Calcutta High Court (Appellete Side)

Bajaj Allianz General Insurance ... vs Omar Faruk & Anr on 13 September, 2023

13.09.2023
 Ct. 654
D/L 187 & 188
  ab/kb

                 IN THE HIGH COURT AT CALCUTTA
                   CIVIL APPELLATE JURIDICTION
                         APPELLATE SIDE

                           FMA 252 of 2017
                                 With
                CAN 2 of 2017(Old No. CAN 174 of 2017)

                Bajaj Allianz General Insurance Co. Ltd.
                                  -Vs-
                           Omar Faruk & Anr.

                                      With

                                 COT 22 of 2016

                               Omar Faruk
                                  -Vs-
                Bajaj Allianz General Insurance Co. Ltd.


          Mr. Rajesh Singh
                        ... for the appellant-Insurance Company

          Mr. Saidur Rahaman
                           ... for the respondent no. 1-claimant

Affidavit of service filed by the appellant-

insurance company is taken on record.

This appeal is preferred against the judgment and

award dated 4th December, 2015 passed by the learned

Additional District Judge-cum- Judge, Motor Accident

Claims Tribunal, 2nd Court, Tamluk, Purba Medinipur

in MAC Case No. 43 of 2011 (Old No. 273 of 2008)

granting compensation of Rs. 4,92,300/- together with

interest in favour of the claimant under Section 166 of

the Motor Vehicles Act, 1988.

The brief fact of the case is that on 26th April,

2008 at about 7.45 p.m. while the victim and one other

were coming from Narghat to Nandakumar side by

riding bicycle at that time the offending vehicle bearing

registration No. WB-31/3253 (Bus) dashed the victim

and his bicycle near Sitalpur bus stoppage, as a result

of which the victim fell down on the road and received

grievous injuries on his head and multiple fracture on

his face, gum, teeth, eye and other parts of the mouth.

The victim at first was treated at Khejurberia BPHC and

thereafter, was shifted to Purba Medinipur District

Hospital and was also treated at Port View Nursing

Home Pvt. Ltd. Due to such accident, the victim

sustained 60% disablement of his eye sight. On account

of injuries sustained and the subsequent disablement,

the claimant-injured filed application for compensation

of Rs. 5,00,000/- under Section 166 of the Motor

Vehicles Act, 1988.

The claimant in order to establish his case

examined three witnesses and produced documents,

which have been marked as Exhibits 1 to 11 (series)

respectively.

The appellant-insurance company also adduced

the evidence of two witnesses and produced documents,

which have been marked as Exhibits A to F

respectively.

The respondent no. 2-owner of the offending

vehicle after service of summons entered appearance

before the learned Tribunal but failed to contest the

claim application subsequently and the case was

disposed of ex parte against him. In the present appeal

steps were taken for causing service of notice of appeal

upon the respondent no. 2-owner of the offending

vehicle through Court as well as personally on the

address provided in the policy of insurance. The notice

sent through Court could not be delivered. Similarly,

sealed envelope sent by the learned advocate for the

appellant-insurance company to respondent no. 2-

owner of the offending vehicle has returned with the

endorsement "left". Since the respondent no. 2-owner of

the offending vehicle after appearing before learned

Tribunal failed to contest the claim application and it is

found on repeated steps, service could not be effected,

service of notice of appeal upon the said respondent

stands dispensed with.

Upon considering the materials on record and the

evidence adduced on behalf of the respective parties,

the learned Tribunal granted compensation of Rs.

4,92,300/- together with interest in favour of the

claimant under Section 166 of the Motor Vehicles Act,

1988.

Being aggrieved by and dissatisfied with the

impugned judgment and award of the learned Tribunal,

the insurance company has preferred the present

appeal.

Challenging the impugned judgment and award of

the learned Tribunal, the claimant has also preferred a

cross-objection being COT 22 of 2016.

Mr. Saidur Rahaman, learned advocate for the

respondent no. 1-claimant at the outset submits that

the claimant does not intend to proceed with the cross-

objection.

In view of such submission, the cross-objection

being COT 22 of 2016 stands dismissed as withdrawn.

Mr. Rajesh Singh, learned advocate for the

appellant-insurance company submits that the

premium in respect of the policy of insurance was paid

by way of cheque by the owner of the offending vehicle

and in anticipation that the said cheque would be

honoured, the insurance company issued policy of

insurance in respect of the offending vehicle. However,

subsequent thereto, upon presentation of the aforesaid

cheque by the insurance company before its banker, it

was returned with endorsement "Sufficient fund

wanting", which clearly goes to show that the insurance

company actually did not receive any premium for

renewal of the policy of insurance and in consequent

thereto, no contract came into existence between the

insurer and insured and, therefore, the owner of the

offending vehicle is not entitled to be indemnified under

the policy of insurance. He fairly submits that the

intimation of cancellation of the insurance policy was

not effected prior to the accident. However, since the

policy stood cancelled due to dishonour of cheque

issued towards payment of premium of the policy of

insurance, as per settled proposition of law, the

insurance company in such circumstances shall be

given liberty to recover the amount of compensation to

be paid to the claimant-injured. To buttress his

contention, he relies on a decision of this Court passed

in FMA 50 of 2019 (Tata AIG General Insurance

Company Limited versus Narayan Pal @ Narayan

Paul & Anr.).

Mr. Saidur Rahaman, learned advocate for the

respondent no. 1-claimant leaves the matter to the

discretion of the Court.

Having heard the learned advocates for the

respective parties, the only issue that has fallen for

consideration is whether the insurance company in

event of dishonour of cheque issued towards premium

of policy of insurance shall have liberty to recover the

compensation paid from the owner of the offending

vehicle.

With regard to the aforesaid issue raised by the

insurance company, it is found that in its written

statement the insurance company has raised the plea

that the insurance policy bearing no.OG-08-2410-1812-

00000105 issued for the period commencing from

13.03.2008 to 12.03.2009 was cancelled by the

insurance company as the cheque delivered towards

payment of premium was returned by the banker on the

ground of "Sufficient fund wanting". As per the policy

conditions, the insurance policy was void ab initio in

case of dishonour of cheque. In order to substantiate

such fact, the insurance company examined one

Arkadeep Sarkar, its Legal Executive as OPW1, who

also deposed of the aforesaid fact and produced the

policy certificate and its cancellation, bank particulars

dated 19th November, 2014 regarding dishonour of

cheque, letter issued to the owner dated 10th May, 2008

and 12th March, 2009, letter of Manager, Balageria

Central Co-operative Bank Ltd. dated 10th April, 2008,

terms and conditions of the policy of insurance marked

as Exhibits A, A/1. B, C, C/1, D & E respectively.

Further OPW-2, Debasis Sadhu, Manager-in-Charge,

Balageria Central Co-operative Bank Ltd. produced the

cheque which was dishonored and is marked as Exhibit

F. From the evidence adduced on behalf of insurance

company it is sufficiently established that the cheque

issued towards premium of insurance policy, was

dishonored due to "Sufficient fund wanting". However,

there are no materials on record to suggest that prior to

accident the cancellation of policy was intimated to the

registered owner of the offending vehicle.

In Deddappa and Ors. Versus Branch

Manager, National Insurance Company Limited

reported in (2008) 2 SCC 595, the Hon'ble Supreme

Court observed as follows:

"24. We are not oblivious of the distinction between the statutory liability of the insurance company vis-à-vis a third party in the context of Sections 147 and 149 of the Act and its liability in other cases. But the same liability arising under a contract of insurance would have to be met if the contract is 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 satisfy the claim.

x x x x x

26. However, as the appellant hails from the lowest strata of society, we are of the opinion that in a case of this nature, we should, in exercise of our extra-ordinary jurisdiction under Article 142 of the Constitution of India, direct the Respondent No.1 to pay the amount of claim to the appellants herein and recover the same from the owner of the vehicle viz., Respondent No.2, particularly in view of the fact that no appeal was preferred by him. We direct accordingly."

In United India Insurance Company Limited

versus Laxmamma and Other reported in (2012) 5

SCC 234, the Hon'ble Supreme Court observed as

follows:

"26. In our view, the legal position is this: where the policy of insurance is issued by an authorized insurer on receipt of cheque towards payment of premiums and such cheque

is returned dishonoured, the liability of authorized insurer to indemnify third parties in respect of the liability which that policy covered subsists and it has to satisfy award of compensation by reason of the provisions of Sections 147(5) and 149(1) of the M.V. 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 dishonored 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.

x x x x x

28. In view of the above, the judgment of the High Court impugned in the appeal does not call for any interference. The civil appeal is dismissed. However, the insurer shall be at liberty to prosecute its remedy to recover the amount paid to the claimants from the insured. No order as to costs."

Bearing in mind the aforesaid proposition, as

the materials on record is bereft of evidence showing

intimation of cancellation of policy of insurance made to

the owner of the offending vehicle and duly served but

shows of dishonour of cheque issued towards payment

of premium of policy of insurance, hence as per settled

proposition of law, the insurance company shall satisfy

the award and thereafter recover the same from the

owner of the offending vehicle in accordance with law.

It is found that an amount of Rs.7,15,648/- has

been deposited vide OD Challan no. 2807 dated 11th

January, 2017 in terms of an order of this Court dated