Delhi High Court
Icici Lombard General Insurance ... vs Smt Usha & Ors on 3 January, 2014
Author: Suresh Kait
$~7
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 3rd January, 2014
+ MAC.APP. 498/2009
ICICI LOMBARD GENERAL INSURANCE CO.LTD. ..... Appellant
Represented By: Ms. Suman Bagga, Adv.
Versus
SMT USHA & ORS ..... Respondents
Represented By: Mr. Bhupesh Narula and
Mr. Ashikesh Gupta, Advs. for R1 to R3.
CORAM:
HON'BLE MR. JUSTICE SURESH KAIT
SURESH KAIT, J. (Oral)
1. Instant appeal has been preferred against the award dated 10.07.2009,
whereby, ld. Tribunal while granting the compensation amount of
Rs.12,35,000/- with interest @ 7% per annum has given the recovery rights
in favour of the appellant against respondent nos. 4 and 5.
2. Vide the present appeal, appellant is seeking direction to exonerate as
the cheque of premium amount was bounced and in that eventuality they are
not liable to pay any compensation and entitled for exoneration.
3. Admittedly, recovery rights have been granted in favour of the
appellant.
4. Appellant / insurance Company in its written statement before the ld.
Tribunal took a plea that cover note filed on record is null and void ab initio
because the premium cheque issued by insured against the said cover note
was dishonoured and accordingly, appellant did not receive any premium
against the said cover note. It was further submitted that the said cover note
was duly cancelled and thus there did not exist any valid, lawful, bindings
and enforceable contract of insurance, hence, the offending vehicle was not
insured on the date of accident. To prove this, appellant / insurance
company examined R3W1 Sh. Gaurav Malhotra, Manager (Legal) ICICI
Lombard General Insurance Company Ltd., who deposed that the cover
note no. PC1538383 was issued to Ms. Pooja Arora against the receipt of
premium cheque bearing no. 858159 for an amount of Rs.13,456/- drawn on
Punjab and Sindh Bank. The said premium cheque issued by Ms. Pooja
Arora was dishonoured on its presentation and returned back on 06.04.2006
with remarks "insufficient funds". On the non-receipt of premium, the said
cover note no. PC1538383 was cancelled vide notice addressed to Ms.
Pooja Arora dated 25.04.2006 sent vide UPC dated 09.05.2006 and same is
Ex.R3W1/A. Copy of the notice is Ex.R3W1/B. The cover note in
question was cancelled before the date of accident. The photocopy of the
cover note attested by him is Ex.R3W1/C which is supplied by the
claimants. In this case the intimation was given to insurer later.
5. Similar issue came before this court in the case of Usha Aggarwal v.
Pramod Kumar Gupta & Ors., MAC. APP. No. 495/2012, decided on
27.11.2013 wherein it is held as under:
"15. Admittedly, the cheque was issued by the
respondent No.2 Raju Gupta, i.e., the owner of the
offending vehicle on 15.03.2001 for issuance of cover note.
Accordingly, the respondent No. 3 issued cover note in
favour of the respondent No. 2. Thereafter, on the cheque
being dishonoured, the respondent No. 3 Insurance
Company sent notice dated 28.03.2013 by cancelling the
said cover note.
16. The question before this Court for consideration is
whether the cover note once issued and thereafter on the
cheque being dishonoured, the said cover note continued in
force as the third party risk is concerned.
17. The similar issue came before the High Court of
Kerela in the case of Oriental Insurance Co. Ltd. Vs.
Sivankutty and others 2006 ACJ 106 wherein the Court
held that the liability of the Insurance Company in damages
for third party risks continues for the entire period covered
by the policy in spite of the cheque issued towards payment
of premium was dishonoured and consequently policy was
cancelled by the Insurance Company. The remedy of the
Insurance Company lies against the "insured" to have the
amount paid by them by way of compensation for third
party risks to be got reimbursed.
18. Moreover, in the case of Oriental Insurance Co.
Ltd. Vs. Inderjit Kaur and others 1998 ACJ 123 the Apex
Court held that despite the bar created by Section 64VB of
the Insurance Act, the appellant, an authorized insurer,
issued a policy of insurance to cover the bus without
receiving the premium. By reason of the provisions of
Section 147(5) and 149(1) of the Motor Vehicles Act, the
appellant became liable to indemnify third parties in
respect of the liability which that policy covered and to
satisfy awards of compensation in respect thereof
notwithstanding its entitlement to avoid or cancel the policy
for the reason that the cheque issued in payment of the
premium thereon had not been honoured.
Insurance Company cannot be absolved of its obligation to
third parties under the policy because it did not receive the
premium. It has remedies in this behalf lay against the
insured. It was the Insurance Company itself who was
responsible for its predicament. It had issued the policy of
insurance upon receipt of a cheque towards the premium in
contravention of the provisions of Section 64 VB of the
Insurance Act. A policy of insurance being a public
interest concept prevails over the interests of the Insurance
Company.
20. The Ld. Tribunal has wrongly exonerated
Respondent No.3 Insurance Company from the liability and
directed respondents no. 1 and 2 to pay the compensation.
Ld. Tribunal has not considered the settled law regarding
the statutory liability of the insurance company which is
also envisaged as per the provisions of Motor Vehicles Act,
1988.
21. In view of the above discussion and the settled
law, the Insurance Company is directed to pay the
compensation amount before the ld. Tribunal within five
weeks from the date of receipt of this judgment, in terms of
the award dated 29.05.2010 with recovery rights against
the respondent no.2, i.e., the owner of the offending vehicle.
6. In view of above, I do not find any merit in the present appeal and the
same is accordingly dismissed.
7. Compensation amount shall be released in favour of the respondents /
claimants in terms of the order dated 24.02.2010 passed by this court.
8. Statutory amount shall be released in favour of the appellant.
SURESH KAIT, J.
JANUARY 03, 2014/jg
