Karnataka High Court
Tata Aig General Insurance Co. Ltd., vs Balaguruvaiah on 15 March, 2013
Author: N.Ananda
Bench: N.Ananda
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IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 15TH DAY OF MARCH 2013
BEFORE
THE HON'BLE MR.JUSTICE N.ANANDA
M.F.A.No.9795/2010 (MV)
BETWEEN:
TATA AIG GENERAL INSURANCE CO. LTD.
J P & DEVI JAMBUKESHWAR ARCADE
II FLOOR, NO.69, MILLERS ROAD
BANGALORE-560052
BY ITS SENIOR MANAGER CLAIMS. ... APPELLANT
(BY SRIYUTHS H S LINGARAJ, ADVOCATE)
AND :
1. BALAGURUVAIAH
S/O PRAKASHAM, 37 YEARS
2. NAGALAKSHMI
W/O BALAGURIVAIAH, 27 YEARS
BOTH ARE R/A 648/6, POWER HOUSE LANE
SHETTIHALLI MAIN ROAD
JALAHALLI WEST, BANGALORE
3. B K KUMAR
S/O BALASUBRAMANI
MAJOR, NO.1, HERITAGE, 2ND CROSS
BIRASANDRA, JAYANAGAR
BANGALORE-560011. ... RESPONDENTS
(BY SRI SHRIPAD V SHASTRI, ADV. FOR C/R1 & R2; R3-
SERVED)
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THIS APPEAL IS FILED U/S 173(1) OF MV ACT AGAINST
THE JUDGMENT AND AWARD DATED:26.07.2010 PASSED IN
MVC NO.2557/2009, ON THE FILE OF VII ADDITIONAL JUDGE,
MEMBER MACT-3, COURT OF SMALL CAUSES, BANGALORE,
AWARDING COMPENSATION WITH INTEREST & ETC.
THIS APPEAL COMING ON FOR FINAL HEARING THIS
DAY, THE COURT DELIVERED THE FOLLOWING:
JUDGMENT
The Insurance Company has filed this appeal, inter alia contending that as on the date of accident, policy issued by Insurance Company had been cancelled as cheque issued by insured towards payment of premium was dishonoured and the same was intimated to insured and concerned Regional Transport Office, in terms of section 64 VB of the Insurance Act, 1938 (for short, 'the Insurance Act').
2. The Tribunal has held that cheque issued by insured towards payment of premium was dishonoured and this fact was brought to the notice of insured and cancellation of policy has been intimated to II-respondent as also concerned Regional Transport Office. The Tribunal by following the judgment of the Supreme Court, reported in 1991 ACJ 650 3 (in the case of United India Insurance Co. Ltd. Vs. Ayeb Mohammed & others) has held that Insurance Company is not liable to pay compensation.
3. The Tribunal by referring to the judgment of the Supreme Court reported in 2008 AIR SCW 3251 (in the case of Oriental Insurance Co. Ltd. Vs. Zaharulnisha & others) has held that Insurance Company is liable to pay compensation to claimants (third party) and recover the same from insured.
4. In the judgment reported in 2008 AIR SCW 3251 (in the case of Oriental Insurance Co. Ltd. Vs. Zaharulnisha & others) the Supreme Court has held that driver not possessing valid and effective licence for driving the kind of vehicle involved in accident, insurer is not liable to pay compensation. If driver has violated the terms of policy, Insurance Company will have a valid defence under section 149(2)(a)(ii) of Motor Vehicles Act, 1988 to avoid its liability. However, the Supreme Court by exercising powers under 4 article 142 of the Constitution of India, directed Insurance Company to satisfy award and to recover the amount with interest from insured.
5. In my considered opinion, the judgment of the Supreme Court, reported in 2008 AIR SCW 3251 (in the case of Oriental Insurance Co. Ltd. Vs. Zaharulnisha & others) has no bearing on facts of the instant case.
In the case on hand, Insurance Company has proved that cheque issued by insured towards payment of insurance premium was dishonoured on 05.05.2008. On the same day, Insurance Company has communicated dishnour of cheque and cancellation of policy to the insured and also to the concerned Regional Transport Office. There has been substantial compliance of section 64VB of the Insurance Act.
6. The law is fairly well settled that contract without consideration is void ab initio. The Insurance Company cannot be saddled liability after it had cancelled policy for non- 5 payment of insurance premium/dishonour of cheque for payment of premium.
7. In a decision reported in 2008 ACJ 581 (in the case of Daddappa & others Vs. Branch Manager, National Insurance Co. Ltd.), the Supreme Court has held that when cheque issued towards premium was dishonoured and Insurance Company cancelled policy, information was communicated to insured and intimation was also given to the R.T.O. The Insurance Company is not liable to pay compensation. The Supreme Court in exercise of its extraordinary jurisdiction under article 142 of the Constitution of India has directed Insurance Company to pay amount of compensation and to recover the same from owner.
8. It is needless to state that extraordinary jursidction exercised by the Supreme Court under article 142 of the Constitution of India cannot be exercised by this court. 6
9. Sri Shripad V.Shastri, learned counsel for claimants, referring to the provisions of section 149(1) of the Motor Vehicles Act, 1988 (for short, 'the M.V.Act') would submit that if, after a certificate of insurance has been issued under sub-section (3) of section 147 in favour of the person by whom a policy has been effected, judgment or award in respect of any such liability as is required to be covered by a policy under clause (b) of sub-section (1) of section 147, being a liability covered by the terms of policy or under the provision of section 163A is obtained against any person insured by policy, then notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, insurer shall, subject to the provisions of this section, pay to the person, entitled to the benefit of decree, any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor, in respect of liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments. 7
10. In my considered opinion, provisions contained under section 149 (1) of the M.V.Act are subject to other provisions of the M.V.Act. The cancellation of policy of Insurance Company for non-payment of premium amount or dishonor of cheque issued for payment of premium is governed by the provisions of the Insurance Act.
11. Section 64VB of the Insurance Act provides for cancellation of policy, if premium is not paid or cheque issued towards payment of premium is dishonoured.
In the case on hand, cheque was dishonoured on 05.05.2008. The Insurance Company has given intimation of dishonour of cheque and cancellation of policy not only to insured but also to the concerned Regional Transport Authority. The accident took place on 10.02.2009. The cancellation of policy referred to under section 149(1) of the M.V.Act, refers to cancellation of policy under section 149(2)(b) of the Motor Vehicles Act, 1988 and not to 8 cancellation of policy under section 64VB of the Insurance Act, 1938.
12. The grounds provided for cancellation of policy are provided under section 149(2)(b) of the M.V.Act. Under section 149(2)(b) of the M.V.Act, policy can be cancelled on the ground that it was obtained by the non-disclosure of a material fact or by representation of fact which was false in some material particular.
13. In the case on hand, insurance policy has been cancelled for dishonour of cheque issued towards payment of premium. The contract is without consideration.
14. Therefore, submission of learned counsel for claimants cannot be accepted. The Tribunal has committed an error in directing Insurance Company to pay compensation and recover from insured.
15. Therefore, impugned judgment as it relates to fastening liability on Insurance Company cannot be sustained.
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16. In the result, I pass the following:-
ORDER The appeal is accepted. The impugned judgment is modified. The Insurance Company is not liable to pay compensation in terms of the impugned award. The claim against Insurance Company is dismissed. The rest of the impugned award is confirmed. The amount in deposit shall be refunded to Insurance Company.
Sd/-
JUDGE SNN