United India Insurance Company Limited, Region II, Regional Office, 5 Kailash Tower v. Mr. Ibrahim Ahmad Jariwala & Ors.

Present: Mr. V. Ramswaroop, Advocate for the appellant. Ms.Amrita Nagpal, Advocate for Mr. Lokesh Sinhal, Advocate for the claimants-respondents. Mr. Ravinder Arora, Advocate for National Insurance Company Ltd. FAO No.1991 of 1999 -2-

4. FAO No.2459 of 1999 Mr. Ibrahim Ahmad Jariwala son of Mr. Ahmad and others Versus ......Appellant Mr. Ranbir Kumar Singh son of Shri Sukhbir Singh and others

5. FAO No.2970 of 1999 ......Respondents John Kannedy son of Abraham ......Appellant Versus Mr. Randhir Kumar son of Shri Sukhbir Singh and others ......Respondents

6. FAO No.2458 of 1999 Smt. Sobhna John wife of Mr. John Kannedy ......Appellant Versus Ranbir Kumar Singh son of Shri Sukhbir Singh and others ......Respondents Present: Ms. Amrita Nagpal, Advocate for Mr. Lokesh Sinhal, Advocate for the appellant. Mr. V.Ramswaroop, Advocate for United India Insurance Company Ltd. Mr. Ravinder Arora, Advocate for National Insurance Company Ltd. CORAM:HON'BLE MR. JUSTICE K. KANNAN

1. Whether Reporters of local papers may be allowed to see the judgment ?

2. To be referred to the Reporters or not ? 3. Whether the judgment should be reported in the Digest? K. KANNAN J.(ORAL) -.-

1. In this batch of six cases, the insurance company is on appeal challenging the liability cast on it in FAO Nos.1991, 1992 and FAO No.1991 of 1999 -3- Civil Revision No.3947 of 1999 and the remaining cases are at the instance of either the claimants or the representatives of the deceased persons seeking for enhancement of compensation. All these claims have arisen out of accident resulting in injuries or death by collision of two vehicles, namely bus and a truck. The United India Insurance Company Limited was the insurer for the bus and the National Insurance Company was the insurer for the truck.

2. As regards the contention raised by the insurer-United India Insurance Company Ltd in its appeals, it is contended that the cover note had been issued on payment of a cheque by the insured on 28.05.1993. The cheque had been dishonoured and the insurer had served a notice on the insured on 04.06.1993 cancelling the policy. The copy of the notice has been filed as R-6, while the proof of dishonour was brought out through R-3. The accident had taken place subsequent to the cancellation of the insurance policy on

10.06.1993. It was evidently a case of the insurer having denied its liability and cancelling the policy for that was essentially the consideration of the contract. If the contract failed by non-payment of premium and a policy had not been even issued after the issuance of cover note, the insurer could not have been made liable at all. The Tribunal, however, found that normally the insurance company gives out a promise not merely to the insured but also to third parties and strangers that it will indemnify the insured when a claim is made for any negligent act of a driver. There are two strands of opinions: in New India Assurance Company Ltd. Vs. Rula 2000 (3) SCC 195, National Insurance Company Limited Vs. Abhay Singh FAO No.1991 of 1999 -4- Partap Singh Waghela (2008) 9 SCC 133 holding that despite cancellation of policy, insurer would be liable but will have a right of recovery against the insured. Deddapps and others Vs. B.M. National (2008) 2 SCC 595 refers to both the decisions but still holds in para 24: "we are not oblivious of the distinction between the statutory liability of the insurance company vis a vis a third party in the context of Section 147 and Section 149 of the Act and its liabilities in other cases. But the same liabilities arising under a contract of insurance would have to be met if the contract is valid. If the contract of insurance has been cancelled and all concerned have been intimated thereabout, we are of the opinion, the insurance company would not be liable to satisfy the claim. The Hon'ble Supreme Court has held that a contract of insurance is like any other contract amenable to the principles of contract and the validity of contract is based on promise supported by consideration. If a cheque, which ought to support the contact failed and the insurance company had exercised its right to cancel the same, it must only be taken that there was no valid insurance at the relevant point of time and therefore, the insurance company could not have been made liable at all. In Deddappa's case (supra), the Hon'ble Supreme Court directed the insurance company to satisfy the award on the ground that the appellant hailed from the lower strata of society. The only way of harmonising the decisions is that the third party claimant shall be satisfied by the insurer and the later will have a right of recovery against the insurer. All these appeals and revision filed by the insurance company are, therefore, allowed but FAO No.1991 of 1999 -5- the liability to satisfy the claims still subsist and the insurer will have only the right of recovery against the insured.

2. The Tribunal has also found both the vehicles to be responsible for the accident and has apportioned the liability as 50:50. The cases will have to be therefore examined with reference to the quantum of compensation that owner of the bus will have to bear in the absence of the liability of the insurance company. In this case, as far as the claim against the truck owner was concerned, the insurance company had still taken a plea that the driver did not have a valid driving licence and the Tribunal had completely exonerated the insurer. In my view, if there had been a breach of condition in the policy, as far as a third party was concerned, he shall be entitled to enforce his claim against the insurer and at best, the insurer can only seek for a right of recovery. The complete exoneration of the liability of the insurer is against the grain of law as set down through the decision of the Hon'be Supreme Court in New India Assurance Co., Shimla v. Kamla,(2001) 4 SCC 342. In the said judgment, the Court has held liability of the insurer to make the payment and to secure a recovery from the owner in spite of the breach of terms of policy and this has been re-affirmed in National Insurance Co v Swaran Singh (2004) 3 SCC 297 that the proposition is now of stare decisis and there shall be no deviation from the said rule. The exoneration of the National Insurance Company, which was the insurer for the truck is, therefore, not tenable. The liability has to be first cast on the insurer and provide for a right of recovery to the insurer. FAO No.1991 of 1999 -6-

3. As regards the subject matter in appeal in FAO No.2459 pf 1999, the case was death of a young woman of 22 years of age, who was said to have been employed as an Administrative-cum-Finance Secretary in Lancashire Council and a certificate from the Lancashire Council had been filed in the Tribunal stating that she as an apprentice was being paid £ 9,000/- per year. The Tribunal rejected the evidence stating that she was not being paid the said sum and that on completion of the probation, she would be paid the said sum. I have gone through the record and it is a clear misreading of the document. The reliance on the document is still an issue for consideration, for one connected with the document, who had issued the same was examined. In my view, it will not become possible to rely on the recitals without positive evidence therefor. The claimants ought to have produced at least corroborative evidence of the fact of any remittance into bank for the amount alleged to have been received by the deceased as a probationer's fee. In the absence of any credible evidence, it will take the income of the deceased as Rs.3,000/- per month to make a deduction of 50% towards personal expenses, having regard to the fact that she was a spinster and adopt of multiplier of 18 to determine a compensation of Rs.3,24,000/- . Adding conventional heads of claim, I would round it off to Rs.3,50,000/-. The award shall be enforced against the insurer of the bus and the truck providing, however, a right of recovery for the respective insurers after satisfying the award from the owners of the bus and the truck.

4. As regards the claim in FAO No.2458 of 1999, the case was FAO No.1991 of 1999 -7- of injury suffered by the passenger of the bus, who was 22 years of age. By virtue of injuries, she is reported to have suffered a semi- paraplegia. The disability is reported to have been permanent and the Doctor has assessed the disability to be 90%. The Tribunal has awarded a compensation of Rs.10,556/- towards medical expenses, Rs.8,000/- towards special diet, Rs.40,000/- for pain and suffering and Rs.60,000/- for permanent disability. To say the least, the compensation arrived at by the Tribunal is not merely grossly low but unscientific. She was a young married woman, who had not even a child. I would take the house-holder's value of service to be not less than Rs.3500/- in the manner indicated by the Hon'ble Supreme Court in Arun Kumar Aggarwal and another Vs. National Insurance Company in Civil Appeal No.5843 of 2010 decided on

22.07.2010, which would work out to Rs.42,000/- as annual income. I would adopt a multiplier of 18 and arrive at Rs.7,56,000/- as the compensation. In view of the fact that the person has 90% disability, I will apply 90% on that and hold that the amount payable towards loss of earning capacity as Rs.6,80,400/-. For pain and suffering from Rs.40,000/-, I will increase it to Rs.1,00,000/-. The other heads of claim for special diet, medical expenses, I will retain the same. In all, the amount payable shall be Rs.15,84,000/-. The amount payable in excess of what has been determined by the Tribunal already as well as the amount already determined shall likewise be distributed as 50:50 against the insurer of the bus and the insurer of the truck with the right of recovery in the manner provided above. FAO No.1991 of 1999 -8-

5. In FAO No.2970 of 1999, it was merely a case of simple injury and the Tribunal has determined a compensation of Rs.2,000/-. I will make it to Rs.5,000/-. The liability shall be apportioned in the manner referred to above providing for right of recovery against the respective owners of the truck and the bus.

6. The enhancement which I have provided in all the cases, shall bear interest @6% from the date of the accident till the date of payment. The appeals filed for enhancement are partly allowed in the manner referred to above. All the awards are passed by the Tribunal are modified in the matter of apportionment of liability in the manner indicated above. August 19, 2010 Pankaj* (K. KANNAN) JUDGE