Chattisgarh High Court
Sbi General Insurance Company Liimited vs Smt. Shahin Khan on 18 September, 2025
Author: Parth Prateem Sahu
Bench: Parth Prateem Sahu
1
SYED
ROSHAN
ZAMIR
ALI
2025:CGHC:48385
Digitally
signed by NAFR
SYED
ROSHAN Order reserved on 1.8.2025
ZAMIR ALI
Order delivered on 18.9.2025
HIGH COURT OF CHHATTISGARH AT BILASPUR
MAC No. 1446 of 2019
1. SBI General Insurance Company Limited Through In Charge
Officer, SBI General Insurance Company Limited, Pachpedi,
Naka, Pujari Complex, Raipur, District Raipur, Chhattisgarh,
Through Its Senior Executive Litigation And T.P. (West) S.B.I.
General Insurance Company Ltd 2nd Floor Above Sbi Main
Branch New Market, T.T. Nagar, Bhoapl Madhya Pradesh.
... Appellant
versus
1. Smt. Shahin Khan W/o Late Aslam Khan Aged About 51
Years R/o Ward No. 13, Near Raza Maszid Mahasamund
District Mahasamund Chhattisgarh.
2. Ku. Aaisha Khan D/o Late Aslam Khan Aged About 15 Years
Minor Through Its Natural Gaurdian Mother Respondent No.1
Smt. Shahin Khan R/o Ward No. 13, Near Raza Maszid
Mahasamund District Mahasamund Chhattisgarh.
3. Ku. Bushra Khan D/o Late Aslam Khan Aged About 13 Years
Minor Through Its Natural Gaurdian Mother Respondent No.1
Smt. Shahin Khan R/o Ward No. 13, Near Raza Maszid
Mahasamund District Mahasamund Chhattisgarh.
4. Tikeshwar Sinha S/o Devsingh Sinha Aged About 27 Years
R/o Chhibarra, Police Station And Tahsil Pithaura, District
Mahasmund Chhattisgarh. (Driver),
2
5. Kanshiram Sharma S/o Late Shri Krishna Sharma Aged About
47 Years R/o Pithaura, Behind Police Colony, Tahsil Pithaura,
District Mahasamund Chhattisgarh. (Owner)
... Respondent(s)
For Appellant : Mr. Ghanshyam Patel, Advocate
For Respondent No.1 to 3 : Mr. Jameel Akhtar Lohani, Advocate
Hon'ble Shri Justice Parth Prateem Sahu
CAV Order
Per Parth Prateem Sahu,J
1. Appellant/Insurance Company has filed this appeal against the award dated 10.05.2019 passed by learned Motor Accident Claims Tribunal, Mahasamund (for short 'the Claims Tribunal') in Claim Case No.H-114//2017 questioning the direction issued by learned Claims Tribunal directing appellant Insurance Company to first pay the amount of compensation to claimants and then to recover it from the owner & driver of offending vehicle.
2. Facts of the case, in brief, are that on 21.07.2017, Mohammad Aslam Khan along with wife Shaheen Khan was going to Mahasamund on his motor cycle bearing registration No. CG.04-HP/6721. When they reached in front of Cheema Petrol Pump, near village-Ratakat turn, Police Station Aarang, non-applicant No.1, who was driver of vehicle bearing No.CG04-HY-2202 going ahead of motorcycle of Aslam Khan and driving the vehicle in high speed negligently, all of a sudden applied the brakes, as a result of which motorcycle of 3 Aslam Khan hit rear side of car. Aslam Khan and his wife sustained grievous injuries. Both were taken to government hospital where Aslam Khan was declared dead. Accident was reported to concerned police station based on which Crime No.325/2017 for commission of alleged offences under Sections 279, 337 & 304A of the Indian Penal Code was registered against respondent No.1.
3. Claimants No.1 to 3 herein, who are wife and daughters of the deceased, filed an application claiming compensation to the tune of Rs.58,00,000/- under various heads on the ground that on the date of accident, deceased was working as an Advocate, earning Rs.25,000/- per month and they were dependent on earning of deceased.
4. Learned counsel for appellant Insurance Company submits that learned Claims Tribunal has correctly held that upon presentation of cheque issued by non-applicant No.2, owner of offending vehicle, at the time of purchase of insurance policy, was dishonored for want of sufficient funds in bank account and information in this regard was duly sent to the owner of vehicle on the address as given in the insurance policy. He also pointed out that once learned Claims Tribunal arrived at a conclusion that the cheque issued at the time of purchase of policy got dishonored, therefore, insurance policy issued in favor of the vehicle owned by non-applicant No.2 4 was was cancelled. On the date of accident, there was no privity of contract between insured and insurer, therefore, appellant/ insurance company is having no liability to pay amount of compensation as directed by the Claims Tribunal.
5. Mr. Jameel Akhtar Lohani, Advocate for respondents No. 1 to 3 / claimants would submit that submission of learned counsel for appellant/ Insurance Company is not correct. Notice regarding dishonour of cheque and cancellation of Insurance Policy issued was not intimated to the owner of the vehicle in accordance with law. He submits that if for any reason, insurance policy is to be cancelled then it is the primary duty upon the insurer/ insurance company to intimate the said fact to the insurer enabling him to correct the mistake or to deposit the amount of premium against the purchase of the Insurance Policy. He next contended that he has filed cross objection seeking enhancement of the amount of compensation on the ground that learned Claims Tribunal has not assessed the income of the deceased correctly. Deceased was an advocate by profession and was practicing in Courts at Mahasamund, Gariyaband, Arang and Raipur, therefore, looking to the age of the deceased (Advocate) on the date of accident as 51 years, learned Claims Tribunal ought to have accepted the income of the deceased as pleaded in the applicant as Rs.25,000/- per month.
5
6. Heard learned counsel for the parties and perused the record.
7. As regards the ground raised by appellant/Insurance Company in the memo of appeal that the learned Claims Tribunal has erroneously issued direction to appellant /insurance company to first pay the amount of compensation to claimants and then to recover the same from the owner and driver of the offending vehicle. Perusal of the impugned award would show that the learned Claims Tribunal has recorded a finding in Para 9 to 24 of the impugned award with respect to the issuance of cheque at the time of purchase of insurance policy, dishonoring of cheque issued against the policy, intimation forwarded on the address as mentioned in the RC book and the insurance policy issued was void ab initio. It is further recorded that, as insurance company failed to trace out actual address of respondent No.5 / Insured, the Insurance Company cannot be absolved from its liability as a whole and has issued a direction upon the insurance company to first deposit the amount of compensation and thereafter to recover the same from the non-applicant No.1 & 2 i.e. driver and owner of the offending vehicle.
8. Finding of the learned Claims Tribunal with respect to dishonoring of the cheque, intimation given and cancellation of the policy as also the insurance policy issued initially to be void-ab-initio is not challenged by the driver or owner of the 6 offending vehicle. Cross appeal is filed by the claimants seeking enhancement of the amount of compensation awarded by the Claims Tribunal. In the aforementioned facts of case, finding of learned Claims Tribunal with respect to dishonouring of cheque and cancellation of insurance policy became final.
9. Now the question arises for consideration is whether in given facts of case insurer can be directed to first pay entire amount of compensation and then to recover the same from owner of offending vehicle.
10. Hon'ble Supreme Court in case of Oriental Insurance Co. Ltd. vs. Inderjit Kaur and others, reported in (1998) 1 SCC 371, has observed thus:-
"9.We have, therefore, this position. Despite the bar created by Section 64-VB of the Insurance Act, the appellant, an authorised insurer, issued a policy of insurance to cover the bus with out receiving the premium therefor. By reason of the provisions of Section 147 (5) and 149 (1) of the Motor Vehicles Act , the appellant became liable to identify third parties in respect of the liability which that policy covered and to satisfy awards of compensation in respect thereof notwithstanding its entitlement (upon which we do not express any opinion) to avoid or cancel the policy for the reason that the cheque issued in payment of the premium thereon had not been honoured.
10. The policy of insurance that the appellant 7 issued was a representation upon which the authorities and third parties were entitled to act. The appellant was not absolved of its obligations to third parties under the policy because it did not receive the premium. Its remedies in this behalf lay against the insured.
12.It must also be noted that it was the appellant itself who was responsible for its predicament. It had issued the policy of insurance upon receipt only of a cheque towards the premium in contravention of the provisions of Section 64-VB of the Insurance Act. The public interest that a policy of insurance serves must, clearly, prevail over the interest of the appellant."
11. In case of Deddappa and others vs. Branch Manager, National Insurance Co. Ltd., reported in (2008) 2 SCC 595 wherein cheque issued towards payment of premium was dishonoured due to insufficient fund and in such circumstance, it was observed thus:-
"24.We are not oblivious of the distinction between the statutory liability of the Insurance Company vis-a-vis a third party in the context of Sections 147 and 149 of the Act and its liabilities in other cases. But the same liabilities arising under a contract of insurance would have to be met if the contract is valid. If the contract of insurance has been cancelled and all concerned have been intimated thereabout, we are of the opinion, the insurance company would not be liable to satisfy the claim.
25.A beneficial legislation as is well known should 8 not be construed in such a manner so as to bring within its ambit a benefit which was not contemplated by the legislature to be given to the party....."
12. In case of National Insurance Co. Ltd. vs Yellamma and anr, reported in (2008) 7 SCC 526 also Hon'ble Apex Court by invoking powers under Article 142 of the Constitution, had directed the insurance company to pay the amount though it came to a conclusion that when the insurer cancels the policy, it is not liable to pay the compensation, as the cheques given towards premium were dishonoured.
13. From the ratio laid down in above decisions, one thing is clear that in case of dishonour of cheque issued towards premium of insurance policy, intimation regarding cancellation of the insurance policy to the owner of offending vehicle is a sine qua non for exonerating the insurance company.
14. In case at hand, from the certificate of registration (Ex.D-2) of offending vehicle, it can be seen that registered address of the owner of vehicle i.e. respondent No.5, is mentioned as "C/o Shri Gurbnam Singh EWS 677, Veer Savarkar Nagar, Raipur, 492001". Insurance Policy (Ex.D-9) also mentions the aforementioned address to be the address of respondent No.5. Ex.D-4 is the letter issued by Insurance Company to respondent No.5 intimating him regarding dishonour of cheque submitted by him towards payment of premium of 9 insurance policy as also cancellation of policy, with further intimation that insurance company is not responsible towards any liability purported to be covered under policy in question and requested to return the certificate of insurance and original policy immediately. This letter was sent to respondent No.5 by post with acknowledgment on the address available with insurance company i.e. "C/o Shri Gurbnam Singh EWS 677, Veer Savarkar Nagar, Raipur, 492001", as is evident from the envelope (Ex.D-8) of insurance company in which said letter despatched to respondent No.5. However, this letter sent through registered post was returned back to Insurance Company with the endorsement that respondent No.5 was not found at the address mentioned on it. This letter further shows that a copy of the same is also sent to the Registering Authority (RTO) Raipur and the same was duly received in the office of RTO concerned, as is evident from acknowledgment which bears seal and signature of Registering Authority, RTO, Raipur.
15. Section 27 of General Clauses Act, 1897 relates to 'Meaning of service by post' and for better understanding and appreciation, the said provision is quoted hereunder :-
"27. Meaning of Service by post.- Where any Central Act or regulation authorizes or requires a document to be served by post, then unless a different intention appears, the service shall be deemed to be effected by 10 properly addressing', prepaying and posting it by registered post, a letter containing the document, and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in ordinary course of post.
16. A bare reading of above quoted provision makes it clear that in the absence of any Act or Regulation made, service of any document would be deemed to have been effected properly on it being addressed and sent by registered post and proof thereof is filed and unless the contrary is proved, service would be deemed to have been effected. Thus, this provision raises a presumption of due service or proper service if the document sought to be served is sent by properly addressing, prepaying and posting by registered post to the addressee and such presumption is raised irrespective of fact whether any acknowledgment due is received from the addressee or not. Of course, the said presumption is rebuttable.
17. In case of Prasanna versus Kabeer reported in AIR 2019 Ker 82, High Court of Kerala has held that production of receipt evidencing the dispatch by registered post raises presumption in favour of the insurer that the intimation has been sent to the addressee for secured delivery and relying on the provisions under Section 27 of the General Clauses Act, 1897.
18. In case at hand, from the documents available in record i.e. Ex.D-5 and Ex.D-8, it is clear that the letter intimating about 11 dishonour of cheque followed by cancellation of policy has been sent to the address of the owner given in the policy by registered post, with acknowledgment due, and the same has been returned with the endorsement that respondent No.5 was not found at the address mentioned on it. This letter having been sent properly addressing as per policy and posting it by registered post, which is the mode acceptable under law, with a copy to the RTO concerned, the presumption of due service is to be drawn because the insurer discharges burden of sending intimation regarding cancellation of policy to the insured at his address given in the insurance policy. In other words, the material brought on record by insurance company clearly shows that service, as is provided for under the term 'meaning of service by post' has been effected and an effective service has been completed. Therefore, the finding recorded by the Claims Tribunal that after return of notice regarding cancellation of policy sent to owner, no steps have been taken by the insurance company to personally serve notice of cancellation of policy to owner, therefore, it cannot be absolved from its liability to indemnify the claimants, is erroneous. In case at hand, attempt is made to say that the address as mentioned in claim application is different from that what is mentinoed in letter. It is not the case of owner of offending vehicle that he gave information of 12 change of his address to insurance company or Road Transport Office/Registering Authority concerned. Insurer gave information in the address available in office and mentioned in insurance policy. Insurer cannot be made to suffer for mistake of insured.
19. Hence, in the opinion of this Court, insurance company is entitled to be absolved from the liability even towards the third party. Accordingly, the impugned award insofar as directing appellant Insurance Company to pay compensation to the claimants and recover the same from the owner / respondent No.5 is set aside.
20. Coming to cross-appeal filed on behalf of respondent No.1 to 3-claimants seeking enhancement of amount of compensation so awarded on the ground that income of deceased as assessed by learned Claims Tribunal is less and adequate compensation is not awarded under other heads.
21. In claim application, claimants have pleaded the occupation of deceased as an Advocate and income therefrom as Rs.25,000/-. In order to prove said pleadings, they examined claimant No.1 as AW-1, produced Advocate Identity Card of deceased issued by Madhya Pradesh State Bar Council, Jabalpur. Date of issuance of card is mentioned as 2.7.1999. Claimants have not submitted any document to show income of deceased by placing bank account etc., however, 13 competent authority fixes the wages/monthly income of daily wage unskilled labourer, semi-skilled labourer and skilled labourer in every fixed intervals. The labourer may not be essentially an educated person. For the period from 1.4.2017 to 30.9.2017 wage of skilled labourer of the area coming under Zone-C, of which deceased was resident, was Rs.10660/-. In case at hand, claimants proved the fact that at the time of accident, deceased was registered as an Advocate, aged about 51 years, and was practicing also. Sometime to determine income of deceased in absence of proof, some guess work is required to be done and therefore, looking to qualification, occupation and age of deceased, I find it appropriate to enhance income of deceased from Rs.15,000/- to Rs.20,000/- p.m.. It is ordered accordingly.
22. In view of the fact that deceased was 56 years old self- employed and survived by 03 dependent family members, addition of 10% towards future prospects, deduction of one- third towards personal and living expenses of deceased; application of multiplier of 11 by learned Claims Tribunal to compute the compensation under the head of loss of dependency is in terms of decision of Hon'ble Supreme Court in cases of Sarla Verma vs. DTC, reported in (2009) 6 SCC 121 and National Insurance Company Ltd. vs. Pranay Sethi & ors, reported in (2017) 16 SCC 680 and the same needs 14 no interference.
23. Perusal of impugned award would show that learned Claims Tribunal has awarded lump sum compensation of Rs.70,000/- towards loss of consortium, loss of estate and funeral expenses, which is not in consonance with decision of Hon'ble Supreme Court in cases of Pranay Sethi (supra) and Magma General Insurance Co. Ltd. vs. Nanu Ram @ Chuhru Ram & ors reported in (2018) 18 SCC 130. The amount of compensation to be awarded as consortium is governed by the principles of awarding compensation under "loss of consortium" as laid down in the matter of Pranay Sethi (supra) and Nanu Ram @ Chuhru Ram & ors (supra), according to which each claimant is entitled to consortium at the rate of Rs.40,000/- under spousal, filial and parental consortium respectively in case claimants are wife/husband, parents and children of deceased. In the instant case, respondents No.1 to 3 are widow and children of deceased respectively and therefore, they are entitled for compensation towards loss of spousal consortium and parental consortium at the rate of Rs.40,000/- each. Hence, I deem it appropriate to award an amount of Rs 40,000/- each to respondents No.1 to 3 under the head of consortium i.e. spousal and parental consortium. Further, in case of Pranay Sethi (supra), Hon'ble Supreme Court has approved Rs.15,000/- each for conventional heads i.e. loss of estate and 15 funeral expenses, and therefore, respondents No.1 to 3 are entitled for Rs.15,000/- each towards loss of estate and funeral expenses.
24. Since, the amount of compensation awarded under the head of loss of consortium, funeral expenses and loss of estate, is to be increased by 10% after every three years in light of decision of Hon'ble Supreme Court in case of Pranay Sethi (supra), therefore, appellants will be entitled to get Rs.44,000/- each for loss of filial and parental consortium respectively; Rs.16,500/- each for loss of estate and funeral expenses respectively. It is ordered accordingly.
25. For the foregoing, this Court proposes to recalculate amount of compensation payable to the claimants.
26.Accordingly, income of deceased is taken as Rs.20,000/- per month, as held above, and after adding 10% towards future prospects, monthly income of deceased would come to Rs.22,000/- and annual income would be Rs.2,64,000/-. Out of this amount, one-third is to be deducted towards personal and living expenses of deceased and after deducting one- third, annual loss of dependency would come to Rs.1,76,000/-. Applying multiplier of 11, as applied by Claims Tribunal, the loss of dependency would be Rs.19,36,000/-. Besides this, respondent No.1-wife is entitled for a sum of Rs.44,000/- towards spousal consortium; respondent Nos.2 16 and 3, daughters of deceased, are entitled for Rs.40,000/- each towards parental consortium, as held above. In addition to aforesaid amount, respondents No.1 to 3 are also entitled to get a sum of Rs.16,500/- for funeral expenses and Rs.16,500/- for loss of estate.
27. Thus, now total compensation for which respondents No.1 to 3 are entitled for comes to Rs.21,01,000/- in place of Rs.15,22,000/- as awarded by learned Claims Tribunal. This amount of compensation shall carry interest @ 8% p.a. from the date of filing of claim application till actual payment is made. Respondent No.5-owner of offending vehicle, is held liable to make payment of amount of compensation, as awarded above, to the claimants. Rest of the conditions mentioned in the impugned award shall remain intact.
28. In the result, appeal filed by appellant Insurance Company is allowed. Cross-appeal filed by respondents No.1 to 3 is allowed in part. The impugned award stands modified to the extent indicated above.
(Parth Prateem Sahu) Judge roshan/-