Karnataka High Court
M/S Icici Lombard General Insurance ... vs Jagadeesh Doddamani on 29 September, 2022
Author: Hanchate Sanjeevkumar
Bench: Hanchate Sanjeevkumar
1 MFA NO.3625/2014
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 29TH DAY OF SEPTEMBER, 2022
BEFORE
THE HON'BLE MR. JUSTICE HANCHATE SANJEEVKUMAR
M.F.A.NO.3625/2014 (MV-I)
BETWEEN:
M/S ICICI LOMBARD GENERAL
INSURANCE COMPANY LIMITED,
NO.89, 2ND FLOOR,
S.V.R. COMPLEX,
HOSUR MAIN ROAD,
MADIWALA,
BANGALORE-560068.
REP. BY ITS MANAGER LEGAL
... APPELLANT
(BY SRI.LAKSHMI NARASAPPA, ADVOCATE FOR
SRI. A.M.VENKATESH, ADVOCATE, THROUGH VIDEO
CONFERENCE)
AND:
1. JAGADEESH DODDAMANI,
S/O BHARAMAPPA DODDAMANI,
ASSISTANT AGRICULTURAL OFFICER,
R/O OLD TAHASILDAR ROAD,
HARIHAR,
DAVANAGERE DISTRICT
2. K. KOTRAPPA,
S/O MAHENDRAPPA,
AGE:MAJOR,
OWNER OF TATA ACE GOODS VEHICLE,
BEARING NO.KA-17/A-4140,
R/O KAMALAPURA VILLAGE
2 MFA NO.3625/2014
HARIHAR TALUK,
DAVANAGERE DISTRICT
... RESPONDENTS
(BY SRI. RAJASHEKAR K., ADVOCATE FOR R1,
SRI. BALU MAHENDRA, ADVOCATE FOR R2,
R3-NOTICE HELD SUFFICIENT V/O DATED:21-11-2017)
THIS M.F.A IS FILED UNDER SECTION 173(1) OF MV
ACT AGAINST THE JUDGMENT AND AWARD
DATED:4.1.2014 PASSED IN MVC NO.33/2008 ON THE
FILE OF THE SENIOR CIVIL JUDGE & MEMBER, ADDL.
MACT, HARIHAR, AWARDING COMPENSATION OF
RS.50,000/- ALONG WITH INTEREST AT 6% P.A. FROM
THE DATE OF PETITION TILL DEPOSIT AND ETC.,
THIS M.F.A. COMING ON FOR ADMISSION THIS DAY,
THE COURT DELIVERED THE FOLLOWING:
JUDGMENT
This appeal is filed under Section-173(1) of the Motor Vehicles Act 1988 (hereinafter referred to as 'MV Act' for brevity) by the appellant-insurance company, challenging the judgment and award dated 04.01.2014, passed in M.V.C.No.33/2008, on the file of the Senior Civil Judge And Additional MACT, 3 MFA NO.3625/2014 Harihar, (hereinafter referred to as 'the Tribunal' for brevity) questioning the liability fastened on the insurance company.
Brief facts:
2. On 06.09.2007 at about 10.00 a.m., when the claimant was traveling on his motor bike bearing registration No.KA-17-J-9605, near Vijaya Bank at Harihar on Old P.B. Road, in order to go to Hanagawadi Village, at that time, the TATA ACC Goods auto rickshaw bearing registration No.KA-17-A-4140, driven by respondent No.1 came from behind in a rash and negligent manner and dashed the motor cycle in which the claimant was riding. As a result, the claimant sustained grievous injuries.
3. Hence, a claim petition was filed by the claimant under Section-166 of the M.V. Act, claiming compensation for the injuries sustained in the accident. The Tribunal on appreciating the materials on record, allowed the petition in part, and awarded a 4 MFA NO.3625/2014 compensation of Rs.50,000/-, along with interest at 6% per annum from the date of petition till the date of realization. The Tribunal held the insurance company is liable to pay the compensation.
4. The learned counsel for the appellant -
insurance company submitted that in the present case the Cheque issued by respondent No.2 - owner towards payment of insurance premium was dishonored on 31.10.2006 and an endorsement was sent to the owner and received on 14.11.2006, but the accident has occurred on 06.09.2007. Therefore, the insurance company is not liable to pay the compensation muchless from the owner.
5. Further, submitted that upon dishonor of Cheque, the said information was intimated and also cancellation of insurance policy was intimated to the owner. But thereafter the owner had not opted to make payment of premium. Therefore, there is no 5 MFA NO.3625/2014 insurance coverage as on the date of the accident. But the Tribunal has erroneously fastened the liability on the insurance company and hence prays to allow the appeal by exonerating the insurance company.
6. On the other hand, the learned counsel for respondent No.1-claimant submitted that the insurance company has not intimated the owner regarding the cancellation of insurance policy. Therefore, the insurance company is liable to pay the compensation and this is rightly observed by the Tribunal. Hence, there is no need to make any interference in this regard. Further, submitted that there is no evidence on the part of the insurance company to prove that the intimation was reached to the owner and the owner has received the same. Hence in the absence of it, the owner is not liable to pay the compensation and that is observed rightly by the Tribunal and hence prays for dismissal of the appeal.
6 MFA NO.3625/2014
7. Learned counsel for respondent No.2-owner of the vehicle endorsed the same argument canvassed by the counsel for the claimant. In the present case, the Tribunal has fastened the liability on the insurance company on the ground that the insurance company has not produced evidence to show that the cancellation of policy and intimation was not reached to the owner and in this regard there is no evidence regarding receipt of intimation. Hence, the Tribunal had fastened the liability on this ground on the insurance company.
8. Undisputedly the accident has occurred on 06.09.2007. Respondent No.2 owner made the premium through cheque No.060610, dated 26.10.2006, Exhibit-R9. The said cheque was presented to the banker and the said cheque was dishonoured and in this regard as far as Exhibit-R10, cancellation of insurance was intimated to the 7 MFA NO.3625/2014 respondent No.2, owner on 14.11.2006. Therefore, undisputedly the cheque was drawn much prior to the accident and the intimation dated 14.11.2006 was forwarded. It is the contention of respondent Nos.1 and 2 that the insurance company has not produced evidence about intimating the cancellation of policy to the owner. Therefore, submitted the insurance company is liable to pay the compensation. The chronological events in the present case has to be appreciated.
9. The accident is caused after morethan ten months from the date of dishonour of the cheque. Respondent No.2 before the Tribunal had examined the Bank Manager as RW-2. This Bank Manager - RW- 2 had stated that he had received the cheque of the account holder who is the owner in the present case on 31.10.2006 and since there is no sufficiency of funds, it was dishonoured and deducted a sum of Rs.100/- as penalty from the account of Respondent 8 MFA NO.3625/2014 No.2 - owner and reflected in the Statement of Account. There is no cross-examination to this effect by any of them, either by the claimant or the owner of the vehicle.
10. RW-2 had produced Exhibits-R3 to R8, are the statements of salary earnings, Account extract, statement of account, clearing house settlement sheet, certified copy of debit voucher for Rs.100, respectively. Upon perusing the same, it is proved that the cheque issued by respondent No.2 owner to the appellant-insurance company towards payment of premium was dishonoured for want of sufficiency of fund and the bank imposed penalty of Rs.100/- reflected in the Bank statement. Therefore, the cheque was dishonored and accordingly as per Exhibit-R10 the Cancellation of insurance which the appellant - insurance company has sent intimation of cancellation of Insurance Coverage Note No.GD3150201. But the question to be considered in 9 MFA NO.3625/2014 the present case is that if respondent No.2 owner has not received the said cancellation of insurance coverage, whether the insurance company can be held liable.
11. An Insurance Policy is basically a contract between insurer and insured for purchasing the insurance policy. The consideration is to be paid by the owner. The premium shall also be paid through cheque and in this regard the Hon'ble Apex Court judgment in the case of DEDDAPPA AND OTHERS vs. BRANCH MANAGER, NATIONAL INSURANCE COMPANY, reported in (2008) 2 SCC 595, has observed at para-21, 22 and 23 which reads as follows:
"20. A contract is based on reciprocal promise. Reciprocal promises by the parties are condition precedents for a valid contract.
A contract furthermore must be for
consideration.
10 MFA NO.3625/2014
21. In today's world payment made by cheque is ordinarily accepted as valid tender. Section 64-VB of the 1938 Act also provides for such a scheme.
22. Payment by cheque, however, is subject to its encashment. In Damadilal & Ors. v. Parashram & Ors. SCC pp. 865-66, para-13):
"13. On the ground of default, it is not disputed that the defendants tendered the amount in arrears by cheque within the prescribed time. The question is whether this was a lawful tender. It is well-established that a cheque sent in payment of a debt on the request of the creditor, unless dishonoured, operates as valid discharge of the debt and, if the cheque was sent by post and was met on presentation, the date of payment is the date when the cheque was posted..."
23. Recently again in New India Assurance Co. Ltd. v. Harshadbhai Amrutbhai Modhiya and Anr. [(2006) 5 SCC 192], although in the context of the Workmen's Compensation Act, 1923, Balasubramanyan, J opined :
"24....It is not brought to our notice that there is any other law enacted which stands in the way of an insurance company and the insured entering into a contract confining the 11 MFA NO.3625/2014 obligation of the insurance company to indemnify to a particular head or to a particular amount when it relates to a claim for compensation to a third party arising under the Workmen's Compensation Act. In this situation, the obligation of the insurance company clearly stands limited and the relevant proviso providing for exclusion of liability for interest or penalty has to be given effect to. Unlike the scheme of the Motor Vehicles Act the Workmen's Compensation Act does not confer a right on the claimant for compensation under that Act to claim the payment of compensation in its entirety from the insurer himself".
It was further observed:-
"23. The law relating to contracts of insurance is part of the general law of contract. So said Roskill, L.J. in Cehave v. Bremer. This view was approved by Lord Wilberforce in Reardon Smith v. Hansen- Tangen (All ER p. 576 h ) wherein he said:
"It is desirable that the same legal principles should apply to the law of contract as a whole and that different legal principles should not apply to different branches of that law."
A contract of insurance is to be construed in the first place from the terms used in it, which 12 MFA NO.3625/2014 terms are themselves to be understood in their primary, natural, ordinary and popular sense. (See Colinvaux's Law of Insurance , 7th Edn., para 2-
01. A policy of insurance has therefore to be construed like any other contract. On a construction of the contract in question it is clear that the insurer had not undertaken the liability for interest and penalty, but had undertaken to indemnify the employer only to reimburse the compensation the employer was liable to pay among other things under the Workmen's Compensation Act. Unless one is in a position to void the exclusion clause concerning liability for interest and penalty imposed on the insured on account of his failure to comply with the requirements of the Workmen's Compensation Act of 1923, the insurer cannot be made liable to the insured for those amounts.""
12. The payment for cheque is subject to cheque encashment. If the cheque is dishonored much prior to the accident and if the owner is having knowledge regarding the cheque is dishonored that is sufficient to exonerate the insurance company. Since 13 MFA NO.3625/2014 the cheque was dishonored and the owner has knowledge regarding the said dishonor of cheque, then in such an event, it can be said that there cannot be effective coverage of insurance policy as on the date of the accident.
13. In the present case, the counsel for the insurance company has argued on the point Exhibit-R10 intimation of cancellation of insurance policy is not communicated to the owner. Exhibit-R13 is the envelop issued by the insurance company to the respondent No.2 - owner of the vehicle having sent intimation of cancellation of insurance policy, but the said envelope was returned to the insurance company, with a postal intimation that the 'Addressee' (owner herein) is not residing in the village. Therefore, the appellant - insurance company has made its best efforts to communicate the said intimation of cancellation of insurance policy to the owner. Therefore, just because the said intimation was not 14 MFA NO.3625/2014 reached to the respondent No.2 - owner that cannot be a ground for the owner to take shelter that the intimation was not received. Therefore, he prays that he is not liable to pay the compensation. But here the concept of the sending intimation to the owner is inviting his attention that the premium was not paid to the insurance company. Thus, breaking down the contract of the insurance. Here the conduct of respondent no.2 that is also to be appreciated in the light of chorological events in the present case.
14. On this aspect, undisputedly the Cheque was issued on 26.10.2006 towards payment of premium to the appellant - insurance company. The same was dishonored on 31.10.2006 was intimation of cancellation of insurance policy is 14.11.2006, as per Exhibit-R10 and the said intimation was forwarded through registered post to respondent No.2-owner. But it was returned with a postal shara that 'addressee is not residing in the village'. The accident 15 MFA NO.3625/2014 has occurred on 06.09.2011. Therefore, there is a gap of more than 10 months from the date of dishonor and the accident.
15. Upon perusal of the bank statement furnished by RW-2-Bank Manager, even on the date of the dishonor of cheque, a penalty of Rs.100 was imposed on respondent No.2 and respondent No.2 had made several transactions with the bank viz., crediting and debiting of amounts. Therefore, under these circumstances it can be inferred that the owner had knowledge about the cheque dishonor and has not made any effort for making payment to the appellant
- insurance company.
16. Upon perusing the bank statement enclosed as Exhibits-R2 to R4, certainly all these ten months the respondent No.2 - owner has made several bank transactions. Therefore, respondent No.2 is presumed to be having knowledge regarding cheque 16 MFA NO.3625/2014 dishonour. In view of this context, the intimation of cancellation of insurance policy, on account of dishonour of cheque is still considered as a formality of sending intimation to the owner regarding the transaction between the insurer and insured and bringing to the knowledge regarding cancellation of insurance coverage of the vehicle. Upon considering the contention of the owner and he being the owner of the vehicle doing business and doing several transactions with the bank after dishonour of cheque, nearly 10 months he has not taken any recourse for making payment to the appellant - insurance company. Therefore, it can be construed that respondent No.2 had knowledge regarding the cheque dishonour and consequently cancellation of insurance policy. Therefore, the appellant - insurance company is not liable to pay the compensation for the reasons above discussed. Therefore, under these circumstances, I pass the following: 17 MFA NO.3625/2014
ORDER i. The appeal is ALLOWED.
ii. The impugned judgment and award dated 04.01.2014, passed in M.V.C.No.33/2008, on the file of the Senior Civil Judge And Additional MACT, Harihar, is modified.The liability to pay the compensation awarded by the Tribunal is fastened on respondent No.2 - owner. Consequently, the appellant is exonerated from payment of compensation.
iii. The amount in deposit shall be refunded to the appellant insurance company.
iv. Registry is directed to return the Trial Court Records to the Tribunal, along with certified 18 MFA NO.3625/2014 copy of the order passed by this Court forthwith without any delay.
v. Draw award accordingly.
vi. No order as to costs.
Sd/-
JUDGE
JJ