National Insurance Company Ltd, ... vs Rameshlal Champalal Jaiswal ...
2017 Latest Caselaw 5050 Bom

2607 FA  508/2012                             1                        Judgment


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


                        FIRST APPEAL NO. 508/2012 


National Insurance Company Ltd.,
Mohata Market Main Road, Wardha,
through Divisional Manager, having
its office at Samra Complex, Jaisthambh
Chowk at Post Tahsil & District Amravati.               APPELLANT

                                .....VERSUS.....


1]     Rameshlal Champalal Jaiswal
       (Dead, through legal heirs)

A]     Smt. Jamunabai Rameshlal Jaiswal,
       aged about 45 years, Occu: housewife,

B]     Miss. Neeta Rameshlal Jaiswal,
       aged about 31 years,

C]     Deepaklal Rameshlal Jaiswal,
       aged about 28 years,

D]     Pradiplal Rameshlal Jaiswal,
       aged about 22 years,

       All R/o. Anjankhed, Post Selu,
       Tahsil Arni, Distt. Yavatmal.

2]     Dilip Keshaorao Sargar,
       aged about 36 years, occu: owner,
       R/o. At Post Saikheda,
       Tahsil Pandharkawada, 
       District - Yavatmal.                              RESPONDE NTS




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 2607 FA  508/2012                              2                         Judgment




Shri Shashikant Borkar, counsel for appellant.
Shri Vivek Awchat, counsel for respondent nos.1(A) to 1(D).
Shri A.S. Ghatole, counsel for respondent no.2.


                 CORAM  : DR. SMT. SHALINI PHANSALKAR-JOSHI, J.

               DATE     : JULY 26, 2017.



ORAL JUDGMENT :  

This appeal is preferred challenging the judgment and

award dated 27/07/2011 passed by the Member, Motor Accident

Claims Tribunal, Darwah in Claim Petition No. 336/2006.

2] Brief facts of the appeal can be stated, as follows:

On 31/10/2005, one Rameshlal was proceeding from

Arni to Anjankhed on his Bajaj M-80 motorcycle, bearing no. MH-

26-C-6526, by observing the necessary care and precaution and the

traffic rules. When he reached Digras Chaufuli near Kamballposh

Baba Dargah at about 2:00 p.m. one sawari taxi bearing no. MH-29-

2688 coming from opposite direction and driven in a rash and

negligent manner, gave dash to his motorcycle. On account of the

dash, Rameshlal fell down and sustained grievous injuries and

2607 FA 508/2012 3 Judgment

fracture to his right leg and also severe injury to his head. He gave

information of the said accident to Arni Police Station and

accordingly C.R. No. 193/2005 came to be registered against the

taxi driver. After the accident, Rameshlal was moved to V.N.G.M.

College and Hospital, Yavatmal. Thereafter he was treated in the

hospital of Dr. Dabhere. However his fracture injuries were not

completely cured and as a result, he sustained 10% permanent

disability, which has resulted into loss of his working and earning

capacity. Hence he claimed the amount of Rs.1,50,000/- as

compensation from the owner of the taxi, respondent no.2 herein

and the appellant, the insurance company of the said taxi.

3] Respondent no.2, did not contest the claim petition,

though duly served with the notice of the same. It is the appellant,

insurance company, which resisted the claim petition contending

inter alia that the cause of the accident was the rash and negligent

driving of the injured himself, as he has not taken precaution or the

note of the vehicles approaching on the road. It was further

submitted that the concerned taxi was not validly insured with the

appellant, as the cheque issued towards the premium was

dishonoured for want of 'sufficient funds'. This fact was intimated to

2607 FA 508/2012 4 Judgment

the owner and also to the R.T.O. Office at Yavatmal by RPAD,

thereby canceling the insurance policy. In such situation, appellant -

insurance company cannot be liable to indemnify the owner of the

taxi. The claim petition against the appellant, therefore needs to be

dismissed.

4] On these respective pleadings of the parties, the

Tribunal framed necessary issues at Exh.26.

5] As during pendency of the petition before the Tribunal,

the injured Rameshlal died on 13/04/2007, the names of his legal

heirs brought on record, with permission of the court and they were

permitted to proceed with the injury claim.

6] In support of their case, one of the legal heir Deepaklal

examined himself and produced the various documentary evidence

on record like the copy of FIR (Exh.42), spot panchnama (Exh.43-

AA), insurance certificate (Exh.45), the prescription issued by Dr.

Dabhere (Exh.49) and certificate of disability (Exh.50). As against

it, witness Vikas Dadaji Shete was examined on behalf of the

appellant-insurance company who proved the dishonoured cheque

2607 FA 508/2012 5 Judgment

of the premium (Exh.62) and the letter under which the intimation

was given to the owner and the R.T.O. about the cancellation of the

insurance policy.

7] In the light of this evidence on record, the Tribunal was

pleased to hold that injured has sustained 10% permanent disability

and accordingly awarded the compensation of Rs.59,000/- to the

legal heirs of the injured. The Tribunal further held the appellant

insurance company also liable, jointly and severally, along with the

owner of the taxi to pay this amount of compensation. The

contention raised before the Tribunal that the legal heirs are not

entitled to proceed with the injury claim, was negatived by the

Tribunal.

8] This judgment of the Tribunal is challenged in the

present appeal by the appellant-insurance company on two-fold

grounds. In the first place, it is submitted that on account of the

dishonour of the cheque of premium, the policy of the insurance

was already canceled and intimation thereof was also given to the

owner and the R.T.O. Yavatmal. Hence, appellant-insurance

company cannot be liable to pay the compensation along with the

2607 FA 508/2012 6 Judgment

owner of the offending vehicle. Second ground raised is pertaining

to the competency of the legal heirs of the injured to continue and

proceed with the claim petition and their entitlement to get the

amount of compensation on all the heads, including the heads of

pains, suffering etc. According to learned counsel for appellant, the

Tribunal has failed to properly appreciate and decide these two

legal issues involved in the case.

9] Per contra, learned counsel for respondent nos.1(A) to

1(D) has supported the judgment of the Tribunal by pointing out

that mere production of intimation letter without the proof of the

said letter being received by the owner and the R.T.O. Office, is not

sufficient for cancellation of the insurance policy or for absolving

the insurance company from liability of payment of compensation to

the third party, like the injured in this case. Secondly, it is

submitted that even the legal heirs are entitled to proceed with the

claim petition, if the injured has died during pendency of the same.

10] In support of their respective contentions, learned

counsel for both the parties have relied upon the various judgments

of the Hon'ble Apex Court and other High Courts.

 2607 FA  508/2012                               7                          Judgment




11]             The   first   point   which   therefore   arises   for   my

consideration is about the liability of the insurance company, once

the cheque of the premium was dishonoured and as a result the

insurance policy came to be cancelled.

12] In this respect, appellant-insurance company has led

the evidence of its Branch Manager, Shri Vikas Dadaji Shete. He has

proved on record the dishonour of the cheque of premium. The

dishonoured cheque is produced on record at Exh.62. He has also

deposed that the intimation of the dishonour of the cheque was

given to the owner of the offending vehicle and also R.T.O.

Yavatmal. Copies of those intimation letters are produced on record

and the endorsements thereon go to show that they were sent by

R.P.A.D. However, acknowledgement receipts of those letters are

not produced on record to show that those letters or intimations

about the cancellation of policy, on account of dishonor of the

cheque, were actually received by respondent no.2, the owner of the

taxi and also by R.T.O. Yavatmal. This fact is admitted by witness

Vikas Shete also that such acknowledgement receipts are not

produced on record.

 2607 FA  508/2012                               8                          Judgment


13]             In   such   situation,   the   question   for   consideration   is

whether such letters can be held to be received by the owner and

R.T.O. Yavatmal? Learned counsel for appellant has in this respect

relied upon the two judgments of Hon'ble Supreme Court in the

cases of Shimla Development Authority -Vs- Santosh Sharma and

another, (1997) 2 Supreme Court Cases 637 and Sunil Kumar

Sambhudayal Gupta and others -Vs- State of Maharashtra,

(2010) 13 Supreme Court Cases 657, to submit that when a letter

is sent under registered cover, there is presumption of service, as

laid down under section 27 of the General Clauses Act, 1897 that it

was duly received by the addressee. The burden to rebut the

presumption lies on the addressee, challenging the factum of

service. It is submitted that in this case, as admittedly the letters

were sent to the respondent no.2, owner and R.T.O. Yavatmal by

R.P.A.D., then necessary presumption under section 27 of the

General Clauses Act, 1897, needs to be drawn that they were duly

received by them. Neither respondent no.2 examined himself nor

produced any evidence to rebut this presumption, and therefore,

according to learned counsel for appellant-insurance company,

appellant is liable to be absolved from its liability.

 2607 FA  508/2012                                 9                          Judgment


14]             Exactly this aspect, whether the insurance company can

be held liable, in the absence of proof relating to the receipt of such

intimation is considered in the case of National Insurance Co. Ltd.

-Vs- Bachubhai Chandubhai Vasava and others, 2011 ACJ 163,

wherein the Gujrat High Court was, after taking note of the various

earlier decisions, pleased to hold that,

"In the absence of evidence produced on record by insurance company to establish that intimation to insured and R.T.O. was received by them, the cancellation of policy cannot come into effect and insurance company cannot be exempted from liability to third party".

The facts of this case were also identical to the present

case. In that case also the cheque issued towards premium was

dishonoured and insurance company canceled the policy under

intimation to owner and R.T.O. concerned. However no evidence

was produced by the insurance company to show that the

intimation was received by owner and R.T.O. and in such situation

it was held that, insurance company cannot be exempted from

liability to third party. It was further held that, "it is an inter-se

dispute between insurance company and insured, and therefore

2607 FA 508/2012 10 Judgment

liability of the insurance company to third party cannot be absolved

merely by way of the cancellation of the policy, especially when no

evidence was produced that the said intimation was received by the

insured and the R.T.O. concern".

15] In para no.14 of the judgment, it was further held that,

"If the procedure prescribed under section 147 of the Motor Vehicles Act is not followed by the appellant-insurance company and there is no evidence produced on record that intimation to insured and R.T.O. Agra was received by them, then cancellation of policy by letter of insurance cannot come into effect and liability of appellant - insurance company continues from the date on which the cheque of premium was accepted by the appellant - insurance company. If there is a breach committed by insured because of dishonor of the cheque for premium by bank, then there is inter-se dispute between the insurance company and the insured, third party cannot be involved in such dispute when statutory liability is accepted by the insurance company under section 147(1) of the Motor Vehicles Act. Therefore, this being a beneficial legislation and compulsory insurance under the Motor Vehicles Act by insurance company having accepted the cheque of premium then vehicle has been put on road and due to that if third party has died, insurance company cannot avoid such liability and insurance company would have to pay the compensation".

 2607 FA  508/2012                                  11                          Judgment


16]             This   decision   of   Gujrat   High   Court   is   based   on   the

decision of the Hon'ble Supreme Court in the case of Oriental

Insurance Co. Ltd. -Vs- Inderjit Kaur and others, 1998 ACJ 123,

wherein in para no.9 it was observed that, "The policy of insurance

that the insurance company issued was a representation upon which

the authorities and third parties were entitled to act. The insurance

company was not absolved of its obligations to third parties under the

policy because it did not receive the premium. Its remedies in this

behalf lay against the insured".

17] Further in para no.11, the Hon'ble Apex Court was

pleased to hold that "It was the insurance company itself who was

responsible for its predicament. It had issued the policy of insurance

upon receipt only of a cheque towards the premium in contravention

of the provisions of section 64-VB of the Insurance Act. The public

interest that a policy of insurance serves must, clearly, prevail over the

interest of the insurance company".

18] Learned counsel for respondents have also relied upon

the judgment of the Hon'ble Apex Court in the case of New India

2607 FA 508/2012 12 Judgment

Assurance Co. Ltd. -Vs- Rula and others, 2000 ACJ 630. In this

reported judgment also, the cheque issued towards the premium

was dishonoured and hence, the contention raised by insurance

company was that it is no more liable to pay the compensation. An

argument was also advanced that policy represents a contract

between insurer and insured for consideration of premium and if

the premium is not paid, the contract would not be valid as there

cannot be any contract without consideration. Moreover, under

section 64-VB of the Insurance Act, no risk would be assumed

unless premium was received in advance. However both these

contentions were rejected by the Hon'ble Apex Court by observing

in para no.9 that,

"Any contract of insurance under Chapter 11 of the Motor Vehicles Act, 1988 contemplates a third party who is not a signatory or a party to the contract of insurance but is, nevertheless, protected by such contract. The rights of the third party to get indemnified can be exercised only against the insurer of the vehicle. It is thus clear that the third party is not concerned and does not come into the picture at all in the matter of payment of premium. Whether the premium has been paid or not is not concern of the third party who is concerned with the fact that there was a policy issued in respect of the vehicle involved in the accident and it is on the basis of this policy

2607 FA 508/2012 13 Judgment

that the claim can be maintained by the third party against the insurer."

19] Relying upon the judgment in the case of Oriental

Insurance Co. Ltd. -Vs- Inderjit Kaur and others it was further

held in this case that this liability of insurance company exists

despite the bar created by section 64-VB of the Insurance Act.

20] Thus, the law relating to the liability of the insurance

company, even in case of dishonor of the cheque of the premium

and cancellation of the policy, being fairly well settled by the

abovesaid decisions of the Hon'ble Apex Court, in the instant case

also it has to be held that Tribunal has rightly affixed the joint and

several liability on the appellant, to pay compensation to the

respondents.

21] This brings me to the second point for consideration

which pertains to the maintainability of the claim petition on the

death of the insured. Admittedly, the claim petition filed before the

Tribunal was a injury claim, which was filed by Rameshlal on

account of the permanent disability sustained by him in the

2607 FA 508/2012 14 Judgment

accident. It is a matter of record that the accident has taken place

on 31/10/2005, the claim petition was filed on 27/11/2006 and it

was decided on 27/07/2011. During pendency of the petition on

13/04/2007, injured Rameshlal has died. His legal heirs i.e.

respondent nos.1(A) to 1(D) were brought on record, as per the

order passed by the Tribunal and thereafter they proceeded with the

petition. Respondent no.1(C) who is one of the legal heir of

Rameshlal examined himself and on the basis of his evidence, the

Tribunal assessed the amount of compensation, considering the

permanent disability of the injured to the extent of 10% and

proceeded to award compensation of Rs.59,000/-.

22] However, as rightly submitted by learned counsel for

appellant, whether such petition could have been continued by the

legal heirs, when it was a injury claim petition and if it was

permitted to be continued, whether legal heirs will be entitled to get

the compensation on all the heads, as awarded by the Tribunal, is

the question for consideration.

23]             In   this   respect,   the   Tribunal   has   relied   upon   two





 2607 FA  508/2012                                 15                         Judgment

judgments, which are also cited in this appeal by learned counsel

for respondents. The first is in the case of United India Insurance

Co. Ltd. -Vs- E. Laxma Reddy and others, 2007 ACJ 638. In the

said case also, during pendency of the injury claim petition, the

injured has expired. It was continued by his legal heirs. The

Tribunal allowed the claim and treated the compensation payable to

the deceased as estate to his widow and son. In the appeal, the

question was raised whether the claim abates on the basis of death

of injured and it was held in para no.9 that,

"The liability of the owner of the vehicle and the injurer, to pay compensation for the injuries of a passenger, does not come to an end in case the claimant dies before the claim is settled. Their liability subsists and legal representatives of the claimant would step into the shoes of claimant. The liability would not be towards legal representatives, on account of the accident itself. The entitlement of the legal representatives would be confined to the amount, which the deceased claimant could have recovered, had he been alive."

It was further held that,

"No exception, therefore can be taken for the

2607 FA 508/2012 16 Judgment

approach of the Tribunal, which treated the said amount as the estate of respondent nos.2 and 3. If not estate, it least connotes the entitlement of the respondent nos.2 and 3 to receive the compensation that was payable on account of the injuries to the deceased respondent no.1."

24] Learned counsel for respondent nos.1(A) to 1(D) has

then relied upon the judgment of Himachal Pradesh High Court in

the case of Narinder Kaur and others -Vs- State of Himachal

Pradesh through the Secretary (Transport) and others, 1991 ACJ

767. In the said case also during the pendency of the claim petition

for personal injuries suffered by the claimant in the accident, the

injured died and the legal heirs were sought to be brought on

record. The issue before the court was whether the claim abates in

toto and it was held that, claim will not abate in toto as the claim in

respect of loss of the estate survives to the legal representatives, as

loss to the estate is not covered by the exceptions contained in

section 306 of Indian Succession Act, 1925. While taking this view,

the Division Bench of Himachal Pradesh High Court had relied upon

the decision of the Hon'ble Supreme Court in the case of

Melepurath Sankunni Ezhuthassan -Vs- Thekittil Geopalankutty

Nair, 1986 ACJ 440 (SC), wherein in para no.8 it was held that,

2607 FA 508/2012 17 Judgment

"The claimants as legal representatives of the original claimant were,

as such, entitled to be substituted in his place with a view to continue

the proceedings in the case and to have a decision on the claim in

respect of the loss caused to the estate of the deceased".

25] As against it, learned counsel for appellant has relied

upon the decision of the Division Bench of Madhya Pradesh High

Court in the case of Umed Chand Golcha -Vs- Dayaram and

others, 2001 ACJ 966. In this case, while discussing the entire law

on the subject and after taking review of the various decisions of

Madhya Pradesh High Court and other High Courts and after having

regard to the provisions contained in section 306 of Indian

Succession Act and the provisions of M.V. Act, it was held that,

"The cause of action survives to the legal heirs in case of death of the injured during pendency of the claim petition and that cause of action includes the one relating to the loss of estate".

In para no.19 of the judgment this very situation, where the

claimant dies during the trial of his claim petition, for cause other

than the accident, was considered, and it was held that,

2607 FA 508/2012 18 Judgment

"So far as the claim for personal injury is concerned, it would abate on the death of the original claimant, but not the claim which pertains to loss to the estate of the injured. It survives for the legal representatives. Therefore, in case loss to the estate is already pleaded in the claim petition, legal representatives can be impleaded and they can seek compensation for loss to the estate".

It was held that, "In absence of pleadings pointing out loss to the

estate of the deceased, claim petition is liable to be dismissed". In para

no.21 of the judgment it was further held that, "The legal

representatives can ask for loss to the estate on the items like medical

expenses, expenditure on traveling, expenditure on attendant,

expenditure on diet, expenditure on doctor's fee etc. They can do so by

producing satisfactory evidence unless court is able to draw legitimate

conclusion about such expenditures from out of the estate, from the

facts and circumstances and on the basis of experience".

26] Thus legal position is fairly well crystallized to the

effect that the legal representatives of the injured, on account of his

death during pendency of the claim petition, can be permitted to

2607 FA 508/2012 19 Judgment

continue the claim petition. However they can be entitled to the

compensation, only as regards the loss to the estate and that

loss to the estate can be inclusive of medical expenses, expenditure

on traveling, expenditure on attendant, expenditure on diet,

expenditure on doctor's fee etc., depending on the facts and

circumstances and pleadings and evidence to that effect.

27] In the instant case, therefore, respondent nos.1(A) to

1(D) can be entitled to get whatever expenses were incurred for the

treatment of the injured as those expenses amount to loss of estate.

In the petition filed before the Tribunal the amount of Rs.10,000/-

was claimed on account of expenses for treatment, doctor fees and

hospital charges. However, in the absence of any evidence brought

on record to that effect, but in view of the admitted fact that he was

treated in the VNGM College and Hospital Yavatmal and by Dr.

Dabhere, the Tribunal has considered that he must have been

required to incur some expenses for medical treatment, doctor fees,

hospital charges and accordingly granted amount of Rs.5,000/-

towards this loss. The amount being reasonable, I do not find any

reason to disturb the said finding.

 2607 FA  508/2012                                 20                          Judgment


28]             Injured has then also claimed the amount of Rs.3,000/-

on account of expenditure incurred for special and nutritious diet.

Though there was no evidence again to show this amount was

actually incurred, the Tribunal has considered the injury sustained

and his treatment in the hospital by Dr. Dabhere, allowed this

amount. I do not find any reason to disagree with the same.

29] In the claim petition, the compensation of Rs.7,000/-

was claimed on account of expenditure for lodging, boarding, and

traveling of the injured and his relatives, who accompanied him and

stayed with him during the treatment and medical check up from

time to time. In the absence of any evidence to that effect and

having regard to the stay of the injured in the hospital VNGM at

Yavatmal and in the treatment by Dr. Dabhere, the Tribunal has

awarded the reasonable sum of Rs.7,000/- as claimed by the injured

and that needs to be confirmed in this appeal also.

30] The tribunal has awarded the amount of Rs.15,000/-

towards the mental and physical shock, pain and suffering etc. of

the injured. However, respondents being the legal heirs of the

2607 FA 508/2012 21 Judgment

injured, cannot be entitled to get this amount as it does not amount

to loss of estate. Hence claim to that effect is required to be

rejected.

31] Further, the Tribunal has considered that injured was

of the age of 49 years and certainly he would have earned the

income of Rs.3,000/- per month. Having regard to 10% permanent

disability, the Tribunal calculated the amount of Rs.39,000/-

towards loss of income. However, having regard to the fact that

during the pendency of the petition itself, injured has expired on

13/04/2007, there is no question of calculating the future loss. The

legal heirs will be entitled to get only the amount towards the

pecuniary loss which they suffered on account of 10% disability

from 31/10/2005 till 13/04/2007 which comes to 18 months and

hence for this period of 18 months, 10% loss at the rate of Rs.300/-

per month comes to Rs.5,400/-.

32] Thus total loss to the estate which is caused and to

which respondent nos.1(A) to 1(D) are entitled, comes to

Rs.20,000/- in round figure. To that extent, the impugned judgment

2607 FA 508/2012 22 Judgment

and award needs to be modified by allowing this appeal.

33]             Appeal is allowed.



34]             The   impugned   judgment   and   award   of   the   Tribunal

stands modified to the extent that appellant and respondent no.2

shall pay jointly and severally, compensation amount of Rs.20,000/-

inclusive of NFL amount, to respondent nos.1(A) to 1(D) with

interest at the rate of 7% per annum from the date of application till

realization of the amount.

35] It is submitted by learned counsel for appellant that

entire amount of compensation, as directed by the Tribunal, is

deposited in the court. Hence appellant is entitled to get and

withdraw the excess amount of compensation with proportionate

interest thereon.

36] Respondents are entitled to withdraw the amount as

stated above for Rs.20,000/- with proportionate interest at the rate

of 7% per annum thereon, from the amount which is deposited in

2607 FA 508/2012 23 Judgment

this court by appellant. The remaining amount with proportionate

interest thereon be returned to the appellant.

37] Appeal stands disposed of in above terms, with no

order as to costs.

JUDGE

Yenurkar