Delhi High Court
United India Insurance Co. Ltd. vs Satpal & Ors. on 3 May, 2012
Author: J.R. Midha
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ MAC.APP.283/2005
% Date of decision : 3rd May, 2012
UNITED INDIA INSURANCE CO. LTD. ..... Appellant
Through : Ms. Sakshi Gupta, Adv.
versus
SATPAL & ORS. ..... Respondents
Through : Mr. Shahid Ali, Adv. for R-4.
CORAM:
HON'BLE MR. JUSTICE J.R. MIDHA
JUDGMENT (ORAL)
1. The appellant has challenged the award of the Claims
Tribunal whereby compensation of `2,67,300/- has been
awarded to claimants/respondents No.1 and 2.
2. The accident dated 30th April, 2003 resulted in the death
of Master Gaurav. The deceased was survived by his parents
who filed the claim petition before the Claims Tribunal. The
Claims Tribunal awarded `2,67,300/- to the claimants. The
award was passed jointly and severally against the appellant
and respondents No.2 and 3.
3. The learned counsel for the appellant has urged at the
time of hearing of this appeal that the appellant is not liable to
pay any compensation to the claimants on the ground that the
insurance policy of the offending vehicle was cancelled before
the accident and the intimation in that regard was sent to the
insured as well as road transport authority. In the alternate, it
is submitted that the recovery rights may be given to the
appellant against respondents No.3 and 4. The learned
counsel for the appellant submits that the cheque issued by
respondent No.4 towards the premium for insurance of the
offending vehicle was dishonoured upon presentation due to
insufficient funds whereupon the appellant cancelled the policy
and intimated the same to respondent No.4 vide notice dated
9th October, 2002. The appellant also intimated the
cancellation to the regional transport authority vide letter
dated 9th October, 2002. The Assistant Administrative Officer
of the appellant appeared in the witness box as R3W1 and
proved the dishonoured cheque as Ex. R3W1/B, cheque return
memo as Ex. R3W1/C and Ex.R3W1/D, notice of cancellation of
policy to respondent No.4 and intimation of cancellation of
policy to RTO dated 9th October, 2002 as Ex.R3W1/E and
Ex.R3W1/F respectively.
4. The learned counsel for respondents No.3 and 4 submits
that the alleged notice of cancellation of policy was not
received by respondent No.4. It is submitted that the
appellant has not placed on record the postal receipts and the
AD card. It is further submitted that R3W1 was specifically
asked to produce the postal receipt but he could not produce
the same as there was no such receipt.
5. The law with respect to the liability of the insurance
company in the event of dishonor of cheque towards the
premium is well settled by the recent judgment of the Supreme
Court in the case of United India Insurance Company
Limited v. Laxmamma, (2012) 4 Scale 409 in which this
Court held that the insurance company is absolved from the
liability if the policy of insurance has been cancelled and
intimation of cancellation has reached before the accident.
The findings of the Apex Court are reproduced hereunder:-
"19. 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
premium 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.
20. Having regard to the above legal position,
insofar as facts of the present case are concerned,
the owner of the bus obtained policy of insurance
from the insurer for the period April 16, 2004 to
April 15, 2005 for which premium was paid
through cheque on April 14, 2004. The accident
occurred on May 11, 2004. It was only thereafter
that the insurer cancelled the insurance policy by
communication dated May 13, 2004 on the
ground of dishonour of cheque which was
received by the owner of the vehicle on May 21,
2004. The cancellation of policy having been done
by the insurer after the accident, the insurer
became liable to satisfy award of compensation
passed in favour of the claimants.
21. In view of the above, the judgment of the High
Court impugned in the appeal does not call for
any interference. 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."
6. In the present case, the appellant has not proved that the
intimation of cancellation of the policy reached the insured and
the road transport authority before the accident. According to
the appellant, the intimation of cancellation was sent to the
insured as well as the road transport authority on 9th October,
2002 by registered AD letters but neither the postal receipts
nor the AD card were placed on record. In cross-examination,
R3W1 deposed that he can produce the same but still the
postal receipts and the AD cards were not produced. In that
view of the matter, the appellant would remain liable to satisfy
the award passed in favour of the claimants.
7. Following the judgment of the Supreme Court in United
India Insurance Company Limited v. Laxmamma (supra),
the appeal is dismissed. However, the appellant shall be at
liberty to prosecute its remedy to recover the amount paid to
the claimants from the insured.
J.R. MIDHA, J
MAY 03, 2012
