UNITED INDIA INSURANCE CO. LTD. versus SANTRO DEVI & ORS.

Citation: [2008] 16 S.C.R. 944 · Decided: 02-12-2008 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Dismissed

Judgment (excerpt)

[2008] 16 S.C.R. 944 
A 
UNITED INDIA INSURANCE CO. LTD. 
., r-
v. 
SANTRO DEVI & ORS. 
(Civil Appeal No. 7009 of 2008) 
B 
DECEMBER 2, 2008 
[S.B. · SINHA AND CYRIAC JOSEPH, JJ.] 
+ 
,J' 
Motor Vehicles Act, 1988 - Chapter XI - ss. 145, 146, 
147 and 149 - Payment of compensation - Liability of insurer 
c - Truck insured with appellant and hypothecated to a Bank -
Renewal of insurance done by Bank - Truck owner died - No 
,,,.. 
step taken either by Bank or by heirs of deceased owner to 
get registration of truck transferred in their names - Insurance 
policy continued to be renewed in name of deceased owner 
D - Three years later, truck met with accident in which the driver 
died - His legal heirs claimed compensation under the 
Workmen's Compensation Act against the widow of deceased 
t 
owner as also appellant - Appellant denied its liability 
~ 
contending that no contract could be made in favour of a dead 
E 
person and on date of the accident, no legal insurance policy 
was in force - Liability of to pay compensation - Held: 
Appellant is liable - When a certificate of insurance is issued, 
the insurer is bound to reimburse the owner- A valid contract 
cannot be said to be void, unless it was shown that in obtaining 
F 
the contract, a fraud had been practised - On facts, no case 
of fraud was made out - If despite knowledge of the fact that 
"f 
the original owner had died, appellant had been accepting 
premium every year from his widow or from the Bank, a 
contract by necessary implication, had come into being -
G 
Doctrine of 'acceptance sub silentio' was applicable -
Doctrines - Doctrine of 'acceptance sub silentio' - Workmen's 
Compensation Act, 1923 - ss.4 and 23. 
The truck in question was insured with appellant and 
hypothecated to a Nationalized Bank. 'A' was owner of 
H 
944 
-
, 
' 
UNITED INDIA INSURANCE CO. LTD. v. SANTRO DEVI 
945 
& ORS. 
the truck. Renewal of the contract of insurance, however, 
A 
used to be done by the Bank. 'A' died in 1991. Despite 
the death of 'A', no step was taken either by the Bank Ci>r 
by the heirs of 'A' to get the registration of the vehicle 
transferred in their names. The insurance policy 
continued to be renewed in the name of 'A'. In 1994, the 
B 
said vehicle met with accident while being driven by one 
'C', in which he died. 
The legal heirs and representatives of 'C' claimed 
compensation 
under 
s.4 
of 
the 
Workmen's 
Compensation Act, 1923 against the widow of 'A' as also 
C 
the appellant. Appellant denied its liability contending that 
no contract could be made in favour of a dead persorJ 
and on the date of the accident, no legal insurance policy 
was in force. 
The Commissioner, Workmen's Compensation held 
that since the truck was insured with appellant, it was 
liable to pay compensation. Appeal filed thereagainst was 
dismissed by the High Court. 
D 
The question which al'ose for consideration in the 
E 
present appeal is whether the contract of insurance 
having been entered into in 1994 in the name of 
deceased 'A', it was void ab initio and in that view of the 
matter, the appellant had no statutory or contractual 
liability to pay compensation. 
F 
Dismissing the appeal, the Court 
HELD: 1.1. The insurer could deny its liability on 
limited grounds as envisaged under sub-section (2) of ' 
s.149 of the Motor Vehicles Act, 1988. One of the grounds 
G 
which is available to the insurance company for denying 
its statutory liability is that the policy is void having been 
obtained by reason of~non-disclosure of a material fact 
or by a representation of fact which was false in some 
material particular. In the instant case, however, apart 
H 
946 
SUPREME COURT REPORTS 
[2008] 16 S.C.R. 
!-
A from raising a general and vague plea of fraud, no 
1-
particulars thereof had been disclosed. The contract of 
insurance was entered into by the Bank with the 
appellant. The premium was paid by the bank .. The 
contract of insurance might have been drawn in the name 
B of the deceased 'A' but no witness has been examined 
on behalf of the appellant alleging that they were not 
-+ 
aware thereabout. [Paras 11 and 12]- [953-C-E] 
'"' 
1.2. If the appellant had been renewing the insurance 
c policy on year to year basis on receipt of a heavy amount 
of premium with the knowledge that the owner of the 
/ 
vehicle has expired and the name of his legal heirs and 
. 
representatives had not been transferred in the 
registration book maintained by the authorities u

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