The National Insurance Co Ltd vs Kum Martina on 8 June, 2009

[Cites 4, Cited by 4]

Karnataka High Court

The National Insurance Co Ltd vs Kum Martina on 8 June, 2009

Bench: A.N.Venugopala Gowda

THIS MFA IS FILED ureoee SECTION 1?3(i)to%lit..l4${ll»ee.:l'~
ACT AGAINST we zuosmem AND AWA_R_[X.UATE£':  
3o.o9.2oo5 msseo 2:4 we N0. }.4_l_.8..2.,,/260:1 €)l*i--lT'§+lE"'FIl-E A

or 'me XIV ADDL. JUDGE, COURT 0? SMALL-;'cAtusE.S"&

MEMBER, MACT, METRoPomANl'l.A AREA, tt'BA9§GAL£lRET1vt.j
(SCCH-14), AWARDENG COMPE¥\iSAT§Dlli..0F RS:..2£3,'0G¥}/"-w

wim cos'? AND SIMPLE tmeaﬁsfr A"r*a% .P.A. FR_0vM..."FHE
DATE 0:: PETITION TILL "me DAT; "OF REAL1smIolt_.

"ms appeal having b_:-eer_2"  r;.~;$.'e;-yea, lathe Court
delivered the following:  _ -.    

1"  Vuﬁ_¥e:l' a claim petition
lmer sga¢tionfQ1i56 ﬁoflf"the.§'ndiaAri_"'MoVtor Vehicles Act, 1988
(for shottfthe :flac:tV')'t'l.":'1_e« Accident Claims Tribunal,

Metropo_l%tarl"Ateiva, Baogeicte (for short Tribunal') against

'"~tl}e  .>_£tespon<:lVe"n*----".':nsured and the Appeilant/Insurer,

V'--wc'la~éhjtng"conipensation for the loss caused, on account of

theAi'hjtz:'ie§'..<ét3_.<étEalned by her, due to the actionable wrorzg

 7:31 the ~._r;ei:t of the insured, in driving his motor vehicle -

"~Ca:rf'l"t=_earlng No.§(A-~02«~P/0993 on 26.8.2003. The

 .___"'l'."ot&ne;o'Insured, did not appear and was pieced ex-parte by

  Tribunal. The Appellant/Insurer, contested the claim

petition. In its statement of objectionskto the claim



petition, the insurer stated that, it had issued__aiV.:A.n'eiiey~-- .

favour of the 2"" Respondent, insuring the seid'are;-1i'r:ieV'_'f9r.t. "

the period 22.3.2003 to 21.3.2oc4.'is4«H¢weve'r,ith§ 'r#:hVeVVV-\q~.{".'é>"v.:

issued by the insured towardsthe premiiurn ivtiviiirespecti of the poiicy was returned. dishg3e.r;h£i'}i'._e:':i--..,Lane' 'therefere the poiicy was cancelled anifhiiehncee_itj.§s n'et':_ii'eb.!e te indemnify the insured, in the*even§:'bf iibassed in the case, as there ifjcitifinsiirance subsisting betweenth.e_'ii:si;ir3e::;;_eyrstijlthie since the poiicy had stood ce.nceii'erjVVi'es'j'ei§'thegiete bf the accident. Based on the % pieadéiing' the Tribunai framed the _ feilowiifng issues} ~ _

1. ~wi1ei:vher the petitiener proves that she f-._sestaih,eci injury in the accident arising out of «i:_h.e 'tree of Motor Vehicie No.KA-O2-£9/0993 CAR V. .on~-.,20.8.20G3 at abeui: 2.80 ;:>.m.?

,2'-J2 _ .A'1-whether the eetitioner is entitied to get the compensatieri? If yes, haw much 8: from whom?

3. What order or award?

2. PW}. deposed rm behaif of the minor cieimant arid Ex. P5. to P10 were marked. on behalf efﬁxe insurer, /~

5. Keeping in View the contentions and main point for consideration 35:-

When a cheque issued by tf1~e'ihs*a:rec..*_ to, towards the premium amount .b«y"

drawee bank due to insufficiency f_unds fh.e_Aa<;¢7ount of the drawer, is the ineureﬁiiebfe' a situation to honour the contractvof insuiméc 2 "

6. "'=i:j;f:_e'...2}5?"V"v-lzkespendent and the Appe5ianvt',"é'nte§fed eh..i;r:sL:feﬁCehcontract on 22.3.2003 by insufing" ..Mar1.§:thij_~.{§tn.fii~-RA-02-P/0993. The insured gave r;heque'fotf"R.sV. j4,A2--._8s1'f¥KV (Ex.R-5) towards the premium "'~a_ne a Cover Note (Ex.R1), as SL149 ef the Act. The said cheque was returhed hank on 26.3.2993 with an endersemeat V:"--«___hfgnsufficiehhf balance' (Ex. R»-»6). The insurer informed the on 28.3.2003 {Ex.R-2) alaeut the dishoneur cf V..__""."premium cheque and the resuitant: <:an<:eBat¥cm of peiicy vﬂsihnce irzceptien. Ex.R~2 was sent by RPAD. The postal receipt and acknewiedgement of insured are at Exs. R3 & and R4. The insurer notified the Ofﬁcer, Rajejihagar on 28.3.2003_,.(.Ex, R5-'7)""e,?3;von'tV V canceiiation of motor poiicy of veh.iAcle;i' and simultaneously, the insiir_eei_ was"-aVls:a_ r'even«este,d«V3 to immediately surrender the poAiVic§*jA"»fpi"vV_,_can.ce'ila:tien_.5 RW1 has ﬁled his affidavit e\ri'd*ence facts and he was not cross exem_ined..-"' of RW1 and Exs.R2 to As already noticed, award directed the insurer 'tie and recover the same from insured, biyVV.§lacing- the decision reported in ELR 1998;__;KAi2, 1';;?":3..,_V_V"'l--ien':ce, it shall be necessary to first cene'iider;'"'eri:ether, the said decision has application to the Af'acte'__c-f case. A reading of the saicnudgement _shnv$i:; t.51'a't-,it was rendered in a different factual heckgrousid. The material facts of the case therein were, a ,._ce$ie«r--Anote had been obtained by the ewner of the vehicle ':fon--i:3.3,1990 by issuing a cheque in fewer of Insurance A ' "Company. On the very day, the driver of the vehicle caused the accident, resulting in the deatliof the person, whose §ega¥ representatives filed the claim petition, was contested, by both the insured and the _ Tribunal ailewecl the claim in part and a.e...e,ie.are.::wesv,:"

passed, which was challenged in a:;i_pea;.l.4i;efere'_this'*ceii_rt,.ll' mainly on the ground that, on the deteef on 3.3.1990, the insured had lre,gea% :helc,m.e, which subsequently came to it could not be said that the the issue of poﬁcy and that came to be issued c'>"\_ie:r';i:he risk to fasten the liability lli'thér.e-uh§se7r,t.kas.'d,,t_i§gséMnst it. After m'ai<mg a reference tet'S.~64eis5.v"e_f i:he Insurance Act 1938 and the ._..,;i_ec£si_r}n the Ai?I'ei*:.*.b.le Supreme Court in the case of Veoriehtatl ':.r'::_sLi,re%ice Co. Ltd., V. Inderjit Kaur and others (JT me-.::%~m' sgzjfreo), it was held that, the Insurance '~{;ompe:isr"e:svs liable ta indemnify the third party in respect Aiethteiielbliity covered by the peiicy, since, the policy V' ___"7isst;ed remained in force without cancellation of the same bouncing of the cheque. Thus, it is clear that, the learned member ef Tribunal, has mechaq::ai¥y, without 10 N98 KAR 1776 and has thereby committed an err€i§""»ih fastening the Habiiity on the insurer.

8. In the case Inderjit Keur tﬁfrupra), _t!--é'e:rhéteifiéa."l'r 'V facts were that, premium was che§.h'e,:.V-Zwhlsghtwtwas later dishonoured and Hevbout it by the insurer, twp got invented in the accident; 'ciehfnsg heirs of the ctriver whe by the insurer on the otftthteyé Insurance Act 1938.

'{he contjzentiehtweV$:."»r§jet'a.§;§;a;g§tet1 in v¥ew of 5.1437 (5) and 149(1).cf thté'A§':t..V'.ThAe. sait! decision and the subsequent d.ecie5.eh the caee' 'of'NVew India Assurance Company Ltd., sec 195), were noticed by the Hen'bie Suer_eh1e v<Z.O'ti?{.t'h:;¥n the case of Natienai Insurance Company \!'.'*'v.v='.'e-'...'-zma Malhotra and others, ((2001) 3 SCC 151), "i?é_ize_rei'h, the point considereci was, "under a contract of ' K --.Wins£:rance, the insured gave the cheque to the insurer tftowards the first premium amount but the cheque was disbcmaured by the drawee bank due K: insufficiency of / .

11 funds. Is the insurer liable in such a situation to f2€i§{I_t)'£[f the contract of insurance?" The material facts ir}v"'th'eVV'.c'as§e___A' of Seema Malhotra (Supra) were that, the3%rrsi,i_.red"'a'ﬁdft_he::Va_at insurer entered inte an insurehce cohtract V21g:.'i.'%'."£A.,j1'.'3_93h insuring a Marathi car.' The gvfcheque towards the first instaiirae:1t_ the insurer issued a cover note. the car was cemilieteiy was caused can 31 . 12. 199;. 1t);fV.--ii.'.?iV§)_.:_1 sent an intimation to the inserer eras dishonoured. On 20.1.1994'v.t_i£1surantie.A":§_6i'ri§5a"hy inforrneci the business coar:e:jn"of the iristiréd ham: the canceliation of poiicy with effect. iegai heirs of the issued, ﬂied a 1<:ia:im__ terjivtiossuefazehicie, which was repudiated and there it _after"«.._they' .e7-wroached the State Consumer Protection wherein, the ciaim was rejected and the ittizzatte? was carried to the High court, which heid the Enséurer iiabie to hcmcur the ciaim. when the insurer ' echaiienged the said order in the Horfbie Supreme Ceurt, after making reference to 8. 2(9), 2401: 64-B-V ef the Insdrance Act 1933 and 3. 51,52 and 54 of the'4.IJ§d..i'_én_ Contract Act, while uphoiding the contentione"'eff-t:ifi'ér.-.:i_". 12

insurer, it was held as foiiows:--

"18.

ﬁgs. when the the grgmigm Q rerraiseg__1_,._:",A;_;;__ _r_;;_;}.{vhe:1 " ' tt;,_e___j::he§ue issued by tiim '_tg_m'rds»ti"the p__{_e__m¥um is returned disVi3p'tnoVurg§_;_¥9_}:;t;h_;e_i;§§'.i1k concerned mgs3j;,_:4rg;:ingJe"g;1:r»:$:"~»::;=;rférr:;'Vhi§,_gart cf the .;:oro£i§Jry is that the insured 1 c:ari.nV:,gt' from the insurer in of the Contract Ag: gn '*a4__§_qreé:g#_§ﬁt~ iﬁfaéde withogt gonsidergtioa is §ro.idd.*"'SeE:t§dn 55 of the Contract Act says Ati'Iat Wi"iéi3 a contract becomes void any _ '_vp:"erson who has received any advantage such contract is bound ts restore it to ' .vtA.i'%he parser: from whom he received it. So,

23. even if the insurer has disbursed the amount covered by the poiicy ts the insured before the cheque was returned dishonoured, the insurer is entitied to get the meney back. if mmg insured mggga up the p_rgga_i_;_im ggrmgn after the chegge was disaongurg tag; pgfore the date of acc_i_§¥,g_I_1§ t

-r'.' ./ HGWEVEI} 13 it wggid gene diffe___r;;__-.3nt cese ' 4_ consideration can be tggeted it ogger in which the change gt reguired it. As sock arieiienxt didihot».ha;5peit"

in this case, ti:e_j"'~...;nsei'an_ce._C-ozn.;§a--nyis iegaiiy justified oéiy the amount ci'e_i_no.ed r_+:%§$!>nC¥en1i§.''; ' V (Evin§7heeis.A'soppiied by roe)

9. In theioese of" (.¢3u.E;.§r»e) the material facts were,:_. 5Ieg.peii:ent"s_ d'aifightei'; who sustained injuries was "e::;:ioe§nt, succumbed due to injuries end. the e;ipe1iaiht»f:i¥'e.d'c¥aim petition uneer section 3.66 of the'.*<Act,v though admitted that the offendtnivgi'~vehiéie~._.Vi.i§asA:insured by" the owner, but the .i>eeue;:i'*~-therefor having been dishonoured, poiicy s?ée.s"'--cencei_iv_ec¥'V~:aiéd thus was not iiebie therefor. The V .VTribe"nai eiiosiied the claim petition hoiding that the insurer si_i4a%3iVe* to pay award amount despite canceiiatioh of the 'ccowntract of insurance. when the insurer chaiienged the T award in this Court, the Appeai was eiiowed, which was i it cheiienged by the claimant, in the Hon'bimS-upreroe Court 14 by placing reliance on the eecisions in Inderji*t':_f'Ka_uif M Seema iviaihotra (Supra). Noticing'"th'e.tiri.disaiiitVad V that, the policy issued was to Vremain iraiiia fi6r'_..Athe 1730.199? to 16.10.1998 "aii;'ciit»thei' igneqVt¥ieii"{t§wa'ras premium was issues an.» ...'.LV.5.1i&11i.;1'i§AA."3i__?v".:"wt-iicn 'izvas 'returned by the bank on 21.10i'i§'S3'7,"'utiiél iganceiled the policy of insure;i,f§vh_ich;:'i'nt§r_reation'_:was 'carzimunicated to the insured ...._;;tincairnVi:iti"VVand the accieent having communication of canceilatiitm "noticing the question that arose far cEmsiderat_¥o'i*'i haiiiiing been left open in Znderjit §<aurf_~ aricl"--thve___fact that the identical question was hadracideci cf Seema Maihotra (Supra), it was held as foiiméiisi - V ' Z ''.'§4. we are not obiivioiis of the distinction " between the statutery liability of the insurance company via-is-vis a third party in the context of Sectiens 147 and 149 of the Act anti its iiabiiitiw in ether cases. But the same liabilities arising under a contract of insurance wauid have to be met if the K 15 contract is vaiici. If the contract of .13....

has been caiigelied and aii coric€ii::i_i_€_e.¢,;L been intimated thereegget, v§:'e"'§--e'fi th "1 'F' opinion. the insurance €o__i'ripgn ﬁx i&ie.iii~§. not-.'b~ei"' iiahie to satisfy tiie't:!aim."v- V _ V .. stiimiieii bysme)

10. The insured oi5tei'n~ee--tifijg:.'e'e't?.er',Afi'ite as at Ex.R1 by entering into eii _insateiieeZ';ce'iiit.ifa_et.Vvsiiitii'tiie insurer on 22.3.2003. :__ i:s_sLi._edf.'vv'teV§~ééVids premium of Rs.4281[<~. dishonoured by the bank C:C!:'§]ACei'iié€Vi;"Viisifiiithbi'I'EihEé'Jidé¥it from the endorsement dated 26.3';2:OCi3 VCif_ "¥:ije= as at Ex.R6. The insurer imme.giAiete.!y inférnied the insured i.e., on 28.3.2608 vide ﬁx: dishonour of the cheque and the resuitaiit <ﬁ.eriCeiViiaAiiie%i_~v_.,v_peiihe peiicy since inception. The said 3 it . intinietioiiwas sent by R¥3AB which is evident frem Exs.R3 "The insurer notiﬁed the concerned Regioriai '.'_'i'~_Tr:§Vii'sp'ert Authority on 28.3.2003 which is evicient from 32 Ex.R.7 wherein the caiiceiiation of Ex.R1 poiicy was made " i-(newn and siinuitaneousiy the irisureci was aise sent with a copy thereef, notifying him to immediatelyﬁsrrender the / ___16 peiicy for canceiiation. Thus the ¥nsu:'ance contract'_;%3:eien'gf one without consideration, is void in terms ﬂofvvthe' Contract Act and as a necessaryIlhtcoroﬂilesjg cannot have the coverage p.oii'cyV_ iierformance of indemni.t§"~%?Y Thievvcohtract of insurance was canceiled ee insured was duty notiﬁed the date of accident, Er: not be Iiabte to indemnify" dififererice in the facts, which is ap;2aré:nt',;-tfhthe case reported in ILR 1998 KAR 1V'7E'.%6,"we:3V$_ noticed by the teamed member of "'~the t}fi"bu5n.eE,..i_which'he--s"resu!ted in the erreneous decision .V.e_'gei§jst, me:aant.

"=11t..._"Aptﬁ\}ing the ratio of the decisions in the cases :o'f,. Seerrie swaﬁwetra and Deddappe (supra), I find that, the e._t:*iVbe~r;--eii has committed an error in directing the appeilant it ':'_""to----i:c3e;3esit the award amount and then recover. The ' "eppeilant, in the absence of a subsisting and a vaiid insurance contract, has no obiigation iLindemnify the /L. _ Ks;/;._ A 1?' insured. The award passed by the tribunai appeilant, without examining the faetua3A p:§éi'fiVoo.«'jveo'd.'§ir;e*-._ ' ﬂaw, being erroneous, is liable to be"'set1'esi£1e;T'~. In the resuit, I auow t'?i'ioéV:._"'a;3_pea'|",.__if¥~3ofaE;§aeV the appellant is concerned, cir9<v:'£mAV1vs'£ances of the case, I wouid diregﬁ be no order as to costs thro'u';ﬁj:o'ut. 2:

Re,c_;istryV.i%f:5'C§~1é:s;_eg;ted fthe amount in deposit to the a';}oe§¥ a¥1t.ﬁ7.ff... - Sal"

Judge

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Karnataka High Court