BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 27/09/2010 CORAM THE HONOURABLE MR.JUSTICE K.CHANDRU W.P.(MD)NO.3283 of 2009 S.Selvi .. Petitioner Vs. The Branch Manager, The Oriental Insurance Company Ltd., D.D.J. Centre, 1st Floor, Opp. To Vadasery Bus stand, Nagercoil, Kanyakumari District. .. Respondent This writ petition has been preferred under Article 226 of the Constitution of India praying for the issue of a writ of mandamus to direct the respondent to consider the representation of the petitioner, dated 1.12.2008. !For Petitioner ... Mr.S.Saji Bino ^For Respondent ... Mr.K.Baskaran - - - - :ORDER
Heard both sides.
2.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.
3.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.
4.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.
5.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.
6.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.
7.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 v. Consumer
Education & Research Centre reported in (1995) 5 SCC 482. He referred to the
following passages found in paragraphs 23 and 24 from the said judgment, which
reads as follows:
23. 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.13 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.”
24. In Dwarkadas Marfatia & Sons v. Board of Trustees of the Port of Bombay14 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.
8.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:
47. 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.
52. 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.
53. 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.
9.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.
10.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.
11.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 under Section 157 was not complied
with, which dis-entitled the petitioner from claiming such relief.
12.In this context, it is necessary to refer to the judgment of the
Supreme Court in Complete Insulations (P) Ltd. v. New India Assurance Co. Ltd.
reported in (1996) 1 SCC 221. In paragraphs 9 and 10, the Supreme Court held as
follows:
9. Section 157 appears in Chapter XI entitled “Insurance of Motor Vehicles
against Third Party Risks” and comprises Sections 145 to 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 under Section 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 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.
10. 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 under Section 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 case1 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)”
13.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.
vvk
To
The Branch Manager,
The Oriental Insurance Company Ltd.,
D.D.J. Centre, 1st Floor,
Opp. To Vadasery Bus stand,
Nagercoil,
Kanyakumari District.