Jharkhand High Court
Oriental Insurance Co. Ltd. vs Neelu Devi And Ors. on 13 June, 2008
Equivalent citations: 2008 (3) AIR JHAR R 548, 2009 A I H C 628, (2008) 3 TAC 151, (2009) 4 ACJ 2262, (2008) 3 TAC 558, (2008) 4 ACC 591
Author: M.Y. Eqbal
Bench: M.Y. Eqbal
JUDGMENT D.K. Sinha, J.
1. This miscellaneous appeal is directed against the award passed by Additional District Judge, Fast Track Court No. III-cum-Motor Vehicle Accident Claims Tribunal, Jamshedpur in Compensation Case No. 38 of 2001 on 4.4.2006, whereby and whereunder, the appellant Oriental Insurance Co. Ltd. was directed to pay a sum of Rs. 5,60,000/- to the claimants-Respondents No. 1 to 4 (third party) by indemnifying the owner of the insured vehicle and satisfying the claim of the claimants minus the amount already paid to the claimants as interim compensation with the interest thereon at the rate of 6 per cent per annum since 22.5.2001.
2. The brief fact of the case was that one Omprakash Verma (since deceased) was travelling in an Ambassador car on 1.4.2000 with other four co-passengers. At about 6 p.m. the Ambassador car collided with the offending truck bearing registration No. MP-26D-0470, allegedly being driven by the driver Harinaryan Yadav @ Harinath Yadav, respondent No. 6 rashly and negligently as a result of which all the five occupants of the Ambassador car including Omprakash Verma sustained grievous injuries.
3. The driver and the cleaner of the offending truck escaped leaving behind the offending truck abandoned at N.H. 33 on its own fate. The injured Omprakash Verma was taken to RMCH, Ranchi for better management of his injuries but he succumbed on 9.4.2000. Pursuant to such accident, a criminal case vide Bundu P.S. Case No. 28 of 2000 was instituted on 1.4.2000 itself for the offence under Sections 279/338/427/304A of the Indian Penal Code.
4. The owner of the offending truck Shyamsundar Choudhary, respondent No. 5 appeared before the Motor Accident Claims Tribunal and pleaded that his vehicle was covered under a policy of the appellant Oriental Insurance Co. Ltd. valid from 29.5.1999 to 28.5.2000 and that the date of accident of his truck viz. 1.4.2000 was covered therefor and the insurer appellant herein was liable to indemnify the insured by compensating the claimants third party.
5. On the other hand, the. appellant Oriental Insurance Co. Ltd. by its rejoinder, outrightly denied and disputed the entire claim of the owner on the ground that the offending truck No. MP-26D-0470 was not insured for the relevant period of accident. The appellant pleaded before the Tribunal that the owner of the offending truck had deposited a cheque for Rs. 5993/- towards premium of the insurance policy in favour of Oriental Insurance Co. Ltd. but the said cheque returned unpaid by the drawee Bank, consequently the insurance policy of the offending vehicle was cancelled as the contract between the insurer and insured as per law of insurance did not subsist.
6. By deciding the relevant issue Nos. 3, 4 and 6, the Tribunal discussed the facts, examined the documents and statement of the witnesses on oath and came to conclusion that the owner of the offending truck Shyamsundar Choudhary issued a cheque of Rs. 5993/- on 28.5.1999 which was tendered at the drawee Piskamore Branch of Central Bank of India which was returned unpaid with the endorsement "Exceeds Arrangements" (Ext.D). The cheque was proved Ext.E whereas copy of the receipt of the cheque issued to the owner was proved Ext.F.
7. The communication made by the appellant Oriental Insurance Co. Ltd. to the owner of the offending truck Shyamsundar Choudhary dated 4.6.1999 was proved and marked Ext.G. The certificate cum policy schedule shows that it was cancelled on 4.6.1999 itself. However, relying upon certain, decisions and the arguments advanced on behalf of the parties the tribunal observed, From the above discussions it has been established that in the instant case, the Insurance Company is liable to the applicants for payment, even though the Insurance policy of the said truck is cancelled for non payment of premium.
8. Yet, the Tribunal was silent as to under which provision of Insurance Law or otherwise the appellant- Insurance Company was liable to pay compensation to the claimants by indemnifying the owner of the offending truck when the insurance policy of the said truck was cancelled for non payment of premium. Such important issue was left unanswered.
9. Mr. Alok Lal, learned Counsel for the appellant submitted that in the event the owner of the vehicle failed to pay the premium promised or when the cheque was issued by him towards the premium of the policy returned unpaid with the endorsement of the Bank, it was open for the insurer to deny his part of promise as no valid contract came into existence between the insurer and the insured in absence of any consideration and in such cases the liability to satisfy the award was totally upon the owner and not upon the insurer- appellant.
10. Mr. Lal further submitted that appellant by Ext.G informed the owner that the policy of the truck was cancelled on 4.6.1999 prior to the date of accident on 1.4.2000, therefore, the factum of cancellation of the policy was within the knowledge of the owner and it was relevant to mention that inspite of such knowledge, no premium was paid by the owner to the appellant-Insurance Company to cover the risk of the offending truck any time before the alleged accident and hence owner alone was liable to pay the compensation. Concluding his argument, Mr. Lal exhorted that none of the provisions of the Motor Vehicles Act, 1988 had overriding effect over Section 64(v)B of the Insurance Act and as such it was clear that if the premium was not paid in advance, risk under the insurance would not be covered.
11. We have heard the learned Counsel for the respondent No. 5 also who is the owner of the offending truck.
12. We find certain facts from the perusal of the materials on record viz:
(i) The motor accident took place on 1.4.2000 on account of collision between Ambassador car and truck No. MP-26D-0470, as a result of which all the occupants of the car sustained grievous injuries and one of the occupants Omprakash Verma succumbed on 9.4.2000 whereas the driver and cleaner of the offending truck escaped.
(ii) The owner of the said truck had earlier deposited a cheque of Rs. 5993/- (Ext.E) on 28.5.1999 prior to such accident towards premium of insurance policy in favour of the appellant Oriental Insurance Co. Ltd. of his truck No. MP-26D-047.
The cheque was tendered by the appellant before the drawee Bank on 2.6.1999 (Ext.C) which was returned unpaid with the endorsement (Ext.D) "Exceeds Arrangements."
(iii) Communication was made by the appellant Oriental Insurance Co. Ltd. to the owner-respondent No. 5 on 4.6.1999 in respect of return of the cheque unpaid under intimation that no claim would be entertained as the said policy was cancelled and the owner of the truck was requested to return back the policy particulars to the appellant Oriental Insurance Co. Ltd.
13. Similar situation fell for consideration and the Orissa High Court in Oriental Fire & General Insurance Co. Ltd. v. Shantilata Das and Ors. , observed in the following manner, The insurer was required to be satisfied that all the requirements for issuance of a policy were complied with. A vehicle was permitted to ply on the road only against a valid insurance policy to cover the liability. On being satisfied that the vehicle was insured, the transport authorities used to issue the 'token' authorizing the vehicle to run on the road and not otherwise. Section 105 of the Motor Vehicles Act puts condition upon the Insurance Company to notify the registering authority regarding the cancellation or suspension of the policy. It was held that the policy once issued cannot automatically become void because the cheque bounced. If the Insurance Company was cheated and was made to issue such a policy, the Company is not without remedy to mitigate its grievances, but it cannot be exempted from its liability under the policy. It was finally held as the appellant- Insurance Company has not intimated the fact of cancellation of the policy to the transport authorities within the time prescribed under Section 105 of the Motor Vehicles Act, therefore, the irresistible conclusion would be that it cannot be absolved of its obligation to third parties under the policy only on the ground that it did not receive the premium", the Orissa High Court held.
14. Hon'ble Supreme Court of India in Deddappa and Ors. v. The Branch Manager, National Insurance Co. Ltd., reported in 2007 AIR SCW 7948, under similar situation observed:
The statutory liability of the Insurance Company vis-a-vis a third party in the context of Sections 147 and 149 of the Act, 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, the insurance company would not be liable to satisfy the claim. A beneficial legislation as is well known should 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.
Thus, where the cheque issued by insured towards premium was dishonoured and as a result Policy of Insurance was cancelled and intimation of cancellation was given to insured much prior to accident, the insured was not liable to pay compensation. However, since claimant hailed from the lowest strata of society, Court in exercise of its powers under Article 142 directed insurer to pay compensation and recover it from owner.
15. In the present case, we find that the cheque issued by the owner-respondent No. 5 returned unpaid by the drawee's Bank on 2.6.1999 and in that manner in view of the propositions of law as laid down, there is no merit in the argument of Mr. Alok Lal, the counsel for the appellant, that it was open for the insurer Oriental Insurance Co. Ltd. to deny his part of promise as no valid contract came into existence between the insurer and the insured and therefore, liability to satisfy the award rests upon the owner and not upon the insurer- appellant.
16. After return of the cheque unpaid in the aforesaid situation, what the appellant Insurance Company was required to do was to immediately inform the owner (insured) of the vehicle who had issued the cheque acknowledgement due and also to the Transport Authority/Registering Authority by whom the permit/token used to be issued for plying of the vehicle in question. Admittedly, none of the provisions of the Motor Vehicles Act, 1988 had overriding effect over Section 64(v)B of the Insurance Act which deals with risk covered under insurance policy and it speaks, (1) No insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily, payable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and until deposit of such amount as may be prescribed, is made in advance in the prescribed manner.
(2) For the purposes of this section, in the case of risks for which premium can be ascertained in advance, the risk may be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the insurer.
17. Apex Court in Deddappa and Ors. v. The Branch Manager, National Insurance Co. Ltd. (supra), observed:
26. 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.
18. In the instant case, we find that there was no evidence on the record in support of the claim of the appellant Oriental Insurance Co. Ltd. that the cancellation of the policy particulars of the offending truck in question on 2.6.1999 was communicated to the owner of the truck on 4.6.1999 against receipt/acknowledgement. Similarly no evidence was led by the appellant-insurer in respect of any communication made to the Transport Authority/Registering Authority regarding cancellation of the insurance policy of the truck No. MP-26D-0470 so as to shift the third party liabilities upon the owner respondent.
19. Under the aforesaid premises, we find that the appellant Oriental Insurance Co. Ltd. failed to discharge its burden by not giving intimation to the owner against acknowledgement as well as the appropriate authority. In absence of such acknowledgement/receipt we observe that there shall be presumption of insurance of the offending vehicle in question against the valid policy and the insurer appellant is bound to compensate the claimants by indemnifying the insured-owner. The appeal of the appellant Oriental Insurance Co. Ltd., therefore, fails and accordingly, it is dismissed with the direction to the appellant Oriental Insurance Co. Ltd. to pay the compensation amount to the respondent Nos. 1 to 4 (third party) with the interest as awarded by the Tribunal, within four weeks.
This appeal is dismissed.
M.Y. Eqbal, Acting C.J.
20. I agree.