Motor Vehicles Act | Cover Note Issued U/S 145 Constitutes Valid 'Certificate Of Insurance' To Establish Insurance Liability: J&K High Court

While overturning a Tribunal's decision and holding the insurer liable to pay compensation for an accident that occurred within the policy's coverage period a bench of Justice M. A Chowdhary explained that a 'Certificate of Insurance' includes a Cover Note meeting the prescribed requirements and if multiple certificates are issued for a policy or a copy of a certificate is provided, all such certificates or copies are collectively considered part of the 'Certificate of Insurance.'

Background Of The Case:

The court was hearing an appeal arising from a vehicular accident involving a motorcycle driven by the appellant, Shafqat Wani, which caused serious injuries to a minor boy, Shahzad Ahmed Malik. The boy's father filed a compensation claim under Section 166 of the MVA.

The Motor Accident Claims Tribunal (MACT) awarded compensation of ₹3,20,000 to the injured boy along with interest. However, the Tribunal held that the insurance policy issued by Universal Sompo General Insurance Co. Ltd. became effective from September 17, 2012, a day after the accident, and thus, the insurer was not liable. Consequently, the liability was imposed on the appellant-owner, prompting him to challenge the award before the High Court.

The appellant contended that the vehicle was insured on September 15, 2012, when the insurer issued a Cover Note confirming receipt of the premium and the commencement of the insurance from 10:10 AM on that day. The appellant argued that since the accident occurred on September 16, 2012, within the period covered by the insurance, the insurer should bear the liability for compensation.

The appellant asserted that the Tribunal erred in relying solely on the formal insurance policy, which recorded the coverage period as beginning from September 17, 2012. He contended that the Cover Note, being a valid proof of insurance under the law, made the insurer liable.

Court Observations:

The Court examined the core issue as to whether the Cover Note issued on September 15, 2012, constituted valid insurance coverage for the accident on the following day. Justice Chowdhary analyzed Section 145(b) of the MVA, which defines a 'Certificate of Insurance' and observed,

“Section 145(b) of the Motor Vehicles Act 1988 prescribes that 'Certificate of Insurance' means a certificate and includes a Cover Note complying with such requirement as may be prescribed, and where more than one certificate has been issued in connection with a policy, or where a copy of a certificate has been issued, all those certificates or that copy, as the case may be, are included in the 'Certificate of Insurance.'”

The court emphasized that the Cover Note issued by the insurer was a binding contract between the insured and the insurer. It stated,

"The respondent-insurer has not clearly denied having issued the Cover Note on 15.09.2012, therefore, the Cover Note for all practical purposes is a contract between the insured and the insurer. In this view of the matter, the insurer is liable to pay compensation having received premium."

The court found it perplexing that the policy recorded a start date of September 17, 2012, despite the issuance of a Cover Note two days earlier. It thus held that the Tribunal's decision to disregard the Cover Note and fix liability on the appellant as erroneous.

“.. impugned award is ordered to be modified to the extent that the compensation shall be paid by the insurer/respondent No. 2 – Universal Sompo General Insurance Co. Ltd., instead of the owner-cum-driver of the offending vehicle (insured-appellant herein). The other terms and conditions of the award are directed to be maintained”, the court concluded.

Case Title: Shafqat Wani Vs Universal Sompo General Insurance Co. Ltd.

Citation: 2024 LiveLaw (JKL) 284

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