# M/S United India Insurance Co. Ltd v. Smt. Jai Laxmi Singh & Ors

- **Citation:** (2022) 5 ILRA 728
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2022-04-08
- **Case number:** First Appeal From Order No. 1182 of 1992
- **Bench:** Dr. Kaushal Jayendra Thaker
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-united-india-insurance-co-ltd-v-smt-jai-laxmi-singh-ors-48581
- **Pages:** 12

## Headnote

A. Civil Law - Motor Accident Act, 1988 -
Sections 147, 148, 149 & 157 - Claim
petition - Breach of policy - Vehicle was
sold and new owner got the vehicle
registered as a vehicle to be used for
commercial purpose without intimating
the Insurance Co. - Effect - Owner would
be liable to the insurance Co. for the
deliberate wrong in not disclosing the fact
as otherwise they would have been liable
to pay a higher premium which they have
not paid - Held, the breach of policy
would fall within the scope of Section 147
of Act, 1988 though not a breach under
Section 149 of Act, 1988 - There is a
breach of policy, a duty is cast on the
subsequent purchaser to convey to the
insurance
Co.
any
change
in
the
registration of the vehicle - Insurance Co.
was given liberty to recover the amount,
already deposited as per the order of this
Court, from both the owners. (Para 13 and
14)
5 All. M/s United India Insurance Co. Ltd. Vs. Smt. Jai Laxmi Singh & Ors.
729
B. Motor Accident Claim - Rash and
negligent driving - Term 'Negligence' -
Meaning - Principle of 'res ipsa loquitur' ,
when it can be applied - Negligence
means failure to exercise care towards
others which a reasonable and prudent
person would in a circumstance or taking
action which such a reasonable person
would
not.
Negligence
can
be
both
intentional or accidental though it is
normally accidental - If the injury rather
death is caused by something owned or
controlled by the negligent party then he
is directly liable otherwise the principle of
"res ipsa loquitur" meaning thereby "the
things speak for itself" would apply. (Para
5)

C. Motor Accident Claim - Principle of
contributory negligence - Scope and
meaning
-
A
person
who
either
contributes or is co author of the accident
would be liable for his contribution to the
accident having taken place. (Para 6)
Appeal partly allowed (E-1)
List of Cases cited:-

## Text

728 INDIAN LAW REPORTS ALLAHABAD SERIES
financial year, registry of this Tribunal is
directed to allow the claimant to withdraw
the
amount
without
producing
the
certificate from the concerned Income- Tax
Authority. The aforesaid view has been
reiterated by this High Court in Review
Application No.1 of 2020 in First Appeal
From Order No.23 of 2001 (Smt. Sudesna
and others Vs. Hari Singh and another)
while disbursing the amount.

14. In view of the above, the appeal
is partly allowed. Judgment and decree
passed by the Tribunal shall stand
modified to the aforesaid extent. The
respondent-Insurance
Company
shall
deposit the amount with interest at the
rate of 7.5% from the date of filing of the
claim petition till the amount is deposited
within a period of 12 weeks from today.
The
amount
already
deposited
be
deducted
from
the
amount
to
be
deposited.

15.

Fresh
Award
be
drawn
accordingly in the above petition by the
tribunal as per the modification made
herein.

16. The Tribunal shall follow the
guidelines issued by the Apex Court in
Bajaj
Allianz
General
Insurance
Company Private Ltd. v. Union of
India and others vide order dated
27.1.2022, as the purpose of keeping
compensation is to safeguard the interest
of the claimants. As 12 years have
elapsed, the amount be deposited in the
Saving
Account
of
claimants
in
Nationalized Bank without F.D.R.

17. This Court is thankful to both the
counsels to see that this very old matter is
disposed of.
----------
(2022)05ILR A728
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 08.04.2022

BEFORE

THE HON'BLE DR. KAUSHAL JAYENDRA
THAKER, J.

First Appeal From Order No. 1182 of 1992

M/S United India Insurance Co. Ltd.
 ...Appellant
Versus
Smt. Jai Laxmi Singh & Ors.
 ...Respondents

Counsel for the Appellant:
Sri K.S. Amist

Counsel for the Respondents:
Sri Vijay Kumar Bist, Sri G.K. Singh, Sri
N.I. Jafri, Sri R.K. Pandey, Sri S.D.Ojha, Sri
S.K. Mishra, Sri S.K. Shukla, Sri S.N.
Srivastava, Sri Manoj Kumar

A. Civil Law - Motor Accident Act, 1988 -
Sections 147, 148, 149 & 157 - Claim
petition - Breach of policy - Vehicle was
sold and new owner got the vehicle
registered as a vehicle to be used for
commercial purpose without intimating
the Insurance Co. - Effect - Owner would
be liable to the insurance Co. for the
deliberate wrong in not disclosing the fact
as otherwise they would have been liable
to pay a higher premium which they have
not paid - Held, the breach of policy
would fall within the scope of Section 147
of Act, 1988 though not a breach under
Section 149 of Act, 1988 - There is a
breach of policy, a duty is cast on the
subsequent purchaser to convey to the
insurance
Co.
any
change
in
the
registration of the vehicle - Insurance Co.
was given liberty to recover the amount,
already deposited as per the order of this
Court, from both the owners. (Para 13 and
14)
5 All. M/s United India Insurance Co. Ltd. Vs. Smt. Jai Laxmi Singh & Ors.
729
B. Motor Accident Claim - Rash and
negligent driving - Term 'Negligence' -
Meaning - Principle of 'res ipsa loquitur' ,
when it can be applied - Negligence
means failure to exercise care towards
others which a reasonable and prudent
person would in a circumstance or taking
action which such a reasonable person
would
not.
Negligence
can
be
both
intentional or accidental though it is
normally accidental - If the injury rather
death is caused by something owned or
controlled by the negligent party then he
is directly liable otherwise the principle of
"res ipsa loquitur" meaning thereby "the
things speak for itself" would apply. (Para
5)

C. Motor Accident Claim - Principle of
contributory negligence - Scope and
meaning
-
A
person
who
either
contributes or is co author of the accident
would be liable for his contribution to the
accident having taken place. (Para 6)
Appeal partly allowed (E-1)
List of Cases cited:-
1. First Appeal From Order No. 1818 of 2012;
Bajaj Allianz General Insurance Co.Ltd. Vs Smt.
Renu Singh & ors. decided by Allahabad High
Court on 19.7.2016
2. Archit Saini & anr. Vs Oriental Insurance Co.
Ltd., AIR 2018 SC 1143
3. National Insurance Co. Ltd Vs Swaran Singh,
(2004) 3 SCC 297
4. Manuara Khatun Vs Rajesh Kumar Singh, AIR
2017 SC 1204
5. Lal Singh Marabi Vs National Insurance Co.
Ltd., 2017(5) SCC 82.
(Delivered by Hon'ble Dr. Kaushal
Jayendra Thaker, J.)

1. Heard Sri K.S. Amist, learned
counsel for the appellant, Sri S.D. Ojha,
learned counsel for claimants-respondent
and perused the judgment and order
impugned.

2. This appeal, at the behest of
appellant-M/S
United
India
Insurance
Company Ltd., challenges the award dated
19.8.1992 passed by Motor Accident
Claims Tribunal/Vth Additional District
Judge, Gorakhpur (hereinafter referred to
as 'Tribunal') in M.A.C.No.35 of 1991
awarding a sum of Rs.3,60,000/- with
interest at the rate of 12% as compensation.

3. Brief facts as culled out from the
record are that on 7.10.1990, Prem Narain
Singh was going driving Hero Puch from
Chargawan towards Gorakhpur and at
about 11:20 a.m. when he reached near M/s
Gautam
Bhterprises
at
Khajanchi
Chauraha, Police Station Shahpur in
Gorakhpur to Bhatahat Road, a Jeep
bearing
UPH-2756,
coming
from
Dharamshala City, Gorakhpur side to
Maharajganj driven in a very rash and
negligent manner, dashed against the
moped causing grievous and fatal injuries
to Prem Narain Singh who later on died in
the Hospital on the same day.

4. Learned counsel for the appellant -
insurance company submits that Kali
Charan- respondent no. 9 who was the
owner of the Jeep UPH-2756 at the time of
the accident and it was being driven by the
Rameshwar Prasad- respondent no. 10.
Jeep UPH-2756 was insured with the
appellant - insurance company at the time
of accident. Kali Charan- respondent no. 9
filed his written statement stated that
accident took place on account of the
negligence of the deceased himself as he
was carrying a gas cylinder on his motor
cycle and was driving it at a high speed and
the motor cycle became uncontrolled,
causing accident. He further states that the
jeep was insured from 5.3.1990 to 4.3.1991
for the purpose of private use only in the
name of Mohd. Aziz as owner and it
730 INDIAN LAW REPORTS ALLAHABAD SERIES
appeared that Mohammad Aziz later on
sold the jeep UPH-2756 to Kali Charan
who got the registration of jeep transferred
for the purpose of using it as taxi but he did
not get the insurance policy transferred and
the insurance of the jeep remained for the
purpose of private use only,therefore, the
appellant was not liable to pay any
compensation. He further submits that the
compensation awarded by the Tribunal is
very high and exorbitant and the Tribunal
has not followed the correct principles of
law in calculating the amount of the award.
The Tribunal has illegally not allowed any
deduction for lump sum payment, atleast
30% deduction should be allowed. He
further submits that the award granted by
the Tribunal is illegal and against the
evidence on record. The Jeep being UPH2756 was being driven in violation of the
terms and conditions of the insurance
policy and the appellant took such specific
plea and the appellant was not liable to pay
any amount of compensation.

Dispute as to negligence : -

5. The term negligence means failure
to exercise care towards others which a
reasonable and prudent person would in a
circumstance or taking action which such a
reasonable person would not. Negligence
can be both intentional or accidental which
is normally accidental. More particularly, it
connotes reckless driving and the injured
must always prove that the either side is
negligent. If the injury rather death is
caused by something owned or controlled
by the negligent party then he is directly
liable otherwise the principle of "res ipsa
loquitur" meaning thereby "the things
speak for itself" would apply.

6. The principle of contributory
negligence has been discussed time and
again. A person who either contributes or is
author of the accident would be liable for
his contribution to the accident having
taken place.

7. The Division Bench of this Court
in First Appeal From Order No. 1818 of
2012 ( Bajaj Allianz General Insurance
Co.Ltd. Vs. Smt. Renu Singh And
Others) decided on 19.7.2016 has held as
under :

"16. Negligence means failure to
exercise required degree of care and
caution expected of a prudent driver.
Negligence is the omission to do something
which a reasonable man, guided upon the
considerations, which ordinarily regulate
conduct of human affairs, would do, or
doing something which a prudent and
reasonable man would not do. Negligence
is not always a question of direct evidence.
It is an inference to be drawn from proved
facts. Negligence is not an absolute term,
but is a relative one. It is rather a
comparative term. What may be negligence
in one case may not be so in another.
Where there is no duty to exercise care,
negligence in the popular sense has no
legal consequence. Where there is a duty to
exercise care, reasonable care must be
taken to avoid acts or omissions which
would be reasonably foreseen likely to
caused physical injury to person. The
degree of care required, of course, depends
upon facts in each case. On these broad
principles, the negligence of drivers is
required to be assessed.

17. It would be seen that burden
of proof for contributory negligence on the
part of deceased has to be discharged by
the opponents. It is the duty of driver of the
offending vehicle to explain the accident. It
is well settled law that at intersection
5 All. M/s United India Insurance Co. Ltd. Vs. Smt. Jai Laxmi Singh & Ors.
731
where two roads cross each other, it is the
duty of a fast moving vehicle to slow down
and if driver did not slow down at
intersection, but continued to proceed at a
high speed without caring to notice that
another vehicle was crossing, then the
conduct of driver necessarily leads to
conclusion that vehicle was being driven by
him rashly as well as negligently.

18. 10th Schedule appended to
Motor
Vehicle
Act
contain
statutory
regulations for driving of motor vehicles
which also form part of every Driving
License. Clause-6 of such Regulation
clearly directs that the driver of every
motor vehicle to slow down vehicle at every
intersection or junction of roads or at a
turning of the road. It is also provided that
driver of the vehicle should not enter
intersection or junction of roads unless he
makes sure that he would not thereby
endanger
any
other
person.
Merely,
because driver of the Truck was driving
vehicle on the left side of road would not
absolve him from his responsibility to slow
down vehicle as he approaches intersection
of roads, particularly when he could have
easily seen, that the car over which
deceased was riding, was approaching
intersection.

19. In view of the fast and
constantly increasing volume of traffic,
motor vehicles upon roads may be
regarded to some extent as coming within
the principle of liability defined in Rylands
V/s. Fletcher, (1868) 3 HL (LR) 330. From
the point of view of pedestrian, the roads of
this country have been rendered by the use
of motor vehicles, highly dangerous. 'Hit
and run' cases where drivers of motor
vehicles who have caused accidents, are
unknown. In fact such cases are increasing
in number. Where a pedestrian without
negligence on his part is injured or killed
by a motorist, whether negligently or not,
he or his legal representatives, as the case
may be, should be entitled to recover
damages if principle of social justice
should have any meaning at all.

20. These provisions (sec.110A
and sec.110B of Motor Act, 1988) are not
merely
procedural
provisions.
They
substantively affect the rights of the parties.
The right of action created by Fatal
Accidents Act, 1855 was 'new in its species,
new in its quality, new in its principles. In
every way it was new. The right given to
legal representatives under Act, 1988 to file
an application for compensation for death
due to a motor vehicle accident is an
enlarged one. This right cannot be hedged
in by limitations of an action under Fatal
Accidents Act, 1855. New situations and
new dangers require new strategies and
new remedies.

21. In the light of the above
discussion, we are of the view that even if
courts may not by interpretation displace
the principles of law which are considered
to be well settled and, therefore, court
cannot dispense with proof of negligence
altogether in all cases of motor vehicle
accidents, it is possible to develop the law
further on the following lines; when a
motor
vehicle
is
being
driven
with
reasonable care, it would ordinarily not
meet with an accident and, therefore, rule
of res-ipsa loquitor as a rule of evidence
may be invoked in motor accident cases
with greater frequency than in ordinary
civil suits (per three-Judge Bench in
Jacob Mathew V/s. State of Punjab, 2005
0 ACJ(SC) 1840).

22. By the above process, the
burden of proof may ordinarily be cast on
732 INDIAN LAW REPORTS ALLAHABAD SERIES
the defendants in a motor accident claim
petition to prove that motor vehicle was
being driven with reasonable care or that
there is equal negligence on the part the
other side."

emphasis added

8. A similar view has been taken by
the Apex Court in Archit Saini and
Another
Vs.
Oriental
Insurance
Company Limited, AIR 2018 SC 1143
wherein the finding of the Tribunal was
upheld by adverting to the same more
particularly the Apex Court has upheld the
finding in paragraph 21 to 27 in its
judgment. The paragraph 5 of the said
Apex Court's judgment is reproduced
hereinbelow:

"5.The respondents had opposed
the claim petition and denied their liability
but did not lead any evidence on the
relevant issue to dispel the relevant fact.
The Tribunal after analysing the evidence,
including the site map (Ext. P-45) produced
on record along with charge-sheet filed
against the driver of the Gas Tanker and
the
arguments
of
the
respondents,
answered Issue 1 against the respondents
in the following words:

"21. Our own Hon'ble High
Court
in
a
case
captioned Lakhu
Singh v. Uday Singh [Lakhu Singh v. Uday
Singh, 2007 SCC OnLine P&H 865 : PLR
(2007) 4 P&H 507] held that while
considering a claim petition, the Tribunal
is required to hold an enquiry and act not
as criminal court so as to find whether the
claimants have established the occurrence
beyond shadow of any reasonable doubt. In
the enquiry, if there is prima facie evidence
of the occurrence there is no reason to
disbelieve such evidence. The statements
coupled with the facts of registration of FIR
and trial of the accused in a criminal court
are sufficient to arrive at a conclusion that
the accident has taken place. Likewise,
in Kusum
Lata v. Satbir [Kusum
Lata v. Satbir, (2011) 3 SCC 646 : (2011) 2
SCC (Civ) 37 : (2011) 2 SCC (Cri) 18 :
(2011) 2 RCR (Civil) 379] the Hon'ble
Apex Court has held that in a case relating
to motor accident claims, the claimants are
not required to rove the case as it is
required to be done in a criminal trial. The
Court must keep this distinction in mind.
Strict proof of an accident caused by a
particular bus in a particular manner may
not be possible to be done by the claimants.
The claimants were merely to establish
their
case
on
the
touchstone
of
preponderance of probability. The standard
of proof beyond reasonable doubt could not
have been applied.

22.
After
considering
the
submissions made by both the parties, I
find that PW 7 Sohan Lal eyewitness to the
occurrence has specifically stated in his
affidavit Ext. PW 7/A tendered in his
evidence that on 15-12-2011 at about 20.30
p.m. he along with PHG Ajit Singh was
present near Sanjha Chulha Dhaba on the
National Highway leading to Jammu. All
the traffic of road was diverted on the
eastern side of the road on account of
closure of road on western side due to
construction work. In the meantime a
Maruti car bearing No. HR 02 K 0448
came from Jammu side and struck against
the back of Gas Tanker as the driver of the
car could not spot the parked tanker due to
the flashlights of the oncoming traffic from
front side. Then they rushed towards the
spot of accident and noticed that the said
tanker was standing parked in the middle of
the road without any indicators or parking
lights.
5 All. M/s United India Insurance Co. Ltd. Vs. Smt. Jai Laxmi Singh & Ors.
733

23. The statement of this witness
clearly establishes that this was the sole
negligence on the part of the driver of the
Gas Tanker especially when the accident
was caused on 15-12-2011 that too at
about 10.30 p.m. which is generally time of
pitch darkness. In this way, the driver of
the car cannot be held in any way negligent
in this accident. Moreover, as per Rule 15
of the Road Regulations, 1989 no vehicle is
to be parked on busy road.

24. The arguments of the learned
counsel for the respondent that PW 7
Sohan Lal has stated in his crossexamination that there was no fog at that
time and there were lights on the Dhaba
and the truck was visible to him due to light
of Dhaba and he was standing at the
distance of 70 ft from the truck being road
between him and the truck and he noticed
at the car when he heard voice/sound
caused by the accident so Respondent 1 is
not at all negligent in this accident but
these submissions will not make the car
driver to be in any way negligent and
cannot give clean chit to the driver of the
Gas Tanker because there is a difference
between the visibility of a standing vehicle
from a place where the person is standing
and by a person who is coming driving the
vehicle because due to flashlights of
vehicles coming from front side the vehicle
coming from opposite side cannot generally
spot the standing vehicle in the road that
too in night-time when there is neither any
indicator or parking lights nor blinking
lights nor any other indication given on the
back of the stationed vehicle, therefore, the
driver of the car cannot be held to be in
any way negligent rather it is the sole
negligence on the part of the driver of the
offending Gas Tanker as held inGinni Devi
case [Ginni Devi v. Union of India, 2007
SCC OnLine P&H 126 : 2008 ACJ 1572]
, Mohan Lal case [New India Assurance
Co. Ltd. v. Mohan Lal, 2006 SCC OnLine
All 459 : (2007) 1 ACC 785 (All)] . It is not
the case of the respondent that the parking
lights of the standing truck were on or
there were any other indication on the
backside of the vehicle standing on the
road to enable the coming vehicle to see
the standing truck. The other arguments of
the learned counsel for Respondent 3 that
the road was sufficient wide road and that
the car driver could have avoided the
accident, so the driver of the car was
himself negligent in causing the accident
cannot be accepted when it has already
been held that the accident has been caused
due to sole negligence of the driver of the
offending stationed truck in the busy road.
The
proposition
of
law
laid
down
in Harbans
Kaur
case [New
India
Assurance Co. Ltd. v. Harbans Kaur, 2010
SCC OnLine P&H 7441 : (2010) 4 PLR
422
(P&H)]
and T.M.
Chayapathi
case [New India Assurance Co. Ltd. v. T.M.
Chayapathi, 2004 SCC OnLine AP 484 :
(2005) 4 ACC 61] is not disputed at all but
these authorities are not helpful to the
respondents being not applicable on the
facts and circumstances of the present case.
Likewise,
non-examination
of
minor
children of the age of 14 and 9 years who
lost their father and mother in the accident
cannot be held to be in any way detrimental
to the case of the claimants when
eyewitness to the occurrence has proved
the accident having been caused by the
negligence of Respondent 1 driver of the
offending vehicle.

25. Moreover,
in
Girdhari
Lal v. Radhey
Shyam [Girdhari
Lal v. Radhey Shyam, 1993 SCC OnLine
P&H 194 : PLR (1993) 104 P&H 109]
, Sudama
Devi v. Kewal
Ram [Sudama
Devi v.Kewal Ram, 2007 SCC OnLine
734 INDIAN LAW REPORTS ALLAHABAD SERIES
P&H 1208 : PLR (2008) 149 P&H
444] andPazhaniammal case [New India
Assurance Co. Ltd. v. Pazhaniammal, 2011
SCC OnLine Ker 1881 : 2012 ACJ
1370] our own Hon'ble High Court has
held that ''it is, prima facie safe to conclude
in claim cases that the accident has
occurred on account of rash or negligent
driving of the driver, if the driver is facing
the criminal trial on account of rash or
negligent driving.'

26. Moreover,
Respondent
1
driver of the offending vehicle has not
appeared in the witness box to deny the
accident having been caused by him,
therefore, I am inclined to draw an adverse
inference against Respondent 1. In this
context, I draw support from a judgment of
the Hon'ble Punjab & Haryana High Court
reported
asBhagwani
Devi v. Krishan
Kumar Saini[Bhagwani Devi v. Krishan
Kumar Saini, 1986 SCC OnLine P&H 274
: 1986 ACJ 331] . Moreover, Respondent 1
has also not filed any complaint to higher
authorities about his false implication in
the criminal case so it cannot be accepted
that Respondent 1 has been falsely
implicated in this case.

27. In view of above discussion, it
is held that the claimants have proved that
the
accident
has
been
caused
by
Respondent 1 by parking the offending
vehicle bearing No. HR 02 AF 8590 in the
middle of the road in a negligent manner
wherein Vinod Saini and Smt Mamta Saini
have died and claimants Archit Saini and
Gauri Saini have received injuries on their
person. Shri Vinod Saini, deceased who
was driving ill-fated car on that day cannot
be held to be negligent in any way.
Accordingly, this issue is decided in favour
of claimants."

9. Learned counsel for the respondent
submits that there is no contribution of
deceased in accident as he was not
negligent. The compensation amount does
not
require
any
recalculation
as
compensation awarded is in consonance of
just compensation as applicable in the year
of decision.

Dispute as to Breach of Policy

10. Sections 147, 148 and 149
and 157 of Act, 1988 reads as follow :

"Section 147 Requirements of
policies and limits of liability. --

"(1) In order to comply with the
requirements of this Chapter, a policy of
insurance must be a policy which--

(a) is issued by a person who is
an authorised insurer; and

(b) insures the person or classes
of persons specified in the policy to the
extent specified in sub-section (2)--

(i) against any liability which
may be incurred by him in respect of the
death of or bodily 27 [injury to any person,
including owner of the goods or his
authorised representative carried in the
vehicle] or damage to any property of a
third party caused by or arising out of the
use of the vehicle in a public place;

(ii) against the death of or bodily
injury to any passenger of a public service
vehicle caused by or arising out of the use
of the vehicle in a public place:

Provided that a policy shall not
be required--
5 All. M/s United India Insurance Co. Ltd. Vs. Smt. Jai Laxmi Singh & Ors.
735

(i) to cover liability in respect of
the death, arising out of and in the course
of his employment, of the employee of a
person insured by the policy or in respect
of bodily injury sustained by such an
employee arising out of and in the course
of his employment other than a liability
arising
under
the
Workmen's
Compensation Act, 1923 (8 of 1923) in
respect of the death of, or bodily injury to,
any such employee--

(b) if it is a public service vehicle
engaged as conductor of the vehicle or in
examining tickets on the vehicle, or

(c) if it is a goods carriage, being
carried in the vehicle, or

(ii) to cover any contractual
liability.

Explanation. --For the removal
of doubts, it is hereby declared that the
death of or bodily injury to any person
or damage to any property of a third
party shall be deemed to have been
caused by or to have arisen out of, the
use of a vehicle in a public place
notwithstanding that the person who is
dead or injured or the property which is
damaged was not in a public place at the
time of the accident, if the act or
omission which led to the accident
occurred in a public place.

(2) Subject to the proviso to subsection (1), a policy of insurance referred
to in sub-section (1), shall cover any
liability incurred in respect of any accident,
up to the following limits, namely:--

(a) save as provided in clause (b),
the amount of liability incurred;

(b) in respect of damage to any
property of a third party, a limit of rupees
six thousand:

Provided that any policy of
insurance issued with any limited liability
and in force, immediately before the
commencement of this Act, shall continue
to be effective for a period of four months
after such commencement or till the date of
expiry of such policy whichever is earlier.

(3) A policy shall be of no effect
for the purposes of this Chapter unless and
until there is issued by the insurer in favour
of the person by whom the policy is effected
a certificate of insurance in the prescribed
form
and
containing
the
prescribed
particulars of any condition subject to
which the policy is issued and of any other
prescribed matters; and different forms,
particulars and matters may be prescribed
in different cases.

(4) Where a cover note issued by
the insurer under the provisions of this
Chapter or the rules made thereunder is
not followed by a policy of insurance within
the prescribed time, the insurer shall,
within seven days of the expiry of the
period of the validity of the cover note,
notify the fact to the registering authority in
whose records the vehicle to which the
cover note relates has been registered or to
such
other
authority
as
the
State
Government may prescribe.

(5) Notwithstanding anything
contained in any law for the time being in
force, an insurer issuing a policy of
insurance under this section shall be
liable to indemnify the person or classes
of persons specified in the policy in
respect of any liability which the policy
736 INDIAN LAW REPORTS ALLAHABAD SERIES
purports to cover in the case of that
person or those classes of persons.

"Section
148.
Validity
of
policies
of
insurance
issued
in
reciprocating
countries.--Where,
in
pursuance of an arrangement between
India and any reciprocating country, the
motor
vehicle
registered
in
the
reciprocating country operates on any
route or within any area common to the
two countries and there is in force in
relation to the use of the vehicle in the
reciprocating
country,
a
policy
of
insurance
complying
with
the
requirements of the law of insurance in
force
in
that
country,
then,
notwithstanding anything contained in
section 147 but subject to any rules which
may be made under section 164, such
policy of insurance shall be effective
throughout the route or area in respect of
which, the arrangement has been made,
as if the policy of insurance had complied
with the requirements of this Chapter."

Section 149. Duty of insurers to
satisfy judgments and awards against
persons insured in respect of third party
risks.--

(1) If, after a certificate of
insurance has been issued under subsection (3) of section 147 in favour of the
person by whom a policy has been
effected, judgment or award in respect of
any such liability as is required to be
covered by a policy under clause (b) of
sub-section (l) of section 147 (being a
liability covered by the terms of the
policy) 1[or under the provisions of
section 163A] is obtained against any
person insured by the policy, then,
notwithstanding that the insurer may be
entitled to avoid or cancel or may have
avoided or cancelled the policy, the
insurer shall, subject to the provisions of
this section, pay to the person entitled to
the benefit of the decree any sum not
exceeding the sum assured payable
thereunder, as if he were the judgment
debtor, in respect of the liability, together
with any amount payable in respect of
costs and any sum payable in respect of
interest on that sum by virtue of any
enactment
relating
to
interest
on
judgments.

(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 organised racing and
speed testing, or
5 All. M/s United India Insurance Co. Ltd. Vs. Smt. Jai Laxmi Singh & Ors.
737

(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 licence
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.

(3) Where any such judgment as
is referred to in sub-section (1) is obtained
from a Court in a reciprocating country
and in the case of a foreign judgment is, by
virtue of the provisions of section 13 of the
Code of Civil Procedure, 1908 (5 of 1908)
conclusive as to any matter adjudicated
upon by it, the insurer (being an insurer
registered under the Insurance Act, 1938 (4
of 1938) and whether or not he is
registered under the corresponding law of
the reciprocating country) shall be liable to
the person entitled to the benefit of the
decree in the manner and to the extent
specified in sub-section (1), as if the
judgment were given by a Court in India:
Provided that no sum shall be payable by
the insurer in respect of any such judgment
unless, before the commencement of the
proceedings in which the judgment is given,
the insurer had notice through the Court
concerned
of
the
bringing
of
the
proceedings and the insurer to whom
notice is so given is entitled under the
corresponding law of the reciprocating
country, to be made a party to the
proceedings and to defend the action on
grounds similar to those specified in subsection (2).

(4)
Where
a
certificate
of
insurance has been issued under subsection (3) of section 147 to the person by
whom a policy has been effected, so much
of the policy as purports to restrict the
insurance of the persons insured thereby by
reference to any condition other than those
in clause (b) of sub-section (2) shall, as
respects such liabilities as are required to
be covered by a policy under clause (b) of
sub-section (1) of section 147, be of no
effect: Provided that any sum paid by the
insurer in or towards the discharge of any
liability of any person which is covered by
the policy by virtue only of this sub-section
shall be recoverable by the insurer from
that person.

(5) If the amount which an
insurer becomes liable under this section to
pay in respect of a liability incurred by a
person insured by a policy exceeds the
amount for which the insurer would apart
from the provisions of this section be liable
under the policy in respect of that liability,
the insurer shall be entitled to recover the
excess from that person.

(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
738 INDIAN LAW REPORTS ALLAHABAD SERIES
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.

(7) No insurer to whom the notice
referred to in sub-section (2) or sub-section
(3) has been given shall be entitled to avoid
his liability to any person entitled to the
benefit of any such judgment or award as is
referred to in sub-section (1) or in such
judgment as is referred to in sub-section (3)
otherwise than in the manner provided for
in sub-section (2) or in the corresponding
law of the reciprocating country, as the
case
may
be.
Explanation.--For
the
purposes of this section, "Claims Tribunal"
means a Claims Tribunal constituted under
section 165 and "award" means an award
made by that Tribunal under section 168."

157. Transfer of certificate of
insurance.--

(1) Where a person in whose
favour the certificate of insurance has
been issued in accordance with the
provisions of this Chapter transfers to
another person the ownership of the
motor vehicle in respect of which such
insurance was taken together with the
policy of insurance relating thereto, the
certificate of insurance and the policy
described in the certificate shall be
deemed to have been transferred in
favour of the person to whom the motor
vehicle is transferred with effect from the
date of its transfer. 1[Explanation.--For
the removal of doubts, it is hereby
declared that such deemed transfer shall
include transfer of rights and liabilities of
the said certificate of insurance and
policy of insurance.]

(2) The transferee shall apply
within fourteen days from the date of
transfer in the prescribed form to the
insurer for making necessary changes in
regard to the fact of transfer in the
certificate of insurance and the policy
described in the certificate in his favour
and the insurer shall make the necessary
changes in the certificate and the policy
of insurance in regard to the transfer of
insurance.

11. It is an proved fact that there was
breach of policy condition, namely, though
the fundamental duty is of the owner and
driver to discharge the duty and to prove
that they had intimated the insurance
company. The new owner to whom vehicle
was sold got vehicle registered from private
to commercial vehicle but never intimated
the insurance company which falls in the
purview of fundamental breach of policy
under Section 147 of M.V. Act. 1988. It is
not fraud but it is definitely misinformation
rather non-feasance by the new owner.

12. In National Insurance Co. Ltd v.
Swaran Singh, (2004) 3 SCC 297 which
has been thereafter referred and dissented
to, the fact remains that the Insurance
Company did not prove that the driver was
not having valid driving license. It cannot
be allowed to avoid its liability unless the
said breach or breaches which have
contributed to the conduct.

13. The fact that the vehicle was sold
and a new owner stepped into the shoes of
insured of the owner may not have been very
important and would not be a ground for
refusing to indemnify the owner but the owner
who subsequently bought the vehicle without
5 All. Raj Kumar Agarwal & Ors. Vs. Ahsan Ali & Ors.
739
intimating the Insurance Company got the
vehicle registered as a vehicle to be used for
commercial purpose; namely, a passenger
vehicle. I am in agreement with the
submission of counsel for insurance company
that as far as the vehicle used as passenger
vehicle is concerned, the premium would be
different. The breach of policy would fall
within the scope of Section 147 of Act, 1988
though not a breach under Section 149 of 1988
Act. There is a breach of policy, a duty is cast
on the subsequent purchaser to convey to the
insurance company any change in the
registration of the vehicle had the owner who
subsequently bought had not converted the
same, this stand taken by the insurance
company could have been rejected but the fact
that the Tribunal did not consider this aspect
from this angle vitiates its direction.

14. The Insurance Company having
deposited the amount as per the order of this
Court, would be at liberty to recovery the same
from both the owners. The reason being it is not
brought on record as to in whose name, the
vehicle stood at the time of accident but it appears
that the present respondent/ new owner who had
got the vehicle registered as a transport vehicle,
must have also got his name registered and,
therefore, the present respondent - owner would
be liable to the insurance company for the
deliberate wrong in not disclosing the fact as
otherwise they would have been liable to pay a
higher premium which they have not paid. Hence,
the submission of counsel for the appellant is
accepted.

15. In the Manuara Khatun Vs. Rajesh
Kumar Singh, AIR 2017 SC 1204, Hon'ble
Supreme Court has held that the deceased who
was traveling in the goods vehicle can be termed
as a gratuitous passenger and not covered under
the insurance policy and, therefore, Insurance
Company is exonerated, but directed to pay the
amount of compensation to claimants with the
right to recover the same from the insured. Similar
view has been taken in the case of Lal Singh
Marabi Vs. National Insurance Co

16. As far as the compensation is
concerned, it cannot be said that the compensation
awarded is on higher side. There is no cross
objection filed by the claimant. The compensation
awarded is without grant of future loss of income
and the amount under non pecuniary damages on
lower side and, therefore, also no interference is
called for.

17. Appeal is partly allowed. Recovery
rights are granted to the appellant.

18. Record be sent back to the Tribunal
forthwith.

19. The insurance company to deposit rest
of the amount if not yet deposited. On deposit of
rest of the amount, the same be disbursed to the
claimants. If the amounts are already deposited,
the same be disbursed to claimant as 30 years
have elapsed from the date of filing of this appeal.
----------
(2022)05ILR A739
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 30.03.2022

BEFORE

THE HON'BLE DR. KAUSHAL JAYENDRA
THAKER, J.
THE HON'BLE AJAI TYAGI, J.

First Appeal From Order No. 1209 of 2007
With
First Appeal From Order No. 1266 of 2007

Raj Kumar Agarwal & Ors. ...Appellants
Versus
Ahsan Ali & Ors. ...Respondents

Counsel for the Appellants:
Sri Shailesh Rai, Sri Rishi Bhushan Jauhari