NATIONAL INSURANCE CO LTD Vs. RAJWINDER KAUR

JUDGEMENT

(1.) In all the three appeals the common point urged for consideration is that insurance company is not liable for the claim arising out of the accident in view of the fact that the proposal had been given and a cover note had been obtained on 13.10.2001 at 5 p.m., suppressing the fact that there had been an accident earlier on the same day at 3 p.m. and the said fact had not been revealed to the insurer. The Development Officer had been examined as RW 1 to testify the above facts of the actual issue of the cover note at 5 p.m. The time of the accident at 3 p.m. is itself not in dispute. What was sought to be brought out through evidence in the cross-examination by the counsel appearing for the driver and the owner was that the cover note stipulated the commencement of the policy at 00:00 hours on 13.10.2001 and, therefore, the policy must be effective to cover the risk that had arisen by an accident during the currency of the policy. Even apart from the evidence of RW 1, the Branch Manager himself was examined as RW 2 who also gave evidence to the effect that there was an investigation instituted and it had revealed that the accident had taken place at 3 p.m. and only subsequent thereto, the cover note had been issued. It is significant that the cross-examination was only to the effect that the cover note referred to the commencement of the risk from 00:00 hours on 13.10.2001 and the owner and the driver did not have the courage to suggest that the proposal itself had been made prior to the accident. Evidence of RW 1 was emphatic on three aspects: (1) the accident had taken place at 3 p.m., (2) the proposal of the cover note had come about subsequently at 5 p.m. and (3) at the time when the proposal for the policy was given or when cover note was issued, they had not been informed that an accident had already taken place with reference to the same vehicle. The suggestion was only with reference to one aspect of the case that the cover note had assumed the risk from 00:00 hours and not from 5 p.m. as spoken to by RW 1 and RW 2. This fact was taken by the Tribunal as completely governing the issue to make the insurer liable.

(2.) Even before me the same contention relating to the commencement of risk is advanced and the learned counsel appearing for the respondents would rely on the judgment of the Hon'ble Supreme Court in J. Kalaivani v. K. Sivashankar, 2002 ACJ 613. The Hon'ble Supreme Court had held that the liability of the insurance company would commence from the time when a specific mention of time is made and in the absence of such time the policy would become operative from previous midnight when bought. The principle of law is well taken and I have no difficulty in accepting the plea that normally the risk would commence from 00:00 hours if there had been no time stipulated in the policy. Another important aspect of the insurance law is that the contract of insurance is a contract of uberrima fidei (utmost good faith) and if there had been a suppression of material fact the policy would become vitiated. The Hon'ble Supreme Court in the above case had occasion to consider only one issue relating to commencement of risk and it had no occasion in that case to deal with the situation of suppression of material fact. That is precisely the issue in this case.

(3.) When evidence was given through two witnesses of the insurer that the owner had suppressed the fact of involvement of the vehicle in an accident even before the risk was undertaken by the insurance company, the owner avoided the witness-box to explain whether he had given such information or the policy and the proposal had been given and accepted by the insurer even before the accident. I have already pointed out that the owner did not even have the courage to put the suggestion that the cover note had been issued prior to the time of the accident itself or that it was issued to cover the risk from an anterior time, after having been apprised of the accident. The finding of the Tribunal has again merely taken into consideration as to when the risk would normally be undertaken when time is not stipulated in the cover note or the policy. The non-examination of the owner in this case assumes enormous significance and an adverse inference has to be drawn and if he had examined himself he would have had to admit that the cover note had been made only subsequent to the accident and the fact that accident itself was not disclosed to the insurer. The liability for the claims arising out of the accident shall under the circumstances fall on the shoulders of the owner of the vehicle only. The insurance company was justified in cancelling the policy and the insurance company shall stand exonerated in all the cases. The awards of the Tribunal casting the liability on the insurance company are set aside and the appeals by the insurer are allowed. If any amount has been deposited by the insurer at the time of preferring the appeal, it is needless to state that the insurer shall be permitted to withdraw the same.