with the premiumsheet Ex.R3/W2 thus, sufficiently establish that the covernote in question was issued at 5.00 p.m. and not at 8.00a.m.

27. In the present case, a perusal of the cover noteEx.RW1/1 shows that there was no mention of the time ofcommencement of the insurance policy. In thecircumstances, the policy would be effective from themidnight to the previous night. In the light of this fact, thetime of issue whether it is 8.00 a.m. or 5.00 p.m. becomesimmaterial. However, this fact assumes importance todetermine if, in fact, there was a fraud played on theinsurance company. It has already been observed that the accident had taken place at around 1/1.30 p.m. on31.10.2001. It has also been held that the insurance coverwas issued at 5.00 p.m. which implies that the insured i.e.,Noor Mohammad had in fact concealed the factum of theinvolvement of the vehicle in the accident.”

As noticed earlier, before the Tribunal at Gurgaon, besidesManjit Singh, Field Officer-cum-insurance agent, who issued the disputedcover note, the appellant insurance company has tendered in evidence thedepositions, documents, affidavits, etc. which were produced by it beforethe Tribunal at Delhi as also the certified copy of the Award passed by theDelhi Tribunal. In addition, the appellant company also moved anapplication before the Tribunal seeking a direction to the driver and theowner of the offending vehicle to produce the original copy of the cover-note. The aforesaid application was disposed of by the Tribunal on26.5.2005 in the following terms:- “At this stage, an application filed by Sh. P.R. Grover fordirecting respondents Akbar and Noor Mohd. to producethe copy of cover note. Sh. R.L. Bhardwaj, counsel forAkbar and Noor Mohd. has made statement that the covernote relating to vehicle HR-47-5738 is not traceable and assuch not in possession of Akbar and Noor Mohd.Therefore, there is no need to pass any order on theapplication.”

The crucial question to be determined would, therefore, be asto whether the appellant has led sufficient evidence to discharge its onusagainst issue No.3 and prove that the cover-note in dispute was interpolated or tampered with?

The answer to the aforesaid question is firstly traceable in thephoto copy of the cover-note (Ex.P-58) when seen with the help of themagnifying glass. The word “8” visibly bears over-writing and originally itwas other than “8”. Similarly, in the printed format in the column where thewords “AM/PM” are inscribed, while the words “AM” have been tick-marked but the words “PM” have also been struck off. In the normalcircumstances, if the words PM were to be struck off, there was no necessityof 'tick-marking' the words “AM” or the vice-versa. It, thus, appears thatthe entry regarding timing in the disputed cover-note has been interpolatedand tampered with.

The claimants had no concern with issue No.3. It was for theowner of the dumper and the insurance company to lead their respectiveevidence in support or against the genuineness of the disputed cover note.The best evidence which the owner of the offending vehicle could haveproduced was the original cover-note. The fact that the original cover notewas not produced by the owner before the Tribunals at Delhi or Gurgaon, issufficient to draw an adverse inference that had it been produced inoriginal, the interpolation made in respect of the timings of its issuancewould have been proved beyond any doubt. The vague and evasive pleataken by the dumper owner/driver that the original insurance cover-note isnot traceable, inspires no confidence.

The certified copies of the documents produced before theTribunal at Delhi and the award passed by it, may also be referred at thisstage. The statement of Amit Chopra, Administrative Officer of theappellant insurance company (Ex.R-18) dated 23.2.2004 reveals that the premium register for the period – 1.10.2001 to 31.10.2001 was brought inorder to prove that the cover-note in dispute bearing No.0874007 was issuedon 31.10.2001 at 5 p.m. and was later on cancelled on 2.11.2001. It wasfurther proved that till 3.30 p.m. when the Accounts Section is closed, nopremium in relation to the above stated cover note was received ordeposited with the appellant company. The statement of T.H. Mewar,Senior Divisional Manager of the appellant company dated 1.4.2004 (Ex.R-19) reveals that the vigilance inquiry into the episode also substantiated theplea taken on behalf of the appellant.

From the shrouding suspicious circumstances, there remains nodoubt that the disputed cover note was procured by the owner of theoffending vehicle after the accident had taken place so as to fasten theliability upon the insurance company. Such an inference is furtherstrengthened by the fact that no previous insurance cover, if any, of theoffending vehicle has been brought on record. Had it been a case ofincidental expiry of the insurance cover on that very day, it might not havebeen an unusual recourse for the owner to get the same renewed on the sameday. However, no such evidence has been led. The owner of the vehiclehas not even opted to enter the witness box. In these circumstances, thefinding arrived at by the Tribunal regarding genuineness of the insurancecover-note is totally contrary to the evidence on record.

For the reasons afore-stated, the findings returned by theTribunal against issue No.3 cannot sustain and the same are accordingly setaside.

The question, however, arises as to whether or not the appellantis still liable to indemnify the compensation-claims arising out of the impugned awards?

Arguments

Learned Counsel for the Respondent-claimants have urged thatin the light of the decisions by the Hon'ble Supreme Court in the cases of:-(i) New India Insurance Company v. Darshana Devi & Ors., 2008[2]RCR [Civil] 86; (ii)New India Assurance Co. Shima v. Kamla & Ors.,[2001]4 SCC 342; (iii) New India Assurance Co. Ltd. v. Rula & Ors.,2000 ACJ 630; and (iv) Oriental Insurance Co. Ltd. v. Inderjit Kaur,1998 ACJ 123, even if the insurance policy had been cancelled or wasinvalid, the third party rights would remain unaffected, therefore, theappellant company is liable to indemnify the award(s) under challengethough recovery rights against the owner and driver of the offending vehiclecan be given to it.

Having regard to the principles laid down in the cited decisions,the above noticed contention merits acceptance. It appears that the breachof a contractual obligation by a party to the agreement even by adoptingfraudulent means would not frustrate the third party rights. That apart, mostof the claimants belong to the poorest section of society and it will be toohard for them to recover the compensation amount from the owner or driverof the offending vehicle. The appellant company, on the contrary, has menand means to effect such recoveries.

For the reasons afore-stated, the appeals and the revisionpetition are allowed to the extent that the findings returned by the Tribunalunder issue No.3 are set aside and the appellant company is not held jointlyor severely liable along with the driver and owner of the offending vehicleto pay the compensation amount. It is, however, directed that the appellantshall firstly indemnify the awards under appeal and shall be at liberty to file execution application against the driver and/or owner of the offendingvehicle and recover the compensation amount from them. The appellantcompany shall deposit the balance compensation amount with the Tribunalwithin a period of two months from the date of receipt of a certified copy ofthis order and the same shall then be disbursed to the claimants withoutinsisting for any security.

No costs.

November 25, 2008.kadyan

[ Surya Kant ]Judge