UNIQUE MOTOR AND INSURANCE COMPANY Vs. GNANAMBIGAI

JUDGEMENT

(1.) THIS appeal has been preferred by the Unique Motor and Insurance Company, the second respondent in the claim petition, O.P.No.15 of 1962, on the file of the Motor Accidents Claims Tribunal (District Judge), South Arcot, at Cuddalore, against the award of compensation in a sum of Rs. 5, 000 to the first respondent herein whose son died as a result of an accident caused by the lorry of the second respondent herein and which lorry has been insured with the appellant herein. As the award of compensation was directed to be paid both by the owner of the lorry and the insurance company, the insurance company has filed this appeal against that decision of the Tribunal below. The insurance company contend that they are entitled to avoid the policy, inasmuch as the policy had been obtained by the owner of the vehicle by the non-disclosure of a material fact. The policy extended to cover third party risk. The policy was renewed on August 29, 1960, for a period of one year, i.e., up to August 29, 1961. In the sample proposal form containing the questionnaire, there is a question, have you or your drivers ever been fined in connection with the use of the motor vehicle or had your licenses been endorsed. Now the appellants contend that the owner of the lorry has suppressed a material fact of the lorry driver, Abdul Khadir, having been convicted for rash and negligent driving in 1960, and which had been endorsed on his licence. The insurance company contend that it was only after enquiry that they came to know of this accident to the insured lorry and also of the driver being penalised in respect of his rash and negligent driving.

(2.) I have to consider whether the owner of the lorry was violated any condition of the policy, by reason of his concealment or non-disclosure of a material fact and whether there is an obligation on the part of the owner of the motor vehicle to make a full disclosure in a contract of motor insurance.The relevant provision of the Motor Vehicles Act, section 96(2)(c), is as follows: "......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." Now the appellants want to defend the action on the ground that the owner of the lorry had suppressed a material fact of their driver being convicted for rash and negligent driving and which fact had not been disclosed in the proposal form or at the time of the renewal of the policy. In Shawcross on the Law of Motor Insurance (second edition), at page 388, the learned authors say: "..........a contract of insurance is uberrimae fidei. It is one of those classes of contracts in which the utmost good faith is required of both parties during the making of the contract. The essential features of these contracts in which good faith is required are well known from the dicta in many authorities....." At page 445, the learned authors say that apart from the insertion of such a question as, "have you, or any person who to your knowledge will driver, been convicted of any offence during the past five years in connection with the driving of any motor vehicle ?" , in the proposal form, the proposer is bound to make full and accurate disclosure to the insurers of previous convictions registered against him in relation to the user of motor vehicles, and that failure to make full and accurate answer to this question, on part from it to disclose previous convictions, has been one of the grounds most frequently urged with success by insurers as entitling them to repudiate General Insurance Co. Ltd. 1934 49 L I.L.R.231, the proposer had failed to disclose certain previous convictions of his chaffeur of which he, as was found, had full knowledge, and the insurers on this, amongst other grounds, were held entitled to repudiate liability. The authors have also cited the case of Bond v. Commercial Assurance Co. 1930 36 L I.L.R.107. (at page 446 of the book), where the insurers successfully repudiated liability on the ground that the proposer had failed to disclose the previous motoring convictions of his son, who to the proposer's knowledge would drive the vehicle after the insurance had been effected. In MacGillivray on Insurance Law (fifth edition), volume I, the learned author says at page 423 (paragraph 870) in regard to motor car insurance that the applicant for motor car insurance ought to make full disclosure of any accidents in which he has been involved whether he was driving on his own account or on behalf of some other person. At page 418 (paragraph 856), certain general principles have been discussed citing the case, Carter v. Boehm 1766 3 Burr. 1905, 1909. That case was not a motor insurance case, but Lord Mansfield has stated the law generally as applicable to all classes of insurance. Lord Mansfield said: "Insurance is a contract of speculation. The special facts upon which the contingent chance is to be computed lie most commonly in the knowledge of the assured only; the underwriter trusts to his representation, and proceeds upon confidence that he does not keep back any circumstance, in his knowledge, to mislead the underwriter into a belief that the circumstance does not exist. The keeping back such circumstance is a fraud, and, therefore, the policy is void. Although the suppression should happen through a mistake, without any fraudulent intention, yet still the underwriter is deceived and the policy is void, because the risque run in really different from the risque understood and intended to be run at the time of the agreement....Good faith forbids either party, by concealing what he privately knows, to draw the other into a bargain from his ignorance of the fact, and his believing the contrary....."

(3.) THE result is the appeal is allowed and the original petition remanded to the Motor Accidents Claims Tribunal (District Judge), Cuddalore. THE parties will be at liberty to adduce evidence in the matter. THEre will be no order as to costs.