Orissa High Court

The United India Insurance Co. Ltd vs Unknown on 20 March, 2023

        IN THE HIGH COURT OF ORISSA AT CUTTACK
                     MACA Nos.458, 459 & 460 of 2007

(From the common judgment dated 28th February, 2007 of learned 2nd
MACT, Cuttack passed in Misc. Case Nos.44, 45 & 60 of 1989)


 The United India Insurance Co. Ltd.,
 represented by its Regional manager,
 Regional Cell, IPICOL House,                          Appellant in all the
 Bhubaneswar                          ....                    three appeals

                                      -versus-
 Sabitri Bewa and Others                     (in MACA No.458 of 2007)
 Baisakhi Bewa and Others                    (in MACA No.459 of 2007)
 Rasika Munda and Another                    (in MACA No.460 of 2007)
                                                 ....         Respondents

Advocate(s) appeared in this case:-

            For Appellant            : Mr. S.K. Mohanty, Advocate

            For Respondents          : Mr. B. Mohanty, counsel for
                                       Respondents 1-5 in MACA
                                       No.458/2007
                                       For Respondents 1 & 3 to 7 in
                                       MACA No.459 of 2007 &
                                       For Respondent No.1 in MACA
                                       No.460 of 2007.

               CORAM: JUSTICE B.P. ROUTRAY
                                   JUDGMENT

20th March, 2023 B.P. Routray, J.

1. All the three appeals are directed against the common impugned

judgment dated 28th February, 2007 of learned 2nd MACT, Cuttack

passed in Misc. Case No.44, 45 and 60 of 1989.

2. The common issue involved in all the three appeals is regarding

liability of the Appellant - Insurance Company to indemnify the

compensation amount. While no dispute is raised with regard to

involvement of the offending vehicle, i.e. truck bearing registration

number OAC 2015 in the accident and death as well as injury in

respect of the claimants, the entire contention is concentrated on the

validity of insurance policy. It is submitted on behalf of the Appellant

that the policy issued in respect of the offending vehicle was cancelled

much prior to the accident and due intimation thereof was sent to the

RTO as well as owner of the vehicle. Therefore, the insurance

company is exempted from the liability.

3. Conversely, it is submitted on behalf of the claimant -

Respondents that no such intimation about cancellation of policy was

sent either to the RTO or to owner prior to the accident and secondly,

the insurance policy once issued cannot be cancelled as contended by

the Appellant.

4. The accident took place on 17th December, 1988 causing death

of two persons and injury to others. The alleged insurance policy

bearing No.034001/24/1/03487 issued on 24th December, 1987 was

effective from 31st December 1987 to 20th December 1988. According

to the insurance company, issuance of certificate of policy was

cancelled with effect from the date of its inception due to dishonor of

the Cheque given by the owner towards premium. The fact of

cancellation, as per the insurer, was duly intimated to the RTO and the

owner on 17th February, 1988.

5. In order to prove their contention, the insurance company

examined 4 witnesses and adduced several documents marked under

Ext. A to G. Further, three other documents were also filed by the

insurance company and though the same were not marked as exhibits

but were marked as 'X', 'M' and 'N' for identification by the tribunal

being Photostat copies.

Amongst four witnesses examined by the insurance company,

O.P.W.3 is the owner of the offending vehicle and rest are the officials

of insurance company.

6. The tribunal on analysis of the evidences brought on record has

come to the finding that the contention of the insurance company

regarding due intimation of cancellation of policy has not been proved

on record and as such, saddled the liability on the insurance company.

The tribunal has further directed the insurer to pay compensation of

Rs.1,13,000/- and Rs.1,20,200 in death cases (Misc. Case No.44 of

1989 and Misc. Case No.45 of 1989) and Rs.18,000/- in the injury case

(Misc. Case No.60 of 1989) along with interest @ 6% per annum from

12th January, 1989.

7. Admittedly, the certificate of insurance policy under Ext.A was

issued on 24th December, 1987 along with money receipt dated 24th

December, 1987. In order to appreciate the contention of the Appellant

with regard to cancellation of the policy, Ext. D, E and F are important

documents. Ext.D is the cancellation bill, Ext.E is the letter addressed

to the RTO, Cuttack regarding cancellation and Ext.F is the extract of

insurance certificate register. The document marked as 'M' is the

Photostat copy of postal receipt addressed to the RTO, Cuttack and

mark 'N' is the Photostat copy of postal receipt in the address of the

owner (T.C. Samal).

8. It is apt to mention here that Ext.A is the insurance policy issued

as per the provisions of the Motor Vehicles Act, 1939.

9. As per the evidences of O.P.Ws.1, 2 & 4, the premium for

issuance of policy was paid by the owner in Cheque No.166202 dated

24th December, 1987 and the same was dishonoured for insufficient

fund. The dishonour of Cheque is not disputed by the owner. O.P.W.3,

the owner, has stated in his evidence that he received the intimation

regarding cancellation of the policy on 12th January, 1989 only when

he gave necessary information to the company regarding the accident.

But as per O.P.Ws.1, 2 & 4, the officials of the company, the fact of

cancellation of the policy was intimated to the RTO as well as the

owner on 17th February, 1988, i.e. much prior to the date of accident.

So it becomes important here to look into the register of the insurance

company produced under Ext. E and F as well as the postal receipts

identified under Mark 'M' and 'N'. From perusal of the same, it is first

noticed that the intimation has been sent to RTO, Cuttack. But the fact

remains that the RTO, Chandikhol is the registering authority of the

offending vehicle. No explanation has been offered by the officials of

the company in this regard that why the intimation was sent to the

RTO, Cuttack when the registering authority of the vehicle is the RTO,

Chandikhol.

10. Secondly, it is seen from the register as well as the postal receipt

that the address of the owner is mentioned as "Trailokya Charan

Samal, Chandikhol". As per the Proposal Form, the address of the

owner is "Trailokya Charan Samal, At/PO:- Aruha, Via:- Haridaspur,

Cuttack". Undoubtedly, Chandikhol is a place that covers Aruha. But

Chandikhol is a bigger place that includes many post offices and it is

difficult to find a particular address at Chandikhol unless the same is

specific. What I mean to indicate here that the address mentioned in the

postal receipt as well as in the register is lacking details and therefore,

the service on the addressee cannot be definitely confirmed. So, it is

concluded that the insurance company has failed to substantiate its case

regarding service of notice of cancellation of policy either on the

owner or on the registering authority.

11. Section 105 of the MV Act, 1939 mandates service of notice of

cancellation to the registering authority within 7 days of such

cancellation. Further section 95(2)(a) prescribes that the insurer can

take such defence of cancellation of policy with compliance to the

provisions under Section 105. A cumulative reading of Sections 96,

103 and 105 suggests that the insurer can take the defence of its non-

liability, within 14 days after the accident or any time before the

accident if a proceeding has been commenced for cancellation of the

certificate of insurance policy, with compliance of the provisions under

Section 105.

12. The Hon'ble Supreme Corut in the case of Oriental Insurance

Company Ltd. v. Indrajit Kaur, (1998) 1 SCC 371 have held that, "the

policy of insurance that the Appellant issued was a representation upon

which the authorities and 3rd parties were entitled to act. The Appellant

was not absolved of its obligations to 3rd parties under the policy

because it did not receive the premium. Its remedies in this behalf lie

against the insured."

13. The Supreme Court in the case of United India Insurance Co.

Ltd. vrs. Laxmamma, (2012) 5 SCC 234 have held as follows:

"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."

14. Further, this Court in the case of Rashmita Mohanty and 4

others vrs. Santosh Kumar Padhi and another, 2016(I) OLR-989,

have observed that, in absence of an intimation to the concerned

Registering Authority regarding cancellation of the insurance policy

issued in respect of the offending vehicle, as required under Section

147(4) of the M.V. Act, 1988, the insurer is liable to pay the awarded

compensation amount to the claimants, with the right to recover the

same from the owner of the vehicle.

15. In the case at hand, as stated above, the insurance company has

failed to establish on record regarding sending of due intimation to the

registering authority regarding cancellation of policy. So for non-

compliance of the provisions of Section 105 of the MV Act, 1939, the