Telangana High Court
The New India Assurance Co. Ltd., ... vs A Rajasree, Nalgonda Dist And 5 Others on 16 February, 2024
Author: N. Tukaramji
Bench: P.Sam Koshy, N.Tukaramji
IN THE HIGH COURT FOR THE STATE OF TELANGANA,
HYDERABAD
***
M.A.C.M.A.No.305 of 2017
Between:
The New India Assurance Co.Ltd.,rep. by its
Branch Manager, Nalgonda
..Appellant/R-2
VERSUS
Amrutham Rajasree and others
...Respondents
ORDER PRONOUNCED ON: 16.02.2024
THE HON'BLE SRI JUSTICE P.SAM KOSHY
AND
THE HON'BLE SRI JUSTICE N. TUKARAMJI
1. Whether Reporters of Local newspapers
may be allowed to see the Judgments? : Yes
2. Whether the copies of judgment may be
Marked to Law Reporters/Journals? : Yes
3. Whether His Lordship wishes to
see the fair copy of the Judgment? : Yes
____________________
P.SAM KOSHY,J
____________________
N. TUKARAMJI, J
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* THE HON'BLE SRI JUSTICE P.SAM KOSHY
AND
THE HON'BLE SRI JUSTICE N. TUKARAMJI
+ M.A.C.M.A.No.305 of 2017
% 16.02.2024
# Between:
The New India Assurance Co.Ltd.,rep. by its
Branch Manager, Nalgonda
..Appellant/R-2
VERSUS
Amrutham Rajasree and others
...Respondents
! Counsel for Appellant/R-2 : Mr. Kota Subba Rao
^Counsel for the respondent(s) : Mr.Chandra Sekhar Reddy Gopi Reddy
<GIST:
> HEAD NOTE:
? Cases referred
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HONOURABLE SRI JUSTICE P. SAM KOSHY
AND
HONOURABLE SRI JUSTICE N. TUKARAMJI
M.A.C.M.A.No.305 OF 2017
JUDGMENT:
(per Hon'ble Sri Justice N. Tukaramji)
We have heard Mr. Kota Subba Rao, learned counsel for
the appellant/respondent No.2 and Mr. Chandra Sekhar Reddy
Gopi Reddy, learned counsel for the claim petitioners.
2. This appeal has been filed by the respondent
No.2/insurance company assailing the liability fastened in the
decree and order dated 09.11.2015 in O.P.No.224 of 2009 on the
file of the Chairman, Motor Accidents Claims Tribunal-cum-I
Additional District Judge, Nalgonda.
3. The prime contest of the appellant/respondent
No.2/insurer (hereinafter 'the insurer') is that as the cheque issued
by the insured/respondent No.6 (hereinafter 'the insured')
towards premium was dishonoured for want of sufficient funds
and the same was intimated to the insured much prior to the
accident, the policy stood cancelled, as such, fastening the liability
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to indemnify the owner is untenable. Further the cover note of
the insurance policy is clearly specifying that the policy would be
subject to realization of premium amount, thus the dishonour of
the cheque automatically rescinds the insurance contract ab initio.
Furthermore, as per the Section 64-VB of the Insurance Act, 1938
specifies that the insurer cannot be held liable under the policy
unless the premium is received in advance. Therefore, the liability
concluded by the tribunal against the insurer is unsustainable in
law.
4. The relevant facts of the claimants' case are that on
20.12.2008 at about 6.15 p.m., while Amrutham
Manohar/deceased along with his family members was
proceeding in Maruthi Wagonor Car bearing registration No. AP-
29-AF 6518 (for short, 'the car'), one bus bearing registration No.
AP-28-X-0578 came in a rash and negligent manner from
opposite direction, dashed the car and caused his instantaneous
death. Whereupon the family members of the deceased filed the
claim petition seeking compensation of Rs.60 lakhs. The tribunal
in the impugned order partly allowed the petition and granted
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Rs.44,00,000/- with interest at 7.5% per annum from the date of
the petition till the date of realization against the insured and
insurer of the bus/respondents 1 and 2.
5. Learned counsel for the insurer would submit that, upon
dishonour of the cheque issued for premium amount, the
insurance policy/Ex.B-2 stood cancelled ab initio, in terms of the
categorical note on the policy itself. However the insurer got
issued notice/Ex.B-8 on the insured to the address given by him
under registered post. Therefore, presumption of service of
notice shall be drawn under Section 27 of the General Clauses
Act, 1897. Therefore, the insurer had discharged its responsibility
and this position has been affirmed in the authority between
Munagala Srinivasa Rao and others v. Rajendra Singh and others - 2010
ACJ 1107. Additionally pleaded that Section 64-VB of the
Insurance Act, 1938 prescribes that insurance company cannot
cover the risk under the policy until premium amount is received
or is guaranteed from the insured. By placing reliance on
judgment in Deddappa and others v. Branch Manager, National Insurance
Company Limited - 2008 ACJ 581 submitted that cancellation of
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insurance policy once duly communicated to the insured, the
insurer cannot be held liable. However in the peculiar
circumstances of that matter, the Hon'ble Supreme Court by
exercising extra-ordinary jurisdiction directed the insurer to pay
the compensation first and to recover the amount from the
insurer. Therefore, implored that the law though harsh, shall be
applied without any departure as per the Maxim 'Dura Lex Sed
Lex' and this position has been affirmed in the authorities
between Vijay Narayan Thatte and others v. State of Maharashtra -
2009(6) ALD 59 (SC) and Narayan v. Babasaheb and others - 2016 (3)
ALD 217 (SC). Further solicited that where suits are instituted or
defended on behalf of a public corporation, public interest should
not be permitted to be defeated on a mere technicality and the
courts shall ensure that the injustice is not done to any party and
as far as possible substantive right should not be allowed to be
defeated on account of curable procedural irregularity. In this
regard, cited the judgment in B. Anil Kumar Reddy v. Margadarsi Chit
Fund Limited and others - 2006(2) ALD (NOC) 56.
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6. Learned counsel for the respondents 1 to 5/claim
petitioners would submit that the tribunal on considering the plea
and the materials placed by the respondent No.2/insurer and by
detailed analysis of the evidence, dismissed the insurer's
contention. Further by citing the judgment in United India
Insurance Company Limited v. Laxmamma and others - (2012) 5 SCC
234 pleaded that where the insurer had cancelled the insurance
policy after the accident on the ground of dishonour of cheque,
the insurer was held liable. Similarly in the authority in National
Insurance Company Limited v. Balkar Ram and others - 2013 LawSuit
(SC) 823 held that failure in intimation regarding the dishonour of
cheque and cancellation of policy before the date of the accident
would make the insurer liable to pay compensation. He
specifically pleaded that the insured was never been informed as
to cancellation of the insurance policy and the notice/Ex.B-8 is
not explaining the date of communication, at the same time, it is
not clear as to when and how the insurance policy was cancelled.
Therefore, the tribunal had rightly held the insurer liable to
indemnify the insured.
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7. We have considered the rival submissions and perused the
materials on record.
8. The insurer's/respondent No.2 contention is in three fold;
firstly the dishonour of cheque itself annulled the insurance policy
ab initio. Nextly, the Section 64-VB of the Insurance Policy makes
it clear that unless the premium is received the insurer is not liable.
Finally there was clear communication to the insured about the
dishnour of cheque about the cancellation of the insurance policy.
9. At the outset the contract of insurance policy/Ex.B-2 was
bilateral. Though it is claimed that the disclaimer on the cover
note of the insurance policy nullified it ab initio and acted upon,
invalidating the insurance policy would not arise. However
through RW-1 the insurer asserted that the policy was cancelled
on 29.07.2008. But no document or endorsement cancelling the
policy has been placed on record. Pertinently as per the insurer
relied on cheque return memo/Ex.B-5 is dated 30.07.2008. The
above dates are making out that the cancellation of policy was
even prior to return of cheque. Be that as it may, as there was
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retrieval from the insurance contract the insurer must inform the
counterpart to the contract, by way of clear communication. For
the above noted aspects, the insurer's claim that the disclaimer on
the policy itself is sufficient to repudiate the contract is not
acceptable.
10. Section 64-VB of the Insurance Act does not prescribe for
issuance of notice is also not convincing as the contemplation in
the provision was in the context of receiving premium in advance.
Once premium is received in advance the situation of issuance of
communication about the cancellation of the policy on the ground
of non receipt of premium would not arise. Therefore, the claim
that the insurer is not under obligation to issue notice does not
merit consideration.
11. In regard to communication to the insured about
cancellation of the policy on the ground of dishonour of cheque/
premium has not been paid, the RW-1 had asserted that the
cancellation was on 29.07.2008 and it was communicated on
04.08.2008. However for the reasons best known to the insurer
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the communication dated 04.08.2008 was not brought on to
record. On the other hand, got marked Ex.B-8 letter dated
24.12.2013. Notably the date itself is indicating that the letter
came into existence after filing of the additional counter in the
claim petition. Nonetheless, the averments of this letter are not
referring to the letter dated 04.08.2008 and the wording are
indicating that the dishonour of cheque and disowning the liability
has been communicated in this letter for the first time.
12. In absence of any other materials indicating proper
communication by the insurer to the insured before the accident,
no other option left but to conclude that the insurer had
communicated the insured about dishonour of the cheque and the
cancellation of the policy only on 04.08.2008 after the accident.
In the similar situation the Hon'ble Apex Court in New India
Assurance Company Limited v. Rula and others - (2000) 3 SCC 195
held that the rights of third party to get indemnified against the
insurer of the vehicle remains live, when premium has not been
paid and for that reason policy of the insurance was cancelled but
communicated subsequent to the accident. Thus the defence of
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the respondent No.2/insurer that the policy of insurance is not
valid as the cheque was dishonoured, cannot be sustained. In
effect, the liability recorded against the insurer, by the tribunal is
found perfectly justified and deserves confirmation.
13. In consequence, the appeal is liable to be and is accordingly
dismissed. There shall be no order as to costs.
As a sequel, miscellaneous petitions pending if any,
stands closed.
________________
P. SAM KOSHY, J
________________
N.TUKARAMJI, J
Date:16.02.2024
ccm
