Divisional Manager vs Sura Das & Ors
2023 Latest Caselaw 6405 Ori

Signature Not Verified
Digitally Signed
Signed by: SANGRAM DAS
Designation: Jr. Stenographer
Reason: Authentication
Location: High Court of Orissa, Cuttack
Date: 23-May-2023 12:41:05


                                          IN THE HIGH COURT OF ORISSA AT CUTTACK
                                                      MACA No. 1121 of 2018


                    (From the judgment dated 17th February, 2018 passed by the Additional
                    District Judge-cum-4th MACT, Cuttack in M.A.C. Case No.235 of
                    2007/314 of 2017)


                    Divisional Manager,
                    M/S. National Insurance Co.Ltd.                  ......                 Appellant

                                                                   Versus

                    Sura Das & Ors                                   .......                Respondents


                    Advocate(s) appeared in this case:-

                      For Appellant                     : Mr. B.Dasmohapatra, Advocate

                      For Respondents                   : Mr. D.Patnaik, Advocate for Respondent No.4
                                                          Mr. A.Garnaik, Advocate for Respondent No.5

                                           CORAM : JUSTICE B.P. ROUTRAY

                                                          JUDGMENT

18th May, 2023 B.P.Routray, J.

1. Heard Mr. Dasmohapatra - learned counsel for the Appellant,

Mr.Patnaik - learned counsel for the Respondent No.4 and Mr.

Garnaik, learned counsel for Respondent No.5.

3. Present appeal by the Insurer is directed against judgment

dated 17th February, 2018 of Additional District Judge-cum-4th

MACT, Cuttack in M.A.C. Case No.235 of 2007/314 of 2017,

wherein compensation to the tune of Rs.3,32,400/- has been granted

Signature Not Verified Digitally Signed Signed by: SANGRAM DAS Designation: Jr. Stenographer Reason: Authentication Location: High Court of Orissa, Cuttack Date: 23-May-2023 12:41:05

along with interest @6% per annum with effect from the date of

filing of the claim application on account of death of the deceased in

the motor vehicular accident on 16th March, 2007.

5. The sole dispute is on the question of liability on the

Insurer for cancellation of the insurance policy. According to the

Insurer-Appellant, the policy issued in respect of the offending

vehicle i.e. passenger Bus bearing registration No. OR-05-E-7455

was cancelled for dishonour of the cheque given towards premium

amount from the date of inception and therefore, the Insurer is not at

all liable to indemnify the owner.

6. The accident took place on 16th March 2007. Admittedly,

Insurance Policy No 163100/31/06/6300000011 was issued by the

Appellant i.e. National Insurance Co. Ltd. valid from 4th April 2006

to 3rd April 2007. The cheque for Rs.17,269/- submitted towards

payment of the premium dated 31st March 2006 was returned by the

bank for insufficient fund. Then the Insurance Company claims to

have sent the letter of cancellation of policy dated 17th April 2006 to

the owner as well as the RTO, Cuttack intimating the fact of

cancellation of the insurance policy from the date of inception.

Copies of those letters dated 17th April, 2006 have been exhibited

under Ext.D & E.

Signature Not Verified Digitally Signed Signed by: SANGRAM DAS Designation: Jr. Stenographer Reason: Authentication Location: High Court of Orissa, Cuttack Date: 23-May-2023 12:41:05

7. The owner did not come to contest before the Tribunal and

he was set ex-parte. Before this Court, Mr. S.K. Garnaik though

appears on behalf of the owner-Respondent No.5, but he is unable to

justify his non-appearance before the Tribunal. He is also unable to

answer regarding cancellation of policy and dishonour of the cheque

submitted by him.

8. As seen from the copies of Ext.D & E, it is mentioned at

the top of those letters that the same were sent by registered post with

A.D. But admittedly, no such postal receipts in proof of sending those

letters, either to the insured or to the Registering Authority, have been

produced on record. The acknowledgment cards, if any, satisfying

service of the letter of cancellation dated 17th April 2006 on the

owner and the RTO have not been filed.

9. The law is well-settled on this point. The Hon'ble Supreme

Court in the case of United India Insurance Company Limited vs.

Laxmamma and others, (2012) 5 SCC 234 by discussing several other

decisions rendered in the cases of Oriental Insurance Co. Ltd. vs.

Inderjit Kaur, (1998) 1 SCC 371, New India Assurance Co. Ltd. vs.

Rula, (2000) 3 SCC 195 and National Insurance Co. Ltd. vs. Seema

Malhotra, (2001) 3 SCC 151, have held as follows:-

Signature Not Verified Digitally Signed Signed by: SANGRAM DAS Designation: Jr. Stenographer Reason: Authentication Location: High Court of Orissa, Cuttack Date: 23-May-2023 12:41:05

"26. In our view, the legal position is this: where the policy of insurance is issued by an authorized insurer on receipt of cheque towards the payment of premium and such a cheque is returned dishonoured, 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 insured 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 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."

10. This Court in the case of Rashmita Mohanty and others vs.

Santosh Kumar Padhi and another, 2016 (I) OLR 989 have held 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."

Signature Not Verified Digitally Signed Signed by: SANGRAM DAS Designation: Jr. Stenographer Reason: Authentication Location: High Court of Orissa, Cuttack Date: 23-May-2023 12:41:05

Further, this Court in a recent judgment dated 20th March, 2023

passed in MACA No. 128 of 2021, have observed that in absence of

proof of service of intimation of cancellation of the policy on the

insured (owner) as well as the Registering Authority, the insurance

company cannot be absolved from its liability under the insurance

policy.

11. In the case at hand, the issuance of policy in respect to the

offending vehicle with effect from 4th April 2006 to 3rd April 2007 is

not disputed. Nothing has also been produced on record to

substantiate the contention of the Insurer regarding service of such

intimation of cancellation on the insured and the Registering

Authority. Though the insurance company has examined its officer as

O.P.W.1, but he is found silent regarding mode of service of the letter

of cancellation on the insured and the Registering Authority. Mr.

Dasmohapatra submits that since O.P.W.1 was not cross-examined by

the Claimants, his statements made in the Examination-in-Chief that

the intimation of cancellation has been sent to the insured as well as

the RTO stands proved being unrebutted. But I fail to agree with the

submission. It is for the reason that the owner did not come to context

the claim before the Tribunal and the Claimants have limited scope to

dispute this specific point regarding service of letter of cancellation of

Signature Not Verified Digitally Signed Signed by: SANGRAM DAS Designation: Jr. Stenographer Reason: Authentication Location: High Court of Orissa, Cuttack Date: 23-May-2023 12:41:05

policy on the owner and the the RTO. The burden is on the insurer to

prove their contention satisfactorily. Poor claimants cannot be

allowed to suffer for the same. Since the owner did neither contest the

claim before the Tribunal nor was able to submit anything in his

support before this Court, the Insurer is at liberty to recover the

amount of compensation form the owner.

12. In view of the discussions made above, while concluding

against the Appellant-Insurer that they are liable to indemnify the

compensation amount and pay the same to the Claimants, they are

granted with right of recovery of the compensation of amount from

the owner.

13. No further dispute is raised with regard to involvement of

the offending vehicle in the accident or negligence on the part of the

driver. No challenge is also advanced regarding quantification of

compensation amount.

14. In the result, the appeal is disposed of with a direction to

the Insurer-Appellant to deposit entire compensation amount along

with interest before the Tribunal as per its direction 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 contained in

Signature Not Verified Digitally Signed Signed by: SANGRAM DAS Designation: Jr. Stenographer Reason: Authentication Location: High Court of Orissa, Cuttack Date: 23-May-2023 12:41:05

the impugned judgment. As stated above the right of recovery is

granted in favour of the Insurer-Appellant.

15. The statutory deposit made by the Appellant with accrued

interest thereon be refunded to him on proper application and on

production of proof of deposit of the award amount before learned

Tribunal.

16. Urgent certified copy of this order be granted on proper

application.

( B.P. Routray) Judge S.Das