Road Accident Victims Can't Be Left Remediless Due To Disputes Between Insurer And Insured: Gauhati High Court

The Gauhati High Court has reiterated that victims of road accidents should not be left without remedy merely because of disputes between the insured and the insurer, even while holding that the insurance company cannot be made liable where there was no valid policy covering the vehicle at the time of the accident.

Justice Yarenjungla Longkumer, observed, “the fact that there was no valid insurance policy covering the vehicle of respondent No.4 is a negative fact and the insurance company cannot be asked to prove a negative fact by leading evidence as held by a coordinate bench of this Court in MACApp.190/2014. The Court held that on the contrary the burden to establish the fact that the vehicle was insured is upon the claimant.”

“As a result this Court is of the view that at the time of the accident there was no valid insurance coverage in respect of the offending vehicle. No doubt the legislative intent behind the motor vehicles act is clear. The victims of road accident should not be left remediless merely because of dispute between the insured and the insurer,” Justice Longkumer added.

As per the facts recorded by the Court, the Motor Vehicle tribunal awarded compensation of Rs.12,77,00/- to the claimants on account of the death of the deceased in a motor vehicle accident and fastened the liability upon the appellant insurance company.

Thereafter, the claimants filed a Case seeking recovery of the awarded amount as the insurer did not deposit the same even after four months. The insurance company filed an affidavit objecting to the deposit on the ground that the date of accident was not covered by the alleged insurance policy. The Tribunal, however, dismissed the objection holding that the insurer ought to have proved the same during trial.

Before the High Court, the insurer contended that the policy was effective only from 27.01.2011 whereas the accident had occurred on 22.01.2011, and that the policy produced by the owner showing an earlier date was not genuine. Additional evidence was adduced to show that the policy relied upon during trial was a misrepresentation as to its validity.

The claimants, on the other hand, contended that the issue of fraud had not been raised before the Tribunal and that the insurer had failed to take steps such as lodging an FIR. They also argued that the insurer should be directed to satisfy the award and recover the amount from the owner and driver.

Upon consideration, the High Court found that the offending vehicle was not insured on the date of the accident and that the policy produced during trial was a case of misrepresentation. The Court while placing reliance on United India Insurance Company vs Rajendra Singh in (2000) 3 SCC 581, reiterated, “the appellants could not have resisted the claim before the Tribunal on the basis of the fake policy because the insurance company at that stage had no knowledge that the policy was fake. The law is settled that the issue of fraud can be raised at any stage of legal proceedings including appeal or revision because fraud vitiates everything. A judgment or decree obtained by fraud is a nullity.”

The Court observed, “by adducing additional evidence, the Appellant Insurer has been able to prove that the policy produced during the trial was a clear case of misrepresentation as far as the dates of validity are concerned. This was a fraudulent act on the part of the owner to change the dates.”

Accordingly, the Court modified the award and directed that the amount already withdrawn by the claimants shall not be recovered from them, and they would be at liberty to realise the remaining compensation from the owner of the offending vehicle in accordance with law.

Case Number: MACApp./84/2017

Case Name: The Oriental Insurance Company Ltd v. Smti Lakhi Das & Ors

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