Delhi High Court
National Insurance Company Ltd. vs Roop Chand & Ors. on 12 October, 2012
Author: G.P. Mittal
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 12th October, 2012
+ MAC. APP. 153/2005
NATIONAL INSURANCE COMPANY LTD. ..... Appellant
Through: Ms. Manjusha Wadhwa, Adv.
versus
ROOP CHAND & ORS. .... Respondents
Through Nemo.
CORAM:
HON'BLE MR. JUSTICE G.P.MITTAL
JUDGMENT
G. P. MITTAL, J. (ORAL)
1. The Appellant National Insurance Company Limited impugns a judgment
dated 17.01.2005 passed by the Motor Accident Claims Tribunal (the
Claims Tribunal) whereby while awarding a compensation of `2,05,200/-
in favour of the Claimants, the Appellant's plea of exoneration on the
ground that it had cancelled the Insurance Policy on account of dishonour
of cheque and had informed the insured, was accepted yet, the Appellant
Insurance Company was made liable to pay the compensation with a right
to recover the same from the insured.
2. This Appeal was instituted on 14.03.2005 and execution of the award was
stayed, subject to deposit of the award amount with the Claims Tribunal.
It appears that the amount was not deposited with the Claims Tribunal. A
perusal of the order dated 01.12.2009 reveals that the entire amount was
realized by the Claimants in execution of the impugned judgment.
3. The recovery rights have already been granted to the Appellant Insurance
Company against the insured. In view of the payment of the award
amount to the Claimants, the Appeal has practically become infructuous.
4. The Supreme Court in its latest report in United India Insurance
Company Limited v. Laxmamma & Ors., (2012) 5 SCC 234 relying on
Oriental Insurance Company Limited v. Inderjit Kaur, (1998) 1 SCC 371,
New India Assurance Company Limited v. Rula, (2000) 3 SCC 195, and
Deddappa & Ors. v. Branch Manager, National Insurance Company
Limited, (2008) (2) SCC 595 held as under:-
"26. In our view, the legal position is this: where the policy of
insurance is issued by an authorised insurer on receipt of cheque
towards the payment of premium and such a cheque is returned
dishonoured, the liability of the authorised insurer to indemnify the
third parties in respect of the liability which that policy covered
subsists and it has to satisfy the award of compensation by reason
of the provisions of Sections 147(5) and 149(1) of the MV Act
unless the policy of insurance is cancelled by the authorised
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 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 awards of
compensation in respect thereof."
5. Thus, in view of the judgment of the Supreme Court in Laxmamma, the
Insurance Company having cancelled the Insurance policy much before
the accident and having informed the insured about the same, had no
liability to satisfy the award. However, in view of the fact that the
compensation has already been realized by the Claimants, the Appellant
Insurance Company shall be entitled to recover the amount of
compensation paid from the insured, that is, Jawahar Singh/his legal
heirs, in execution of this very judgment without having recourse to an
independent proceedings.
6. The statutory deposit of `25,000/- shall be refunded to the Appellant
Insurance Company.
7. Appeal stands disposed of accordingly.
8. Pending Applications also stand disposed of.
(G.P. MITTAL)
JUDGE
OCTOBER 12, 2012
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