Bajaj Allianz General Insurance Co Ltd vs Banoth Sharath Chandra And Anr

Telangana High Court

Bajaj Allianz General Insurance Co Ltd vs Banoth Sharath Chandra And Anr on 12 January, 2024

THE HON'BLE SRI JUSTICE NAMAVARAPU RAJESHWAR RAO

                 M.A.C.M.A.No.340 OF 2013

JUDGMENT:

This M.A.C.M.A. is filed under Section 173 of the

Motor Vehicles Act, 1988 by the appellant/2nd respondent-

Insurance Company aggrieved by the order and decree dated

29.12.2011 passed in M.A.T.O.P.No.137 of 2009 by the

Chairman, Motor Accidents Claims Tribunal-cum-II Additional

District Judge (F.T.C.I.), Khammam (for short, "the Tribunal").

2. For convenience, the parties will be hereinafter

referred to as they are arrayed before the Tribunal.

3. Brief facts of the case are that the petitioner filed a

claim petition claiming compensation of Rs.50,000/- on

account of injuries sustained by him in a motor vehicle

accident that occurred on 14.06.2008.

3(1) It is stated that on 14.06.2008, the petitioner went

to Khammam in order to purchase the cotton sheets along

with one Nanya and Chilakamma. After completion of work,

he returned to her village by boarding an auto bearing No.AP-

20X-4505, on the way when the auto reached near Bypass

road of Naidupeta outskirts, the driver of Mahendra Savari 2

2WD 10 bearing No.AP-36X-1670 of 1st respondent insured

with 2nd respondent, which was coming from Mahubabad

towards Khammam, drove his vehicle in a rash and negligent

manner with high speed, dashed against the auto, and as a

result of which, the inmates of the auto sustained injuries in

which the petitioner also sustained contusions on right thigh

and on right leg and multiple injuries all over the body. On a

complaint, the P.S. Khammam Rural, registered a case in

Cr.No.135 of 2008 for the offence under Section 337 IPC.

Hence, the claim petition.

4. Respondent No.1 remained ex parte before the

Tribunal. Respondent No.2/Insurance Company filed a

counter denying the allegations made in the petition. They

submitted that initially cover note bearing No.BZ0800290026

was issued in respect of the Savari vehicle bearing No.AP-36X-

1670 was issued in respect of the above said vehicle by

receiving cheque for Rs.11,900/-. But, the said cheque was

returned with an endorsement that "funds insufficient". Thus,

in the present case since no premium was received from the 1st

respondent, no liability can be undertaken and contract

becomes void in between 1st respondent and this respondent.

They further submitted that the driver-cum-owner of the said 3

vehicle, was not holding the effective driving license and that

the accident occurred due to the negligence of the driver of the

auto as the driver of the auto drove the same with excessive

passengers in uncontrollable manner and without driving

license and without observing traffic rules, as such, this

respondent is not liable to pay compensation. Accordingly,

prayed to dismiss the petition.

5. On behalf of the petitioner, PWs.1 and 2 were

examined and got marked Exs.A1 to A6. On behalf of

respondent No.2, RWs.1 and 2 were examined and got marked

Exs.B1 to B3.

6. On appreciating the material available on record,

the Tribunal partly allowed the petition by awarding

compensation of Rs.27,500/-. The Tribunal directed the 1st

respondent to pay the compensation to the petitioner, and it

also directed the 2nd respondent/Insurance Company to

deposit the above said compensation amount with interest @

7.5% p.a. from the date of filing of the petition till date of

realization within two months from the date of its order at first

instance and then recover the same from the 1st respondent-

owner of the crime vehicle. Aggrieved by the same, the

present appeal is filed by the appellant/Insurance Company. 4

7. Learned counsel appearing for the

appellant/Insurance Company inter-alia contended that the

learned judge grossly erred in holding the appellant-Insurance

Company also liable to pay compensation of Rs.27,500/- with

interest @7.5% p.a. He further contended that the learned

judge ought to have seen that the owner of the crime vehicle-

the respondent No.2 herein failed to pay the premium

promised and, therefore, the appellant Company need not

perform its part of promise as an agreement made without

consideration, is void and the appellant Company is not liable

to pay the compensation. He further contended that the

learned judge ought to have seen that since the cheque given

towards premium was dishonoured, and no policy was issued

by the appellant Company and therefore it is not liable to

indemnify the respondent No.2 herein for payment of

compensation to the first respondent herein.

8. Learned counsel appearing for the

appellant/Insurance Company further contended that the

learned judge did not consider the fact that no policy was

issued in pursuance of the said cover note, thus no liability

can be attributed basing on the cover note. He relied upon the

following judgments:

i) In the case of United India Insurance Company Ltd., Vs. A. Narayana Reddy and others 1

ii) In the case of New India Insurance Company Ltd., Tirupati Vs. G. Sampoorna and others 2

Accordingly, prayed to allow the appeal.

9. Per contra, learned counsel appearing for

respondent No.1 contended that the order under challenge

suffers no infirmity and, as such, no interference of this Court

is required. Thus, prayed to dismiss the appeal.

10. Heard both sides. Perused the record.

11. As seen from the impugned order, the Tribunal

observed that as per the evidence of PW.1, he boarded the auto

to return to his village, on the way when the auto reached near

bypass road of Naidupeta outskirts, the driver of the crime

vehicle drove it in a rash and negligent manner with high

speed and dashed against their auto. As a result of which,

himself and other inmates of the auto sustained grievous and

simple injuries. In support of his case, he filed Ex.A1-certified

copy of FIR, Ex.A2-certified copy of charge-sheet, Ex.A3-

certified copy of Medical Certificate, issued by the Government

Hospital, Khammam, shows that PW.1 sustained two simple

1 2007(3) ALT 568 2 2010(5) ALT 105 6

injuries i.e. contusion on right thigh and right leg and took

treatment as inpatient from 14.06.2008 to 25.06.2008.

12. The Tribunal further observed that the 2nd

respondent/Insurance Company did not elicit anything from

the cross-examination of PW.1 to show that the auto wherein

the PW.1 was travelling was over loaded with passengers.

Further, RW.1 who is the Assistant Manager in the 2nd

respondent Insurance Company did not deny rash and

negligent driving of the 1st respondent. The evidence of PW.1

is duly corroborating with Ex.A1 to A3 and the Tribunal rightly

came to the conclusion that the accident occurred only due to

rash and negligent driving of the crime vehicle by the 1st

respondent and awarded the amount as stated supra.

13. As regards the liability, the Tribunal observed that

it is the contention of the respondent No.2/Insurance

Company that their Company initially issued cover note in

respect of the crime vehicle by receiving cheque for

Rs.11,500/- from the 1st respondent and the same was

mentioned in the cover note also, and any risk undertakes

subject to receipt of premium only. The cheque issued by the

1st respondent was returned with an endorsement that "funds

insufficient." In support of its contention, the 2nd 7

respondent/Insurance Company examined its Assistant

Manager as RW.1 and got marked Ex.B1-certified copy of the

cover note, Ex.B2-certified copy of the returned cheque issued

by the 1st respondent and Ex.B3-certified copy of the cheque

returned memo issued by Andhra Bank and further, the 2nd

respondent examined Deputy Manager, Andhra Bank,

Khammam, as RW.2 and he deposed that Ex.B3-cheque return

memo was issued by their bank due to insufficient funds in the

account of the 1st respondent.

14. The Tribunal further observed that as per Section

147(4) of the Motor Vehicles Act, it is statutory duty of the

Insurance Company to intimate to the registering authority of

the offending vehicle about the cancellation of the insurance

cover note/policy within a period of one week. In the present

case, it is not the case of the 2nd respondent/Insurance

Company that they have issued notice to the registering

authority of the offending vehicle by intimating the cancellation

of the cover note. Further, the 2nd respondent/Insurance

Company did not get mention either in its counter or RW.1,

who is the Assistant Manager of the 2nd respondent did not

state in his chief-examination whether the 2nd

respondent/Insurance Company got issued any notice to the 8

1st respondent intimating the dishonour of the cheque issued

by him towards premium. But, RW.1 stated in the cross-

examination that they intimated about the dishonour of the

cheque to the 1st respondent/owner of the crime vehicle

through letter. But, the 2nd respondent/Insurance Company

did not file copy of the letter, postal receipt, postal

acknowledgement to show that the 2nd respondent/Insurance

Company intimated about the dishonour of the cheque and

cancellation of the cover note to the 1st respondent/owner of

the crime vehicle.

15. Learned counsel appearing for the

appellant/Insurance Company has relied upon United India

Insurance Company Ltd., (1st supra) wherein at para No.5

and 6, it is stated as under:

5. On 10-1-1997 the insurer addressed a letter to the insured as follows:

Notwithstanding anything contained therein to the contrary it is hereby declared and agreed that the insurance under this policy stands cancelled as from inceptions i.e. 6-1-1997. Since the cheque paid by the insured towards payment of premium returned from our Bankers duly dishonoured, and in consequence whereof premium amounting to Rs. 5,783/- is hereby written off.

6. The original registration receipt dated 14-1-1997 issued by the postal authorities was marked in one case and the Xerox copies in the rest of the cases.

The insured i.e. the owner of the vehicle remained ex parte in all these cases. In view of the evidence of R.W. 1 and the registration receipt filed into the 9

Court and marked, it must be held that the cancellation order was received by the insured, the owner of the vehicle. In fact, the served postal acknowledgement was filed into the Court and was got marked. But it does not contain the date of receipt of the notice by the insured, owner of the vehicle. The accident covered by all these cases occurred on 21-1-1997 i.e., exactly one week after the cancellation letter was sent to the insured by registered post.

In the present case, it is not the case of the 2nd

respondent/Insurance Company that they have issued notice

to the registering authority of the offending vehicle by

intimating the cancellation of the cover note. Though RW.1

stated in the cross-examination that they intimated about the

dishonour of the cheque to the 1st respondent/owner of the

crime vehicle through letter. But, the 2nd

respondent/Insurance Company did not file copy of the letter,

postal receipt, postal acknowledgement to show that the 2nd

respondent/Insurance Company intimated about the

dishonour of the cheque and cancellation of the cover note to

the 1st respondent/owner of the crime vehicle. As such, the

said judgment is not applicable to present set of facts.

16. Learned counsel appearing for the

appellant/Insurance Company has relied upon New India

Insurance Company Ltd., (2nd supra) wherein at para No.17,

18, 19 and 20, it is stated as under:

Further more in Oriental Insurance Co., Ltd., vs. Brij Mohan and others[5] S.B. Sinha, J., who spoke for the three Judge Bench in Swaran Singh (1 supra), while holding that the insurance company had no liability, however, invoked the power vested in the Supreme Court under Article 142 read with Article 136 of the Constitution of India to direct the insurance company to pay the compensation amount first and then realize the same from the owner of the Tractor. It may be apt to reproduce the relevant paragraphs in this connection:

"However, respondent No. 1 is a poor labourer. He had suffered grievous injuries. He had become disabled to a great extent. The amount of compensation awarded in his favour appears to be on a lower side. In the aforementioned situation, although we reject the other contentions of Ms. Indu Malhotra,we are inclined to exercise our extraordinary jurisdiction under Article 142 of the Constitution of India so as to direct that the award may be satisfied by the appellant but it would be entitled to realize the same from the owner of the tractor and the trolley wherefor it would not be necessary for it to initiate any separate proceedings for recovery of the amount as provided for under the Motor Vehicles Act. It is well settled that in a situation of this nature this Court in exercise of its jurisdiction under Article 142 of the Constitution of India read with Article 136 thereof can issue suit directions for doing complete justice to the parties."

Had the judgment in Swaran Singh (1 supra) laid down in absolute terms on the liability of the insurance company, there was no necessity for the Court to invoke Article 142. A Division Bench comprising two Judges of the Supreme Court in National Insurance Co., Ltd., vs. Parvathneni and another[6] by an order dated 10.08.2009 doubted the correctness of the directions issued in various judgments to the insurance company to pay the amount even though they are not held liable. The Supreme Court observed thus:

"We have some reservations about the correctness of the aforesaid decisions of this Court. If the insurance company has no liability to pay at all, then, in our opinion, it can not be compelled by order of the Court in exercise of its jurisdiction under Article 142 of the Constitution of India to pay the 11

compensation amount and later on recover it from the owner of the vehicle. In our view, Article 142 of the Constitution of India does not cover such type of cases. When a person has no liability to pay at all how can it be compelled to pay? It may take years for the insurance company to recover the amount from the owner of the vehicle, and it is also possible that for some reason the recovery may not be possible at all."

The Supreme Court framed the following issues for consideration of Larger Bench:

"1) If an insurance company can prove that it does not have any liability to pay any amount in law to the claimants under the Motor Vehicles Act or any other enactment, can the Court yet compel it to pay the amount in question giving it liberty tolater on recover the same from the owner of the vehicle.

2) Can such a direction be given under Article 142 of the Constitution, and what is the scope of Article 142? Does Article 142 permit the Court to create a liability where there is none?"

On the strength of the discussion undertaken above, it is not possible for this Court to treat the judgment in Swaran Singh (1 supra) as containing mandatory directions to the Tribunals and Courts to invariably direct the insurance companies to pay the amounts at the first instance and recover the same from the owners of the offending vehicles even though they are held not liable. Pending resolution of the issues by the Larger Bench of the Supreme Court, it would be reasonable to understand the judgment in Swaran Singh (1 supra) as leaving discretion to the Tribunals and Courts to give appropriate directions depending upon the facts and circumstances of each case.

17. The Tribunal has rightly relied upon the decision

reported in Oriental Insurance Company Ltd. Vs. Mahamad

Vasim and others 3. In the said decision also, the cheque

issued by the insured in favour of the Insurance Company

towards premium was dishonoured due to insufficient funds

3 2008 ACJ 2242 12

thereby their Insurance Company cancelled the cover note due

to non-payment of premium and intimation was given to the

insured by letter very much prior to the date of the accident

but no intimation was sent to the registering authority. The

Tribunal directed the Insurance Company to satisfy the award

in favour of the third party and recover the amount from the