National Insurance Co. Ltd. vs Smt. Sumitra Devi And Ors.
2007 Latest Caselaw 1757 Del

JUDGMENT

P.K. Bhasin, J.

1. This is an appeal under Section 173 of Motor Vehicles Act, 1988 against the award dated 08.07.2004 passed by the M.A.C.T., Delhi in MACT case No. 86/2004 whereby the claim petition of the claimants/respondent Nos. 1 to 5 herein, which was initially filed under Sections 166 and 140 of the said Act and then converted into one under Section 163-A, was allowed and compensation to the tune of Rs. 4,09,000/- along with interest thereon @ 9 % per annum from the date of filing of the claim petition till actual realization was awarded in favor of the claimants. The insurance company-appellant herein was held liable by the said impugned award to pay the compensation awarded to the claimants at first instance but at the same time a right was given to it to recover the said amount from the 'insured' i.e. respondent No. 7 herein.

2. Brief facts resulting in filing of the present appeal may be summarized as follows:

a) Lekh Raj, aged 40 years, husband of respondent No. 1 and father of respondent Nos. 2-5 on the intervening night of 13.09.1997/14.09.1997 while sleeping outside his house was hit by a truck bearing No. HR-26-GA-0430 driven by respondent No. 6 and received fatal injuries and died. The deceased was tailor by profession and was stated to have been earning Rs. 5,000/- per month at the time of his death

b)Claim petition was filed in the MACT by the legal representatives of the deceased i.e. respondent Nos. 1-5 herein claiming a compensation of Rs. 5,00,000/-. The owner and driver of the offending vehicle, despite being served, failed to cause appearance, and thus were proceeded against ex parte. The petition was contested by respondent No. 3 (appellant herein). In its written statement before the Tribunal, the appellant denied its liability on the ground that the offending truck bearing No. HR-26-GA-0430 was not having valid Insurance Coverage at the time of the accident.

c)Appellant took the plea that it was not liable to pay the compensation as the cheque issued by the insured on account of payment of premium was dishonoured before the accident in question and so the insurance policy No. 300300/31/11/6300577 was cancelled under intimation to the insured. And in order to prove the same, insurance company, appellant herein, examined RW1 Sh. Manjeet Singh, Administrative officer on oath who stated that cheque issued by the insured was dishonoured for the reason 'insufficient funds' and letter dated 26.06.1997 was sent to the insured through registered AD intimating him the dishonour of the cheque and cancellation of policy issued. RW1 also produced on record original cheque return memo and attested copy of the notice dated 26.06.1997. He also produced the postal receipts and dispatch register and stated that the company had not received any premium of the said policy.

3. The Learned Tribunal after appreciating the evidence as well as documents placed on record held the owner (insured), driver and the insurance company jointly and severally liable to make the compensation fixed at Rs. 4,09,000/- along with interest @ 9 % per annum. As far as the plea of the insurance company that it was not liable to pay any amount to the claimants because of the cancellation of the insurance policy prior to the accident is concerned the tribunal while accepting the plea that the insurance policy stood cancelled before the accident and that the insured had also been intimated about that rejected the plea that the insurance company was not liable to pay the compensation to the claimants. That plea was rejected by the tribunal relying upon the judgment of the Apex Court in "Oriental Insurance Co. v. Inderjit Kaur and Ors." . However, the insurance company was given the right to recover this amount from the insured.

4. Aggrieved by the said award, the insurance company has come up in appeal. The only grounds for challenging the award put forth are:

a) that insurance policy for the offending vehicle was cancelled much before the happening of the alleged accident due to the fact that the cheque issued in favor of the appellant towards premium was dishonoured for insufficient funds, meaning thereby there was no valid insurance at the relevant time.

b) that contract of insurance between the appellant and respondent No. 7 did not commence at all as the consideration was not received by the appellant and despite having the knowledge of cancellation of policy, respondent No. 7 did not take any steps to get the policy revived which clearly showed unwillingness on his part to keep his vehicle insured.

5. The learned Counsel for the appellant also argued that this is a case where there was no insurance policy in existence at the time of the accident in respect of the offending vehicle and is not a case of simple breach of a term of the insurance policy and, thus, the insurance company cannot be held liable for any payment on account of compensation to the legal representatives of the victim of the accident. The counsel for the appellant in furtherance of his argument has cited the judgment of this Court in "Oriental Insurance co. v. Vinod Kumar and Ors." 2007 (96) DRJ 483 and also stated that the Tribunal erred in relying upon the decision of the Hon'ble Supreme Court in Inderjit Kaur's case(supra), as the facts of that case were different from that of the case in hand.

6. Per contra, the learned Counsel on behalf of the claimants contended the appeal is without any merit in view of the decision of the Hon'ble Supreme Court in Inderjit Kaur's case(supra).

7. As far as the liability of an insurance company towards the claims of third parties is concerned this issue stands finally determined by the Hon'ble Supreme Court in Inderjit Kaur's case (supra). In that case it has been held that an insurance company is liable to pay the compensation to the victims of a motor accident involving a vehicle in respect of which it had issued an insurance policy before the occurrence of the accident irrespective of the fact that after issuance of the insurance policy the cheque issued by the insured towards the insurance premium was dishonoured by the concerned bank. So, in the present case also the appellant insurance company was bound to pay the compensation to the claimants despite the fact that the premium cheque issued by the insured was not honoured by his banker when presented to it by the insurance company. There is no doubt that in the judgment of this Court in Vinod Kumar's case(supra) cited by the learned Counsel for the appellant the insurance company was absolved of the liability to pay compensation awarded by the MACT because of the bouncing of the premium cheque issued by the insured before the occurrence of the accident. However, the facts of that case are not similar to the facts of the present case inasmuch as in that case the insurance company had not issued the insurance policy and only a cover note had been issued at the time of acceptance of the premium cheque. It was in those circumstances that it was held by the learned Single Judge that since the insurance company had not issued the insurance policy and the certificate of insurance within the stipulated period the cover note stood expired by efflux of time. In the present case, as noticed already, the appellant insurance company had itself claimed in its written statement before the tribunal that it had issued insurance policy No. 300300/31/11/6300577. Since this is not a case where only a cover note had been issued by the insurance company after taking the premium cheque of the insured the aforesaid judgment of this Court will not be of any help to the appellant.

8. Since no other point was urged on behalf of the appellant by its counsel in support of the appeal and the aforesaid argument, which only was advanced, having been rejected this appeal is liable to be dismissed.

9. In the result, this appeal is dismissed leaving the parties to bear their own costs. The compensation amount lying with this Court can now be released in favor of the claimants in terms of the original award of the tribunal.