Karnataka High Court
The Oriental Insurance Co. Ltd., ... vs Smt. Kashamma W/O. Late Manik And Ors. on 10 July, 2006
Equivalent citations: 2008ACJ222, AIR 2008 (NOC) 13 (KAR.) = 2007 (6) AIR KAR R 377, 2007 (6) AIR KAR R 377, 2008 A I H C 439, (2008) 6 KANT LJ 272, (2008) 1 ACJ 222
Author: K. Ramanna
Bench: K. Ramanna
JUDGMENT K. Ramanna, J.
Page 2162
1. This appeal is directed against the judgment and sward made by the additional Civil Judge, Bidar in MVC. No. 153/2001 on the file of the Addl. Civil Judge (Sr. Dn.) & Motor Accident Claims Tribunal-III, Bidar, whereby the Member of the Claims Tribunal directed the appellant Insurance Company to pay a global compensation of Rs. 2,05,200/-together with interest @ 8% p.a. from the date of petition till the date of deposit, to the respondent-claimants.
Page 2163
2. Assailing the said judgment and award the Insurance Company has come up with this appeal mainly urging on the ground that the Court below committed an error in making the appellant liable to satisfy the award, even after the appellant proved the cancellation of the insurance policy by producing EXS.R-1 to R-8 and that it is not justified in adopting the negative approach to make the appellant liable to pay the compensation even in the absence of subsisting policy. It is the case of the appellant that the policy came to be cancelled much prior to the date of accident and the cancellation of policy was intimated to the 7th respondent by registered post. Therefore the appellant is not liable to indemnify the owner of the vehicle and the evidence recorded by the trial court is liable to be dismissed.
3. Heard the arguments of the learned Counsel for the appellant and the learned Counsel for the respondents 1 to 7.
4. The admitted foots are that Manik - husband of respondent No. 1, father of the minor children - respondents 2 to 5 and son of Chinnamma - respondent No. 6, died in the motor vehicle accident. Respondent No. 7 is the owner of the lorry bearing No. MH-13 B-527. The deceased Manik was a pedestrian, on that day i.e. on 19.3.2001 at about 7.45 a.m. the deceased was returning to his village Mangalgi on NH.9, when the driver of the lorry came in a rash and negligent manner and dashed against the deceased, as a result he succumbed to the injuries, while undergoing treatment in Osmania Hospital. Incidentally the death of late Manik is not being disputed by either party. The appellant herein has taken a contention that respondent No. 7 being the owner of the vehicle issued a cheque towards the premium and the same came to be dishonoured, the dishonoured cheque is marked as Ex.R-1. Ofcourse immediately after the receipt of cheque, a policy came to be issued covering the risk of the 7th respondent which was in force from 29.11.2000 to 28.11.2001 and when the cheque was presented for encashment it was dishonoured with an endorsement as per Ex.R-3 stating that the funds are insufficient.
5. Therefore, the appellant cancelled the policy as per Ex.R-6 issued in anticipation of the encashment of the cheque, which was received towards payment of premium. So immediately after the dishonour of the cheque insurance company sent a letter Ex.R-5 dated 1.1.2001 under a registered post and the cancelled policy is marked as Ex.R.6 and copy of the cancelled receipt as Ex.R-7; that the accident in question occurred on 19.3.2001 by the time the accident occurred, the insurance policy is said to have been cancelled by the appellant. The Tribunal fixed the liability on the insurance company, against which the insurance company has come up with this appeal.
6. During the course of the argument, Sri. Seetharama Rao - learned Counsel for the appellant submitted that the usual practice adopted by the insurance company is that either immediately on receipt of the cash or cheque the policy was being issued. In the instant case immediately on Page 2164 receipt of the cheque Ex.R-1 the policy came to be issued covering the risk of the owner w.e.f. 29.11.2000 to 28.11.2001 but the cheque issued by the owner of the vehicle towards the premium came to be dishonoured when it was presented for encashment, therefore, appellant cancelled the policy. Hence it is clear that before the accident took place, the policy issued was cancelled and the same was intimated to the owner by sending a letter through registered post. Therefore, the liability fastened on the appellant by the Member of the Claims Tribunal is incorrect. Therefore, the present appeal is to be allowed setting aside the liability fixed on the appellant.
7. In support of his contention the learned Counsel for the appellant has relied upon the decision in the case of New India Assurance Co. Ltd. v. Rula and Ors. wherein the honourable Apex Court has hold the cancellation of the insurance policy on the ground that the cheque through which premium was paid was dishonoured and the policy was issued on 8.11.1991 but the cheque was dishonoured on 16.11.1991 when the vehicle met with an accident on 8.11.1991 resulting in death of three persons and the contract would not be valid as then cannot be any contract without considerations and under Section 64 VB of the Insurance Act, no risk can be presumed unless the premium was collected in advance.
Therefore, it is contended that the liability saddled on the appellant by the Member of the Motor Accident Claims Tribunal is incorrect and the appellant is not liable to pay any compensation. Learned Counsel has also relied on another decision in the case of Oriental Insurance Co. Ltd., v. Inderjit Kaur and Ors. reported in AIR 1998 SC 588 wherein it has been held that in this case the insurance policy was issued but the cheque issued towards the premium was dishonoured and the Insurance company sent a letter to the insurer stating that the cheque has not been encashed. Therefore, the Insurance Company was not liable to cover the risk.
Therefore, the counsel for the appellant submits that in the instant case the accident took place after the cancellation of the policy. Therefore, the appellant is not liable to pay any compensation. However, he has argued that under Section 2 of the General Clauses Act, notice issued under registered post is to be presumed that notice was duly served. There is no change of address furnished by the owner of the vehicle to send the notice to the correct address, whatever the address that has been furnished along with the form to issue insurance policy, the notice has been issued to that address Therefore, the appellant is not liable to pay the compensation. It is Page 2165 further argued that when the respondent No. 7 appear before the Court and contest the matter seriously, even after coming to know about the fact that the cheque issued by him was dishonoured, he has not paid any premium either by way of cash or through DD. Therefore, when the owner of the vehicle failed to pay the premium prior to the accident, issuance of the policy only on the basis of cheque sent by the respondent No. 7 cannot become a valid contract unless the cheque issued by R-7 is honoured, the contract will not be completed. Therefore, the appellant is not liable to indemnify the owner of the vehicle. Therefore, the question of appellant being liable to pay whatever compensation awarded by the MACT in favour of the respondents 1 to 6 does not arise, it is the owner alone who is liable to pay the compensation.
8. As against this learned Counsel for respondents 1 to 6 -claimants submits that when once the policy has been issued notwithstanding the fact that the cheque issued was encashed or not, then it is the liability of the insurance company to discharge the award or indemnify the owner of the vehicle. Therefore, the Tribunal is right in fixing the liability on the insurer of the vehicle.
9. Whereas the learned Counsel for respondent No. 7 contends that as per Section 147(5) of the Act after the insurance company purported to endorse the cancellation of the insurance policy on the ground of dishonour of the cheque. The insurer-appellant ought to have given notice to the registered owner or it would how adopted any proceedings for cancellation of policy as required under the Act. Therefore, the appellant is not discharged from the duty and it has to indemnify the owner of the vehicle. It is argued that the question of recovery from the owner of the vehicle does not arise, when once the policy come to be issued, then it is the duty of the appellant to comply the award. On this aspect learned Counsel for the respondent No. 7 draws the attention of the Court to paragraph 6 of the judgment reported in the case of Oriental Insurance Co. Ltd. v. Prakash Chunilal Mirgany and Ors. wherein it is held; whether the premium is paid or not, is not the concern of the 3rd party. The concern of the 3rd party is that there was a policy in respect of the vehicle involved in the accident and it is on the basis of the policy that the claim petition can be maintained against the insurer. If on the date of the accident there was a policy in respect of the vehicle in question, 3rd party would have claimed against the insurance company and the owner of the vehicle will have to be indemnified in respect of the claim of the 3rd party. Subsequent cancellation of the insurance policy on the ground of non-payment of premium could not have affected the rights which has already accrued in favour of the 3rd party. So in the instant case the respondents 1 to 6 are the 3rd parties who are the legal heirs of the victim of the road traffic accident, who have lost the earning member of the family. Therefore, dishonour of the cheque issued by the insured and subsequent cancellation Page 2166 of the insurance policy will not affect the lights of the claimants who have lost their earning member.
10. In the instant case the appellant has informed about the dishonour of the cheque much prior to the date of accident. But the respondent No. 7 has not paid the premium even after intimation given to him on 2.2.2001 under a registered letter sent to him. Therefore, respondent No 7 who is the owner of the vehicle is duty bound to at least pay the premium after dishonour of the cheque and that in the present case R-7 has not stopped into the witness box to say that policy premium is subsequently paid, so the finding of the Tribunal, about the subsequent payment of premium, before the accident took place is not proper to saddle the liability on the insurance company. In this regard, the counsel for respondent No. 7 has relied on another decision of the Supreme Court in the case of Oriental Insurance Co. Ltd. v. Inderjit Kaur and Ors. reported in AIR 1998 SC 580 wherein it is held that as per Section 64 VB liability is on tine insurance company in spite of the insurer issues policy to cover risk without receiving premium.
Therefore, the tribunal who rightly fixed the liability on the insurance company i.e. to pay the compensation by relying on the decisions of the Apex Court.
11. Respondent No. 7 who being the owner of the vehicle though appeared through counsel filed a separate written statement but appellant has not taken the contention before the Tribunal that the policy was issued in favour of respondent No. 7 only on the basis of the cheque, but the cheque issued came to be dishonoured and therefore it has cancelled the insurance policy with due intimation to respondent No. 7. When there is no pleadings as such to that effect, the evidence adduced by the appellant through its officer will not become the proof. Any amount of proof without pleadings is not of any consequence.
12. In the instant case it is not the case of the respondent No. 7 that after receipt of the intimation, he has paid the premium, and insurance policy is issued in his favour. Thus in the instant case the accident occurred after the cancellation of the insurance policy. Therefore, under Section 147- 2-VB of the Motor Vehicles Act, it is for the appellant to indemnify the owner of the vehicle.
13. In the recent judgment in the case of Oriental Insurance Company Limited v. Basavaraju and Ors. it is held that "Section 149(5) of the Motor Vehicles Act, cannot come to the rescue of the claimants as the case in question did not involve breach of the condition of policy. Therefore, this Court by relying on the decision of the Apex Court in the case of New India Assurance Company v. Rula and Ors. held that the Insurance Page 2167 company is held responsible for claiming from the insured to enable recovery of the amount from the owner."
14. Therefore, in the instant case the Tribunal ought to have relied on the decision of the Apex Court reported in 2001 ACJ 843 wherein it has held that the insurance company should pay and recover the amount. The insurance company without waiting for the encashment of the cheque issued the policy which cheque came to be dishonoured. Therefore, taking into consideration the facts and circumstances of the case, when the respondent No. 7 failed to pay the premium even after dishonour of the cheque which shows that he tried to fasten the liability on the insurer without payment of premium, thus the public money should not be allowed to pay or indemnify the owner of the vehicle while making payment to the victim of the road traffic accident Therefore, it is hereby directed that the appellant is liable to pay compensation and then recover the same from the owner of the vehicle i.e. respondent No. 7.
15. Therefore, the appeal is partly allowed. Judgment and award made by the Member of the Claims Tribunal if partly allowed without disturbing the compensation awarded in favour of respondents 1 to 6 and the entire liability fixed on the appellant is hereby modified and the appellant shall satisfy the award made by the Member of the Claims Tribunal and then recover the same from respondent No. 7. Appellant shall deposit the award amount together with accrued interest within four weeks and after depositing the said award amount the appellant is entitled to initiate proceedings against the owner of the vehicle for recovery of the said sum. A sum of Rs. 25,000/-deposited before this Court shall be transferred to the Motor Accident Claims Tribunal.