Karnataka High Court
Bajaj Allianz General Insurance Co Ltd vs S Nataraj on 24 February, 2022
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 24th DAY OF FEBRUARY 2022
BEFORE
THE HON'BLE MR. JUSTICE P. KRISHNA BHAT
MISC. FIRST APPEAL NO.8419/2010(MV)
BETWEEN
BAJAJ ALLIANZ GENERAL INSURANCE CO. LTD.,
105A/ 107A, CEARS PLAZA, I FLOOR
136, RESIDENCY ROAD, BANGALORE - 25
NOW SITUATED AT
BAJAJ ALLIANZ GENERAL INSURANCE CO. LTD
# 31, GROUND FLOOR, TBR TOWER,
I CROSS, NEW MISSION ROAD
ADJACENT TO JAIN COLLEGE
BANGALORE - 560 027.
... APPELLANT
(BY SRI.A.N.KRISHNASWAMY, ADVOCATE)
AND
1. S.NATARAJ
S/O SATHYANARAYANA RAO
NOW AGED ABOUT 37 YEARS
R/AT # 88, 8TH CROSS, I MAIN
MALATHAHALLI, N G E F LAYOUT
MAIN ROAD, BANGALORE - 560 056
2. SMT.K.BASAVAMADHAVI
W/O K.RAMAKRISHNA, MAJOR
M/S J.K.TRANSPORTS, NO.47
PADMA NILAYA, 3RD CROSS
CHANDRA LAYOUT, VIJAYANAGARA
BANGALORE - 560 040
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3. THE MANAGING DIRECTOR
B M T C CENTRAL OFFICE
K H ROAD, SHANTHINAGARA
BANGALORE - 560 027. ...RESPONDENTS
(BY SRI. PRADEEP NAIK.K., ADVOCATE FOR R-1
SRI.K.NAGARAJ, ADVOCATE FOR R-3)
V/O DATED 17.03.2016 SERVICE OF NOTICE TO R-2 IS
DEEMED TO BE COMPLETE.
THIS MFA IS FILED UNDER SECTION 173(1) OF MV
ACT AGAINST THE JUDGMENT AND AWARD DATED
19.02.2010 PASSED IN MVC NO.610/2008 ON THE FILE OF
THE 14TH ADDITIONAL JUDGE, COURT OF SMALL CAUSES,
MACT, BENGALURU, AWARDING A COMPENSATION OF
RS.56,550/- WITH INTEREST @ 8% P.A. FROM THE DATE OF
PETITION TILL DEPOSIT IN COURT.
THIS APPEAL COMING ON FOR FINAL HEARING, THIS
DAY, THE COURT DELIVERED THE FOLLOWING:
JUDGMENT
This appeal is at the instance of the Insurance Company calling in question the correctness of judgment and award dated 19.02.2010 in M.V.C. No.610/2008 passed by 14th Addl. Judge, Motor Accident Claims Tribunal, Court of Small Causes, Bengaluru city, awarding a compensation of `56,550/- (Rupees Fifty six thousand 3 five hundred fifty only) with interest thereon for the bodily injuries suffered.
2. The substantial contention of the learned Counsel for the appellant is that the cheque issued by the owner of the vehicle towards payment of premium was returned by the banker dishonoring the same and therefore, the policy of insurance was rendered void abinitio for non-payment of consideration amount and therefore the Insurance Company is not liable to pay the compensation. It is therefore submitted that the direction in the award to the Insurance Company to pay the compensation awarded is illegal and liable to be set aside.
3. Perusal of the records including the impugned judgment and award shows that the appellant-Insurance Company had issued a policy of insurance for the period commencing from 14.08.2007 to 13.08.2008 to the offending vehicle. The accident occurred on 25.08.2007 4 resulting in injuries to the claimant. On account of the dishonor of the cheque issued by the insured towards payment of premium, the appellant-Insurance Company issued a cancellation of premium letter dated 13.09.2007, that is, subsequent to the occurrence of the accident. The question now is whether in the facts and circumstances of this case the policy of Insurance issued under Ex. R-1 is rendered void ab initio for non-payment of premium by the insured owner due to the dishonor of cheque and therefore, no liability can be fastened on the appellant- Insurance Company to pay the compensation as directed by the Learned MACT on the impugned judgment and order?
4. The above question is covered by a decision of the Hon'ble Supreme Court in Vijay Singh vs State Of Uttar Pradesh & Others (2012) 5 SCC 242. The relevant observations of the Hon'ble Supreme Court at para No.26 and 27 read as follows;
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" 26. In our view, the legal position is this: where the policy of insurance issued by an authorized insurer on receipt of cheque towards the payment of premium and such a cheque is returned dishonored, the liability of the authorized insurer to indemnify the third parties in respect of the liability which that policy covered subsists and it has to satisfy the award of compensation by reason of the provisions of Sections 147(5) and 149(1) of the MV Act unless the policy of insurance is cancelled by the authorized insurer and intimation of such cancellation has reached the insurer before the accident. In other words, where the policy of insurance is issued by an authorized insurer to cover a vehicle on receipt of the cheque paid towards premium and the cheque gets dishonored and before the accident of the vehicle occurs, such insurance company cancels the policy of insurance and sends intimation thereof to the owner, the insurance company's liability to indemnify the third parties which that policy covered ceases and the insurance company is not liable to satisfy awards of compensation in respect thereof.
27. Having regard to the above legal position, insofar as the facts of the present case are concerned, the owner of the bus obtained the policy of insurance from the insurer for the period 16.4.2004 to 15.04.2005 for which premium was paid 6 through cheque on 14.04.2004. The accident occurred on 11.05.2004. It was only thereafter that the insurer cancelled the insurance policy by communication dated 13.05.2004 on the ground of dishonor of cheque which was received by the owner of the vehicle on 21.05.2004. The cancellation of policy having been done by the insurer after the accident, the insurer became liable to satisfy the award of compensation passed in favour of the claimants".
5. As already noticed in this case, the cancellation of the policy letter was issued by the appellant- Insurance Company by a letter dated 13.09.2007 that is subsequent to the occurrence of the accident on 25.08.2007. In view of the above decision of the Hon'ble Supreme Court, the contention of the appellant that it is not liable to pay the compensation amount is therefore untenable.
6. Accordingly, there is no merit in the appeal and it is liable to be dismissed.
7. Hence, the above appeal is dismissed. 7
8. The appellant Insurance Company is liable to pay the compensation as directed in the impugned judgment and award.
The amount in deposit shall be transmitted to the learned MACT along with records forthwith.
Sd/-
JUDGE GVP/HDK