Karnataka High Court
Smt. Haseena vs Sri.B.V. Venkatashiva Reddy on 11 July, 2025
Author: B M Shyam Prasad
Bench: B M Shyam Prasad
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MFA No. 7964 of 2023
C/W MFA No. 5841 of 2023
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 11TH DAY OF JULY, 2025
PRESENT
THE HON'BLE MR. JUSTICE B M SHYAM PRASAD
AND
THE HON'BLE MR. JUSTICE G BASAVARAJA
MISCELLANEOUS FIRST APPEAL NO. 7964 OF 2023 (MV-D)
C/W
MISCELLANEOUS FIRST APPEAL NO. 5841 OF 2023 (MV-D)
IN MFA No. 7964/2023
BETWEEN:
1. SMT. HASEENA
W/O LATE RAFIQ @ MOHAMMED RAFI,
AGED ABOUT 35 YEARS,
2. SHABREENA
D/O LATE RAFIQ @ MOHAMMED RAFI,
Digitally AGED ABOUT 20 YEARS,
signed by
VANAMALA
N 3. SRI SUHEL
Location: S/O LATE RAFIQ @ MOHAMMED RAFI,
High Court AGED ABOUT 18 YEARS,
of Karnataka
4. SRI RASOOL SAB
S/O LATE KASIM SAB,
AGED ABOUT 68 YEARS,
RESIDING AT HAMPASANDRA
VILLAGE, GUDIBANDE TALUK,
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MFA No. 7964 of 2023
C/W MFA No. 5841 of 2023
HC-KAR
CHIKKABALLAPURA DISTRICT,
PIN 561209.
...APPELLANTS
(BY SMT. INDUMATHI S R.,ADVOCATE)
AND:
1. SRI.B.V. VENKATASHIVA REDDY
S/O VENKATA REDDY,
AGED ABOUT 74 YEARS,
R/AT ETIGADDAPALLI,
BAGEPALLI TALUK,
CHIKKABALLAPURA DISTRICT 561207.
2. THE REGIONAL MANAGER
ICICI LOMBARD GEN INSURANCE CO LTD,
REGIONAL OFFICE 9TH FLOOR,
ESTATE BUILDING, DICKENSON ROAD,
M G ROAD, BANGALORE 560046.
...RESPONDENTS
(BY SMT. SUGUNA R REDDY., ADVOCATE FOR R1;
SRI. A.N. KRISHNA SWAMY, ADVOCATE FOR R2)
THIS MFA IS FILED U/S 173(1) OF MV ACT
AGAINST THE JUDGMENT AND AWARD DATED
03.06.2023 PASSED IN MVC NO. 1546/2020 ON THE
FILE OF THE MEMBER, MACT, XVIII ADDITIONAL
JUDGE, COURT OF SMALL CAUSES, BENGALURU
SCCH-4 PARTLY ALLOWING THE CLAIM PETITION FOR
COMPENSATION AND SEEKING ENHANCEMENT OF
COMPENSATION.
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MFA No. 7964 of 2023
C/W MFA No. 5841 of 2023
HC-KAR
IN MFA NO. 5841/2023
BETWEEN:
ICICI LOMBARD GENERAL
INSURANCE COMPANY LTD
REGIONAL OFFICE,
9TH FLOOR, ESTATE BUILDING
DICKENSON ROAD
M G ROAD
BENGALURU-560046
REPRESENTED BY ITS REGIONAL MANAGER.
...APPELLANT
(BY SRI. A N KRISHNA SWAMY.,ADVOCATE)
AND:
1. SMT. HASEENA
W/O LATE RAFIQ @ MOHAMMED RAFI
AGED ABOUT 35 YEARS
2. KUMARI SHABREENA
D/O LATE RAFIQ @ MOHAMMED RAFI
AGED ABOUT 20 YEARS
3. MASTER SUHEL
S/O LATE RAFIQ @ MOHAMMED RAFI
AGED ABOUT 18 YEARS
PETITIONERS NO.2 AND 3 ARE NOW MAJOR
HENCE THEY ARE NOT
REPRESENTED BY GUARDIAN
ALL ARE R/A HAMPASANDRA VILLAGE
GUDIBANDE TALUK
CHIKKABALLAPUR DISTRICT
PINCODE-561209.
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MFA No. 7964 of 2023
C/W MFA No. 5841 of 2023
HC-KAR
4. SRI RASOOL SAB
S/O LATE KASIM SAB
AGED ABOUT 71 YEARS
R/A HAMPASANDRA VILLAGE
GUDIBANDE TALUK
CHIKKABALLAPUR DISTRICT
PINCODE NO.561209.
5. SRI B V VENKATASHIVA REDDY
S/O VENKATA REDDY
AGED ABOUT 74 YEARS
R/A ETIGADDAPALLI
BAGEPALLI TALUK, CHICKBALLAPUR
DISTRICT-561207.
...RESPONDENTS
(BY SMT. INDUMATHI S R.,ADVOCATE FOR R1 TO R4;
SMT. SUGUNA R REDDY, ADVOCATE FOR R5)
THIS MFA IS FILED U/S.173(1) OF MV ACT,
AGAINST THE JUDGMENT AND AWARD DATED
03.06.2023 PASSED IN MVC NO.1546/2020 ON THE
FILE OF THE XVIII ADDITIONAL JUDGE, COURT OF
SMALL CAUSES, MEMBER, MACT, BENGALURU, (SCCH-
4), AWARDING COMPENSATION OF RS.30,20,500/-
WITH INTEREST AT 6 PERCENT P.A.
THESE APPEALS, COMING ON FOR ADMISSION,
THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS
UNDER:
CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD
and
HON'BLE MR. JUSTICE G BASAVARAJA
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MFA No. 7964 of 2023
C/W MFA No. 5841 of 2023
HC-KAR
ORAL JUDGMENT
(PER: HON'BLE MR. JUSTICE B M SHYAM PRASAD)
These cross appeals are as against the
Judgment and Award dated 03.06.2023 in MVC No.
1546 of 2020 on the file of the Motor Accident Claims
Tribunal, Bengaluru City [for short 'the Tribunal']. The
appeal by the concerned Insurer is in MFA
No.5841/2023 and the appeal by the claimants is in
MFA No.7964/2023. The contesting parties, for
reasons of convenience, are referred to as the
claimants and the Insurer with the owner of the
vehicle being referred to as the Insured.
2. Sri R Rafiq alias Mohammed Rafi was on
his motorcycle on 16.01.2020 at 06.30 p.m. when a
tractor with a water tank trolley [the Insured Vehicle]
dashed against him. He has suffered head injuries,
and the doctors, when shifted to Government
Hospital, Bagepalli, Chikkaballapur District, have
declared him dead. The claimants are his wife and
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two minor sons. The Tribunal has granted a total
sum of Rs.30,20,500/- under the following heads:
Sl. No. Heads of compensation Amount
[In Rs.]
1. Loss of dependency 19,57,500
2. Loss of future prospects 7,83,000
3. Loss of consortium 1,60,000
4. Loss of love and affection 1,00,000
5. Funeral expenses 15,000
6. Transportation of dead body 5,000
TOTAL 30,20,500
3. The Insurer in its appeal does not dispute
the accident or that the driver of the Insured Vehicle
was rash and negligent. The Insurer contests its
liability on the ground that two days prior to the date
of accident [16.01.2020], a Cover Note dated
14.01.2020 was issued as against the cheque of even
date and that this cheque when presented on
23.01.2020 is returned unpaid for 'insufficiency of
funds'. In fact, the Insurer has filed Statement of
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objections resisting the claim petition on 10.03.2021
but without a defense in this regard, and later, on
07.05.2022, the Insurer, with the Tribunal's
permission, has amended the Statement of objection
asserting that it is not liable to pay compensation
because the premium is not received with the return
of the cheque.
4. The Insurer has examined one of its
officers as RW1. This witness has stated that Cover
Note is issued because the Insured has issued a
Cheque for payment of premium, and that when the
cheque is sent for collection, an Endorsement is
issued by the concerned Bank stating that the
cheque is dishonored because of 'insufficiency of
funds'. The witness asserts that, because the Insured
had not paid the premium as on the date of the
accident, there was no valid or effective Policy. The
witness has produced the cheque [Ex.R1] in
consideration of which the Cover Note is issued.
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5. Even at this stage, this Court must
observe that the cheque is issued by one Sri Mani
Nayaka A and not the Insured1, but the witness
states that it is issued by the Insured which is
factually incorrect. The Tribunal, relying upon the
Apex Court's decision in 'Oriental Insurance
Company Limited v. Inderjit Kaur and Others'2,
has opined that even if there is cancellation of the
Policy on the ground that the cheque is dishonored
would not affect the rights of the third parties to
receive compensation from the Insurer.
6. Sri A N Krishnaswamy, the learned
counsel for the Insurer, has a two-fold submission to
justify the Insurer's case. The first fold is that the
Insurer cannot be liable howsoever, and the next fold
is that even if the Insurer is held liable to answer the
claimants' claim as a third-party claim, it must be at
1 The First respondent with the Tribunal
2 AIR 1998 SC 588
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liberty to recover from the Insured. On the first fold,
the learned counsel submits that the decision of the
Apex Court in Inderjit Kaur [supra] and the later
decisions, including the decision of the Apex Court in
'United Insurance Company Limited v.
Laxmamma and Others'3, is because of the
provisions of Section 64VB of the Insurance Act,
1938 [the Insurance Act] as it stood prior to the
amendment in the year 2002, but sub-clause [6] is
included by amendment enabling the concerned
authority to specify the Regulations for the manner in
which the premium can be received by the Insurer.
7. Sri A N Krishnaswamy elaborates that
consequent to the conferment of this power under
Section 64VB [6] of the Insurance Act, the Insurance
Regulatory and Development Authority [Manner Of
Receipt of Premium] Regulations 2002 [for short 'the
Regulations'] is published and that under these
3AIR 2012 SC 2817
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Regulations, the Manner of Payment of premium is
stipulated providing for Commencement of the Risk
[except where premium is received in cash] only with
the receipt of the premium by the Insurer. The
learned counsel canvasses that under Regulation-3,
the premium can be paid by any person [who is
called a Proposer] or by a policy holder, that the
premium can be tendered by cash or different
instruments that are mentioned and that if the
payment is made in any manner other than by cash,
the commencement of the risk would only be with the
receipt of the premium.
8. Sri A. N. Krishnaswamy argues that with
this change in regime, the onus is on the Insured,
whether the cheque is given by him or on his behalf,
to ensure that the same is honoured, and that if the
Insured has failed, the Insurer's risk does not
commence because the policy is declared void ab
initio. The learned counsel emphasizes that the
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decision in Inderjit Kaur or Laxmamma [supra]
cannot be applied contending that because in the
present case it is beyond dispute that the cheque is
returned unpaid and that the Apex Court has not
considered this change in regime in any of the
decisions.
9. Sri A. N. Krishnaswamy, on the second
fold of the Insurer's case, submits that the Apex
Court in 'Deddappa and others v. The Branch
Manager, National Insurance Company Limited'4
has underscored that insurance is a reciprocal
promise; that the reciprocal promises are condition
precedent for a valid contract; and that insurance
contracts must be for consideration and if they are
not backed by consideration, will be void ab initio as
contemplated under Section 65 of the Indian
Contracts Act, 1872. The learned counsel argues
that, therefore, even if the Insurer is unable to
4AIR2008 SC 767. This decision is also referred to in
Laxmamma's case.
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dispute its liability to answer the third-party claim, it
must be entitled to recover the amount paid from the
Insured.
10. Smt Suguna R Reddy, the learned counsel
for the Insured, without joining debate on the
Insurer's liability to pay the claimants, contests the
assertion that the Insurer must be at liberty to
recover the amount paid to the claimants from the
Insured. The learned counsel canvasses that the
Insurer cannot dispute that the crucial test is
whether it has cancelled the Policy before the date of
accident, and that if the policy is not cancelled before
the date of the accident, then there cannot be any
liberty to recover the compensation paid to third
party claimants.
11. Smt. Suguna Reddy, on the facts relevant
for the consideration, points out that the Cover Note
is issued on 14.01.2020, that the accident is on
16.01.2020, that the cheque is presented on
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23.01.2020, that no notice of cancellation is issued at
any stage, that the Insurer did not even take this
contention during the subsistence of the Policy and it
is only after the Policy period the Statement of
Objection is amended to say that premium is not paid
and therefore it is not liable.
12. On the quantum of compensation, Smt
Indumathi S R, the learned counsel for the claimants,
submits that the deceased is shown to be a
'Carpenter', but the Tribunal has computed the loss of
dependency taking notional income which is only
when the victim is an unskilled labourer. The learned
counsel submits that because the deceased was a
Carpenter, an income higher than the notional
income should be taken. Sri A N Krishnaswamy is
also heard on this aspect.
13. In the light of the rival submissions, the
questions for consideration are:
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[i] Whether this Court must hold
that the Insurer in the
peculiarities of the case must
answer the liability to pay
compensation to the claimants,
and if it must answer the
liability, whether it can have the
liberty to recover the same from
the Insured, and
[ii] Whether there must be any
enhancement in the
compensation granted by the
Tribunal to the claimants.
14. The Apex Court in its decision in
Laxmamma [supra] has exposited that the Insurer
must indemnify the owner in respect of the third
party claims and satisfy the award of compensation
in view of the relevant provisions of the Motor
Vehicles Act, 1988, unless it has, before the accident,
cancelled the policy and ensured that the intimation
of such cancellation has reached the Insured. The
Apex Court's exposition reads as under:
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"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
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liable to satisfy awards of compensation in
respect thereof."
15. This Court is now called upon to make a
distinction based on the Regulations published in
exercise of the power conferred under sub-section [6]
of Section 64 of the Insurance Act, 1938. It is argued
that with Regulations 3 and 4, the commencement of
the risk would only be if the Insurer has received
premium whether it is offered by the owner of the
vehicle or any other person and whether the premium
is offered by way of a cheque or other instruments as
mentioned in Regulation-3. It is argued that because
the cheque issued by the Insured is returned unpaid,
the risk never commenced.
16. The Regulations 3 and 4 read as under:
"3. Manner of premium payments- The
premium to be paid by any person
proposing to take an insurance policy
(hereinafter referred to as the Proposer) or
by the policyholder to an Insurer may be
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made in any one or the of the following
manner(s), namely: -
(a) Cash,
(b) any recognised banking negotiable
instrument such as cheques,
including demand drafts, pay
orders, banker's cheques drawn on
any scheduled bank in India,
(c) postal money orders,
(d) credit or debit cards held in his name,
(e) bank guarantee or cash deposit,
(f) internet,
(g) E-Transfer,
(h) direct credits via standing
instructions of proposer or the
policyholder or the life insured
through bank transfers, and
(i) any other method of payment as
may be approved by the Authority
from time to time.
4. Commencement of risk- In all cases of risks
covered by the policies issued by an Insurer,
the attachment of risk to an Insurer will be in
consonance with the terms of section 64-VB of
the Act and except in the cases where the
premium has been paid in cash, in all other
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cases the Insurer shall be on risk only after
the receipt of the premium by the Insurer:
Provided that in the case of a policy of general
insurance that where the remittance made by
the proposer or the policyholder is not realised
by the Insurer, the policy shall be treated as
void ab initio:
Provided further that in the case of a policy of
life insurance, the continuance of the risk or
otherwise shall depend on the terms and
conditions of the policy already entered into."
The Regulation-3 reads that the premium to an
Insurer may be by any person proposing to take an
insurance policy [the Proposer] or by the policy
holder, and the payment can be by any of the mode,
including by cash or cheque. The Regulation-4 reads
that, unless when the premium is by cash, the
commencement of the policy will be with the receipt
of the premium, and the first proviso stipulates that if
the premium is not realized, the Policy shall be
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treated as void ab initio but that is in the case of a
general insurance.
17. This Court must observe that if the
Insurer has issued a Cover Note [or a Policy] as
against a cheque issued by its own agent and such
cheque is returned unpaid, the default will be by its
agent and therefore the default will be at its doorstep.
Further, it cannot be gainsaid that the owner of the
vehicle cannot be penalised if the default is by the
Insurer's agent. Therefore, a distinction must be
made between cases where cheques are issued by
owner [or on his/her behalf] and where the cheques
are issued by the Insurer's agent. This Court is of
definite opinion that the Insurer cannot invoke the
expression 'any person proposing to take an insurance
policy' as found in Regulation 3 to deny its liability
when its agent has offered the cheque. Of course,
whether the expression 'any person proposing to take
an insurance policy' alters the position when the
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cheque is issued by the Owner/Insured[or on their
behalf] must be examined. As such, whether the
concerned cheque is issued by the Insured will be
very germane.
18. It is indisputable that the Cover Note is
issued as against the cheque issued by a certain 'A
Mani Nayaka'. The Insurer's witness, though the
subject cheque is issued by this Sri Mani Nayaka A,
states in evidence [without any elaboration] that the
Insured has issued the cheque. The Insurer has
received this cheque as the consideration for
issuance of the Cover Note and it has issued Cover
Note contemporaneously but has presented the
cheque only on 23.01.2020 i.e., after nine days. The
burden will be on the Insurer to explain how the
Cover Note was issued to the Insured against a
cheque of Sri Mani Nayaka A. The Insurer has not
established the identity of this person to discharge
this burden.
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19. Incidentally, this Court must observe that
Smt. Suguna Reddy [on behalf of the Insured, who
has not let in evidence] proposes to contend that Sri
Mani Nayaka A is the Insurance Agent who has
collected premium in cash and has presented the
cheque; and that it is not a solitary case, he has
collected premium from many in cash and presented
cheques which are returned. If the Insurer has failed
to discharge the burden to show that the Cover Note
is issued because the Insured has issued the cheque
in question and if there is any doubt that the Insurer
has collected the cash from the Insured through its
agent and has issued the Cover Note [or Policy] as
against such cheque, the Insurer cannot contend
that the cheque is issued by the Insured.
20. This Court, in the facts and
circumstances, finds that the proposition exposited
by the Apex Court in the decision of Laxmamma
[supra], after referring to the earlier decision, must
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prevail, and that the Insurer cannot succeed by
relying on the Regulations 3 and 4 of Regulations.
Indisputably, the Insurer has not presented the
cheque though received on 14.01.2020, until
23.01.2020, and though the intimation of the return
is received on 24.01.2020, the Insurer has not
recalled or cancelled the Cover Note [and therefore the
assurance to indemnify] during the term of the Policy.
As such, the first question is answered opining that
the Insurer cannot succeed even on the second
ground, and the question, whether an Insurer can
rely upon Regulations 3 and 4 when it has
established that the owner has issued cheque is left
open to be considered in an appropriate case.
21. The claimants seek enhancement in
compensation on the ground that the deceased is
shown to be a Carpenter and therefore a higher
income than the notional income should be taken,
but, it cannot be gainsaid that there is no evidence to
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demonstrate that the deceased was in fact working as
a Carpenter - a skilled labourer. In the absence
thereof, this Court is of the considered view that the
Tribunal has rightly taken the notional income and
capitalized loss of dependency with addition towards
future prospects and the deduction towards personal
expenses based on the deceased's age. In the light of
the afore, the following:
ORDER
The appeals are dismissed, and the
Registry is directed to transmit the amount
in deposit in this appeal to the Tribunal for
disbursement.
SD/-
(B M SHYAM PRASAD)
JUDGE
SD/-
(G BASAVARAJA)
JUDGE
AN/-
