An insurance company is liable to pay compensation to a bona fide transferee of an insured vehicle, even if the original owner of the vehicle obtained the insurance policy by misrepresentation.

R.D. Shukla, J.

1. This order shall dispose of M.A. Nos. 38 and 133 of 1992, Nos. 471 and 472 of 1991 as all the four appeals arise out of judgment and award dated 27.9.1991 of IVth Motor Accidents Claims Tribunal, Indore, passed in Claim Case Nos. 2 and 3 of 1987, whereby the claimant Haider Ali has been awarded a total compensation of Rs. 24,500/- for sustaining injuries in a motor accident on 13.7.1986 and Hussaini has been awarded a compensation of Rs. 10,500/- for sustaining injuries in the same accident.

2. The brief history of the case is that Haider Ali and Hussaini were travelling on a scooter. Haider Ali was driving it while Hussaini was a pillion rider. They met with an accident. Motor vehicle No. MBI 9212 was coming from opposite direction. The same was being driven rashly and negligently. It dashed against the scooter, and resulted in injuries to Haider Ali and Hussaini. Both of them filed separate claim petitions (Haider Ali filed Claim Case No. 2 of 1987 and Hussaini filed Claim Case No. 3 of 1987) for compensation. The learned Tribunal awarded compensation as above with a direction that the insurance company is not liable for making payments. The owner of the vehicle on the date of accident, i.e., Sunder Lai was directed to pay the compensation. Hence, these four appeals. Two appeals (M.A. Nos. 471 and 472 of 1991) have been filed by both the claimants with a prayer that the insurance company be directed to make payment of compensation on behalf of the insured (owner of the vehicle). M.A. Nos. 38 and 133 of 1992 have been filed by owner of the vehicle with the same relief.

3. The facts leading to controversy are as follows:

Earlier Jagdish Prasad Mukati was the owner of vehicle (Matador) No. MBI 9212 and the vehicle was earlier insured with the insurance company, i.e., respondent No. 3 herein. The same was renewed on 14.9.1985 as Jagdish had issued a cheque bearing No. 379123 of Rs. 1,539/- drawn on Cooperative Bank, Rau. The insurance company issued certificate of insurance on the basis of that cheque and covered the risk beginning from 14.9.85 to 13.9.1986. This vehicle was transferred to Sunder Lai on 22.2.1986. Sunder Lal, on the basis of certificate issued in favour of Jagdish Mukati, approached insurance company for issuance of transfer certificate of the policy. The same was done on an extra premium of Rs. 5/- and a certificate Exh. D/4 was issued whereby Sunder Lal Devi Lal Sahu was taken to be the insured and the date of expiry of insurance policy was accepted to be 13.9.1986. The cheque issued by Jagdish Prasad was dishonoured on 14.10.1985. The insurance company sent the information to Jagdish Prasad Mukati on 25.10.1985. It appears no evidence had been adduced as to whether the notice was served on Jagdish.

The insurance company again issued a notice to Jagdish Prasad Mukati on 28.11.1985 vide Exh. D/6 and disclaimed the insurance of the vehicle. Similar letters were issued to the present owner of the vehicle Sunder Lal on 26.9.1986 vide Exh. D/7 (after the accident). On the basis of above facts insurance company, inter alia, pleaded that they are not bound to make good the loss as insurance was obtained on misrepresentation of facts. Drawer of the cheque Jagdish Prasad Mukati had special knowledge about the fact of absence of credit in his favour with the Cooperative Bank and, therefore, the insurance was ineffective and void.

4. As against it the owner of the vehicle submitted that insurance company endorsed the transfer and issued a certificate in the name of the owner of the vehicle. The information as to non-payment was given after the accident and, therefore, the insurance company is bound to make good the loss.

5. The contention of the insurance company found favour before the learned Tribunal, who vide impugned judgment and award directed the owner of the vehicle to make payment of compensation. Hence, these appeals.

6. The contention of the learned Counsel for the appellant, i.e., owner of