By NNN-PTI,
New Delhi : A motor insurance company cannot deny compensation to the legal heirs of a vehicle owner merely because the death of the original policy taker was not disclosed to the firm, the Supreme Court has ruled.
A bench of Justices S B Sinha and Cyriac Joseph has held that the insurance company cannot on the one hand keep accepting premium amounts from the insured party and then repudiate a claim on the ground that the death of the original policy taker was not disclosed.
“If despite knowledge of the fact that Atma Ram Sharma had died in the year 1991, the insurance company, with its eyes wide open, had been accepting the amount of the premium every year from the widow of the said Late Atma Ram Sharma or from the bank, in our opinion, a contract by necessary implication had come into being,” the bench observed.
In this case Atma Ram, a truck owner, who had hypothecated the vehicle to a bank died in 1991. The said vehicle was insured with the United India Insurance Company Limited.
Though Atma Ram had died, renewal of the insurance policy was done every year by the bank on his name as the vehicle was being used by his legal heirs who did not take steps for transferring the ownership registration.
On September 15, 1994 the vehicle’s driver Chatter Singh who was driving the vehicle died in an accident and the Commissioner Workmen’s Compensation directed the insurance company to pay a compensation of Rs 1.42 lakh to the deceased’s family.