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Himachal Pradesh High Court · body

2025 DAILYLAW 4047 (HP)

National Insurance Company v. Vipin Kumar

2025-12-19

Jiya Lal Bhardwaj

body2025
JUDGMENT : Jiya Lal Bhardwaj, J. This judgment shall dispose of two appeals, one bearing No. FAO No.312 of 2015 filed by the appellant-National Insurance Company and another bearing No. FAO No.273 of 2015 filed by the appellant-Nausahad Ahmed. Both these appeals arise out of a common award dated 01.04.2015 passed by the Motor Accident Claims Tribunal-II, Sirmaur District at Nahan, H.P., whereby the claim petition preferred by injured Vipan Kumar was allowed and he was held entitled for compensation of Rs.3,14,659/- with interest at the rate of 7.5% per annum from the date of the petition till realization. The liability to pay the awarded amount was upon the owner, namely Nausahad Ahmed. However, keeping in view the fact that the vehicle was insured with the appellant–Insurance Company and third-party risk was covered, it was ordered that the appellant–Insurance Company would first satisfy the award and thereafter, the liberty was granted to recover the amount from the owner, i.e., appellant–Nausahad Ahmed. The parties in the appeals shall be hereinafter referred to as they were in the claim petition. 2. Shorn of unnecessary details, the key facts for adjudicating the claim in both the appeals are that the claimant– Vipan Kumar had sustained multiple injuries in a motor accident occurred on 15.01.2002 at about 2:00 p.m. near Malwa Cotton Mills, Patlion, Paonta Sahib, District Sirmaur, H.P. At the relevant time, the claimant was travelling in a Maruti Car bearing No.UGX-4001, which was being driven by one Shri Rakesh Kumar Sharma, who also sustained grievous injuries and succumbed to the same. 3. At the time of accident, the claimant was 38 years old and working as a Sales Representative with M/s Sharma Enterprises at Village Khodonwala, Tehsil Paonta Sahib, District Sirmaur and was earning a monthly salary of Rs. 5,000/-. 4. An FIR was registered. The claimant remained under treatment and thus claimed compensation of Rs.7,00,000/- along with interest from the respondents jointly and severally. 5. Appellant-Nausahad Ahmed contested the claim petition and admitted ownership of the car but pleaded that the accident occurred due to sudden mechanical defect. He further pleaded that the vehicle at the relevant time was insured with the Insurance Company. 6. 5. Appellant-Nausahad Ahmed contested the claim petition and admitted ownership of the car but pleaded that the accident occurred due to sudden mechanical defect. He further pleaded that the vehicle at the relevant time was insured with the Insurance Company. 6. The appellant–Insurance Company contested the petition and raised preliminary objections, inter alia, that the petition was bad for misjoinder of necessary parties as appellant–Nausahad Ahmed was not the owner of the car at the time of the accident. It was also pleaded that late Sh. Rakesh Kumar Sharma was the owner and driver at the time of the accident and his legal representatives had not been impleaded. It was further pleaded that the petition was filed in collusion with owner-Nausahad Ahmed; and that the driver did not hold a valid driving licence. The income of the claimant was also stated to be exaggerated. 7. The claimant filed a rejoinder denying the averments made in the replies. 8. The Tribunal on the basis of the pleadings, framed the following issues: “1) Whether petitioner Vipan Kumar sustained grievous injuries in a motor accident caused by rash and negligent driving of a Maruti Car (No. UGX-4001) by its driver (who also died) near Malwa Cotton Mills, Patlion in Paonta Sahib Tehsil on January 15, 2002, as alleged? ...OPP 2) If the issue 1 is proved, whether the petitioner is entitled to compensation? If so, its effect? ...OPP 3) Whether the Maruti Car driver (deceased) had no valid driving licence at the relevant time? If so, its effect? ...OPR-2 4) Whether the petition is bad for non-joinder of necessary parties as alleged? ...OPR2 5) Whether the car involved in the accident was being plied in violation of terms and conditions of the Insurance Policy?...OPR-2 6) Relief.” 9. The Tribunal after recording the evidence returned the findings that since the claimant had not taken any steps to get the legal representatives of Sh. Rakesh Kumar Sharma (deceased) impleaded in the petition, despite the fact that an objection in that regard was taken by the Insurance Company, it cannot be directed to pay the compensation amount because it was required to be paid by the legal representatives of the deceased, since at the relevant time deceased was the owner of the car and the accident was caused due to his rash and negligent driving and thus dismissed the claim petition on 28.02.2007. 10. 10. Claimant-Vipan Kumar feeling aggrieved by the award dated 28.02.2007, had preferred the appeal before this Court which was registered as FAO(MVA) No.164 of 2007, titled, Vipan Kumar vs. Nausahad Ahmed and another . 11. This Hon’ble Court was pleased to allow the aforementioned appeal vide judgment dated 28.11.2014 holding that so far issue No.1 is concerned, the same has been decided in favour of the claimant, by holding that the driver had driven the offending vehicle rashly and negligently. It was held that since Insurance Company had failed to lead any evidence on issue Nos.3 and 5, the finding recorded by the Tribunal were upheld and so far issue No.4 is concerned, it was held that the claim petition cannot be dismissed in view of the provisions of Sections 158(6) and 166(4) of the Motor Vehicles Act, 1988. It is beaten law of the land that unless and until the transfer is effected in the Registration Certificate and other documents, registration continues to be in the name of the owner of the vehicle and so called transferee in whose name the vehicle was transferred cannot be said to be registered owner and thus set aside the findings recorded qua issue No.4. 12. So far issue No.2 is concerned, it was held that the Tribunal has made assessment of compensation and came to the conclusion that the claimant is entitled to Rs.3,14,659/- which was not disputed in the appeal and this finding was based on the basis of findings recorded on issue Nos.3 and 4. 13. This Court has however held that the question which is now left to be determined is who is to be saddled with the liability since the Tribunal has not decided the same. The Insurance Company had not led any evidence to prove whether it is an Act Policy or otherwise. In the given circumstances, this Court remanded the matter and directed the Tribunal to decide the said issue i.e. “who is to be saddled with the liability”. 14. After remand of the matter before the Tribunal, both the appellants in the appeals led their evidence. The Insurance Company placed on record the insurance policy along with terms and conditions, which is Exhibit R-1. Owner also led his evidence who stated that after selling the vehicle in favour of Sh. Rakesh Kumar, he has no concern with the vehicle. 15. The Insurance Company placed on record the insurance policy along with terms and conditions, which is Exhibit R-1. Owner also led his evidence who stated that after selling the vehicle in favour of Sh. Rakesh Kumar, he has no concern with the vehicle. 15. The Tribunal after recording the evidence has passed the award holding that the policy was not a comprehensive policy and passengers were not covered in it. It was further held that the premium was paid for third party claim and it was an Act Policy and the question whether the deceased is travelling in the offending vehicle can be termed as third party is no more res integra in view of the judgments passed by the Hon’ble Supreme Court in Oriental Insurance Company Ltd. vs. Sudhakaran K.V. (2008) 7 SCC 428 , National Insurance Company Ltd. vs. Balakrishnan and another , (2013) 1 SCC 731 and New India Assurance Company Ltd. vs. Smt. Anuradha and others , Latest HLJ 2014(HP) 1 and hence the Insurance Company cannot be fastened with the liability to indemnify the award amount. However, it was held that since the vehicle in question was insured with the Insurance Company and third party risk is covered, the appellant-Insurance Company was directed to firstly satisfy the award and thereafter liberty was given to recover the same from appellant- Nausahad Ahmed-owner. 16. Both the appellants feeling aggrieved by the award have preferred the appeals. Insurance Company is aggrieved by the award to the extent it has been directed to pay the amount first and thereafter to recover the same from owner. The owner has preferred the appeal questioning the liability having been saddled upon him on the plea that the appellant-Insurance Company has not taken the plea in the reply that it was an Act Policy nor there was any issue framed and further the Insurance Company has failed to prove that there was willful breach to the terms and conditions of the Insurance Policy. 17. I have heard the learned counsel for the parties and also perused the record carefully. 18. It is not in dispute that the claimant was travelling in a Maruti Car No.UGX-4001, which was insured with the Insurance Company. This Court in the earlier round of litigation had only directed that whether the policy in question is an Act Policy or comprehensive policy. 18. It is not in dispute that the claimant was travelling in a Maruti Car No.UGX-4001, which was insured with the Insurance Company. This Court in the earlier round of litigation had only directed that whether the policy in question is an Act Policy or comprehensive policy. The Insurance Company has led the evidence and has placed on record the policy (Exhibit R-1), which was valid at the time of accident. 19. A perusal of policy (Exhibit R-1) reveals that it is an Act Policy and 1X1 Private Car. Although, the law relating to the liability of an insurance company qua the Act policy cannot be disputed, but the fact remains that the liability of the Insurance Company would always depend upon the terms and conditions of the policy. In other words, merely because the contract of insurance is stated as a private car liability policy, the Insurance Company cannot escape its liability and the liability of the Insurance Company depends upon the construction of the contract. 20. If the policy (Exhibit R-1) is perused, it clearly envisages that the limits of liability of the Insurance Company is against all sums including claimants costs and expenses, which the insured shall become legally liable to pay in respect of death of or bodily injury to any person and/of damage to any property of third party. The relevant portion of the clauses of policy (Exhibit R-1) is reproduced hereunder: “Now this policy witnesseth that subject to the Terms Exceptions and Conditions contained herein or endorsed hereon. 1. Subject to the limit of liability as laid down in the Motor Vehicles Act the Company will indemnify the Insured in the event of accident caused by or arising out of the use of the Motor Vehicle anywhere in India against all sums including claimant’s costs and expenses which the Insured shall become legally liable to pay in respect of death of or bodily injury to any person and/of damage to any property of Third Party.” 2. x x x x 3. x x x x 4. x x x x 3. x x x x 4. In the event of the death of any person entitled to indemnity under this Policy the Company will in respect of the liability incurred by such person indemnify his personal representatives in the terms of and subject to the limitations of this Policy provided that such personal representatives shall as though they were the Insured observe fulfill and be subject to the terms exceptions and conditions of this Policy in so far as they can apply.” 21. The reading of clause 1 clearly covers the risk of insured by the Insurance Company to pay in respect of death of or bodily injury to any person, meaning thereby the passenger travelling in the passenger car is also covered under the Act Policy. The policy also covers the damage to any property of third party. It is settled law that coverage provisions should be interpreted broadly and if there is any ambiguity, the same should be resolved in favour of the insured. Reference, in this regard is made to the judgment in Canara Bank versus United India Insurance Company Limited and others (2020) 3 SCC 455 , and the relevant para is reproduced hereunder: “22. The principles relating to interpretation of insurance policies are well settled and not in dispute. At the same time, the provisions of the policy must be read and interpreted in such a manner so as to give effect to the reasonable expectations of all the parties including the insured and the beneficiaries. It is also well settled that coverage provisions should be interpreted broadly and if there is any ambiguity, the same should be resolved in favour of the insured. On the other hand, the exclusion clauses must be read narrowly. The policy and its components must be read as a whole and given a meaning which furthers the expectations of the parties and also the business realities. According to us, the entire policy should be understood and examined in such a manner and when that is done, the interpretation becomes a commercially sensible interpretation.” 22. As per the terms of the policy (Exhibit R-1), the risk covered is in respect of death of or bodily injury to any person and/of damage to any property of third party has to be read in disjunction to each other. As per the terms of the policy (Exhibit R-1), the risk covered is in respect of death of or bodily injury to any person and/of damage to any property of third party has to be read in disjunction to each other. In the earlier part of the clause, it covers the risk of any person and in the later part it is specifically for the risk of any property of third party only, as contained in Clause 1 of the policy. The terms and conditions clearly postulate that the insurance company shall become legally liable to pay in respect of death of or bodily injury to any person, which includes even passengers travelling in the passenger vehicle. The other part which disentitles the insured from being covered is with respect to the damage to his own property and the occupant siting in the vehicle, as the policy covers only the damage of property of third party. Therefore, both the coverage in respect of death of or bodily injury to any person and/of damage to the property of a third party has to be read in disjunction to each other. 23. Further clause 4 of the policy also covers the risk of any person including the passenger travelling in the private car, when it specifically says in the event of death of any person entitled to indemnify under this Policy, the company will in respect of the liability incurred by such person, indemnify his personal representatives in terms of and subject to the limitations of this policy, provided that such personal representatives shall as though they were the insured observe fulfill and be subject to the terms exceptions and conditions of the policy in so far as they can apply. 24. Since the policy (Exhibit R-1) also provides that in the event of death of any person, the Insurance Company shall indemnify the insured, it can safely be concluded that under the policy (Exhibit R-1), though termed as an Act Policy, the persons travelling in the ill fated car were covered and the insured has to be indemnified by the Insurance Company. The Insurance Company has not proved willful breach of any terms and conditions of policy (Exhibit R-1). Since the vehicle was a passenger vehicle though own car, there was no violation of any terms and conditions. 25. The Insurance Company has not proved willful breach of any terms and conditions of policy (Exhibit R-1). Since the vehicle was a passenger vehicle though own car, there was no violation of any terms and conditions. 25. The plea raised by the appellant-Insurance Company that it has wrongly been directed to pay the compensation at the first instance even after recording the finding that the claimant was not covered under the Act Policy is concerned, the same deserves rejections, since this Court has held that as per the terms and conditions of policy (Exhibit R-1), the passenger was covered to be indemnified by the Insurance Company. 26. In view of the above, I am of the considered view that the Tribunal has wrongly held that the owner is liable to pay the compensation since he had only Act Policy, whereas as per the discussion made above, the vehicle once insured and having insurance policy to indemnify the insured in respect of any persons as per the terms and conditions contained in Exhibit R-1, the liability ought to have been fastened upon the Insurance Company with whom the vehicle was insured. 27. Resultantly, the appeal preferred by the Insurance Company i.e. FAO No.312 of 2015 is dismissed and the appeal preferred by the owner i.e. FAO No.273 of 2015 is allowed. The award dated 01.04.2015 passed by the Motor Accident Claims Tribunal-II, Sirmaur District at Nahan, H.P., is quashed only to the extent of saddling the liability upon the owner. Consequently, the appellant-Insurance Company is directed to pay the entire amount as assessed by the Tribunal below. However, no order as to costs.