Andhra Pradesh High Court – Amravati
P.V. Subba Rao vs Jagbir Singh on 24 March, 2026
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Date of reserved for Judgment :17.12.2025
Date of Pronouncement :24.03.2026
Date of uploading :25.03.2026
APHC010381162012
IN THE HIGH COURT OF ANDHRA PRADESH
AT AMARAVATI [3520]
(Special Original Jurisdiction)
TUESDAY, THE TWENTY FOURTH DAY OF MARCH
TWO THOUSAND AND TWENTY SIX
PRESENT
THE HONOURABLE SRI JUSTICE A. HARI HARANADHA SARMA
MOTOR ACCIDENT CIVIL MISCELLANEOUS APPEAL NO: 848/2012
Between:
1. P.V. SUBBA RAO, S/O RAMACHANDRA RAO DRIVER CUM OWNER
R/O D.NO. 4/748 RAJUPET, MACHILIPATNAM,
...APPELLANT
AND
1. YARRA LAKSHMI SURYAKANTHAM AND 2 OTHERS, W/O
LATETRISULAPANI MILK VENDOR R/O D.NO. 29/342, CHINTAGUNTA
PALEM, MACHILIPATNAM,
2. M/S SRI RAM TRANSPORT FINANCE COMPANY LIMITED, REP.BY ITS
BRANCH MANAGER, VIJAYAWADA -8, KRISHNA DISTRICT.
3. ICICI LOMBARD GENERAL INSURANCE COMPANY LIMITED, REP.BY
ITS BRANCH MANAGER, ICICI BANK TOWERS, BANDRA- KURLA
COMPLEX, MUMBAI - 400 051.
...RESPONDENT(S):
Appeal filed under Order 41 of CPC praying thet the Highcourt may be
pleased toset aside the order and decreetal order dated 22-9-2011 in MVOP.No.
210 of 2008 on the file of the MACT cum VI Addl. District Judge [FTC] Krishna
Machilipatnam and consequently allow the appeal by set asiding the decree
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IA NO: 1 OF 2012(MACMAMP 1974 OF 2012
Petition under Section 151 CPC praying that in the circumstances stated in
the affidavit filed in support of the petition, the High Court may be pleased
condone the delay of 25 days in resubmitting the above MACMASR.NO. 7319 of
2012
IA NO: 2 OF 2012(MACMAMP 1975 OF 2012
Petition under Section 151 CPC praying that in the circumstances stated in
the affidavit filed in support of the petition, the High Court may be pleased
dispense with the filing of Original Satutory Deposit Chalan in the above
MACMASR.NO. 7319 of 2012
Counsel for the Appellant:
1. NARASIMHA RAO GUDISEVA
Counsel for the Respondent(S):
1. SAI GANGADHAR CHAMARTY
2. GUDI SRINIVASU
3. MAHESWARA RAO KUNCHEAM
The Court made the following:
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THE HONOURABLE SRI JUSTICE A. HARI HARANADHA SARMA
M.A.C.M.A.No.848 of 2012
JUDGMENT:
Introductory:
1. Respondent No.1 in M.V.O.P.No.210 of 2008 on the file of the Chairman,
Motor Accidents Claims Tribunal-cum-VI Additional District Judge (F.T.C),
Krishna at Machilipatnam (for short “the learned MACT”), feeling aggrieved by
the order and decree dated 22.09.2011, filed the present appeal invoking Section
173 of the Motor Vehicles Act, 1988.
2. Respondent No.1 herein is the claimant. The learned MACT awarded a
compensation of Rs.60,000/- with interest at the rate of 7.5% per annum as
against a claim made for Rs.1,00,000/-, however, fixing the liability on the
appellant alone, who is the owner-cum-driver of the tractor bearing No.AP 16 S
9830 (for short “the offending vehicle”). Respondent No.2 is the financier and
Respondent No.3 is the Insurance Company with which the offending vehicle is
claimed to have been insured.
3. For the sake of convenience, the parties will be hereinafter referred to as
“the claimant” and “the respondents” as and how they are arrayed before the
learned MACT.
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Case of the claimant:
4. The claimant is aged „53‟ and was earning Rs.5,000/- per month as a milk
vendor. On the fateful day i.e. 29.02.2008 at about 11:30 A.M., when she was
standing near Ranga Statue at Goswami Poultry, opposite side to
Chintaguntapalem, Krishna District, for the purpose of attending a marriage
function, the offending vehicle came in a rash and negligent manner and dashed.
As a result, she fell down and sustained grievous injuries. She was shifted to the
hospital. On complaint, a case in Crime No.34 of 2008 registered. She suffered
injuries and disability incurred medical expenditure of Rs.20,000/- and she has
undergone operation. Hence, she is entitled for compensation of Rs.1,00,000/-.
All the respondents are liable.
Case of Respondent No.1:
5. The age, occupation and income of the claimant and the material
particulars of the accident are all incorrect. He is not the driver of the tractor at
the relevant time.
Case of Respondent No.2 / financier:
6. The petition is not maintainable against finance company and deserves
dismissal on the ground of misjoinder. There is no legal accountability for the
Respondent No.2 towards the claimant and that there is no cause of action
against Respondent No.2 / financier. Respondent No.1 applied for finance facility
from Respondent No.2 and on hypothecation and an entry in the C-book, the
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finance facility was made available. The financier has no control over crime
vehicle. The offending vehicle is insured with respondent No.3. Therefore,
Respondent No.2 is not liable for anything.
Case of Respondent No.3 / Insurance Company:
7. The age, occupation, income of the claimant, correct insurance and driving
licence particulars are not placed. The driver of the offending vehicle did not
possess a valid driving licence as on the date of the accident. The petitioner shall
prove the pleaded accident, negligence, injuries, effect of the injuries and
absence of her contributory negligence in occurrence of accident. The claim is
excessive.
Findings of the learned MACT:
8(i). The evidence of P.W.1, Ex.A1-FIR, Ex.A3-MVI report and Ex.A8-charge
sheet are sufficient to hold that the negligence of respondent No.1,owner-cum-
driver of the tractor, is the cause for the accident. Documents viz. Ex.A2-wound
certificate, Ex.A6-bunch of medical bills, Ex.A7-X-ray films and Exs.C1 and C2-
X-ray films and case sheet, along with the evidence of P.W.2 / Dr. C. Sai Prasad,
indicate the treatment taken by the claimant.
(ii). In the light of evidence, the claimant is entitled for Rs.20,000/- towards
fracture injury, Rs.4,000/- towards other simple injury, Rs.5,000/- towards pain
and suffering and Rs.20,800/- towards medical expenditure. Rs.1,200/- towards
6extra nourishment and transport and Rs.9,000/- towards loss of earnings for
three months. In all, the claimant is entitled for Rs.60,000/-.
(iii). The Insurance Company contended that the cover note is not issued by
the Respondent No.3/ Insurance Company and it is a fake one. Ex.B3 is the
proposal form of the insurance company in respect of Tractor-cum-Trailer
bearing No.AP 16 YS 4572 and AP 16Y 4500 in the name of one Sri. Venkata
Siva Rama Krishna Prasad Yenuga and the same is valid on 14.04.2008 to
13.04.2009. Ex.B4 is the office copy of cover note for Ex.B3, office copy of the
Proposal Form. Ex.B5 is the insurance policy which was issued based on
Exs.B3 and B4.
(iv). The Insurance Company got issued a legal notice dated 24.04.2011 under
Ex.B6 to Respondent No.1, calling upon him to furnish the driving licence and
insurance policy etc. but, there was no reply. As per the terms, respondent No.1,
owner of the tractor, is required to pay insurance and during verification, the
insurance cover note is found to be fake on comparison with Ex.B5 insurance
policy, which is covering the period from 14.04.2008 to 13.04.2009. Ex.B9 is the
photostat copy of Ex.B1 cover note given by Respondent No.1 to Respondent
No.2 at the time of taking the finance. Respondent No.1 as R.W.1 did not
examine any agent or concerned official of the Insurance Company to show that
Ex.B1 was issued by respondent Insurance Company.
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(v). Respondent No.1 failed to show the renewal from year to year as he failed to
prove insurance, he alone is liable.
Arguments in the appeal:
For the appellant / Respondent No.1 / owner of the offending vehicle:
9(i). The learned MACT failed to consider the case in the correct prospective
particularly the evidence of R.W.1.
(ii). The learned MACT erred in imposing liability on Respondent No.1
(appellant) alone and exonerating Respondent No.3 Insurance Company from
liability, when the Insurance Policy was in force from 11.02.2008 to 10.02.2009
covering the date of accident viz. 29.02.2008.
(iii). Without any positive proof, the learned MACT erroneously observed that
Ex.A5 is a fabricated document. Further, the evidence of Respondent No.1 that
Respondent No.2 collected Rs.10,500/- towards premium of Insurance Policy is
erroneously ignored, particularly when the cover note is placed.
(iv). The admissions of R.W.2 / the official of the Insurance Company are
erroneously ignored by the learned MACT and without any basis and an
erroneous finding is given that the cover note is fake.
For the Insurance Company:
10. The findings of the learned MACT are just and reasonable, based on the
evidence. Respondent No.1 (appellant) did not choose to place positive evidence
8proving the factum of insurance. The Insurance Company has discharged its
burden. Therefore the impugned order and decree are sustainable.
For the Finance Company:
11. It is for owner of the offending vehicle to obtain the insurance and for the
insurance company to pay compensation in the event of coverage, there is no
liability for the finance company.
For the claimant:
12. The claimant is the poor milk vendor, suffered accident, injuries and
disability. Hence, she is entitled for the compensation claimed and all the
respondents are liable to pay the compensation.
13. Heard both sides. Perused the record. Thoughtful and anxious
consideration is given to the arguments advanced by both sides.
Scope of the Appeal:
14(i). The contention of the Respondent No.1/owner in brief is that Ex.B1 cover
note was issued by Respondent No.2, financier, indicating that the vehicle was
insured with respondent No.3.
(ii). The contention of Respondent No.3/Insurance Company in brief is that
cover note Ex.B1 is fake. Therefore, the Insurance Company has no liability.
(iii). The contention of the claimant is that he is a third party. Respondent
No.1- the owner, Respondent No.2-financier and also Respondent No.3-
Insurance Company are all liable.
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15. Now the points that arise for determination in this appeal are:
1) Whether exoneration of Respondent Nos.2 and 3, the financier and
Insurance Company, from the liability by the learned MACT under the
impugned order and decree is proper?
2) Whether all the respondents before the learned MACT are liable to
pay compensation and if so, at what quantum?
3) What is the result of the appeal? Point No.1: Evidence and Analysis:
16(i). As per R.W.1, the owner of the offending vehicle, the vehicle was insured
with Respondent No.3 covering the period from 11.02.2008 to 10.02.2009 which
includes the date of accident. He was driving the tractor. He was charge-
sheeted. The criminal case was settled before the Lok Adalat. He purchased
the offending vehicle through finance from Respondent No.2. A copy of the
policy was given by Respondent No.2. He has denied suggestion that it was not
given by Respondent No.2 (financier). This is elicited during his cross
examination. Further, he has stated during cross-examination on behalf of the
claimant that respondent No.2 collected Rs.10,500/- towards the premium of the
insurance policy Ex.B1 and expenses and thereafter provided finance to him.
There was no further cross- examination on that by finance company.
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(ii). It is relevant to note that common cross-examination is done on behalf of
respondent Nos.2 and 3 together.
(iii). One G. Mala Kondaiah, the Assistant Bank Manager of the Finance
Company was examined as R.W.3. His evidence is that Respondent No.1
approached for finance and Rs.2,50,000/- was arranged as finance payable in
„36‟ instalments and a loan-cum-hypothecation agreement was executed on
15.02.2008 along with a guarantor, which is Ex.B8.
(iv). As per the terms of the agreement, vide Article 4, the borrower is liable to
pay the insurance amount for the loaned vehicle and that a comprehensive policy
shall be obtained and he has to show the same to the finance company. By the
time of Ex.B8-loan agreement, Ex.B9 dated 11.02.2008 cover note was
submitted by Respondent No.1 to Respondent No.2. After the agreement and
finance given by the company, an entry was made in the registration certificate
as to finance particulars. Ex.B10 is the registration certificate.
(v). During cross-examination on behalf of the Insurance Company, R.W.3,
witness for the finance company, stated that Ex.B8 belongs to the Machilipatnam
branch. At that time, finance company took the cover note
Ex.B9. He does not know whether Respondent No.1 owner of the offending
vehicle, approached for finance. By the time of Ex.B9, finance was not provided
to the owner of the vehicle. For the question, when there was no finance
provided to the owner of the vehicle by the time of Ex.B9, how the name of the
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finance company is mentioned in Ex.B9, there is no answer by R.W.3, but he has
simply stated to put the said question to the owner of the vehicle / borrower
(Respondent No.1). Respondent No.1 has clearly stated that the cover
note/policy was supplied by Respondent No.2 (i.e. the financier). Therefore
R.W.3‟s reply to ask Respondent No.1 can be considered as an answer in
disguise. If by the time of Ex.B9 finance was not provided, there can be no
question of mentioning the name of Respondent No.2 in Ex.B9 corresponding to
Ex.B1.
17. It is the case of Respondent No.2 that Ex.B9 was submitted by
Respondent No.1. Ex.B9 is the customer copy of cover note corresponding to
Ex.B1 cover note. The entries in Ex.B1 and Ex.B9 are the same and it is the
specific case of R.W.3 that Ex.B9 is the photostat copy of Ex.B1.
18. The argument of the finance company, Respondent No.2, is that Ex.B1 is
dated 11.02.2008 and Ex.B8 is dated 15.02.2008, therefore, the finance was
done only on 15.02.2008, by which time Ex.B1 was already obtained by the
borrower / owner of the offending vehicle. Whereas, the contention of
Respondent No.1, owner of the vehicle, is that Ex.B1 was supplied by the finance
company, Respondent No.2. The evidence shows the role of Respondent No.2 in
supplying Ex.B1 as claimed by Respondent No.1. It is interesting to note that
both are cover note and customer copy only. If Ex.B1 was not provided by
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Respondent No.2, there can be no occasion for mentioning the name of
Respondent No.2 finance company in Ex.B1.
19. It is the specific case of R.W.3 that pursuant to Ex.B9, Ex.B10 was
obtained containing / mentioning the name of the finance company (Respondent
No.2). Ex.B10 was got marked on behalf of the finance company (respondent
No.2) and the financier‟s name is mentioned i.e. Sriram Transport Finance
Company. As per Ex.B10, the agreement date is 18.02.2008, but Ex.B8
agreement contains the date is 15.02.2008. All these have happened much prior
to the date of accident.
20. In this context it is relevant to note that it is not in dispute that the Ex.B8 is
the loan-cum-hypothecation agreement in respect of the offending vehicle and
that there was finance. Article 4 of Ex.B8 deals with the insurance relating to the
vehicle which reads as follows:
ARTICLE 4
INSURANCE
4.1 (i) In order to safeguard the security for the Loan and to ensure
that the Lender’s lien is marked on the insurance, the Borrower(s) shall,
immediately after signing this Agreement, keep the Vehicle(s) insured.
under Comprehensive Insurance policy with an Instance Company
approved by the Lender, against any loss or damage by accident, theft, fire,
riots, civil, commotion, floods and unlimited Third Party liability risks during
operation of this Agreement and hereafter until repayment of all amounts
due to the Lender.
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(ii) Each Insurance Policy shall be in the name of the Borrower(s) with
the necessary endorsement in favour of the Lender as “Loss payee” and
additional endorsement in favour of the Lender’s Banker’s, if so required by
the Lender.
(iii) The Borrower(s) shall punctually pay all premia and other sums
required for keeping the said insurance effective until the repayment of all
amounts due, under this Agreement, to the Lender. The Borrower(s) shall
produce and deliver as and when required by the Lender any Insurance
policy, cover note or receipt of payment of premium for its inspection and
verification. If the Borrower(s) fails to so insure the vehicle(s) or to keep it so
insured, the lender, without prejudice to any of their rights in this Agreement
in consequence of the said failure, though not bound, may insure the
Vehicle(s) and keep it insured covering the comprehensive risks, at the
Borrower(s)’s cost. If the Lender pays the insurance premium or any other
sum for the insurance of the Vehicle(s) the Borrower(s) shall forthwith
reimburse the same to the Lender on demand and till such time shall be
liable to pay interest thereon at the rate set out in Schedule 1 for delayed
payment charges, and the said amount will be charged on the
Hypothecated Vehicle(s) till repayment. The Borrower(s) will comply with all
the directions of the Lender with respect to the insurance policy and its
renewal as stipulated from time to time.
(iv) The Borrower(s) shall not use the Vehicle(s) for any purpose not
permitted by the terms and conditions of the insurance policy and shall not
do or permit to be done any act or thing which might render the insurance
invalid.
(v) The Borrower(s) shall inform the Lender in writing, of any damage
to or theft of the Vehicle(s), lodging of any claim with the insurance
company in respect of the Vehicle(s), within three working days of such
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damage or lodgement of claim. The Borrower(s) at his/her/its cost and
without undue delay carry out repairs to the Vehicle(s) occasioned by any
accident and shall produce bills, receipts and any other document required
for the settlement of the Insurance claim by the Insurance Company.
(vi) The first claim or any insurance proceeds shall be that of the
Lender. The Lender shall at its sole discretion appropriate the insurance
claim proceeds. The Borrower(s) will be given the benefit of any insurance
claim only if there are no dues outstanding against the Borrower(a) under
this Agreement or any other Agreement with the Lender. In case of total
loss of theft of the Vehicle(s) if the amount received from the insurance
company is less than the amount due and payable by the Borrower(s) under
this Agreement, the Borrower(s) hereby undertakes to immediately pay to
the Lender the balance outstanding amount. However if the amount
received from the insurance company exceeds the amount due and payable
under this Agreement or any other Agreement of the Borrower(s) with the
Lender then the excess shall be refunded to the Borrower(s)
(vii) The Borrower(s) irrevocably authorises the Lender to act at the
Borrower(s) risk and cost and on the Borrower(s)’s behalf and take all
necessary steps, actions and proceedings and settle any claim as the
Lender may deem fit to safeguard its interest and receive the claim
proceeds of the insurance policy The Borrower(s) agrees that he will be
bound by any settlements the Lender may make with the insurance
company regarding any claim and that the Lender will in no way be
answerable to the Borrower(s) in respect of the said settlements.
21. A reading of Article 4(iii) indicates that the financier/lender is also
responsible to obtain insurance. Although the registered owner is under
obligation, in view of the involvement of the interest of the financier, a duty is
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undertaken by Respondent No.2, financier, to ensure that the vehicle is insured.
There is a clear assertion that the amount is also collected for obtaining the
policy. Insurance cover note Ex.B9, covering the period from 11.02.2008 to
10.02.2009, contains the name of Sri Ram Transport Finance Company also.
The financier (respondent No.2) claims that it was collected from respondent
No.1, owner of the offending vehicle but unable to place clear evidence.
22. The general legal proposition is that the owner has to obtain the insurance
policy vide Section 146 of the Motor Vehicles Act, 1988. In respect of hire
purchase, the person in possession of the article is presumed to be the owner of
the article. The expression “owner” contemplated under Section 146 of the Motor
Vehicles Act refers to the person in possession of the vehicle even in respect of a
hire purchase vehicle. For this legal position, reference can be had to the
findings of the three-Judge Bench of the Hon‟ble Apex Court in Central Bank of
India vs. Jagbir Singh1, vide para 8, which reads as follows:
8. A three-Judge Bench of this Court, in HDFC Bank Ltd. v. Reshma [(2015)
3 SCC 679 : (2015) 2 SCC (Civ) 379 : (2015) 2 SCC (Cri) 408 : AIR 2015 SC
290] , has further explained the law relating to liability of the creditor bank,
and it has been held that the liability of such bank to get the vehicle insured is
only till the vehicle comes out on the road. In other words, the creditor bank is
not liable to get renewed the insurance policy on behalf of the owner of the
vehicle from time to time. Paras 22, 23 and relevant part of para 24 of that
judgment are reproduced as under: (SCC pp. 693-94)1
(2015) 14 SCC 788
16“22. In the present case, as the facts have been unfurled, the
appellant Bank had financed the owner for purchase of the vehicle
and the owner had entered into a hypothecation agreement with the
Bank. The borrower had the initial obligation to insure the vehicle, but
without insurance he plied the vehicle on the road and the accident
took place. Had the vehicle been insured, the insurance company
would have been liable and not the owner. There is no cavil over the
fact that the vehicle was the subject of an agreement of
hypothecation and was in possession and control under the
Respondent 2. The High Court has proceeded both in the main
judgment as well as in the review that the financier steps into the
shoes of the owner. Reliance placed on Mohan Benefit (P)
Ltd. v. Kachraji Raymalji [(1997) 9 SCC 103 : 1997 SCC (Cri) 610] ,
in our considered opinion, was inappropriate because in the instant
case all the documents were filed by the Bank. In the said case, the
two-Judge Bench of this Court had doubted the relationship between
the appellant and the respondent therein from the hire-purchase
agreement. Be that as it may, the said case rested on its own facts.
The decision in Rajasthan SRTC v. Kailash Nath Kothari [Rajasthan
SRTC v. Kailash Nath Kothari, (1997) 7 SCC 481] , the Court
fastened the liability on the Corporation regard being had to the
definition of the „owner‟ who was in control and possession of the
vehicle. Similar to the effect is the judgment in National Insurance
Co. Ltd. v. Deepa Devi [(2008) 1 SCC 414 : (2008) 1 SCC (Civ) 270 :
(2008) 1 SCC (Cri) 209] . Be it stated, in the said case the Court
ruled that the State shall be liable to pay the amount of compensation
to the claimant and not the registered owner of the vehicle and the
insurance company. In Pushpa v. Shakuntala [(2011) 2 SCC 240 :
(2011) 1 SCC (Civ) 399 : (2011) 1 SCC (Cri) 682] , the learned
Judges distinguished the ratio in Deepa Devi [(2008) 1 SCC 414 :
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(2008) 1 SCC (Civ) 270 : (2008) 1 SCC (Cri) 209] on the ground that
it hinged on its special facts and fastened the liability on the insurer.
In U.P. SRTC v. Kulsum [(2011) 8 SCC 142 : (2011) 4 SCC (Civ) 66 :
(2011) 3 SCC (Cri) 376] , the principle stated in Kailash Nath
Kothari [Rajasthan SRTC v. Kailash Nath Kothari, (1997) 7 SCC 481]
was distinguished and taking note of the fact that at the relevant time,
the vehicle in question was insured with it and the policy was very
much in force and hence, the insurer was liable to indemnify the
owner.
23. On a careful analysis of the principles stated in the foregoing
cases, it is found that there is a common thread that the person in
possession of the vehicle under the hypothecation agreement has
been treated as the owner. Needless to emphasise, if the vehicle is
insured, the insurer is bound to indemnify unless there is violation of
the terms of the policy under which the insurer can seek exoneration.
24. In Purnya Kala Devi v. State of Assam [(2014) 14 SCC 142 :
(2015) 1 SCC (Civ) 251 : (2015) 1 SCC (Cri) 304] , a three-Judge
Bench has categorically held that the person in control and
possession of the vehicle under an agreement of hypothecation
should be construed as the owner and not alone the registered
owner and thereafter the Court has adverted to the legislative
intention, and ruled that the registered owner of the vehicle should
not be held liable if the vehicle is not in his possession and control.”
23. Here is a specific case where the policy is said to have been supplied by
the finance company. The finance company had an occasion to verify the entries
in Ex.B9 corresponding to Ex.B1 with the Insurance Company.
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24. In this context, it is relevant to note that the evidence of Insurance
Company also. R.W.2 is the witness on behalf of the Insurance Company. He
has stated that cover note bearing No.M.G.6996510, Ex.B1, is a fake one. In fact
the proposal with cover note No.M.G.6996510 was issued by the Insurance
Company for the Tractor-cum-Trailer bearing Nos.AP 16 YS 4572 and AP 16 Y
4500 in the name of one Venkata Siva Rama Krishna Prasad Yenuga, valid for
the period from 14.04.2008 to 13.04.2009, vide Ex.B3. Ex.B3 is the proposal
form. Ex.B4 is the office copy of cover note. Ex.B5 is the policy. Further, a legal
notice was also issued to respondent No.1 to produce the policy etc., for which
there is no response. It is interesting to note that the financier and owner of the
vehicle conducted common cross-examination on R.W.2, witness for Respondent
No.3 Insurance Company. It was elicited during cross-examination of R.W.2 that
several agents will be deputed for insurance business and agents collect
premium in the form of cash. The witness denied the suggestion that after
collecting the premium amounts, a customer copy of the cover note will be issued
on the spot and later the policy will be sent. Regarding the rubber stamp on
Ex.B1 as to I.C.I.C.I. Lombard General Insurance Company Ltd., the witness
denied that the same does not belong to the company. R.W.2 admitted that there
is no stamp on their office on the proposal form and cover note filed by them and
explained that there are office copies. He has denied the suggestion that the
owner or agents for the company gave Ex.B1. He has admitted that as per the
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dictates of the company, the order of the printout comes. It was specifically
suggested to R.W.2 that respondent No.3 Insurance Company has not field any
criminal case against Respondent No.1 for filing fake document Ex.B1. During
cross-examination on behalf of the claimant, R.W.2 admitted that he did not bring
the cover note book. MVI report Ex.A3 is indicating the information relating to the
vehicle that it is insured with Respondent No.3 Insurance Company. How and
why the name of Respondent No.2 is there on Ex.B1 corresponding to Ex.B9 by
11.02.2008, when the agreement was entered into on 15.02.2008 is not
explained by Respondent No.2. For the question whether Respondent No.2 has
a duty to explain, the answer shall be positive, as Respondent No.2 has acted
upon Ex.B9 and granted loan under Ex.B8 and also got its name entered in
Ex.B10, the registration certificate of the offending vehicle.
25. The events relating to, Ex.B1 corresponding to Ex.B9, Ex.B8 loan
agreement and Ex.B10 registration certificate occurred in quick succession within
one week i.e. from 11.02.2008 to 18.02.2008 ( Ex.B1 equivalent to Ex.B9 is
dated 11.02.2008, Ex.B8 is dated 15.02.2008 and Ex.B10 is dated 18.02.2008).
By virtue of Article 4 of the hire purchase agreement Ex.B8, the financier has a
specific duty to obtain the insurance policy and it is the clear and specific case of
Respondent No.1, owner of the offending vehicle, that the policy copy was
supplied by Respondent No.2, financier. The witness of the finance company
was cross-examined by the borrower(Respondent No.1) and insurer(Respondent
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No.3) together. The witness of the Insurance Company was cross-examined by
the owner(Respondent No.1) and financier(Respondent No.2) together. But
interestingly, the financier and insurer are throwing liability against each other.
26. Cross-examination on behalf of the Insurance Company is eliciting the
lapses on the part of the financier and the contradictions in the stand of the
financier. Cross-examination of the financier and insurance company is
espousing the lapses on the part of the Insurance Company. In one breath, both
are trying to throw the blame on each other and in the next breath, throwing
blame on the owner of the vehicle. The Insurance Company is trying to point out
defects in customer copy Ex.B1 and Ex.B9 and referring to the cover note
No.6996510 by referring to Ex.B3 proposal form and Ex.B4 cover note. The
Insurance Company claims that the cover note number relied on by respondent
No.1 (the owner of the offending vehicle) and pertains to a different vehicle and
different owner. But interestingly, Respondent No.3 Insurance Company does
not state anywhere that Ex.B1 corresponding to Ex.B9 does not pertain to the
said Insurance Company. It is relevant to note that cover note book is not placed
before the Court despite drawing the attention of the witness of the Insurance
Company.
27. The cover note book normally contains the customer copy and
corresponding office copy. Ex.B1 corresponding to Ex.B9 is the customer copy.
Ex.B4 is the office copy of Ex.B1. The numbers on Ex.B4 and Ex.B1 are same.
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Printed contents are also matching with each other. The contents filled are
different. What is the corresponding customer copy of Ex.B4 must be within the
knowledge of the Insurance Company alone. When the customer copy of Ex.B4
is not before the Court, it can be taken that Ex.B1 is the corresponding customer
copy of Ex.B4. When Ex.B1 and Ex.B4 pertain to the same Insurance Company,
how Ex.B1 went into the custody of either Respondent Nos.1 and 2 shall be
explained by the Insurance Company. There is no explanation. On the contrary,
it is elicited that the agents will go to customers and collect the premium of the
insurance policy in the form of cash. It was suggested to R.W.2 that after
collecting premium, cover notes will be issued on the spot. It is also relevant to
note that no criminal case is registered against Respondent No.1 for making a
false claim by the Insurance Company. Therefore the contention of Respondent
No.3-Insurance Company that Ex.B1 is fake cannot be believed.
Lapses on the part of the financier:
28(i). Not verifying the genuineness of Ex.B1 as to whether it is issued by
Respondent No.3.
(ii). Relying on Ex.B1/ Ex.B9 and proceeding with Ex.B8 and Ex.B10.
(iii). Not taking any action for the lapse on the part of Respondent No.1.
(iv). No further cross-examination, when it is elicited that premium for obtaining
the insurance policy was collected from the owner of the offending vehicle.
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Lapses on the part of the Insurance Company:
29(i). No criminal complaint is given against anyone, even after alleging that the
cover note is fake.
(ii). Original of the cover note corresponding to the office copy Ex.B4 is not
placed.
(iii). The person to whom original of the cover note corresponding to Ex.B4 was
issued is not examined to discharge its burden to show that the cover note
Ex.B1 does not belong to the Insurance Company.
(iv). The office copy Ex.B4 is a self-serving document coming from the custody
of the Insurance Company.
(v). The official entries in Ex.A3 MVI report indicate that the vehicle was
insured with Respondent No.3 under cover note No.6996510, including the
validity period. The date of Ex.B1 equivalent to Ex.B9 is 11.02.2008, whereas
date of Ex.B3 proposal form and the date mentioned on Ex.B4 office copy of
cover note is 14.04.2008.
(vi). It is relevant to note that the date of accident is 29.02.2008. Ex.B1
corresponding to Ex.B9 is prior to the accident. Ex.B3 and Ex.B4 are subsequent
to the date of accident.
(vii). It is also relevant to note that the legal notice issued by Respondent No.3
Insurance Company is dated 23.04.2011. Subsequent to 14.04.2008 i.e. the
dates mentioned in Ex.B3 and Ex.B4, but the legal notice Ex.B6 does not refer to
23the documents Ex.B3 to Ex.B5, which were very much available by the said date.
Therefore, the defence of the Insurance Company cannot be accepted.
30. The proceedings and enquiry in terms of the Motor Vehicles Act are
summary in nature. For want of the required material, except accepting the
possibility of Ex.B1 being true and binding on Respondent No.3 / Insurance
Company, a complete finding is not possible in the present proceedings, that too
at this appellate stage. It is clear that both Respondent Nos.2 and 3 engaged in
business pertaining to the motor vehicles, one is in financing and another is in
insuring the vehicles. They did not take proper care. Therefore, it is found that
there is no basis for totally exonerating Respondent Nos.2 and 3 from its liability
for the third party, particularly the claimant. Therefore, the findings of the learned
MACT that they are not liable is not convincing. Remedies for Respondent No.3
in the event of fraud by either Respondent No.1 or by Respondent No.2 or
agents of either the Insurance Company or the finance company, are elsewhere.
The Insurance Company may, in its wisdom, may prosecute the same.
31. In view of the discussion made above, point No.1 is answered in favour of
the appellant and against Respondent No.3, concluding that Respondent No.3 /
Insurance Company is also liable to pay compensation to the claimant / victim
and exoneration of Respondent No.3 from liability under the impugned order and
decree is not proper.
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Point No.2:
32. Respondent No.1 is the owner-cum-driver of the offending vehicle. Hence
liable to pay compensation. In view of Ex.B1 cover note and as Ex.B4 is
subsequent to the accident date 29.02.2008, further, as the legal notice got
issued by Respondent No.3/Insurance Company dated 23.04.2011 (Ex.B6) is
silent as to Ex.B3 and Ex.B4, the Respondent No.3 / Insurance Company is
liable to pay. However, Respondent No.3 is at liberty to recover the
compensation amount paid to the victim from Respondent Nos.1 and 2 if able to
show that Ex.B1 document is fake or fabricated in a properly instituted separate
legal proceedings. The point framed is answered accordingly.
33. Since there is no appeal by the claimant, this appeal is confined to the
aspect of liability alone.
Point No.3:
34. In the result, the appeal is allowed as follows:
(i). The order and decree dated 22.09.2011 passed by the learned
MACT in M.V.O.P.No.210 of 2008 to the extent of dismissing the petition
against Respondent Nos.2 and 3 are hereby set-aside.
(ii). Respondent Nos.1 and 3 before the learned MACT are jointly and
severally liable.
(iii). The compensation amount, if any, paid by Respondent No.1 shall be
reimbursed by Respondent No.3/Insurance Company to Respondent No.1.
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(iv). The compensation amount, if not paid to the claimant, the same
shall be paid by Respondent No.3 in terms of the directions of the learned
MACT under the impugned order and decree.
(v). On payment, Respondent No.3/Insurance Company, if so advised,
is at liberty to prosecute its remedies by way of separate legal
proceedings against Respondent Nos.1 and 2 or any other person
responsible / accountable.
(vi). There shall be no order as to costs in the appeal.
35. As a sequel, miscellaneous petitions, if any, pending in the appeal shall
stand closed.
____________________________
A. HARI HARANADHA SARMA, J
Date:24.03.2026
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HON’BLE SRI JUSTICE A. HARI HARANADHA SARMA
M.A.C.M.A.No.848 of 2012
24.03.2026
Knr