Karnataka High Court
Bajaj Allianz General Insurance ... vs S Nataraj on 24 February, 2022
Bench: P.Krishna Bhat
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 24th DAY OF FEBRUARY 2022
BEFORE
THE HON'BLE MR. JUSTICE P. KRISHNA BHAT
MISC. FIRST APPEAL NO.8419/2010(MV)
BETWEEN
BAJAJ ALLIANZ GENERAL INSURANCE CO. LTD.,
105A/ 107A, CEARS PLAZA, I FLOOR
136, RESIDENCY ROAD, BANGALORE - 25
NOW SITUATED AT
BAJAJ ALLIANZ GENERAL INSURANCE CO. LTD
# 31, GROUND FLOOR, TBR TOWER,
I CROSS, NEW MISSION ROAD
ADJACENT TO JAIN COLLEGE
BANGALORE - 560 027.
... APPELLANT
(BY SRI.A.N.KRISHNASWAMY, ADVOCATE)
AND
1. S.NATARAJ
S/O SATHYANARAYANA RAO
NOW AGED ABOUT 37 YEARS
R/AT # 88, 8TH CROSS, I MAIN
MALATHAHALLI, N G E F LAYOUT
MAIN ROAD, BANGALORE - 560 056
2. SMT.K.BASAVAMADHAVI
W/O K.RAMAKRISHNA, MAJOR
M/S J.K.TRANSPORTS, NO.47
PADMA NILAYA, 3RD CROSS
CHANDRA LAYOUT, VIJAYANAGARA
BANGALORE - 560 040
2
3. THE MANAGING DIRECTOR
B M T C CENTRAL OFFICE
K H ROAD, SHANTHINAGARA
BANGALORE - 560 027. ...RESPONDENTS
(BY SRI. PRADEEP NAIK.K., ADVOCATE FOR R-1
SRI.K.NAGARAJ, ADVOCATE FOR R-3)
V/O DATED 17.03.2016 SERVICE OF NOTICE TO R-2 IS
DEEMED TO BE COMPLETE.
THIS MFA IS FILED UNDER SECTION 173(1) OF MV
ACT AGAINST THE JUDGMENT AND AWARD DATED
19.02.2010 PASSED IN MVC NO.610/2008 ON THE FILE OF
THE 14TH ADDITIONAL JUDGE, COURT OF SMALL CAUSES,
MACT, BENGALURU, AWARDING A COMPENSATION OF
RS.56,550/- WITH INTEREST @ 8% P.A. FROM THE DATE OF
PETITION TILL DEPOSIT IN COURT.
THIS APPEAL COMING ON FOR FINAL HEARING, THIS
DAY, THE COURT DELIVERED THE FOLLOWING:
JUDGMENT
This appeal is at the instance of the Insurance
Company calling in question the correctness of judgment
and award dated 19.02.2010 in M.V.C. No.610/2008
passed by 14th Addl. Judge, Motor Accident Claims
Tribunal, Court of Small Causes, Bengaluru city, awarding
a compensation of `56,550/- (Rupees Fifty six thousand
five hundred fifty only) with interest thereon for the bodily
injuries suffered.
2. The substantial contention of the learned
Counsel for the appellant is that the cheque issued by the
owner of the vehicle towards payment of premium was
returned by the banker dishonoring the same and
therefore, the policy of insurance was rendered void
abinitio for non-payment of consideration amount and
therefore the Insurance Company is not liable to pay the
compensation. It is therefore submitted that the direction
in the award to the Insurance Company to pay the
compensation awarded is illegal and liable to be set aside.
3. Perusal of the records including the impugned
judgment and award shows that the appellant-Insurance
Company had issued a policy of insurance for the period
commencing from 14.08.2007 to 13.08.2008 to the
offending vehicle. The accident occurred on 25.08.2007
resulting in injuries to the claimant. On account of the
dishonor of the cheque issued by the insured towards
payment of premium, the appellant-Insurance Company
issued a cancellation of premium letter dated 13.09.2007,
that is, subsequent to the occurrence of the accident. The
question now is whether in the facts and circumstances of
this case the policy of Insurance issued under Ex. R-1 is
rendered void ab initio for non-payment of premium by the
insured owner due to the dishonor of cheque and
therefore, no liability can be fastened on the appellant-
Insurance Company to pay the compensation as directed
by the Learned MACT on the impugned judgment and
order?
4. The above question is covered by a decision of
the Hon'ble Supreme Court in Vijay Singh vs State Of
Uttar Pradesh & Others (2012) 5 SCC 242. The
relevant observations of the Hon'ble Supreme Court at
para No.26 and 27 read as follows;
" 26. In our view, the legal position is
this: where the policy of insurance issued by
an authorized insurer on receipt of cheque
towards the payment of premium and such a
cheque is returned dishonored, the liability
of the authorized 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 authorized
insurer and intimation of such cancellation
has reached the insurer 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.
27. Having regard to the above legal
position, insofar as the facts of the present
case are concerned, the owner of the bus
obtained the policy of insurance from the
insurer for the period 16.4.2004 to
15.04.2005 for which premium was paid
through cheque on 14.04.2004. The accident
occurred on 11.05.2004. It was only
thereafter that the insurer cancelled the
insurance policy by communication dated
13.05.2004 on the ground of dishonor of
cheque which was received by the owner of
the vehicle on 21.05.2004. The cancellation
of policy having been done by the insurer
after the accident, the insurer became liable
to satisfy the award of compensation passed
in favour of the claimants".
5. As already noticed in this case, the cancellation
of the policy letter was issued by the appellant- Insurance
Company by a letter dated 13.09.2007 that is subsequent
to the occurrence of the accident on 25.08.2007. In view
of the above decision of the Hon'ble Supreme Court, the
contention of the appellant that it is not liable to pay the
compensation amount is therefore untenable.
6. Accordingly, there is no merit in the appeal
and it is liable to be dismissed.
7. Hence, the above appeal is dismissed.
8. The appellant Insurance Company is liable to
pay the compensation as directed in the impugned
judgment and award.
The amount in deposit shall be transmitted to the
learned MACT along with records forthwith.
Sd/-
JUDGE
GVP/HDK
