Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(AP) 9395

HIGH COURT OF ANDHRA PRADESH
A. Hari Haranadha Sarma, J
P.V. Subba Rao – Appellant
Versus
Yarra Lakshmi Suryakantham – Respondent
MOTOR ACCIDENT CIVIL MISCELLANEOUS APPEAL NO: 848/2012

Advocates:
For the Appellants/Petitioners: Narasimha Rao Gudiseva
For the Respondents: Sai Gangadhar Chamarty, Gudi Srinivasu, Maheswara Rao Kuncheam

An insurance company cannot evade third-party liability by alleging a document is fake without providing primary documentary evidence or initiating criminal proceedings, especially when the vehicle's financier and insurer failed to exercise due diligence in handling insurance documentation.

Headnote:(A) Motor Vehicles Act, 1988 - Sections 146 and 173 - Claim for compensation - Liability of financier and insurer - Dispute regarding validity of insurance cover note - Person in possession of vehicle under hypothecation agreement is treated as owner - Finance company has a duty to ensure vehicle is insured as part of security safeguards - Where insurer fails to provide original records or initiate criminal proceedings for alleged fabricated documents, the claim cannot be denied solely based on self-serving declarations of falsity. (Paras 16, 20, 22, 27)

(B) Appeals - Burden of proof - Evidence and findings - Appellate court should not overlook the failure of the insurer to examine relevant witnesses or produce original cover note records when claiming a document is fake - Insurer and financier cannot avoid liability by shifting blame entirely to the vehicle owner while failing to substantiate their own due diligence. (Paras 26, 27, 29, 30)

Facts of the case:
The claimant, a pedestrian, was injured by a tractor and initiated claim proceedings. The lower tribunal awarded compensation but held only the owner liable, exonerating the finance company and the insurance company, the latter claiming the insurance cover note produced was fake. The owner appealed the exoneration of the financier and the insurer.

Findings of Court:
Both the finance company and insurance company were involved in the process of insurance and financing. The court found that the evidence provided by the insurer was contradictory and failed to establish the fabrication of the insurance document, as the insurer failed to produce the relevant records or initiate legal action. As they were engaged in the business of financing and insuring, they failed to exercise due care, making them liable to indemnify the victim.

Issues: Whether the exoneration of the financier and the insurance company from liability by the lower tribunal was proper and whether the insurance company can escape liability by simply claiming a document is fake without providing cogent evidence.

Ratio Decidendi: The court held that in the case of hire-purchase agreements, while the borrower has the primary duty to insure, the lender is not absolved of responsible practices, especially when they act as the agent or facilitator for insurance. Furthermore, where an insurance company alleges fraud regarding a document but fails to produce primary records or initiate criminal prosecution, the court will not permit them to escape third-party liability based solely on unsubstantiated assertions of fraud.

Result: Appeal allowed. The order dismissing the claim against the insurer and financier is set aside. The owner and the insurer are held jointly and severally liable, with the insurer granted liberty to recover costs later through separate legal proceedings if they can prove fraud.

Table of Content
1. summary of the accident and initial compensation award. (Para 1 , 2 , 3 , 4)
2. defining the conflicting claims and defences of the parties. (Para 5 , 6 , 7)

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.

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 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 extra nourishment and transport and Rs.9,000/- towards loss of earnings for

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2026 Supreme(Online)(AP) 9395

HIGH COURT OF ANDHRA PRADESHA. Hari Haranadha Sarma, JP.V. Subba Rao – AppellantVersusYarra Lakshmi Suryakantham – RespondentMOTOR ACCIDENT CIVIL MISCELLANEOUS APPEAL NO: 848/2012

An insurance company cannot evade third-party liability by alleging a document is fake without providing primary documentary evidence or initiating criminal proceedings, especially when the vehicle's financier and insurer failed to exercise due diligence in handling insurance documentation.

Cases Referred (8)

HIGH COURT OF ANDHRA PRADESH
A. Hari Haranadha Sarma, J
P.V. Subba Rao – Appellant
Versus
Yarra Lakshmi Suryakantham – Respondent
MOTOR ACCIDENT CIVIL MISCELLANEOUS APPEAL NO: 848/2012