The Divisional Manager vs Dukhabandhu Dehuri (Since Dead)
2023 Latest Caselaw 2244 Ori

       IN THE HIGH COURT OF ORISSA AT CUTTACK

                      MACA No.128 of 2021

(From the judgment dated 28th September, 2020 passed by the learned
1st M.A.C.T., Jagatsinghpur in M.A.C. Case No.1441 of 2014)

 The Divisional Manager, Oriental       ....                   Appellant
 Insurance Company Ltd.
                                      -versus-
 Dukhabandhu Dehuri (since dead) ....                       Respondents
 through LRs and others

Advocate(s) appeared in this case:-

          For Appellant        : Mr. S. Satapathy, Advocate

          For Respondents      : Mr. P.K. Mishra, Advocate
                                 For Respondent Nos.1(a), 1(b) & 2


              CORAM: JUSTICE B.P. ROUTRAY
                             JUDGMENT

20th March, 2023

B.P. Routray, J.

1. Present appeal by the insurer, i.e. Oriental Insurance Co. Ltd. is directed against the judgment dated 28th September, 2020 passed by learned 1st M.A.C.T., Jagatsinghpur in M.A.C. Case No.1441 of 2014, wherein compensation to the tune of Rs.8,60,400/- has been granted along with simple interest @7% per annum to the claimants from the date of filing of the claim application, i.e. 17.12.2014 on account of death of the deceased in the motor vehicular accident dated 15.06.2014.

2. The entire challenge is with regard to cancellation of policy due to dishonour of cheque.

3. The accident took place on 15.6.2014 at 3.00 P.M. when the deceased was going by walk on the extreme left side of the road. The offending vehicle dashed him coming in a high speed being driven in rash and negligent manner. According to the insurer, the policy issued in respect of the offending vehicle, i.e. Pickup Van bearing Registration No.OD-19A-5017 has been cancelled since 4.4.2014. So the insurer is not liable to indemnify the owner.

4. The undisputed facts remain that Policy No.345900/31/ 2014/9777 was issued by Oriental Insurance Co. Ltd. with its validity from 29.3.2014 to 28.3.2015, i.e. covering the date of accident. According to the Insurance Company, Cheque No.387578 dated 28.3.2014 paid by the insured (owner) was dishonoured due to insufficient fund and as such, the policy was cancelled on 4.4.2014 for non-payment of premium amount. The intimation of cancellation was sent to the owner as well as the RTO, Angul by registered post with A.D.

5. In this regard, the Insurance Company has examined its Senior Divisional Manager as O.P.W.1. It is relevant to reproduce his deposition stated at paragraph 9 in the cross-examination, which reads as follows:

"9. The insurance policy was issued in favour of the owner of the vehicle i.e.Bolero Max Pick up bearing Regd. No.OD-19A-5017 i.e. Bismit Kumar Sahoo on

dated 29.03.2014 from our company. The said policy (which was issued in favour of Bolero Max Pick up bearing Regd. No.OD-19A-5017 i.e.Bismit Kumar Sahoo on dated 29.03.2014 from our company) was cancelled by our company on 04.04.2014. After cancelling the policy on dated 04.04.2014, our company intimated to the policy holder Bismit Kumar Sahoo. Today I am not filing any document relating to providing of any intimation to the RTO, before which, the aforesaid Max Bolero Pick up was registered regarding the cancellation of its insurance policy. The party (policy holder) was intimated about the cancellation only through registered post. But, I am not sure whether any acknowledgement slip was attached with the registered letter. No documentary prove is shown on behalf of our company regarding the receipt of policy cancellation letter of the insured Bismit Kumar Sahoo in respect of his aforesaid Bolero Pick up by the said Bismit Kumar Sahoo or the RTO. I have not filed the original dishonored cheque, because the same has been submitted before the Court of 4th MACT in another case."

(emphasis supplied)

6. The service of intimation of cancellation on the owner as well as the RTO is seriously objected by the claimants. However, the Insurance Company strongly relies on Ext.A and Ext.G in support of their contention. Ext.A is the copy of policy cancellation paper and Ext.G is the copy of postal receipt dated 10.4.2014 issued to the addressee, namely, Bismita Kumar Sahu (the owner). But nothing could be produced in respect of service of intimation of cancellation on the RTO.

7. 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."

8. This Court in the case of Rashmita Mohanty and others vs. Santosh Kumar Padhi and another, 2016 (I) OLR 989 has observed as follows:

"Accordingly, no material had been produced by the Insurance Company before the learned Tribunal to show that such intimation regarding cancellation of

policy had been given to the concerned Registering Authority. Therefore, 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, 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."

9. As a matter of fact, in case of a valid Insurance Policy and satisfaction of required conditions, the Insurance Company cannot deny its liability to pay the compensation. A motor vehicle is prohibited from plying on public road without a valid Insurance Policy with manifest object that third-party is ensured with compensation for damages he suffered due to irresponsibility/negligence in the use of the motor vehicle by the driver irrespective of his and owner's financial condition or solvency. Therefore, when issuance of the policy remains undisputed, but only validity of cancellation is disputed, the interest of third-party should not be allowed to suffer. A third-party is neither a signatory nor party to the contract, but nevertheless is protected by the contract. Since validity of cancellation of policy is left as a dispute between the Company and the owner, the interest of third-party must be left unaffected. In the case at hand, O.P.W.1 has admitted that no document relating to service of intimation to the RTO has been produced by the Insurance Company. The copies of exhibits as relied on by the Insurance Company also do not disclose anything regarding service of such intimation of cancellation on the RTO, Angul (the registering authority). Therefore, the insurer-Appellant is found to have failed to satisfy regarding any such intimation sent to the registering

authority regarding cancellation of the policy. Therefore, in view of the law settled and discussions made above, the Insurance Company cannot be absolved of its liability to indemnify the owner.

10. With regard to quantum of compensation, it is seen that learned Tribunal has computed the amount as follows:

  Sl.                   Heads                      Amount of Rs.
  No.
  (i)   Loss of dependency                          Rs.6,80,400/-
  (ii)  Approximate       expenditures   towards    Rs. 25,000/-
        treatment
  (iii) Loss of consortium                          Rs.1,20,000/-
  (iv) Loss of Estate                               Rs. 15,000/-
  (v) Funeral and obsequies expenses                Rs. 15,000/-
  (vi) Cost of litigation                           Rs. 5,000/-
                                          Total     Rs.8,60,400

11. Learned Tribunal has assessed the income of deceased as an unskilled labourer based on prevalent rate of minimum wages. Therefore, no ground is seen in favour of the Insurance Company to interfere with the award amount.

12. In the result, the appeal is disposed of with a direction to the Insurance Company to deposit 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 claimants on same terms and proportion as contained in the impugned judgment. However, the direction for payment of penal interest @9% per annum is waived.

13. It is made clear that the direction of learned Tribunal regarding liberty granted in favour of the insurer to realize compensation amount

from the owner is left undisturbed in absence of any challenge from the side of the owner.

14. On deposit of the award amount before the 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