Madras High Court
P.Selvamani vs R.Selvakumar
Author: M.Dhandapani
Bench: M.Dhandapani
____________
C.M.A. No.2781/2017
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on Pronounced on
06.11.2023 20.11.2023
CORAM
THE HONOURABLE MR. JUSTICE M.DHANDAPANI
C.M.A. NO.2781 OF 2017
AND
C.M.P. NO.15879 OF 2017
P.Selvamani .. Appellant
- Vs -
1. R.Selvakumar
2. M/s. New India Assurance Company Ltd.
TP Hub, Sethu Krishna Trade Center
133-31-A, Trichy Main Road
Near by Raja Sabari Theatre
Gugai, Salem – 6. .. Respondents
Civil Miscellaneous Appeal filed u/s 173 of the Motor Vehicles Act
against the order and decreetal order dated 23.12.2016 dmade in M.C.O.P.
No.957 of 2013 on the file of the Motor Accident Claims Tribunal, Special
Subordinate Judge- I, Salem.
1
https://www.mhc.tn.gov.in/judis
____________
C.M.A. No.2781/2017
For Appellant : Mr. V.Srikanth
For Respondents : No Appearance for R-1
Mr. K.Vinod for R-2
JUDGMENT
Aggrieved by the order passed by the Special Subordinate Judge-I, Motor Accidents Claims Tribunal, Salem, in directing the 2nd respondent, insurer to pay the compensation to the victim/1st respondent and to recover the same from the appellant herein, the present appeal at the instance of the appellant, who is the owner of the vehicle.
2. The facts in the present case, which are necessary for disposal of the present appeal, are as under :-
The appellant is the owner of the vehicle, whose vehicle was allegedly insured with the 2nd respondent herein, which vehicle met with an accident on 9.4.2013 at about 10.15 p.m., in which the 1st respondent herein was injured, resulting in the 1st respondent filing the claim petition, claiming compensation jointly and severally from the owner and insurer of the vehicle. The Tribunal, after contest of the matter, passed an order and decree directing the 2nd 2 https://www.mhc.tn.gov.in/judis ____________ C.M.A. No.2781/2017 respondent, viz., the insurer of the vehicle to pay the compensation to the tune of Rs.2,91,000/- (Rupees Two Lakhs Ninety One Thousand only) to the 1st respondent/victim and to recover the same from the appellant, viz., the owner of the vehicle, as the Tribunal rendered a finding that on the date when the accident had happened, the certificate of insurance was not in force, as the cheque, which was issued by the appellant, stood dishonoured and, therefore, the liability cannot be fastened on the 2nd respondent to pay the compensation. Aggrieved by the said decree, directing recovery of the amount from the appellant, the present appeal has been filed.
3. Learned counsel appearing for the appellant, vociferously contended that the appellant, though had issued the cheque towards the discharge of the premium to the 2nd respondent, however, was not made aware of the dishonour of the cheque by the 2nd respondent before the date of the accident and, therefore, the insurer cannot shriek liability to pay the compensation.
4. It is the further submission of the learned counsel that Ex.R-8 series clearly establish that the appellant was not made aware of the dishonour of 3 https://www.mhc.tn.gov.in/judis ____________ C.M.A. No.2781/2017 the cheque by the 2nd respondent. In this regard, it is the contention of the learned counsel that the appellant had issued the cheque dated 27.3.2013 towards the premium for the policy, which was returned unpaid on 30.03.2013 and the bankers of the 2nd respondent, though had intimated about the return of the cheque on 03.04.2013 itself, however, the 2nd respondent had intimated the same to the appellant only on 10.04.2013, after coming to know about the accident, which took place on 9.4.2013.
5. It is the further submission of the learned counsel that the bona fide of the appellant would be writ large by the fact that upon coming to know about the dishonour of the cheque, the appellant had immediately revived the policy on 14.4.2013. But for the lethargic attitude of the insurer in not intimating the dishonour of the cheque immediately on 3.4.2013, the appellant would have paid the amount and revived the policy, thereby, on the date of the accident the vehicle would have stood covered with a live policy. Laying emphasis on Sections 147 (5) and 149 (1) of the Motor Vehicles Act, learned counsel submitted that the insurer is liable to indemnify the third parties in respect of liability for which policy was taken not withstanding its 4 https://www.mhc.tn.gov.in/judis ____________ C.M.A. No.2781/2017 entitlement to avoid or cancel the policy for the reason that the cheque issued in payment of the premium has not been honoured.
6. It is therefore the submission of the learned counsel that the insurer was responsible for the above predicament, which, if immediately had been brought to the knowledge of the appellant, would have resulted in the premium being paid and policy being revived. When the appellant had no knowledge about the dishonour of the cheque prior to the accident, it is only the insurer, viz., the 2nd respondent, who is legally liable to pay the compensation and no liability can be mulcted on the appellant, the owner of the vehicle. It is the further submission of the learned counsel that Ex.R-1, the policy document, would clearly reveal that there was a policy in-force between 27.03.2013 and 26.03.2014 on the date of the accident, viz., 9.4.2013 and, therefore, the order of the Tribunal that there was no valid policy in the eye of law cannot be countenanced.
7. The non-intimation of the dishonour of the cheque by the 2 nd respondent cannot be put against the appellant to fasten liability as it was not 5 https://www.mhc.tn.gov.in/judis ____________ C.M.A. No.2781/2017 within the knowledge of the appellant about the dishonour of the cheque, which negligence should be put only against the 2nd respondent, who alone would be liable to pay the amount and, therefore, the order of the Tribunal directing the 2nd respondent to pay the amount and recover the same, clearly reveals total non-application of mind, which order cannot be allowed to stand.
8. It is the further submission of the learned counsel that the intention of the appellant in reviving the policy would clearly show that all along the appellant was intent on continuing the policy and merely because the insurer had cancelled the policy dated 27.03.2013 and revived it only on 14.04.2013, it cannot avoid its liability for the accident, which took place on 9.4.2013. The delay caused by the insurer is the reason for the whole issue and once the policy stood revived upon payment of premium and, therefore, the insurer is liable to pay the compensation which arose due to the accident which took place on 9.4.2013, as the revival of the policy would result in continuity of the policy and, therefore, the insurer cannot be absolved of its liability to pay the compensation and prayed for allowing the present appeal. 6 https://www.mhc.tn.gov.in/judis ____________ C.M.A. No.2781/2017
9. To lay more emphasis on the above contentions, learned counsel placed reliance on the following decisions :-
i) Oriental Insurance Co. Ltd., Cuddalore, - Vs – Pushpan & Ors. (2009 (1) TN MAC 608 (DB)); and
ii) Branch Manager, Oriental Insurance Co. Ltd. – Vs – P.Chinraj & Ors. (2023 SCC OnLine Mad 3603)
10. Per contra, learned counsel appearing for the 2nd respondent submitted that the certificate of insurance, which was issued with effect from 27.3.2013, upon receipt of cheque, upon dishonour of the cheque, the said policy stood cancelled, vide the communication of the 2nd respondent dated 3.4.2013. It is the further submission of the learned counsel that the revival of the policy was done on 14.4.2013 and a fresh policy had been issued on the said date for the period 14.4.2013 to 13.4.2014 and, therefore, between 3.4.2013 and 13.4.2013, there was no valid insurance policy in the eye of law covering the acts relatable to the vehicle and, therefore, the 2 nd respondent cannot be fastened with any liability to pay the compensation. 7 https://www.mhc.tn.gov.in/judis ____________ C.M.A. No.2781/2017
11. Further, learned counsel appearing for the 2nd respondent, placing reliance on the decision of the Apex Court in United India Insurance Co. Ltd. – Vs – Laxmamma & Ors. (2012 ACT 1307), submitted that at best, the liability of the insurer, in terms of Section 147 (5) and 149 (1) of the Motor Vehicles Act is to pay the compensation to the victim and to recover the same from the owner of the vehicle. Therefore, the direction of the Tribunal in that regard, is in consonance with the law laid down by the Apex Court in the aforesaid decision, which cannot be said to be perverse or unreasonable.
12. Distinguishing the decisions relied on by the learned counsel for the appellant, learned counsel for the 2nd respondent submitted that in the aforesaid decisions, the delay in intimating the dishonour of the cheque was enormous and in such circumstance, the said delay was held to be fatal. However, in the case on hand, pointing out that by intimation dated 10.4.2013, communication intimating the cancellation of the policy had been addressed to the appellant, the said delay cannot be said to be fatal. Further, taking impetus from the decision in Pushpan case (supra), learned counsel submitted that it is within the domain of the Tribunal to order pay and recover 8 https://www.mhc.tn.gov.in/judis ____________ C.M.A. No.2781/2017 depending on the facts and circumstances of the case and the delay not being enormous, the Tribunal had thought it fit to exercise its discretion to pass the said order, which does not require any interference.
13. This Court gave its anxious consideration to the submissions advanced by the learned counsel appearing on either side and perused the materials available on record, as also the decisions relied on by the respective parties.
14. There arises no factual disputes in the present case and, therefore, there is no necessity for this Court to delve into the factual aspects, except for the dates with regard to the issuance of cheque, the dishonour of cheque and the communication of the same by the banker to the insurer and the insurer to the insured, which alone have a bearing on arriving at a substantive finding.
15. The cheque had been issued on 27.3.2013, the date on which the certificate of insurance has come into force, which is evident from the period prescribed in the certificate of insurance, as the policy period started from 9 https://www.mhc.tn.gov.in/judis ____________ C.M.A. No.2781/2017 27.03.2013 to 26.03.2014. However, it is to be noted that the said coverage is always subject to the realisation of the cheque, which is a deeming provision.
16. Be that as it may. In the aforesaid backdrop, it is seen that the cheque, which was issued on 27.03.2013, the date on which the policy had been issued, was returned due to insufficiency of funds on 30.03.2013 by the clearing bank to the insurer’s bankers, which intimation was passed on to the 2nd respondent on 3.4.2013 by its banker. Upon receipt of the said intimation, vide letter dated 3.4.2013, the policy issued to the appellant stood cancelled due to dishonour of cheque. The intimation of dishonour dated 3.4.2013, was communicated by way of RPAD on 10.04.2013, which was received by the appellant on 11.04.2013. Though the letter had been drafted on 3.4.2013, however, the same stood dispatched only on 10.04.2013, but by then, the accident had taken place on 9.4.2013.
17. The whole case of the appellant is woven upon the fact that the 2 nd respondent was aware of the dishonour of cheque on 3.4.2013, as it was intimated by its banker, yet, the intimation was given to the appellant through 10 https://www.mhc.tn.gov.in/judis ____________ C.M.A. No.2781/2017 RPAD only on 10.4.2013 and this delay of 7 days is fatal to the 2nd respondent, as on the date of accident, the policy was subsisting irrespective of the dishonour of the cheque, as it was not within the knowledge of the appellant that the cheque stood dishonoured and, therefore, the appellant cannot be fastened with any liability.
18. To substantiate the aforesaid contention, reliance had been placed on Pushpan case (supra), wherein, in similar circumstances, where the insurer was aware of the dishonour of cheque, but had intimated the same to the insured belatedly, the Division Bench of this Court had held that the liability would be only on the insurance company to pay the amount. The relevant portion of the decision, which is pressed into service, is as under :-
“17. The Hon'ble Supreme Court in a decision in New India Assurance Co. Ltd. v. Rula and Ors. reported in MANU/SC/0161/2000 : [2000]2SCR148 , held that in a contract of Insurance under Chapter 11 of the Motor Vehicles Act a third party who is not a signatory to the contract of Insurance, is nevertheless protected by such a contract. It is further held that the third party is not concerned and does not come into the picture at all in the matter of payment of premium. Whether the premium has been paid or not is not a 11 https://www.mhc.tn.gov.in/judis ____________ C.M.A. No.2781/2017 concern of the third party who is not concerned with the fact that there was a Policy issued in respect of vehicle involved in the accident and it is on the basis of this Policy that the claim can be maintained by the third party against the Insured. It was further held in the said decision, if on the date of the accident, there was a Policy of Insurance in respect of the vehicle in question, the third party can claim against the Insurance Company and the owner of the vehicle would have to be indemnified in respect of the claim of that party and any subsequent cancellation of the Insurance Policy on the ground of non payment of premium would not affect the rights already accrued in favour of the third party. So it would appear that it was in not payment of premium or non- payment thereof, but whether the policy was alive or cancelled.
18. The said decision of the Hon'ble Supreme Court applies squarely to the facts of the present case. As stated, the accident took place on 24.8.2003 and the cancellation of the Policy was on 3.9.2003 i.e. much after the accident. Therefore, it is to be seen that on the date of the accident, the Insurance Policy was not cancelled. If the Insurance Company had been diligent, they could have asked from their Bankers about the dishonour of the cheque at the earliest point of time and intimated the Insured, the Insured would have had an option to immediately remit the premium. Therefore, we hold that the Insurance Company is liable to settle the claim.” 12 https://www.mhc.tn.gov.in/judis ____________ C.M.A. No.2781/2017
19. In the aforesaid case, which is relied on by the appellant, the dishonour of cheque, which was intimated to the insurer’s bankers on 5.8.2023, was not communicated to the insurance company immediately and it was intimated only on 3.9.2003, after a delay of one month and though the insurance company had taken steps on the very same day, viz., 3.9.2003 and cancelled the policy and intimated the same to the insured, which was received by the insured on 4.9.2003, yet the delay of one month in intimating the cancellation was held to be fatal, as the insurer had not acted diligently by finding out about the status of the cheque, and more so, on the crucial date, when the accident had taken place, neither the insurer nor the insured were aware of the dishonour of the cheque, resultantly, the policy was very well in force on the said date and in that context, applying the ratio laid down in the case of New India Assurance Company Ltd. – Vs – Rula & Ors. (2000 ACJ 630), the insurer was held liable to indemnify the victim. In the said case, the Division Bench held that the insurer had not acted diligently and had slept over the matter with regard to realisation of cheque for more than a month.13
https://www.mhc.tn.gov.in/judis ____________ C.M.A. No.2781/2017 The said case cannot be said to be identical to the case on hand, though it has traces of similarity as to the dishonour of the cheque.
20. Further, in Pushpan case, the Division Bench had further held that while the insurer is liable to indemnify the victim by paying the compensation, however, it is within the domain of the Tribunal, on the facts and circumstances of the case, to order pay and recovery in case, where dishonour of cheque had arisen and the policy, thereby, stood cancelled on the crucial date.
21. However, the decision in Laxmamma’s case addresses the issue on hand, wherein the Supreme Court, in identical circumstances, held as under :-
“13. This decision, which is a three-Judge Bench decision, squarely covers the present case also. The subsequent cancellation of the insurance policy in the instant case on the ground that the cheque through which premium was paid was dishonoured, would not affect the rights of the third party which had accrued on the issuance of the policy on the date on which the accident took place. If, on the date of accident, there was a policy of insurance in respect of the vehicle in question, the third party would have a claim against the Insurance Company and the owner of the vehicle would have to be indemnified in respect of the claim of that party.14
https://www.mhc.tn.gov.in/judis ____________ C.M.A. No.2781/2017 Subsequent cancellation of the insurance policy on the ground of non-payment of premium would not affect the rights already accrued in favour of the third party * * * * * *
15. In Seema Malhotra MANU/SC/0112/2001 : (2001) 3 SCC 151, the Court was concerned with the question whether the insurer is liable to honour the contract of insurance where the insured gave a cheque to the insurer towards the premium amount but the cheque was dishonoured by the drawee bank due to insufficiency of funds in the account of the drawer. In the case of Seema Malhotra MANU/SC/0112/2001 : (2001) 3 SCC 151, the above question arose from the following facts: the owner of a Maruti car entered into an insurance contract with National Insurance Company Limited on December 21, 1993; on the same day the owner gave a cheque of Rs. 4,492/- towards the first installment of the premium; the insurance company issued a cover note as contemplated in Section 149 of the M.V. Act; the car met with an accident on December 31, 1993 in which the owner died and the car was completely damaged;
on January 10, 1994 the bank on which the cheque was drawn by the insured sent an intimation to the insurance company that the cheque was dishonoured as there were no funds in the account of the drawer and on January 20, 1994 the business concern of the owner was informed that the cheque having been dishonoured by the bank, the insurance policy is cancelled with immediate effect and the company is not at risk. The widow and children of the owner filed a claim for the loss of the vehicle with the insurance company. When the claim was repudiated, they moved the State Consumer Protection Commission (for short, 'Commission'). The 15 https://www.mhc.tn.gov.in/judis ____________ C.M.A. No.2781/2017 Commission rejected the claim of the claimants and held that insurer was justified in repudiating the contract as soon as cheque got bounced. The claimants moved the Jammu and Kashmir High Court. The High Court reversed the order of the Commission and held that the insurance company chose to cancel the insurance policy from the date of issuance of communication and not from the date the cheque was issued which got bounced. The matter reached this Court from the above judgment of the High Court. The Court referred to Section 64-VB of the Insurance Act, Sections 25, 51, 52, 54 and 65 of the Indian Contract Act and the decisions of this Court in Inderjit Kaur MANU/SC/0842/1998 : (1998) 1 SCC 371 and Rula MANU/SC/0161/2000 : (2000) 3 SCC 195 and held (at pages 156 and 157) as under:
17. In a contract of insurance when the insured gives a cheque towards payment of premium or part of the premium, such a contract consists of reciprocal promise.
The drawer of the cheque promises the insurer that the cheque, on presentation, would yield the amount in cash. It cannot be forgotten that a cheque is a bill of exchange drawn on a specified banker. A bill of exchange is an instrument in writing containing an unconditional order directing a certain person to pay a certain sum of money to a certain person. It involves a promise that such money would be paid.
18. Thus, when the insured fails to pay the premium promised, or when the cheque issued by him towards the premium is returned dishonoured by the bank concerned the insurer need not perform his part of the promise. The 16 https://www.mhc.tn.gov.in/judis ____________ C.M.A. No.2781/2017 corollary is that the insured cannot claim performance from the insurer in such a situation.
19. Under Section 25 of the Contract Act an agreement made without consideration is void. Section 65 of the Contract Act says that when a contract becomes void any person who has received any advantage under such contract is bound to restore it to the person from whom he received it. So, even if the insurer has disbursed the amount covered by the policy to the insured before the cheque was returned dishonoured, the insurer is entitled to get the money back.
20. However, if the insured makes up the premium even after the cheque was dishonoured but before the date of accident it would be a different case as payment of consideration can be treated as paid in the order in which the nature of transaction required it. As such an event did not happen in this case, the Insurance Company is legally justified in refusing to pay the amount claimed by the Respondents.
20. Having regard to the above legal position, insofar as facts of the present case are concerned, the owner of the bus obtained policy of insurance from the insurer for the period April 16, 2004 to April 15, 2005 for which premium was paid through cheque on April 14, 2004. The accident occurred on May 11, 2004. It was only thereafter that the insurer cancelled the insurance policy by communication dated May 13, 2004 on the ground of dishonour of cheque which was received by the owner of the vehicle on May 21, 2004. The cancellation of policy having been done by the insurer 17 https://www.mhc.tn.gov.in/judis ____________ C.M.A. No.2781/2017 after the accident, the insurer became liable to satisfy award of compensation passed in favour of the claimants.
21. In view of the above, the judgment of the High Court impugned in the appeal does not call for any interference. Civil appeal is dismissed. However, the insurer shall be at liberty to prosecute its remedy to recover the amount paid to the claimants from the insured. No order as to costs.”
22. From the aforesaid decision of the Apex Court, it is implicitly evident that where the accident occurred during the survival of the policy, even upon dishonour of the cheque and the communication of the dishonour being after the happening of the accident, the insurer is liable to satisfy the award of compensation, but was well within its rights to work out its remedy to recover the amount.
23. In the case on hand, the dishonour of cheque came to the knowledge of the insurer on 3.4.2013 and the policy was cancelled by communication dated 3.4.2013. But curiously, the said letter was sent by RPAD only on 10.4.2013 and received by the insured on 11.4.2013. However, as fate would have it, the accident occurred on the night of 9.4.2013. Therefore, following the ratio laid down in Laxmamma’s case, the Tribunal 18 https://www.mhc.tn.gov.in/judis ____________ C.M.A. No.2781/2017 had rightly directed the insurer to pay the amount of compensation quantified to the victim. Therefore, no error or non-application of mind can be attributed to the said order passed by the Tribunal.
24. Now comes into picture the further order of the Tribunal, which had permitted the 2nd respondent, viz., insurer to recover the amount from the insured, which is assailed herein, in line with the observations of the Division Bench in Pushpan case.
25. The decision in Pushpan case, though has traces of similarity to the case on hand, however, the said case cannot be said to be identical, as in the said case, the delay was for more than a month, due to the banker of the insurer not communicating the dishonour of the cheque, during which time, the accident had happened and in that regard, the Division Bench held that the insurer had not acted diligently and, therefore, the cancellation of the policy after the occurrence of the accident, cannot be the basis to deny the compensation that would be payable to the victim, as it is not within the realm of the third party, viz., the victim to know about the payment of premium with 19 https://www.mhc.tn.gov.in/judis ____________ C.M.A. No.2781/2017 regard to the insurance policy. It was so held that the insurer was liable to indemnify the claim to the victim and non-payment of premium would not affect the rights already accrued in favour of the third party. It was also further held therein that the delay is fatal and that the insurer therein cannot seek for recovery of the compensation paid from the insured, viz., the owner of the vehicle, for the reason, that due diligence was not exercised by the insurer in contacting its banker with regard to the honour of the cheque, which was issued with respect to the policy in question therein. When the insurer had not acted diligently in ascertaining the status of the cheque from its banker, the insurer is jointly and severally, along with the insured, is liable to compensate the victim and pay and recover the amount cannot be invoked by the insurer.
26. However, in the case on hand, the communication from the banker to the insurer had happened on 3.4.2013 and on the very same day, vide letter of even date, the policy was cancelled, but the said communication had left the office of the insurer on 10.4.2013 and received by the insured on 11.4.2013. Between 3.4.2013 and 11.4.2013, there are four working days, 20 https://www.mhc.tn.gov.in/judis ____________ C.M.A. No.2781/2017 which falls on 4th, 5th, 9th and 10th of April, 2013. The rest of the two days are Saturday and Sunday. Therefore, the communication with regard to dishonour of cheque had reached the insured on the 5 th working day. In the aforesaid backdrop, though there is a delay, but it cannot be said that due diligence had not been exercised by the insurer in communicating the dishonour of cheque to the insured/appellant herein and, therefore, the delay cannot be said to be fatal warranting fastening of liability on the insurer alone.
27. Further, it is to be pointed out that on 3.4.2013 itself the policy had been cancelled, but the communication had taken a week’s time to reach the hands of the insured. When the insured puts the ball in the court of the insurer to say that the insurer should have acted diligently, equally, it is for the insured also to see that sufficient funds are available in the account, when the cheque was issued, for honouring the cheque which is given towards renewal premium. It is for the safety of the insured that motor accident policy is taken, so as to save the insured in case of any accident, that may occur so that compensation would be paid by the insured. However, satisfied with the issuance of the cheque, more particularly on 27.3.2013, the very day, when 21 https://www.mhc.tn.gov.in/judis ____________ C.M.A. No.2781/2017 the policy is renewed, the insured had kept silent without even knowing as to whether the cheque had got cleared or not.
28. When the insured wants the insurer to be diligent enough and act by informing the dishonour of the cheque immediately to the insured so as to enable the insured to set good the loss, equally, a duty is also cast upon the insured to see that sufficient funds are there in his account so that the cheque, which has been issued towards the renewal premium, passes safely without being dishonoured.
29. When a policy is renewed by the insurer, by accepting a cheque, it is on the understanding between the contracting parties that the said cheque would be honoured. If one of the contracting parties fails to perform its part of the contract, the other party to the contract alone cannot be fixed with liability and responsibility and it should also fall on the party, who fails to perform his part of the contract.
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30. When the appellant issued the cheque to the 2nd respondent towards renewal of the policy, the unsaid understanding between the contracting parties is that the cheque would be honoured. Sections 147 (5) and 149 (1) of the Motor Vehicles Act, which have been deliberated by the Courts, are intended to protect the victim of the accident from falling prey between the insurer and insured in aforestated situations and only to that extent the indemnification is on the insurer to pay the amount to the victim, as ordered, towards compensation, and the said provisions does not cloth the insured with any safety. Only in the aforesaid logical reasoning, the Supreme Court, as well as the Division Bench of this Court had held that it is always open to the insurer to proceed against the insured to recover the amount paid towards compensation to the victim, as in actuality it is the insured, who is liable to pay the amount. The above safeguard is only for securing justice to the victim and in no way grants any benefit to the insured to wriggle out of such scenario by fastening the liability on the insurer. The joint and several liability would stand fastened on the insurer only when the insured had performed his part of the contract and when the insured fails to perform its contract, the joint and several liability would be only to the extent of the 23 https://www.mhc.tn.gov.in/judis ____________ C.M.A. No.2781/2017 insurer paying the amount of compensation, at the threshold to the victim and, thereafter, taking necessary steps to recover the said amount from the insured.
31. It is common knowledge that any act done in pursuance of receipt of a cheque is always subject to the realisation of the cheque. When the cheque, which is given for performing a part of the contract is not realised, the other party to the contract cannot be clothed with liability to perform its part of the contract and the minimal liability on the insurer is only to the extent of paying the compensation and, thereafter, recovering the same from the insured, provided that the insurer had acted diligently in informing the dishonour of the cheque to the insured. In the present case, within a period of four days, the communication had been sent by the insurer to the insured informing about the dishonour of the cheque and merely because the accident had taken place on the day previous to the day on which the communication had been addressed, it cannot be said that the insurer had knowledge about the accident and, thereafter, had hurriedly sent the 24 https://www.mhc.tn.gov.in/judis ____________ C.M.A. No.2781/2017 communication. No material to the said effect is available in the documents to support such a contention.
32. In this regard, the policy itself is the best document, which stands as evidence for the above. The initial policy was issued for the period 27.3.2013 to 26.3.2013, but upon dishonour of the cheque, the said policy was cancelled on 3.4.2013 and intimation was sent on 10.4.2013, which was received on 11.4.2013. Therefore, between 3.4.2013 and 11.4.2013 and till the revival of the policy, there was no policy in existence, which covers instances of accident caused by the vehicle, which was previously insured. Further, it is also to be pointed out that the renewal of the policy and revival of the policy are two distinct terms and one is not interchangeable with the other. While renewal of the policy gives continuity to the earlier policy without any break, however, revival of the policy, merely revives the old policy from the date on which it is revived and the liability on the insurer starts only from that day and for the period when the renewal premium was not paid, the policy cannot be said to have been in force. Therefore, in the present case, upon dishonour of the cheque, the policy, which was issued on 27.3.2013 stood cancelled and, 25 https://www.mhc.tn.gov.in/judis ____________ C.M.A. No.2781/2017 thereafter, a fresh policy with starting date of 14.4.2013 had been issued and during the interregnum period between 27.3.2013 and 14.4.2013, there was no comprehensive coverage for the vehicle, as the cheque, which had been issued towards payment of renewal premium had stood dishonoured.
33. Further, it is to be pointed out that if any finding rendered that the issuance of cheque would suffice to hold the policy to be valid till such period the communication is addressed by the insurer to the insured would be giving the insured too much leeway, which is impermissible, as it is equally the duty of the insured, who issues the cheque from seeing to it that sufficient funds are available in his account. Any such finding, rendered, would put the insurer on the backfoot and, thereby, would lead to a situation, where the insurer may even desist from accepting cheque towards issuance of a policy.
34. Further one other fact which should also not be lost sight of is that in the grounds the appellant has raised a ground that the finding of the Tribunal with regard to the education and intellectual knowledge of the appellant which also has a bearing on the issuance of the cheque, when the 26 https://www.mhc.tn.gov.in/judis ____________ C.M.A. No.2781/2017 funds are insufficient, according to the appellant, should not have a bearing and be a decisive factor in considering the legal issue. However, the said ground raised is wholly unreasonable for the simple reason that when the Courts have been consistently holding that the insurer should be diligent in communicating to the insured about the dishonour of the cheque, equally, it should also be pointed out that while issuing the cheque, the insured should be diligent enough to know the nuances of cheque bounce, more especially in cases of this nature, particularly, when the insured is a person, well read and knowledgeable. When in normal scenario, a cheque bounce would entail action u/s 138 of the Negotiable Instruments Act, however, under the Motor Vehicles Act, the indemnification is fastened on the insurer to safeguard the victim and it cannot be stretched to the extent of safeguarding the insured as well, which would be against logic and sane thinking and such finding, if rendered, would have disastrous consequences, which would not have the support of law.
35. As stated above, the provisions u/s 147 (5) and 149 (1) are benevolent provisions only insofar as the victim is concerned and it could not 27 https://www.mhc.tn.gov.in/judis ____________ C.M.A. No.2781/2017 be stretched to grant any relaxation to the insured. Therefore, to the limited extent of paying the compensation immediately to the victim, the insurer would be liable and, thereafter, realising the same from the insured in the manner known to law would be well within the domain of the insurer.
36. The decision relied on by the appellant in Chinraj’s case (supra), more particularly, the operative portion in Para-35, wherein S. No.iv, it has been held that where the dishonour of the cheque and the cancellation of the policy are intimated to the insured person before the accident, the insurance company would not be liable to satisfy the award, even the said order clearly reveals in S. No.,iv, that it is incumbent on the insurance company to pay the compensation and, thereafter, proceed to recover it in accordance with law. However, the reliance placed on the decision in Pushpan case with regard to the ineligibility of the insurance company to seek for pay and recover is wholly erroneous as the decision of the Apex Court in Laxmamma case would clinch the issue in favour of the insurance company, as the indemnification of the insurer is only with regard to the victim and not with regard to the insured. 28 https://www.mhc.tn.gov.in/judis ____________ C.M.A. No.2781/2017
37. Further, as stated above, in Pushpan case, the Division Bench had held that it is open to the insurance company to recover the amount from the insured in accordance with law. Further, in the said decision, the Division Bench had also held that it is purely within the domain of the Tribunal to order pay and recover in the facts and circumstances of the case. Such being the position, no fetters could be placed on the insurance company from realising the amount from the insured, who had also equally not acted diligently and, therefore, shifting the blame on the insurer alone would be nothing but perpetrating injustice.
38. In the aforesaid circumstances, the order passed by the Tribunal does not suffer the vice of illegality or perversity and the same is perfectly in order and does not warrant any interference at the hands of this Court. Accordingly, this appeal fails and the same is dismissed. Consequently, connected miscellaneous petition is also dismissed. There shall be no order as to costs.
20.11.2023
Index : Yes / No
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C.M.A. No.2781/2017
GLN
To
The Special Subordinate Judge- I
Motor Accident Claims Tribunal
Salem.
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C.M.A. No.2781/2017
M.DHANDAPANI, J.
GLN
PRE-DELIVERY JUDGMENT IN
C.M.A. NO.2781 OF 2017
Pronounced on
20.11.2023
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C.M.A. No.2781/2017
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