Madhya Pradesh High Court
Oriental Insurance Co.Ltd. vs Smt.Kamla Bai & Ors. on 21 June, 2018
1 M.A.No. 463/2002 & 647/2002
HIGH COURT OF MADHYA PRADESH
BENCH AT GWALIOR
SINGLE BENCH:
HON. SHRI JUSTICE ANAND PATHAK
MISCELLANEOUS APPEAL NO. 463/2002
Oriental Insurance Co. Ltd
Versus
Smt. Suman and others
And
MISCELLANEOUS APPEAL NO. 463/2002
Oriental Insurance Co. Ltd
Versus
Smt. Kamla Bai and others
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Shri S.S.Bansal, learned counsel for appellant/Insurance Company.
Shri R.P.Gupta, learned counsel for respondents/Claimants.
None for driver of offending vehicle.
Shri Raj Kumar Singh Kushwah, learned counsel for
respondent/owner of the offending vehicle.
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JUDGMENT
(Pronounced on 21st day of June, 2018) This order shall govern the disposal of M.A.No. 463/2002 and M.A.No. 647/2002 as both the appeals arise out of same road accident and are preferred by the Insurance Company. However, for the sake of convenience, facts of Miscellaneous Appeal No. 463/2002 are being taken for consideration.
2. The present appeal is being preferred by the Insurance Company against the award dated 6/5/2002 passed by the Motor Accident claims Tribunal, Gohad, District Bhind, whereby, claim application preferred by the respondents No. 1 to 6/claimants has been allowed and Insurance Company has been fastened with the liability to pay award of Rs. 1,73,100/- as compensation alongwith 2 M.A.No. 463/2002 & 647/2002 interest.
3. Precisely stated facts of the case are that claimants filed a claim case under Section 166 of the Motor Vehicle Act, 1988 (for short "Act of 1988") for compensation to the tune of Rs. 18,25,000/- on account of death of Raju alias Rajesh Kumar, husband of respondent No. 1, father of respondents No. 2 and 3, son of respondents No. 4 and 5 and brother of respondent No. 6, because of the accident arising out of an accident on 5/12/2000 by the truck No. M.P. 09 K 7669.
4. As per the claimants story, deceased Rajesh was coming from Gohad to Gwalior with one Munnalal when driver of the offending vehicle by driving the vehicle in rash and negligent manner came and dashed the motorcycle of the deceased, who died on the spot. FIR was lodged at Police Station Gohad Chauraha, District Bhind and Criminal case was registered. As per the claim application, deceased was earning Rs. 52,000/- per annum by doing dairy work and he was aged about 25 years at the time of accident. Offending truck was owned by respondent No. 8 and insured with appellant-Insurance Company, at the relevant point of accident, therefore, insurance company and driver and owner of the offending vehicle were alleged to be jointly and severally liable to pay compensation.
5. Respondents No. 7 and 8, driver and owner of the offending vehicle remained ex parte and therefore, proceeded ex parte.
6. Insurance Company filed its written statement and denied the liability on the ground that offending truck was not insured with the Insurance Company at the relevant point of time. Owner of the offending Vehicle Rakesh Sharma, paid premium of Rs. 3149/- for insurance of the vehicle to Insurance company through Cheque No. 960585 dated 17/5/2000 of the State Bank of Indore, Branch Ambah. A receipt was issued on 19/5/2000 wherein it is printed that on payment by cheque, receipt is valid subject to realization of cheque. Cover Note No. 843220 was issued against that receipt. The cheque returned unpaid with the endorsement "Not arranged for". The report was received on 25/5/2000 from the Bank. The appellant-Insurance 3 M.A.No. 463/2002 & 647/2002 company sent a letter dated 26/5/2000 to the respondent No. 8 and cancelled the insurance of the instant truck under the aforesaid cover note. The accident occurred after six months of the cancellation of the insurance and intimation to the respondent No. 8. thus, the instant truck was not insured with the appellant-Insurance company at the relevant point of accident, therefore, appellant- Insurance company cannot be held liable to pay compensation to the claimants. It is further contended that the driver of the instant truck did not possess valid and effective driving licence at the relevant point of time and prayed for dismissal of the claim case to the extent holding appellant-Insurance company liable for payment of amount under compensation.
7. The tribunal after framing six issues in this regard, recorded the statement of parties and passed the award of Rs. 1,73,100/- with interest at the rate of 9% per annum since 6/2/2001 with default stipulation. Therefore, the appellant-Insurance company has preferred this appeal.
8. According to learned counsel for the appellant, Claims Tribunal erred in passing the impugned award and not framing any issue regarding insurance of the offending truck. Appellant-company specifically pleaded about the cancellation of insurance and intimation in this regard has been sent to the owner of the vehicle by the registered post then an important issue arises in this behalf for final adjudication of the controversy but Tribunal without framing issue in this regard erred to held that the offending vehicle was insured with the appellant-company. It is further submitted that in a contract of insurance when an insured gives a cheque towards payment of premium or part of premium, such contract consist of reciprocal promise. The drawer of the cheque promises the insurer that the cheque on presentation would yield the amount in cash. The receipt clearly indicates that the terms and conditions of the contract the receipt is valid only after the realisation of the cheque. Since the agreement was not fulfilled and it was without consideration under Section 25 of the Contract Act and no rights accrued to the third party then the contract becomes void. Section 64 (v) (b) of the 4 M.A.No. 463/2002 & 647/2002 Insurance Act contemplates that no insurer shall assume any risk in India in respect of any insurance business on which premium is not paid. Thus, the vehicle was not insured with the appellant-company, therefore,no liability can be fastened over the insurance company.
9. Learned counsel for appellant further submits that Tribunal relied on judgment rendered by Hon'ble Apex Court in the case of Oriental Insurance Company Limited Vs. Indrajeet Kaur and Ors., AIR 1998 SC 588 but facts of said case are different vis a vis the present one. In the instant case, appellant-company cancelled the insurance six months before the accident and intimation of cancellation was already sent to the owner of the vehicle through registered post when premium remained unpaid because cheque of the insured returned dishonoured. Therefore, there was no contract at all. Further the company while issuing receipt regarding payment of premium by cheque has specifically endorsed in the receipt Ex. D/8 that it would be subject to realization of amount under cheque. In such circumstances, Tribunal erred in relying upon the law laid down by Hon'ble Apex Court in the case of Indarjeet Kaur (supra). Claims Tribunal did not consider the case of Hon'ble Apex Court in the case of New India Assurance Co. Ltd. Vs. Rula, (2000) 3 SCC 195; wherein, it is held that subsequent cancellation of policy due to dishonour of cheque would not affect the rights already accrued in favour of the third party which has been created on the date of accident but in respect of cancellation of policy before six months from the date of accident, both the judgments cited above have not given any finding. In the present case, policy was cancelled six months prior to the accident and therefore, the offending vehicle was not at all insured with the appellant-company on the day of accident.
10. Learned counsel for the appellant relied upon the decision, National Insurance Co.Ltd. Vs. Khalli Bai, 2006 ACJ 1160, Dedappa and Ors. Vs. Branch Manager, National Insurance Company Ltd., (2008) 2 SCC 595, National Insurance company Ltd. Vs. Parwati Naini, (2009) 8 SCC 785.
11. On the other hand, learned counsel for the respondents/claimants opposed the prayer made by the appellant-
5 M.A.No. 463/2002 & 647/2002company and submits that once the cover note is issued it be assumed that policy is issued. It is further submitted that official address of owner of offending vehicle -Rajesh Sharma was DRP Line, Indore but no intimation was given at this address. Intimation was given to his village Dharmgarh, Tahsil Porsa, District Morena but that was incorrect address. Ex. C/9 is certificate of Sarpanch but he was not testified as witness on the basis of judgment rendered in the case of Shiva Devi Jadon Vs. Shiv Kumar, 2007 ACT 774. He submitted that receipt of intimation of letter is mandatory while cancelling the insurance and in the case of Dedappa (supra) intimation was given to insured as referred in para 10.
12. Alternatively, it is submitted that case in hand needs no interference and if any intervention is required then order of pay and recovery be passed so that interest of claimants can be safeguarded.
13. Learned counsel for respondent-owner of the vehicle opposed the prayer of appellant-company. He also reiterated the submissions urged by learned counsel for claimants and submits that no intimation was given to him at the proper address. He prayed for dismissed of the appeal.
14. Heard the learned counsel for the parties and perused the record.
15. From perusal of the record, it revealed that cover note was issued for the period from 18/05/2000 to 17/05/2001 and the accident occurred on 05/12/2000. Owner of the vehicle-Rakesh Sharma issued a cheque of State Bank of India, Morena Branch for payment of premium which got dishonoured and on information provided by the Bank regarding dishonour of cheque, the appellant- Insurance Company intimated respondent-owner-Rakesh Sharma through Registered post, but neither any response nor any cheque for payment of premium was received by the Insurance Company therefore, the Insurance Company cancelled the policy of the offending vehicle and intimated the said fact to the owner of the vehicle and RTO.
16. The core question in the controversy is; whether when a 6 M.A.No. 463/2002 & 647/2002 policy stand cancelled due to dishonour of cheque and the said fact is duly intimated to the policy holder (insured), the insurance company (insurer) is liable to pay compensation or not?."
17. It is settled in law that for a liability of the Insurance Company, a policy should be in existence. If a accident occurred after the cancellation of the policy then the Insurance Company is not liable to pay the amount.
18. The Supreme Court in the case of United India Insurance Co. Ltd. Vs. Laxmamma & Others reported in 2012 (5) SCC 234 held as under:-
"In our view, where the policy of insurance is issued by an authorized insurer on receipt of cheque towards the payment of premium and such a cheque is returned dishounered, 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) & 149(1) of the Motor Vehicle Act unless the policy of insurance is cancelled by the authorized insurer and intimation of such cancellation has reached the insured 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 dishounoured 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."
19. The High Court of Madhya Pradesh in the case of National Insurance Co. Ltd. Vs. Khelli Bai & Ors. reported in 2006 ACJ 1160 followed the said view. Here in the present case, the policy was cancelled six months prior to the accident due to non-payment of premium and the said fact, as per the Insurance Company was 7 M.A.No. 463/2002 & 647/2002 duly intimated to the respondent (owner of the offending vehicle ) as well as to the Regional Transport Officer. However, from the documents exhibited, it appears that respondent (owner of the offending vehicle) initially submitted his address as DRP Line, Indore and therefore, his address appears on cover note of DRP Line, Indore as the address of the insured whereas from the evidence and submissions of the appellant-Insurance Company, it appears that another address existed of the owner was of Porsa, Morena.
20. The dichotomy of service of notice of intimation for cancellation of policy gives a chance to the respondent-owner to establish his ignorance about service of intimation for dishonur of the cheque. Although, from a prudent men, who is operating his Bank account, it is expected to note about the fate of his cheque because the bank account always indicates such exigencies and even Bank intimates the drawer about the fate of cheque issued by him. Besides that Insurance Company intimated the Regional Transport Officer and therefore, he was also under the information about the dishonour of the cheque. Despite a legitimate presumption drawn in favour of service, still looking to the fact situation, it is imperative that respondent-owner may get a chance to discharge the said presumption about non-service of intimation, if any, or whether the intimation given to his village address was in-sufficient service or whether respondent-owner can be given premium to his own fault therefore, matter is remanded back to the Tribunal below for further inquiry only in respect of service of intimation.
21. Similarly, the Tribunal below shall also see whether the cover note includes the 'Policy' in itself or it is an 'Initial Agreement' between the insurer and insured. All the parties shall be at liberty to adduce additional evidence only in respect of service of intimation to the respondent-owner and its related aspect.
22. Resultantly, the Misc. Appeal No.463/2002 and Misc. Appeal No.647/2002 filed by the appellant-Insurance Company are partly allowed and the impugned award dated 06/05/2002 passed by the Motor Accident claims Tribunal, Gohad, District Bhind is hereby set aside with a direction to the Tribunal below to consider and hear the 8 M.A.No. 463/2002 & 647/2002 matter afresh only in respect of the direction given above.
23. Parties and/ or their counsel are directed to appear before the Tribunal below on 18th July, 2018 and take necessary guidance from the Tribunal for further proceeding.
(Anand Pathak) Judge jps/-vc/-
JAI Digitally signed by JAI PRAKASH SOLANKI DN: c=IN, o=HIGH COURT OF M.P. BENCH GWALIOR, ou=P.S., PRAKASH postalCode=474011, st=Madhya Pradesh, 2.5.4.20=21a61bf5c087ff6d5bbc8 d38b611677f4e4306c281cca8759 SOLANKI 91d2a0b6545c503, cn=JAI PRAKASH SOLANKI Date: 2018.06.22 10:46:53 +05'30'