in a motor accident case , suppressing the accident on the day , the accident bus was insured and cover note was taken for laying claim. Their Lordships set aside the lower court award = It is established on record that the accident took place on 13.01.1995 at about 12:40 pm. The cover note Ex.RW1/A does not bear any time of issue. The cover note No.240327(Ex.RW1/D) was issued by RW2 prior to Ex.RW1/A. A perusal of Ex.RW1/D reveals that the same was issued at 12:45 pm. Thus, the cover note No.240329 (Ex.RW1/A) could be issued after cover note 240327 and 240328. It is, therefore, evident and as stated by RW2, the cover note Ex.RW1/A could not have been issued before 12:40 pm i.e. before the time of the accident. This is further supported from the fact that the premium amount in respect of the cover note Ex.RW1/A was deposited with the Insurance Company only on 16.01.1995. It is important to note that a written statement dated 02.03.1998 was filed by the Appellant before the Claims Tribunal on 23.03.1998. In para 2 of the preliminary objections, the Appellant stated as under: “II. That the answering respondent has no liability towards the subject claim because the Insured – Respondent No.2, Sanjay Kumar, obtained cover Note No.2403029 for offending vehicle DBP-906 effective for the period 13.1.95 to 12.1.96 (date of accident 13.1.95) by concealment and suppression of material facts re.the accident already occurred on the same day i.e. 13.1.95, of taking Policy. The Policy, so obtained, is therefore void-ab-initio.”FAO. No224/2002 Page 6 of 6 7. Although, the counsel for the Respondent No.8 was present before the Claims Tribunal on 23.03.1998, but the Respondent No.8 preferred not to contradict the averments made in the written statement filed by the Appellant. Rather thereafter, he preferred not to contest the proceedings and was ordered to be proceeded ex-parte. This shows Respondent No.8’s conduct. The Appellant Insurance Company, therefore, established that the cover note Ex.RW1/A was issued after the accident and thus this policy was void as the factum of accident was not disclosed by the Respondent no.8. The Appellant Insurance Company was, therefore, entitled to avoid the policy. It, however, having paid the amount is entitled to recover the same from Respondent No.8, owner of the bus No.DBP-906 involved in the accident. 8. The Appeal is accordingly allowed. It is directed that the Appellant Insurance Company shall be entitled to recover the amount of compensation paid along with interest without undertaking separate proceedings in execution of this very judgment. 9. The statutory amount of `25,000/- shall be refunded to the Appellant Insurance Company. 10. The Appeal is allowed in above terms.


FAO. No224/2002        Page 1 of 6
$~43
* IN  THE  HIGH  COURT  OF  DELHI  AT  NEW  DELHI
Date of decision: 1st May, 2012
+  FAO. No.224/2002
ORIENTAL INSURANCE CO. LTD.          ..... Appellant
Through: Mr.  Ram N. Sharma,  Advocate
Versus
SMT. ANARA DEVI & ORS.   ..... Respondents
Through: None
CORAM:
HON'BLE MR. JUSTICE G.P.MITTAL
J U D G M E N T
G. P. MITTAL, J. (ORAL)
1. The Appellant Oriental Insurance Co. Ltd. impugns a judgment
dated 11.02.2002 whereby a compensation of  `3,58,500/- was
awarded in favour of the Respondents No.1 to 6 for the death
of the deceased  Shitla Prasad Shukla who died in a motor
accident which occurred on 13.01.1995.
2. The ground of challenge is that the cover note Ex.RW1/A in
respect of the offending vehicle bus No.DBP-906 was
fraudulently obtained after the accident and the Insurance
Company had no liability to pay the compensation.
3. It is the admitted case of the parties that the cover note
Ex.RW1/A was issued on 13.09.1994 i.e. on the date of the FAO. No224/2002        Page 2 of 6
accident.  The amount of compensation was released to  the
Claimants by an order of this Court dated 26.04.2002 and
15.09.2003.   Thus, what is required to be seen in the instant
Appeal is whether the cover note was fraudulently  obtained
and if the Appellant Insurance Company is entitled to recovery
rights against the Respondent No.8, owner of the offending
vehicle.
4. A perusal of the Trial Court record reveals that the Respondent
No.8(Respondent No.2 before the Trial Court) initially
appeared through the counsel.  He was ordered to be proceeded
ex parte by an order dated 20.04.1998 and thereafter did not
appear and contest the proceedings.  Section 149 of the Motor
Vehicles Act lays down certain statutory defences.  Section 149
is extracted hereunder:
“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 sub-section (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 (1) of section 147
(being a liability covered by the terms of the
policy) [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 FAO. No224/2002        Page 3 of 6
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 of 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;……………
(a)……………..
(b) that the policy is void on the ground
that it was obtained y the non-disclosure of a
material fact or by a representation of fact
which was false in some material particular.”
5. It is urged by the learned counsel for the Appellant that in this
case the accident took place on 13.01.1995 at about 12:35 pm,
whereas the cover note was issued at about 5:00 pm.  The
Claims Tribunal discussed the testimony of RW2 Anil Kumar
Sethi in detail and disbelieving him held as under:
“30. RW2 Anil Kumar Sethi has stated that he
issued above referred cover note on 13.1.95 at 12.45
p.m. and during his subsequent testimony he
corrected himself by saying that aforesaid cover note
was issued by him at around 5 or 5.15 pm. after the
inspection of the offending vehicle it was parked FAO. No224/2002        Page 4 of 6
outside his office.  The aforesaid version of Anil
Kumar Sethi is firstly contradictory in respect of the
time of issue of cover note.  Otherwise also
aforesaid version is not believable  because perusal
of certified copy of the charge sheet pertaining to the
impugned accident would reveal that as per details
in this charge sheet the accident took place at around
12.40 p.m. on 13.1.95 and  the offending bus was
seized by the Investigation Officer  at the spot of
accident.  As per certified copy of the mechanical
inspection report of the offending bus and the
superdarinama of the bus  offending bus was
mechanically inspected on 15.1.95 and it was
released on superdari to Sanjay Kumar on 18.1.95
This imply that after the accident the offending bus
stopped at the spot of accident from where it was
seized and thereafter it remained in custody of the
police till 18.1.95  That being the case the offending
bus could not have reached the insurance office on
13.1.95 at around 5 or 5.15 p.m.   Therefore, the
version of RW-2 regarding the issue of cover note
pertaining to the offending bus  after  accident  after
the impugned accident is not reliable.  Perusal of the
cover note Ex.RW1/A would reveal that on this
cover note no time is mentioned.  Therefore, it
cannot be concluded that cover note Ex.RW1/A was
issued after the  impugned accident on 13.1.95.
Thus, under the circumstances, I am of the view that
respondent No.3 has failed to establish that cover
note was obtained by the insured Sanjay Kumar
after the accident by concealment of fact.  Thus,
respondent no.3 being the insurer of the offending
vehicle, in my opinion, is also under contractual as
well as statutory obligation to compensate the
petitioners.  In view of my discussion above, I am of
the opinion, that all the three respondents are jointly
and severally liable to pay the award amount to the
petitioners.”FAO. No224/2002        Page 5 of 6
6. It is established on record that the accident took place on
13.01.1995 at about 12:40 pm.  The cover note  Ex.RW1/A
does not bear any time of issue.  The cover note
No.240327(Ex.RW1/D) was issued by RW2 prior to
Ex.RW1/A.  A perusal of Ex.RW1/D reveals that the same was
issued at 12:45 pm.  Thus, the cover note  No.240329
(Ex.RW1/A) could  be issued after cover note 240327 and
240328.  It is, therefore, evident and as stated by RW2, the
cover note Ex.RW1/A could not have been issued before 12:40
pm i.e. before the time of the accident.   This is further
supported from the fact that the premium amount in respect of
the cover note Ex.RW1/A was deposited with the Insurance
Company only on 16.01.1995.   It is important to note that a
written statement dated 02.03.1998 was filed by the Appellant
before the Claims Tribunal on 23.03.1998.  In para 2 of the
preliminary objections, the Appellant stated as under:
“II. That the answering respondent has no liability
towards the subject claim because the Insured  –
Respondent No.2, Sanjay Kumar, obtained cover
Note No.2403029 for offending vehicle DBP-906
effective for the period 13.1.95 to 12.1.96 (date of
accident 13.1.95) by concealment and suppression
of material facts re.the accident already occurred on
the same day i.e. 13.1.95, of taking Policy.  The
Policy, so obtained, is therefore void-ab-initio.”FAO. No224/2002        Page 6 of 6
7. Although, the counsel for the Respondent No.8 was present
before the Claims Tribunal on 23.03.1998, but the Respondent
No.8 preferred not to contradict the averments made in the
written statement filed by the Appellant. Rather thereafter, he
preferred not to contest the proceedings and was ordered to be
proceeded ex-parte.  This shows Respondent No.8’s conduct.
The Appellant Insurance Company, therefore,  established that
the  cover note Ex.RW1/A was issued after the accident and
thus this policy was void as the factum of accident was not
disclosed by the Respondent no.8.  The Appellant Insurance
Company was, therefore, entitled to avoid the policy.  It,
however, having paid the amount is entitled to recover the
same from Respondent No.8, owner of the bus No.DBP-906
involved in the accident.
8. The Appeal is accordingly allowed.  It is directed that the
Appellant Insurance Company shall be entitled to recover the
amount of compensation paid along with interest without
undertaking separate proceedings in execution of this very
judgment.
9. The statutory amount  of  `25,000/- shall be refunded to the
Appellant Insurance Company.
10. The Appeal is allowed in above terms.
(G.P. MITTAL)
JUDGE
MAY 01, 2012
pst

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