AI Structured Summary
Not yet generated for this judgment
Judgment
K. Chandru, J.—Heard both sides.
The Petitioner''s husband late Selvaraj, purchased a two wheeler (Bajaj M-80) with registration No. TN 74-W 2072. It originally belonged to
one L. Jose, who insured the vehicle with the Respondent Insurance Company under Policy No. 4544011/2008/10009. After purchase of the
vehicle, an application was made for transfer of ownership of the vehicle borrowed on 22.10.2007. The name transfer of the vehicle was made in
the R.C. Book on 24.10.2007 with effect from 22.10.2007.
On 01.06.2008, the vehicle met with an accident, as a result of which the Petitioner''s husband died. A case was registered in Crime No. 162 of
2008 for various offences under the IPC including Section 304-A IPC by the Arumanai Police Station, Kanyakumari District. The Petitioner''s
husband had a valid driving licence granted by RTO, Marthandam, dated 7.3.2008, which was valid till 24.12.2017. The vehicle was insured with
the Respondent Insurance company and the policy taken by the vehicle owner was valid from 18.10.2007 to 17.10.2008. Therefore, at the time
when the Petitioner''s husband met with an accident on 1.6.2008, the policy was very much in home.
As per the policy, it had premium of Rs. 50/- paid towards personal accident of the owner driver. Therefore, the Respondent insurance
company was liable to pay the insured amount towards the death of the Petitioner''s husband, who was the driver of the vehicle in terms of the
insurance policy taken for the vehicle. But, it is an admitted case that the Petitioner''s husband though got name transfer in the RC Book regarding
transfer of ownership, but did not ask for change of insurance policy. The Petitioner sent a representation, dated 01.12.2008 claiming insurance
amount towards personal accident coverage for the vehicle. But since the said amount was not paid, she had filed the present writ petition, seeking
for a direction to consider her representation.
When the matter came up on 18.04.2009, the Petitioner was directed to serve notice privately on the Respondent Insurance Company.
Accordingly, notice was issued to the Respondent Company and it is represented by its counsel. A counter affidavit, dated 9.9.2010 was also
filed. In the counter affidavit, it was stated that the insurance policy stood in the name of the previous owner of the vehicle. But, no application was
made in terms of Section 157 of the Motor Vehicles Act. As per the said provision, the transferee of the vehicle should apply within 14 days from
the date of transfer in a prescribed form to the insurer for making necessary changes with regard to the fact of transfer in the Certificate of the
insurance and the policy described in the certificate in his favour and the insurer should make necessary changes in the certificate and the policy of
the insurance in regard to the transfer of insurance. Even as per the Tariff General conditions GR 17, the transferee should apply within 14 days
from the date of transfer in writing under recorded delivery to the insurer who had insured the vehicle with all relevant details.
It is admitted that the policy was taken in the name of Jose for the period from 18.10.2007 to 17.10.2008 and the premium of Rs. 50/- was
paid for covering the risk of the owner of the vehicle. It is also admitted that there was name transfer in the RC Book on 22.10.2007. But no
intimation was given to the Insurance company within 14 days from the date of transfer of the vehicle. Since the accident had taken place after the
name transfer in the RC book, but which fact was not intimated to the insurance company and the policy was not transferred in the name of
Selvaraj, the insurance company repudiated the claim made by the Petitioner.
When asked as to how the writ petition is maintainable, Mr. S. Saji Bino, learned Counsel appearing for the Petitioner contended that the
Respondent insurance company is a wholly owned Government of India undertaking and hence it is amenable to the writ jurisdiction. He also
stated that the conditions stipulated in the insurance policy are statutory in character. Therefore, the same can be enforced in the writ jurisdiction
under Article 226 of the Constitution of India. In support of his contention, the learned Counsel placed reliance upon a judgment of the Supreme
Court in LIC of India and Another Vs. Consumer Education and Research center and Others, . He referred to the following passages found in
paragraphs 23 and 24 from the said judgment, which reads as follows:
Every action of the public authority or the person acting in public interest or any act that gives rise to public element, should be guided by
public interest. It is the exercise of the public power or action hedged with public element (sic that) becomes open to challenge. If it is shown that
the exercise of the power is arbitrary, unjust and unfair, it should be no answer for the State, its instrumentality, public authority or person whose
acts have the insignia of public element to say that their actions are in the field of private law and they are free to prescribe any conditions or
limitations in their actions as private citizens, simpliciter do in the field of private law. Its actions must be based on some rational and relevant
principles. It must not be guided by irrational or irrelevant considerations. Every administrative decision must be hedged by reasons. The
Administrative Law by Wade, 5th Edn. at p.513 in Chapter 16, Part IV dealing with remedies and liabilities, stated thus:
Until a short time ago anomalies used to be caused by the fact that the remedies employed in administrative law belong to two different families.
There is the family of ordinary private law remedies such as damages, injunction and declaration; and there is a special family of public law
remedies particularly certiorari, prohibition and mandamus, collectively known as the prerogative remedies. Within each family the various
remedies can be sought separately or together or in the alternative. But each family had its own distinct procedure.
At p.514 it was elaborated that ""this difficulty was removed in 1977 by the provision of a comprehensive, ''application for judicial review'', under
which remedies in both facilities became interchangeable"". At p.573 with the heading ""Application for Judicial Review"" in Chapter 17, it is stated
thus:
All the remedies mentioned are then made interchangeable by being made available ''as an alternative or in addition'' to any of them. In addition, the
court may award damages if they are claimed at the outset and if they could have been awarded in an ordinary action.
The distinction between private law and public law remedy is now settled by this Court in LIC v. Escorts Ltd. by a Constitution Bench thus: (SCC
p.344, para 102)
If the action of the State is related to contractual obligations or obligations arising out of the tort, the court may not ordinarily examine it unless the
action has some public law character attached to it. Broadly speaking, the court will examine actions of State if they pertain to the public law
domain and refrain from examining them if they pertain to the private law field. The difficulty will lie in demarcating the frontier between the public
law domain and the private law field. It is impossible to draw the line with precision and we do not want to attempt it. The question must be
decided in each case with reference to the particular action, the activity in which the State or the instrumentality of the State is engaged when
performing the action, the public law or private law character of the action and a host of other relevant circumstances.
In Dwarkadas Marfatia and Sons v. Board of Trustees of the Port of Bombay it was held that the Corporation must act in accordance with
certain constitutional conscience and whether they have so acted must be discernible from the conduct of such Corporations. Every activity of
public authority must be informed by reasons and guided by the public interest. All exercises of discretion or power by public authority must be
judged by that standard. In that case when the building owned by the port trust was exempted from the Rent Act, on terminating the tenancy for
development when possession was sought to be taken, it was challenged under Article 226 that the action of the port trust was arbitrary and no
public interest would be served by terminating the tenancy. In that context, this Court held that even in contractual relations the Court cannot ignore
that the public authority must have constitutional conscience so that any interpretation put up must be to avoid arbitrary action, lest the authority
would be permitted to flourish as imperium in imperio. Whatever be the activity of the public authority, it must meet the test of Article 14 and
judicial review strikes an arbitrary action.
It is not clear as to how the said judgment will be of any assistance to the Petitioner. In the very same judgment, it has been also held that it was
not enforcing any terms and conditions in the insurance policy, but only dealt with the eligibility condition which is not conforming with the
constitutional principle evolved in part IV and excluded the larger segment of public from the coverage. The following passages found in
paragraphs 47, 52 and 53 of the said judgment may be usefully extracted below:
It is, therefore, the settled law that if a contract or a clause in a contract is found unreasonable or unfair or irrational, one must look to the
relative bargaining power of the contracting parties. In dotted line contracts there would be no occasion for a weaker party to bargain or to assume
to have equal bargaining power. He has either to accept or leave the services or goods in terms of the dotted line contract. His option would be
either to accept the unreasonable or unfair terms or forego the service for ever. With a view to have the services of the goods, the party enters into
a contract with unreasonable or unfair terms contained therein and he would be left with no option but to sign the contract.
It is seen that the Respondents are not seeking any direction in their favour to call upon the Appellants to enter into a contractual relation of
term policy in Table 58. Their privilege and legitimate expectation to seek acceptance of policy of life insurance are their freedom. Instead they
sought for a declaration that the policy confining to only salaried class from Government, semi-Government or reputed commercial firms is
discriminatory offending Article 14. Denial thereof to larger segments violates their constitutional rights. We are of the considered view that they are
right. They are not seeking any mandamus to direct the Appellants to enter into contract of life insurance with them. The rest of the conditions, age,
etc., are valid and do not call for interference. The offending clause extending the benefit only to the salaried class in Government, semi-
Government and reputed firms is unconstitutional. Subject to compliance with other terms and conditions, the Appellant is free to enforce Table 58
policy with all eligible lives. The declaration given, therefore, is perfectly valid. The offending part is severable from the rest of the conditions.
We have, therefore, no hesitation to hold that in issuing a general life insurance policy of any type, public element is inherent in prescription of
terms and conditions therein. The Appellants or any person or authority in the field of insurance owe a public duty to evolve their policies subject to
such reasonable, just and fair terms and conditions accessible to all the segments of the society for insuring the lives of eligible persons. The
eligibility conditions must be conformable to the Preamble, Fundamental Rights and the Directive Principles of the Constitution. The term policy
under Table 58 is declared to be accessible and beneficial to the large segments of the Indian society. The rates of premium must also be
reasonable and accessible. Accordingly, we hold that the declaration given by the High Court is not vitiated by any manifest error of law warranting
interference. It may be made clear that with a view to make the policy viable and easily available to the general public, it may be open to the
Appellants to revise the premium in the light of the law declared in this judgment but it must not be arbitrary, unjust, excessive and oppressive. Both
the appeals are accordingly dismissed but in the circumstances parties are directed to bear their own costs.
With reference to non compliance of Section 157(2) of the Motor Vehicles Act, the Petitioner merely contended that the vehicle was
compulsorily insured and therefore, so long as the death had occurred to the owner of the vehicle, the company is bound to honour the claim made
by the legal heirs of the owner. She also stated that the Respondent company should not indulge in technicalities and they should really honour their
commitments.
The first submission made by the learned Counsel for the Petitioner, i.e. maintainability of writ petition under Article 226 of the Constitution of
India is really a doubtful proposition. The policy taken by the owner of the vehicle may contain several clauses over which there may be dispute
which requires factual foundation. In case there is repudiation of terms, the insurance company may also lead counter evidence in support of their
repudiation of claim. Such factual dispute cannot be gone into in the writ jurisdiction under Article 226 of the Constitution. It is not as if the
Petitioner has no remedy. She has remedy by way of civil suit or in alternative, before an appropriate consumer forum for the alleged deficiency in
service in not honouring the insurance claim. May be earlier the entire general insurance was made as State monopoly. But now that the general
insurance has been widely opened to private entrepreneurs including Multi National Companies whether similar contentions will still be available is
a doubtful proposition.
Assuming that there was no factual dispute and the court will have to decide the legal entitlement, in the present case, even as per the admission
of the Petitioner, the statutory requirement u/s 157 was not complied with, which dis-entitled the Petitioner from claiming such relief.
In this context, it is necessary to refer to the judgment of the Supreme Court in M/s. Complete Insulations (P) Ltd. Vs. New India Assurance
Company Ltd., . In paragraphs 9 and 10, the Supreme Court held as follows:
Section 157 appears in Chapter XI entitled ""Insurance of Motor Vehicles against Third Party Risks"" and comprises Sections 145 - 164. Section
145 defines certain expressions used in the various provisions of that chapter. The expression ""Certificate of Insurance"" means a certificate issued
by the authorised insurer u/s 147(3). ""Policy of Insurance"" includes a certificate of insurance. Section 146(1) posits that ""no person shall use,
except as a passenger, or cause or allow any other person to use, a motor vehicle in a public place, unless there is in force in relation to the use of
the vehicle by that person or that other person, as the case may be, a policy of insurance complying with the requirements of this chapter. Of
course this provision does not apply to vehicles owned by the Central or State Government and used for Government purposes not connected
with any commercial enterprise. This provision corresponds to Section 94 of the old Act. Section 147 provides that the policy of insurance to be
issued by the authorised insurer must insure the specified person or classes of persons against any liability incurred in respect of death of or bodily
injury to any person or damage to any property of a third party as well as against the death of or bodily injury caused to any passenger of a public
service vehicle caused by or arising out of the use of the vehicle in a public place. This provision is akin to Section 95 of the old Act. It will be seen
that the liability extends to damage to any property of a third party and not damage to the property of the owner of the vehicle, i.e., the insured.
Sub-section (2) stipulates the extent of liability and in the case of property of a third party the limit of liability is Rupees six thousand only. The
proviso to that sub-section (sic) continues the liability fixed under the policy for four months or till the date of its actual expiry, whichever is earlier.
Sub-section (3) next provides that the policy of insurance shall be of no effect unless and until the insurer has issued a certificate of insurance in the
prescribed form. The next important provision which we may notice is Section 156 which sets out the effect of the certificate of insurance. It says
that when the insurer issues the certificate of insurance, then even if the policy of insurance has not as yet been issued, the insurer shall, as between
himself and any other person except the insured, be deemed to have issued to the insured a policy of insurance conforming in all respects with the
description and particulars stated in the certificate. It is obvious on a plain reading of this provision that the legislature was anxious to protect third-
party interest. Then comes Section 157 which we have extracted earlier. This provision lays down that when the owner of the vehicle in relation
whereto a certificate of insurance is issued transfers to another person the ownership of the motor vehicle, the certificate of insurance together with
the policy described therein shall be deemed to have been transferred in favour of the new owner of the vehicle with effect from the date of
transfer. Sub-section (2) requires the transferee to apply within fourteen days from the date of transfer to the insurer for making necessary changes
in the certificate of insurance and the policy described therein in his favour. These are the relevant provisions of Chapter XI which have a bearing
on the question of insurer''s liability in the present case.
There can be no doubt that the said chapter provides for compulsory insurance of vehicles to cover third-party risks. Section 146 forbids the
use of a vehicle in a public place unless there is in force in relation to the use of that vehicle a policy of insurance complying with the requirements of
that chapter. Any breach of this provision may attract penal action. In the case of property, the coverage extends to property of a third party i.e. a
person other than the insured. This is clear from Section 147(1)(b)(i) which clearly refers to ""damage to any property of a third party"" and not
damage to the property of the ''insured'' himself. And the limit of liability fixed for damage to property of a third party is Rupees six thousand only
as pointed out earlier. That is why even the Claims Tribunal constituted u/s 165 is invested with jurisdiction to adjudicate upon claims for
compensation in respect of accidents involving death of or bodily injury to persons arising out of the use of motor vehicles, or damage to any
property of a third party so arising, or both. Here also it is restricted to damage to third-party property and not the property of the insured. Thus,
the entire Chapter XI of the new Act concerns third-party risks only. It is, therefore, obvious that insurance is compulsory only in respect of third-
party risks since Section 146 prohibits the use of a motor vehicle in a public place unless there is in relation thereto a policy of insurance complying
with the requirements of Chapter XI. Thus, the requirements of that chapter are in relation to third-party risks only and hence the fiction of Section
157 of the new Act must be limited thereto. The certificate of insurance to be issued in the prescribed form (See Form 51 prescribed under Rule
141 of the Central Motor Vehicles Rules, 1989) must, therefore, relate to third-party risks. Since the provisions under the new Act and the old
Act in this behalf are substantially the same in relation to liability in regard to third parties, the National Consumer Disputes Redressal Commission
was right in the view it took based on the decision in Kondaiah case because the transferee-insured could not be said to be a third party qua the
vehicle in question. It is only in respect of third-party risks that Section 157 of the new Act provides that the certificate of insurance together with
the policy of insurance described therein ""shall be deemed to have been transferred in favour of the person to whom the motor vehicle is
transferred"". If the policy of insurance covers other risks as well, e.g., damage caused to the vehicle of the insured himself, that would be a matter
falling outside Chapter XI of the new Act and in the realm of contract for which there must be an agreement between the insurer and the transferee,
the former undertaking to cover the risk or damage to the vehicle. In the present case since there was no such agreement and since the insurer had
not transferred the policy of insurance in relation thereto to the transferee, the insurer was not liable to make good the damage to the vehicle. The
view taken by the National Commission is therefore correct.
(Emphasis added)
In the light of the above, the contentions raised by the Petitioner cannot be countenanced by this Court. Hence the writ petition will stand
dismissed. No costs.