REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.1838  OF 2009

Balbir Kaur & Ors. …Appellants

Versus

New India Assurance Company Ltd. & Ors. …Respondents

J U D G M E N T  

S.B. SINHA, J :

1. Baljit Singh, deceased was riding on a two-wheeler (scooter) bearing

Registration No. DAB 6529.  The said scooter was hit by a bus driven by

one Ramesh Singh Rawat.  He suffered multiple grievous injuries in the said

accident.   He  was  taken  to  Deen  Dayal  Upadhya,  Hospital,  New Delhi

where he was declared ‘brought dead’.  

2. Appellants  filed  an  application  before  the  Motor  Accident  Claim

Tribunal,  Delhi (Tribunal) under Section 166 of the Motor Vehicles Act,

1988  (for  short  “the  Act”)  claiming  a  sum  of  Rs.  20,00,000/-  towards

compensation for death of Baljit  Singh inter alia on the premise that the

accident was caused by reason of rash and negligent driving of the said bus

by its driver Shri Ramesh Singh Rawat.   

3. In the said claim petition, the income of the deceased was stated to be

Rs.  4,000/-  per  month.   He was  aged  34  years  on  the  date  of  accident.

Indisputably, in relation to the said accident, a criminal proceeding was also

initiated under Sections 279 and 304A of the Indian Penal Code.

4. The Tribunal upon considering the materials brought on record by the

parties awarded a sum of Rs. 7,96,000/- to the appellants.  Respondent No. 1

preferred an appeal thereagainst before the High Court.  By reason of the

impugned  judgment,  the  High  Court  set  aside  the  award  passed  by  the

Tribunal opining that as the cover note of the insurance had been issued on

15.03.1996  but  the  same  was  to  take  effect  from  19.03.1996  and  the

accident  having  taken  place  on  18.03.1996,  the  insurer  was  not  liable

therefor.

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5. Appellants are, thus, before us.

6. By an order dated 13.08.2007, this Court issued a limited notice to the

following effect:

“Issue  notice  confined  to  the  question  as  to whether in the peculiar facts and circumstances of the case and, particularly, in view of the fact that the petitioners have already withdrawn the amount deposited  by the  Insurance Company,  this  Court can issue a direction as to whether the Insurance Company may recover the amount from the owner and the driver in the same proceedings.”

7. Before adverting to the contentions raised before us, we may notice

that  the  High  Court  while  issuing  notice  to  the  appellants  directed  the

respondent No. 1 herein to deposit the awarded amount pursuant whereto

the said amount has been deposited.  Appellants have also withdrawn the

same.

However, the High Court, in its impugned judgment, directed refund

of the said amount to the respondent No. 1.

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8. The  Tribunal  in  the  said  claim  petition  inter  alia  formulated  the

following issues:

“1. Whether the insurance cover in the present case was effectively only from 19.3.96 to 10.3.97, replaced on behalf of R-3 in their WO7OPR3. 2. Whether premium insurance policy referred to in above issue No. 1 was paid on 15.3.96 and if so to what effect?”

9. On the  first  issue,  the  Tribunal  noticed  that  in  the  cover  note  the

policy was shown to have been issued with effect from 18.03.1996 in view

of a circular issued by the insurance company but  it  had not  been given

effect  to.   Having  regard  to  the  fact  that  a  photocopy  thereof  had  been

produced, it was held:

“…Besides  the  proposal  form  relating  to  the impugned  insurance  policy  has  also  not  been produced to show as to what were the terms and conditions on which the insurance policy was to be executed with regard to the offending vehicle. There  is  no  material  on  record  to  show that  the insured was made aware of the office circular Ex- R3W1/B  that  if  there  was  no  other  insurance policy in  operation  with  regard  to  the  offending vehicle  immediately  preceding  15.3.96  in  these circumstances the insurance policy covering third party interest would be issued three days after the receipt  of  the  proposal.   The material  on  record placed by both the petitioner as well as respondent No.  3  in  clear  terms shows that  the injured  had

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made the payment of the premium on 15.3.96 and there was no reason for the insurance company to have  issued  the  insurance  policy  covering  third party interest w.e.f. 18.3.96…”

10. The High Court, on the other hand, having regard to the decisions of

this Court in National Insurance Co. Ltd. v. Jikubhai Nathuji Dabhi (SMT)

and Ors. [(1997) 1 SCC 66] and J. Kalaiveni and Ors. v. K. Sivshankar and

Anr. [JT 2001 (10) SC 396], held:

“9.  In  view  of  the  clear  cut  position  of  law explained  by the  Supreme Court,  it  is  clear  that policy of insurance commences risk coverage only in  terms  of  the  policy  of  insurance  and  if certificate of insurance has not been issued, on the terms of the cover note.”

11. Chapter  XI  of  the  Act  provides  for  insurance  of  motor  vehicles

against third party risks.  Indisputably, the deceased was a third party.  In

terms of Section 146 of the Act, an owner of a motor vehicle must take out

an insurance in respect of a third party risk.  Section 147 of the Act provides

that a policy of insurance referred to in Section 146 thereof must be a policy

which satisfies the conditions under Clauses (a) and (b) of Sub-section (1)

thereof.  Sub-section (5) of Section 147 reads as under:

“(5)  Notwithstanding  anything  contained  in  any law for the time being in force, an insurer issuing a

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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 purports to cover in the case of that person or those classes of persons.”

12. Section 64 VB of the Insurance Act, 1938 merely provides that no

insurer shall assume any risk in India in respect of any insurance business

on which premium is not ordinarily payable outside India unless and until

the premium payable is received by him or is guaranteed to be paid by such

persons in such manner and within such time as may be prescribed or unless

and until deposit of such amount as may be prescribed, is made in advance

in the prescribed manner.

13. For  the  purpose  of  this  case,  we  would  assume that  an  insurance

policy, in law, could be issued from a future date.  A policy, however, which

is issued from a future date must be with the consent of the holder of the

policy.  The insurance company cannot issue a policy unilaterally from a

future date without  the consent  of the holder of a policy.  Even the said

circular letter had not been produced and/ or no material was placed as to

why the policy was issued from a later date.  It is, however, not necessary

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for us to delve deep into the matter in view of the limited notice issued by

this Court.  

14. Respondent No. 3, however, owner of the vehicle has not questioned

that part of the order passed by the High Court.  He, therefore, accepted the

judgment  of  the  High  Court.   Accordingly,  liability  to  pay the  awarded

amount by him is not in question.   

15. Keeping in view the peculiar facts and circumstances of the case and

in  particular  having  regard  to  the  fact  that  the  appellants  have  already

withdrawn the amount,  the interest  of  justice  would  be  subserved if  this

Court in exercise of its discretionary jurisdiction under Article 142 of the

Constitution  of  India  direct  the  insurance  company  not  to  recover  the

amount from the appellants herein, subject of course to its right of recovery

from the owner and the driver of the vehicle.   

16. The appeal is allowed to the aforementioned extent.  No costs.  

………………………….J. [S.B. Sinha]

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..…………………………J.     [P. Sathasivam]

New Delhi; April 15, 2009

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