The Oriental Insurance Co. Ltd. ... vs Vijay S/O Ramchandra Kale & 3 Ors
2017 Latest Caselaw 9254 Bom

   fa.109.09                                    1
                IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                          NAGPUR BENCH, NAGPUR

                               FIRST APPEAL NO.109 OF 2009.


   APPELLANT:                             The Oriental Insurance Co.Ltd.
                                          Rayat Haveli Building, Old Cotton
                                          Market, Akola, The Divisional
                                          Manager,Divisional Office No.2:
                                          08, Hindustan Colony, Wardha
                                          Road, Nagpur.

                                                               : VERSUS :

   RESPONDENTS:         1.   Vijay Ramchandra Kale,
                              aged about 31 years, Occu: Labour Work,

                                     2.   Dhiraj s/o Ramchandra Kale,
                                          aged 28 years, Occu:  Household work,

                                     3.  Smt.Meerabai w/o Ramchandra Kale,
                                         aged about 52 years, Occu: Household,

                                       All resident of Borgaon Manju, Tq.
                                       and Distt.Akola.

                                    4.  Nitin s/o Motiram Paturde,
                                         aged 38 years, Occu: Driver, resident
                                         of Telecom Colony, Block No.40, Akoli
                                         Road, Amravati,Tq. and Distt.Amravati.

   -=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-
   Mr.Lalit Limaye, Advocate for the appellant.
   Mrs.Jyoti Dharmadhikari, Advocate for respondent nos.1 to 3.
   None present for respondent no.4.
   =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-




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    fa.109.09                               2
                                            CORAM
                                                  :     P.N.DESHMUKH, J.

   DATE OF RESERVING THE JUDGMENT :         22nd NOV. 2017.
   DATE OF PRONOUNCEMENT OF JUDGMENT: 4th DEC.2017.


   JUDGMENT :

1. This appeal is preferred by Insurance

Company/ori.respondent no.2 hereafter referred as appellant,

against the impugned judgment and award dated 7 th November,

2008 passed by the Member, Motor Accident Claims Tribunal,

Akola in M.A.C.P.No.27 of 2007. By partly allowing the petition,

though owner of the offending vehicle, ori.respondent no.1, is

directed to pay amount of compensation to the extent of

Rs.1,95,000/- with interest at the rate of 7% P.A. upon it from the

date of petition till its realization, inclusive amount of no fault

liability of Rs.50,000/-, looking to the peculiar circumstance,

appellant is directed to pay said amount to claimants in the first

place, and is granted liberty to recover the same from, the owner of

the vehicle with interest. In that view of the matter, limited

challenge in this appeal is to order of Tribunal directing appellant

to pay first and then to recover from the owner.

2. Learned Counsel Shri Limaye appearing for the

appellant, has contended that in fact no such direction can be

issued as cheque issued by owner dated 21 st August, 2006 towards

premium of insurance policy was dishonoured for want of

sufficient funds and the bank intimated said fact to appellant on

28th September, 2006 and on receipt of said information, the

appellant on 4th October, 2006 had intimated the owner of

cancellation of Cover Note for dishonour of cheque. It is thus the

case of appellant that much prior to incident which took place on

22nd December, 2006, appellant on 4th October, 2006 itself had, by

giving intimation of cancellation of Cover Note cancelled the

Insurance Coverage and as such, no liability can be fasten upon

appellant much less than to direct the appellant to pay the amount

of compensation first to claimants and then to recover the same

from owner.

3. Learned Counsel has further contended that to

substantiate above case of dishonour of cheque and intimation,

appellant has also examined their witness, however, his evidence is

not considered by Tribunal in its true spirit and therefore,

contended that appeal be allowed setting aside impugned

judgment and Award.

4. Learned Advocate Mrs.Jyoti Dharmadhikari appearing

for respondent nos.1 to 3/ori.claimants has on the other hand

submitted that in fact, no such notice as alleged to have been sent

by the appellant by registered post on 4 th October, 2006 at any

point of time is received by owner, inasmuch as said notice was

never sent to the owner on the address which is stated on Cover

note and has therefore, submitted that since there is nothing on

record to establish fact of cancellation of insurance coverage by the

appellant, Tribunal has rightly fastened liability on the Insurance

Company. It is further submitted that Chapter XI of M.V.Act of

1988 providing compulsory Insurance of vehicle against third party

risk, is a social welfare Legislation to extend relief of compensation

to victim of accident caused by use of motor vehicle and has

contended that since from the evidence and documents on record

it can amply be established that on the day of accident there was

no intimation to owner of the vehicle involved in the accident of

cancelltion of policy for non-payment of premium since cheque

issued for same came to be dishonoured that by itself can be no

ground to disallow the claim of claimants and therefore, contended

that the appeal be dismissed.

5. In the background of submissions advanced as aforesaid,

facts involved in the appeal needs to be considered which can

briefly be submitted to the effect that respondents/claimants had

filed petition for grant of compensation to the extent of

Rs.3,00,000/- due to death of deceased Ramchandra Shivram Kale

who on 22nd December, 2006 met with an accident involving Car

bearing registration No.MH 19 Q 3813 owned by respondent No.4

since it gave dash to the deceased by coming from opposite

direction. Owner of the vehicle chose to remain absent before the

Tribunal inspite of service and was thus proceeded ex parte.

Petition was contested by appellant Company and has come out

with a specific case that no negligence can be attributed on the Car

driver as no dash was given by Car to the bicycle of deceased but it

is deceased himself who met with an accident due to his own

negligence. It is further case of appellant that owner of the Car

had issued cheque No.1246375 dated 21 st August, 2006 towards

premium of Insurance Company of his Car which, however, on

presentation to Bank was dishonoured and on receipt of such

intimation from the Bank, appellant had issued registered letter to

the owner as well as to the concerned Regional Transport

Authorities, on 4th October 2006 intimating cancellation of

Insurance Policy for non-payment of premium, much prior to the

date of accident which had occurred on 22nd December, 2006.

6. It is thus specific case of appellant that at the time of

accident there exists no contract of insurance between Insurer and

Insured and thus, no liability can be fasten upon Insurance

Company for satisfying the claim in any manner.

7. Sofaras issue of accidental death of deceased

Ramchandra Shivram Kale involving vehicle No.MH 19/Q-3813

owned by original respondent no.1/Insured on 22nd December,

2006 is concerned, said issue appears to be considered by the

Tribunal and is replied in affirmative, which fact is even otherwise

not disputed. In that view of the matter, it is establish that

deceased died of accidental death involving above numbered

vehicle on 22nd December, 2006. In the circumstances, the only

issue which needs consideration is if any liability can be fasten

upon appellant to pay the amount of compensation as awarded by

the Tribunal. Before proceeding to answer the same, it is

necessary to understand the Scheme of Section 64-VB of Insurance

Act, 1938, which is reproduced below :

"64-VB : No risk to be assumed unless

premium is received in advance -

(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) .......

(3) .......

(4) .......

(5) ......

(6) ......

In view of above provision, it is crystal clear that no risk is assumed by insurer unless premium payable is received in advance.

Similarly, Chapter XI of the Motor Vehicles Act, 1988 deals with insurance of motor vehicle against third party risks. Section 145 of the said Chapter defines :

(a) authoried insurer,

(b) certificate of insurance,

(c) liability,

(d) policy of insurance,

(e) property,

(f) reciprocating country and

(g) third party.

Section 146 mandates insurance of a motor vehicle

against third party risk. Inter alia, it provides that no

person shall use the motor vehicle in a public place

unless a policy of insurance has been taken with regard

to such vehicle complying with requirements as set out in

Chapter XI. Section 147 makes provision for

requirements of policies and limits of fallibility. With

regards to facts involved in the appeal at hand, sub-

section (5) of Section 147 is relevant, which is

reproduced below :

"(5) Notwithstanding anything contained in any law for the time being in force, an insurer issuing a policy of insurance under this Section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons."

8. In addition to above provisions, when Sections 165 and

168 of the M.V.Act of 1988 under which Claims Tribunals are

constituted, and found to be empowered to adjudicate all claims in

respect of the accidents involving death or of bodily injury or

damage to property of third party arising in use of motor vehicle.

The said power of the tribunal is not restricted to decide the claims

inter se between claimant or claimants on one side and insured,

insurer ad driver on the other. In the course of adjudicating the

claim for compensation and to decide the availability of defence or

defences to the insurer, the Tribunal necessarily has the power and

jurisdiction to decide disputes inter se between insurer and the

insured.

9. In the backdrop of above provisions though from the

evidence of appellant's witness Bhimrao Daulatrao Dhakale

examined at Exh.67, it has come on record that the owner had paid

premium on 21st August, 2006 for which Cover Note was issued,

said cheque was dishonoured by Dena Bank for want of sufficient

funds by its Memo dated 28 th September, 2006 and immediately on

receipt of said intimation, appellant brought this fact to the notice

of owner and of concerned R.T.O. by sending registered letter with

acknowledgment due dated 4th October, 2006. In support of his

evidence as aforesaid, the appellant's witness has also placed on

record relevant documents.

10. On perusal of Dak-book, Exh.17 maintained by

appellant, it is established that vide entry at Sr.No.752, some

correspondence was sent to owner regarding dishonour of his

cheque, however from Letter, Exh.71, which is issued to owner, it

is noted that his address mentioned thereon is of "40, Telecom

Nagar Amravati (Mah)" and intimation given to him was that his

vehicle was insured vide Policy No.163400/31/2007/7782 for the

period from 21st August, 2006 to 20th August, 2007 and since the

cheque issued by the client towards premium was dishonoured, the

policy stood cancelled at their end right from inception of the

policy. This letter is dated 22nd September, 2006 which, as

aforesaid, is sent on above address of owner. On perusal of

document at Exh.45(1), which is copy of Insurance Cover Note, it

reveals that there is condition printed thereon which is reproduced

below :

"In case of dishonour of the premium cheque the document stands automatically cancelled ab initio. This Cover note is valid subject to realization of premium cheque."

11. It is material to note that on perusal of Cover Note

address mentioned in it appears to be different than that on letter

of intimation sent by registered post to owner as address

mentioned in the policy is "40, Telecom Colony, Akoli Road,

Amravati" while address of owner as can be found on the copy of

his driving licence, Exh.46 is "Telecom Colony Amravati". In that

view of the matter, there is no mention of plot No.40, in the

driving licence while address mentioned in policy is of "40,

Telecom Colony, Akoli Road, Amravati which is totally inconsistent

to the address mentioned on letter of intimation, Exh.71 wherein

address mentioned is "40, Telecom Nagar Amravati". In view of

such different address of owner, there is nothing to establish that

the registered letter sent to owner was at all issued on this correct

address as such, there is nothing to hold that intimation of

cancellation of policy was received by the owner much prior to the

accident as submitted on behalf of appellant.

Moreover, even from the calculations made on the Cover

Note, Exh.45(1) in respect of own damage and liability, the

amount calculated is Rs.6924/- and Rs.7772/- respectively, while

cheque, Exh.68 alleged to be issued by owner in the name of

appellant Company while purchasing policy involved in this case is

valued for Rs.7872/-, no satisfactory explanation is put forth on

this aspect by the appellant. On the contrary, having considered

material difference in these amounts there is even reason to doubt

if cheque, Exh.68 for an amount of Rs.7872/- is at all issued

towards payment of premium for purchasing policy of vehicle

involved in the accident. From the above discussed evidence on

record thus, it is difficult to hold that intimation of cancellation of

Policy was given to the owner of vehicle prior to accident. Nor it

can be said that the cheque as alleged was issued towards

insurance premium.

12. On the aspect of policy having condition printed thereon

about cancellation of same in case of dishonour of cheque, law

relied upon by the learned counsel for the appellant in the case of

Oriental Insurance Co.Ltd. ..vs.. Nadiram and ors. reported in

2014 ACJ 2110 can not be made applicable in the appeal at hand

for the reasons that in that case the policy was held to have been

automatically cancelled on account of dishonour of cheque as

intimation to that effect was received by the owner and as such

owner was alone held liable.

13. The learned Tribunal on the basis of evidence and

documents on record, therefore, appears to have rightly held that

the owner was not residing at the address mentioned in Exh.71,

upon which notice is issued by appellant to the owner of the Car,

at 'Telecom Nagar, Amravati', though address on the policy

Exh.45(1) is of 'Telecom Colony, Akoli Road Amravati. It is

further found that there is even no evidence on record that there

are two colonies, one is called as 'Telecom Colony' and other as

'Telecom Nagar'. In view of above evidence, thus there is nothing

to establish that the intimation of cancellation of policy was

issued by appellant, inasmuch as there is nothing on record to

establish that there are two colonies or two mohallas namely,

'Telecom Colony' and 'Telecom Nagar'.

14. Learned counsel for the appellant has further relied

upon the case of Oriental Insurance Co.Ltd. ..vs.. Nadiram and

ors. reported in 2014 ACJ 2110, where, in para no.14 of its

judgment the Court has relied in the case of Daddappa ..vs..

Branch Manger, National Insurance Co.Ltd. 2008 ACJ 581 (SC),

in which the Apex Court has held that the cheque issued for

covering vehicle in question was dishonoured by communicating to

the owner of the vehicle and accident occurred after the

cancellation of policy. It has further held that if the contract of

insurance is cancelled, then, insurance company would not be

liable to satisfy the claim towards third party. Para 26 reads thus :

:(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 his 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 satisy the claim."

15. Appellant has further relied in the case of Munagala

Srinivasa Rao and ors. ..vs.. Rajendra Singh and ors. reported

in 2010 ACJ 1107 where in para no.14 Court has observed that,

Cover Note, Exh.B2, containing note 'cancellation endorsement' of

a policy of insurance, Exh.B1, was sent to the insured to the

address which is found in policy, Exh.B1. Exh.B2 was returned

with the postal endorsement, 'not known' and thus the question

which arose for consideration was - whether there is valid

communication of cancellation of contract of insurance ? In such a

case, the presumption under Section 27 of General Clauses Act,

1897, was raised which is rebutable presumption unless contrary is

proved and in the given set of facts was presumed that a registered

letter sent to the person on last known address is deemed to have

been served or communicated to him. If a communication is sent

by registered post to the address give by a person or to a known

place of residence, the presumption under Section 27 of General

Clauses Act springs into action and it shall be deemed to have

been served.

However, law relied cannot be made use in favour of

appellant for the reason that in the appeal in hand there is no

communication found to be made to Insured on the address found

on his policy as referred above.

16. On the other hand, learned counsel for

respondents/claimants has relied in the case of United India

Insurance Co.Ltd. ..vs.. Laxmamma and ors. reported in 2012

ACJ 1307 wherein it is laid down that :

"Where the policy of insurance is issued by an

authorised insurer to cover a vehicle on receipt of the cheque paid towards premium and the cheque gets dishonoured 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 award of compensation in respect thereof."

However, in the appeal in hand, from the above discussed

evidence and for the reasons mentioned herein above, there is

nothing to establish that the policy of insurance issued by the

appellant/insurer to cover vehicle involved in the accident on

receiving cheque towards premium, having been dishonoured,

same was cancelled by giving intimation to the insured prior to

date of accident. In that view of the matter, appellant/Company's

liability to indemnify the claim of the third party does not cease.

In the circumstances, the appellant is liable to satisfy the award of

compensation.

In view of above, the judgment of the Tribunal

impugned in appeal does not call for any interference. Appeal is,

therefore, dismissed.

JUDGE.

Chute