The Divisional Manager vs Abhinna Kumar Das And Another
2023 Latest Caselaw 2243 Ori

       IN THE HIGH COURT OF ORISSA AT CUTTACK
                       MACA No.10 of 2020
(From the judgment dated 7th January, 2019 passed by the learned 1st
M.A.C.T., Cuttack in M.A.C. No.93 of 2013)

 The Divisional Manager, DO-II,         ....                   Appellant
 M/s.National Insurance Co. Ltd.
                                      -versus-
 Abhinna Kumar Das and another          ....                Respondents

Advocate(s) appeared in this case:-

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

          For Respondents      : Mr. P.K. Mishra, Advocate
                                 For Respondent No.1


             CORAM: JUSTICE B.P. ROUTRAY
                             JUDGMENT

20th March, 2023

B.P. Routray, J.

1. Present appeal by the insurer, i.e. National Insurance Co. Ltd. is directed against the judgment dated 7th January, 2019 passed by learned 1st M.A.C.T., Cuttack in M.A.C. No.93 of 2013, wherein compensation to the tune of Rs.6,41,000/- has been granted along with simple interest @6% per annum to the claimant from the date of filing of the claim application, i.e.01.03.2013 on account of injury sustained by him in the motor vehicular accident dated 02.01.2013. Learned Tribunal has directed the Appellant to pay the compensation amount at first instance and then has granted right of recovery from the owner.

2. The entire challenge of the insurer is in respect of its liability to indemnify the owner. According to the Appellant, the policy issued in respect of the offending vehicle, i.e. Truck bearing Registration No.OR-09-E-1857 was cancelled prior to the accident for dishonour of the cheque issued by the insured.

3. According to the injured-claimant, the offending vehicle dashed him from behind when he was returning on the left side of the road. Due to the accident, he sustained severe injuries on his person and suffered with permanent disability to the extent of 70% as his right arm and ear was amputed. The accident took place on 2.1.2013. Prior to that, alleged Policy No.163101/31/12/630000/5331 was taken by the insured (owner) in respect of the offending vehicle by submitting a Cheque dated 24.12.2012 for Rs.20,815/-. It is stated by the Insurance Company that the Cheque was dishonoured on 27.12.2012 due to insufficiency of fund and the Insurance Company immediately intimated the owner on 1.1.2013 about cancellation of the policy from the date of its inception, i.e. from 26.12.2012. It is further stated that the intimation was also sent to the RTO on the same day on 1.1.2013. The further case of the Insurance Company is that on 4.1.2013, the owner availed a new insurance policy in respect of the same offending vehicle on 4.1.2013 vide Policy No.163101/31/12/6300005652.

4. In support of its contention, the Insurance Company examined its Officer as O.P.W.1 and adduced copies of intimation sent to the owner as well as the RTO under Ext.D and E.

5. The owner did not come to contest the claim application and was set ex-parte. Before this Court also, the owner remained absent.

6. The Supreme Court in the case of United India Insurance Company Limited vs. Laxmamma and others, (2012) 5 SCC 234 have set the law at rest on the point of cancellation of policy due to dishonour of cheque. With discussion to earlier decisions rendered in the cases of Oriental Insurance Co. Ltd. vs. Inderjit Kaur, (1998) 1 SCC 371, New India Assurance Co. Ltd. vs. Rula and others, (2000) 3 SCC 195 and National Insurance Co. Ltd. vs. Seema Malhotra and others, (2001) 3 SCC 151, the Supreme Court have stated the legal position 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."

7. Coming back to the case at hand, the accident took place on 2.1.2013 at 4.00 P.M. As per the Insurance Company, the intimation of cancellation of policy was sent on 1.1.2013, i.e. on the previous date of

accident, as shown under Ext.D and E. However, the Insurance Company did not produce the postal receipts sending the intimation to the owner and the RTO, or any service proof thereof. It needs to be emphasized here that Ext.D and E are the letters of the Insurance Company addressed to the owner and the RTO. As observed by the Supreme Court in the case of Laxmamma and others (supra), the intimation of cancellation must reach to the insured before the accident. Ext.D and E does not satisfy the service of cancellation of intimation on the addressee and admittedly no such service proof has been produced by the Insurance Company. So in absence of any service proof on the insured, it cannot be concluded that the intimation of cancellation of the policy issued on 26.12.2012 has reached the owner before the accident. It is noticeable here that the owner has taken a fresh policy w.e.f. 4.1.2013. This presupposes the genuineness of the owner that return of his earlier Cheque was not deliberate. Otherwise also, in normal course, it cannot be expected that a letter issued by registered post with A.D. (as mentioned at the top of Ext.D and E) through official process would reach the addressee within one day. Issuance of a fresh policy in favour of the insured on 4.1.2013 gives rise an inference that he took a fresh policy immediately upon knowing about cancellation of the earlier policy, which again presupposes that he received the intimation of cancellation either on 4.1.2013 or just before that.

8. Therefore, as discussed above, in absence of any proof of service of intimation of cancellation on the owner prior to the accident, the insurer cannot be absolved of its liability. The liability of the Insurance Company does not cease for such reasons mentioned above.

9. Next coming towards quantification of the compensation amount, it is seen that learned Tribunal by assessing monthly income of the injured at Rs.3500/- has determined the loss of future income at Rs.4,41,000/- with functional disability to the extent of 70%. This Court does not find any reason in support of the Insurance Company to reduce the compensation amount as determined by learned Tribunal. Further, in absence of any challenge from the side of the injured- claimant, this Court is not inclined to interfere with the compensation amount.

10. In the result, the appeal is dismissed and the Insurance Company is directed to deposit the entire compensation amount before learned Tribunal including interest as directed by it, within a period of two months from today; where-after the same shall be disbursed in favour of the claimant-injured on same terms and proportion as contained in the impugned judgment. However, the direction for payment of penal interest @12% per annum is waived.

11. On deposit of the award amount before learned Tribunal and filing of a receipt evidencing the deposit with a refund application before this Court, the statutory deposit made by the Appellant-insurer with accrued interest thereon be refunded to him on proper application.

(B.P. Routray) Judge

B.K. Barik/Secretary