Telangana High Court

The National Insurance Company Ltd., vs Baba Sharaduddin , Sharfuddin And ... on 24 January, 2024

Author: G. Radha Rani

Bench: G. Radha Rani

       THE HONOURABLE DR.JUSTICE G. RADHA RANI

     M.A.C.M.A.No.3797 of 2011 & Cross Objection No.15 of 2019

COMMON JUDGMENT:

M.A.C.M.A.No.3797 of 2011 is filed by the insurance company

aggrieved by the award and decree passed in O.P.No.1098 of 2007 dated

15.02.2010 on the file of the Motor Accident Claims Tribunal (for short

"MACT") - cum - Chief Judge, City Civil Court, Hyderabad and X-Objection

No.15 of 2019 is filed by the injured claimant, seeking enhancement of

compensation.

2. The parties are hereinafter referred as claimant and respondent No.2 as

arrayed before the MACT.

3. The claimant filed a claim petition under Section 166 of the Motor

Vehicles Act claiming compensation of Rs.3,00,000/- for the injuries sustained

by him in a motor vehicle accident.

4. As per the claim petition, the claimant was aged about 26 years, he was

working as an employee in Osmania University, M.Ed. College and was getting

a salary of Rs.4,800/- per month by the date of the accident. On 02.02.2007 at

about 02:45 PM, while the claimant was proceeding on his Bajaj Pulsar vehicle

bearing No.AP-10-AV-8320 from Hyderabad towards Hanumakonda and when

Dr.GRR, J macma_3797_2011 & cross objection _15_2019

reached Kazipet Junction at the same time a trolley lorry bearing No.AP-16-

TV-4347 driven by its driver with high speed in a rash and negligent manner hit

the vehicle of the petitioner, due to which he sustained fractures to both legs,

head injury, lacerations and abrasions to his hands. Immediately, he was shifted

to Rohini Hospital, Hanumakonda and on the advice of the hospital authorities,

he was shifted to NIMS Hospital. The doctors therein found that his legs were

fractured due to the crush injury to left foot and he was operated. But the

doctors stated that three more operations were required to be performed. He

further stated that due to the accident, he sustained permanent disability, his life

became miserable and his movements were totally restricted. As such, claimed

compensation from respondents 1 and 2, the owner and insurer of the trolley

lorry bearing No.AP-16-TV-4347.

5. The respondent No.1 remained ex-parte.

6. The respondent No.2 filed counter. As per the counter filed by the

respondent No.2, the cheque issued by respondent No.1 towards premium for an

amount of Rs.25,525/- on 26.07.2006 drawn on M/s.ICICI Bank, Vijayawada,

when presented for collection was dishonored for the reason "insufficient

funds" vide memo dated 29.07.2006. It was specifically mentioned in the

premium receipt that if payment was made through cheque, the policy would be

valid subject to realization of the cheque and in case of dishonor, the policy

Dr.GRR, J macma_3797_2011 & cross objection _15_2019

would automatically stand cancelled. A notice was issued by the respondent

No.2 - Insurance Company to respondent No.1 on 03.08.2006 informing the

dishonor of the cheque and demanding return of policy certificate. But inspite of

receiving the notice by respondent No.1, the respondent No.1 did not remit the

premium amount nor surrendered the policy certificate, as such, the policy

issued in favor of respondent No.1 was cancelled. The respondent No.2

contended that they were not liable to pay compensation as policy was not

subsisting as on the date of accident.

7. During the course of enquiry, the appellant - claimant examined himself

as PW.1 and examined the Assistant Professor, Department of Plastic Surgery,

NIMS as PW.2 and the Financial Controller of NIMS as PW.3 and the doctor

who issued the disability certificate as PW.4. Exs.A1 to A15 were marked on

behalf of the appellant - claimant. The Administrative Officer of the Insurance

Company at Secunderabad was examined as RW.1 and Exs.B1 to B8 were

marked on behalf of the respondent No.2 - Insurance Company.

8. On considering the oral and documentary evidence on record, the learned

Chief Judge, City Civil Court, Hyderabad held that the accident was due to the

rash and negligent driving of the driver of the lorry bearing No.AP-16-TV-4347

and the claimant sustained grievous injuries in the said accident.

Dr.GRR, J macma_3797_2011 & cross objection _15_2019

9. With regard to the quantum of compensation, though the claimant

claimed compensation of Rs.3,00,000/-, the MACT awarded Rs.3,73,525/-,

which it considered as just and reasonable.

10. In the absence of any evidence adduced by the claimant in proof of his

income, the learned Chief Judge had considered the income of the claimant

notionally as Rs.3,000/- per month and applied multiplier "18" as per the

Second Schedule of the Motor Vehicles Act and considering the evidence of

PW.4, the Tribunal had taken disability as 50% and assessed the loss of

earnings of the claimant due to the disability sustained by him as Rs.3,24,000/-.

An amount of Rs.44,525/- was awarded towards medical bills as per Ex.A12

and awarded an amount of Rs.5,000/- toward "pain and suffering". Thus, in

total awarded an amount of Rs.3,73,525/-.

11. With regard to the liability, as there is no proof of service of notice on

respondent No.1 with regard to the cancellation of the policy due to dishonor of

cheque and that a letter was addressed to Regional Transport Officer (for short

"RTO"), Vijayawada with regard to cancellation of the insurance policy, the

Tribunal held that Exs.B6 and B7 could not be relied upon and respondent No.2

was liable to pay the compensation to the petitioner. As such, the Tribunal

awarded the above amount of Rs.3,73,525/- with interest @ 9 % per annum.

Dr.GRR, J macma_3797_2011 & cross objection _15_2019

12. Aggrieved by the said award and decree, the respondent No.2 - Insurance

Company preferred M.A.C.M.A.No.3797 of 2011 contending that the Tribunal

failed to observe that as per Exs.B1 and B2, the cheque issued by the respondent

No.1 towards premium was dishonored and as there was no premium paid by

him, the Company rightly cancelled the policy and issued notice dated

03.08.2006 under Exs.B6 and B7 both to respondent No.1 and the RTO. The

respondent No.1 had not denied the fact of issuing notice to him. He remained

ex-parte. In such event, it could be presumed that respondent No.1 was aware

of the fact of dishonor of cheque as well as cancellation of policy by the

Company. The Hon'ble Apex Court also stated in the judgment relied by the

Tribunal in Deddappa and Others v. Branch Manager, National Insurance

Company Limited 1 that, there was no liability on the part of the Insurance

Company, if once the notice was issued to the respondent No.1 cancelling the

policy. The Tribunal committed an error in taking the income of the petitioner

as Rs.3,000/- per month in the absence of any proof and erred in awarding

compensation in excess of the claim by the petitioner and prayed to allow the

appeal.

13. The learned counsel for the claimant who preferred X-Objection No.15 of

2019 on the other hand contended that I.A.No.1 of 2019 filed by him for

enhancement of compensation from Rs.3,00,000/- to Rs.10,00,000/- was

(2008) 2 SCC 595

Dr.GRR, J macma_3797_2011 & cross objection _15_2019

allowed and necessary court fee was also paid by the claimant. The Tribunal

failed to consider that the claimant was working as a driver - cum - clerk in

Osmania University on temporary basis and was earning Rs.4,800/- per month

and as the doctor categorically deposed that the claimant was unfit to drive the

vehicle, the loss of earnings ought to have been considered at 100%, but not

50%. Future prospects were also not considered by the Tribunal. The Tribunal

failed to award any amount towards loss of amenities, loss of earnings during

the period of treatment, attendant charges, transportation, extra nourishment.

The amount awarded under the head "pain and suffering" was also meager and

prayed to enhance the compensation.

14. Heard Sri Jagathpal Reddy Kasi Reddy, learned counsel for the appellant

- claimant and Sri K.Ajay Kumar, learned counsel for the respondent No.2 -

Insurance Company.

15. Now, the points for consideration in this appeal and X-Objection are:

i. Whether the Tribunal committed any error in fixing the liability on the Insurance Company when the cheque issued by the owner of the vehicle towards premium was dishonored? ii. Whether the compensation awarded by the Tribunal is in accordance with the settled principles of law?

iii. To what result?

P O I N T No.1:

Dr.GRR, J macma_3797_2011 & cross objection _15_2019

Whether the Tribunal committed any illegality in fixing the liability on the Insurance Company when the cheque issued by the owner of the vehicle towards premium was dishonored?

16. The respondent No.2 - Insurance Company got examined the

Administrative Officer of his Company at Secunderabad as RW.1. RW.1 filed

his evidence affidavit stating that the cheque bearing No.291875 dated

26.07.2006 issued by the owner of the vehicle for an amount of Rs.25,525/-

drawn on M/s.ICICI Bank, Vijayawada Branch was returned for "insufficient

funds". A premium receipt was issued to the respondent No.1 at the time of

taking the policy, in which it was clearly stated that the receipt would be valid

subject to realization of cheques. Hence, the policy automatically stands

cancelled. Immediately, after the policy was cancelled, the Company issued a

letter dated 03.08.2006 to respondent No.1 stating that the policy was cancelled

due to dishonor of cheque. Subsequent to the cancellation of policy, another

letter dated 03.08.2006 was also issued to the RTO, Vijayawada intimating that

the cheque issued was cancelled to the vehicle registration No.AP-16-TV-4347.

As such, at the time of the accident, the policy was not in force and the

respondent No.2 - Insurance Company was not liable to pay any compensation.

17. The cheque bearing No.291875 dated 26.07.2006 was marked as Ex.B1,

bank return memo dated 29.07.2006 stating the reason for return of cheque due

to "insufficient funds" was marked as Ex.B2, the notice of Indian Overseas

Dr.GRR, J macma_3797_2011 & cross objection _15_2019

Bank informing about the return of cheque dated 31.07.2006 was marked as

Ex.B3, the premium receipt was marked as Ex.B4, the insurance policy issued

by the Vijayawada Branch Office was marked as Ex.B5, the office copy of the

letter dated 03.08.2006 informing the insurer about the cancellation of the

policy was marked as Ex.B6 and the letter dated 03.08.2006 informing the

RTO, Vijayawada about the cancellation of the policy was marked as Ex.B7.

18. In his cross-examination, RW.1 admitted that no acknowledgment was

filed in proof of receipt of notices by respondent No.1 and RTO, Vijayawada

vide Exs.B6 and B7.

19. The learned counsel for the appellant - claimant relied upon the judgment

of the Hon'ble Apex Court in Deddappa and Others v. Branch Manager,

National Insurance Company Limited (cited supra), wherein on similar facts,

when the cheque issued by the owner of the vehicle was dishonored with the

remarks "funds insufficient" and the insurer cancelled the policy of insurance

and the said information was communicated to the owner of the vehicle and an

intimation was also given to the concerned RTO and the accident occurred was

much after communication of the cancellation of the policy, the Hon'ble Apex

Court held that:

"14.Section 64-VB of the 1938 Act provides that no risk is to be assumed unless premium is received in advance in the following terms:-

Dr.GRR, J macma_3797_2011 & cross objection _15_2019

"Section 64-VB - No risk to be assumed unless premium is received in advance -

(1) No insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily payable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and until deposit of such amount as may be prescribed, is made in advance in the prescribed manner. (2) For the purposes of this section, in the case of risks for which premium can be ascertained in advance, the risk may be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the insurer.

Explanation.- Where the premium is tendered by postal money order or cheque sent by post, the risk may be assumed on the date on which the money order is booked or the cheque is posted, as the case may be.

(3) Any refund of premium which may become due to an insured on account of the cancellation of a policy or alteration in its terms and conditions or otherwise shall be paid by the insurer directly to the insured by a crossed or order cheque or by postal money order and a proper receipt shall be obtained by the insurer from the insured, and such refund shall in no case be credited to the account of the agent.

(4) Where an insurance agent collects a premium on a policy of insurance on behalf of an insurer, he shall deposit with, or dispatch by post to, the insurer, the premium so collected in full without deduction of his commission within twenty-four hours of the collection excluding bank and postal holidays.

The said provision, therefore, in no unmistakable term provides for issuance of a valid policy only on receipt of payment of the premium.

26. We are not oblivious of the distinction between the statutory liability of the Insurance

Dr.GRR, J macma_3797_2011 & cross objection _15_2019

Company vis-a-vis a third party in the context of Sections 147 and 149 of the Act and its liabilities in other cases. But the same liabilities arising under a contract of insurance would have to be met if the contract is valid. If the contract of insurance has been cancelled and all concerned have been intimated thereabout, we are of the opinion, the insurance company would not be liable to satisfy the claim.

27. A beneficial legislation as is well known should not be construed in such a manner so as to bring within its ambit a benefit which was not contemplated by the legislature to be given to the party. In Regional Director, Employees' State Insurance Corporation, Trichur v.

Ramanuja Match Industries [AIR 1985 SC 278], this Court held :

"We do not doubt that beneficial legislations should have liberal construction with a view to implementing the legislative intent but where such beneficial .legislation has a scheme of its own there is no warrant for the Court to travel beyond the scheme and extend the scope of the statute on the pretext of extending the statutory benefit to those who are not covered by the scheme."

We, therefore, agree with the opinion of the High Court.

28. However, as the appellant hails from the lowest strata of society, we are of the opinion that in a case of this nature, we should, in exercise of our extra-ordinary jurisdiction under Article 142 of the Constitution of India, direct the Respondent No.1 to pay the amount of claim to the appellants herein and recover the same from the owner of the vehicle viz., Respondent No.2, particularly in view of the fact that no appeal was preferred by him. We direct accordingly.."

20. The only difference in the facts cited before the judgment of the Hon'ble

Apex Court and the present case is that the said information with regard to the

Dr.GRR, J macma_3797_2011 & cross objection _15_2019

dishonor of cheque was communicated by the Insurance Company to the insured

and a postal acknowledgment was also filed showing the intimation with regard

to the service of the copy of the letter on the insured and also to the RTO.

21. Taking the said aspect into consideration, the Tribunal held that "in the

present case as observed above, the respondent No.2 failed to establish about the

service of Ex.B6 on the respondent No.1 and Ex.B7 on the RTO. Therefore, it

could not be said that respondent No.2 has intimated to the respondent No.1

with regard to the cancellation of the policy or about the dishonor of the cheque

issued by him towards premium for the policy. In the absence of the same, the

respondent No.2 having issued the policy and not intimated about the

cancellation of the same, they are liable to pay the compensation to the

petitioner."

22. The Hon'ble Apex Court in The United Insurance Company Limited v.

Laxmamma & Others 2 discussed with regard to the insurer's liability against

the third party risk while considering Sections 149, 146 and 147 and held that:

"When cheque issued for payment of premium was dishonored and subsequent to the accident, insurer cancelled the policy of insurance, in such circumstances, statutory liability of insurer to indemnify their parties which policy covered subsists and insurer has to satisfy award of compensation unless policy of insurance was cancelled by insurer and intimation of such

(2012) 5 SCC 234

Dr.GRR, J macma_3797_2011 & cross objection _15_2019

cancellation had reached the insured before the accident."

23. In National Insurance Company Limited v. Balkar Ram and Others 3,

the Hon'ble Apex Court held that:

"failure on the part of Insurance Company to give intimation regarding the dishonor of cheque and cancellation of policy to the policy holder before the date of the accident - the defence that the policy of Insurance was not valid since the cheque had been dishonored prior to the accident, would not exonerate Insurance Company."

24. Thus, as rightly observed by the Tribunal, only when the Insurance

Company had filed the acknowledgments also in proof of receipt of notice by

the insured intimating about the cancellation of policy, then only, the Insurance

Company could be exonerated from its liability. Otherwise, the Insurance

Company is liable to pay compensation to the claimant, who is a third party and

cannot avoid its liability towards the risk of the third parties.

25. As such, the appeal filed by the Insurance Company vide

M.A.C.M.A.No.3797 of 2011 is liable to be dismissed.

2013 SCC Online SC 592

Dr.GRR, J macma_3797_2011 & cross objection _15_2019

P O I N T No.2:

Whether the compensation awarded by the Tribunal is in accordance with the settled principles of law?

26. The claimant though filed the claim petition stating that he was working

as an employee in Osmania University and was earning Rs.4,800/- per month by

the date of the accident on 02.02.2007, had not filed any document in proof of

his employment showing the nature of his employment or the pay slips to prove

the income earned by him. However, as per the judgment of the Hon'ble Apex

Court in Sri Ramachandrappa v. The Manager, Royal Sundaram Alliance

Insurance Company Limited 4, even a laborer is considered as earning Rs.150/-

per day for the accident occurred during the year 2004, considering the date of

the accident in the year 2007, the earnings of the petitioner can be taken as

Rs.4,800/- per month as claimed by him.

27. Considering the judgment of the Hon'ble Apex Court in National

Insurance Company Limited v. Pranay Sethi and Others 5, wherein it was

held that future prospects also to be considered for the persons who were self-

employed or on a fixed salary and the age of the petitioner is stated to be 26

years, which was not disputed, an addition of 40% of his income can be

considered towards "future prospects". As such an amount of Rs.1,920/- (40%

2011 ACJ 2426

2017 (6) ALD 170 (SC)

Dr.GRR, J macma_3797_2011 & cross objection _15_2019

of Rs.4,800/-) is taken towards future prospects and the income of the injured

claimant can be taken as Rs.4,800/- + Rs.1,920/- = Rs.6,720/-.

28. The Tribunal had taken the multiplier as per the Second Schedule of the

Motor Vehicles Act, 1988, but the same ought to have been taken as per the

judgment of the Hon'ble Apex Court in Smt.Sarla Verma & Others v. Delhi

Transport Corporation & Another 6. Considering the age of the claimant as

26 years, multiplier "17" is applicable as per the above case.

29. The evidence of PWs.2 and 4 would disclose that the claimant had

sustained crush injury to his left foot which resulted in loss of skin and tendons

on the left foot. He was operated on 03.02.2007 and the doctors did

debridement, micro surgical tissue transfer, repair of tendons and skin grafting.

The claimant was kept in the hospital for post operative care and was discharged

on 13.02.2007 with an advice to come back for follow-up treatment. The

evidence of PW.2 would disclose that he had examined the patient in the

presence of both the counsel and found that there was no much movement at the

ankle as the transfer tissue was bulky and fat. He would advise him for plastic

surgery to improve the appearance of the foot and the surgery would

approximately cost him Rs.20,000/- and that he would refer him to orthopedic

surgeon for opinion as to whether it was surgically possible to improve the ankle

movement and function.

(2009) 6 SCC 121

Dr.GRR, J macma_3797_2011 & cross objection _15_2019

30. PW.4 was Professor of Orthopedics at Osmania General Hospital. He

stated that on 02.06.2008, the claimant approached him and on examining him,

found that he had crush injury to left foot with degloving of skin, fractures and

sub-location of tarsal and meta tarsal bones which were treated by external

fixation and skin grafting. Full thickness of skin graft was done from right

thigh. Left ankle tarsal and meta tarsal joints were fixed but movement of toes

were absent. There was deformity and disfigurement, loss of sensation. Due to

the permanent physical impairment and loss of physical function of left lower

limb, the disability was estimated as 50% which was partial and permanent in

nature. He also stated that in his opinion, the claimant could not drive motor

vehicle. He admitted issuing the disability certificate marked under Ex.A14.

31. The learned counsel for the claimant relied upon the judgment of the

Hon'ble Apex Court in Golla Rajanna and Others v. Divisional Manager and

Another 7, which was a case under the Workmen's Compensation Act, 1923. It

was held that:

"As per Section 4(1)(c)(ii) of the Act, the percentage of permanent disability needs to be assessed only by a qualified medical practitioner. There is no case for the respondent that the doctor, who issued the disability certificate, is not a qualified medical practitioner, as defined under the Act.

(2017) 1 SCC 45

Dr.GRR, J macma_3797_2011 & cross objection _15_2019

The High Court was not justified in interfering with the order passed by the Commissioner."

32. The learned counsel for the appellant - claimant relied upon the Division

Bench judgment of this Court in Charan Singh v. G.Vittal Reddy and

Another 8, which was also a case under Workmen's Compensation Act, 2023,

wherein it was held that any qualified doctor can assess the loss of disability vis-

à-vis loss of earning capacity and it is not necessary that he should be the doctor

who treated the injured.

33. He also relied upon the judgment of the Single Bench of this Court in

Syed Saleem and Others v. Abdul Shukur and Another 9, wherein also it was

held that the disability certificate to the injured need not be given by the doctor

who treated him. It could be given subsequently by any other qualified medical

practitioner after the injuries are healed.

34. Thus, PW.4 is also a qualified doctor who also worked as a member of

Medical Board and gave the reasons for assessing the disability as 50%.

Though, he stated that the claimant could not drive the motor vehicle, as the

claimant failed to prove that he was working as a driver and as such sustained

functional disability to an extent of 100%, it is considered fit to accept the

disability as 50%. As such, the loss of earning capacity due to partial and

2003 (4) ALD 183 (DB)

2007 (1) ALT 648 (S.B)

Dr.GRR, J macma_3797_2011 & cross objection _15_2019

permanent disability sustained by the claimant can be assessed as Rs.6,700 x 12

x 17 x 50% = Rs.6,85,440/-.

35. As the evidence of PW.2 would disclose that he required another surgery

to improve the appearance of the foot and the said surgery would approximately

cost him Rs.20,000/-, it is considered fit to award an amount of R.20,000/-

towards his future medical expenses.

36. As the evidence of PW.3, the Financial Controller working in NIMS

would disclose that the claimant incurred an amount of Rs.44,525/-, the Tribunal

rightly awarded the said amount which requires no interference. However, as

the evidence of PW.2 would disclose that there was restricted movement of

ankle as the transfer of tissue was bulky and fat and his physical appearance is

also affected and about three surgeries were performed on him for debridement

and skin grafting, the amount of Rs.5,000/- awarded by the Tribunal under the

head "pain and suffering" is considered as meager and the same need to be

enhanced to Rs.50,000/-.

37. As the evidence of PW.4 would disclose that the claimant had sustained

loss of sensation and he could not drive any vehicle, it is considered fit to award

an amount of Rs.50,000/- towards loss of amenities in life. As no amount is

awarded towards attendant charges and some of the family members of the

petitioner might have attended him by leaving their work, it is considered fit to

Dr.GRR, J macma_3797_2011 & cross objection _15_2019

award an amount of Rs.20,000/- towards attendant charges. As no amount is

awarded towards loss of income during the period of treatment, the loss of

earnings can be considered for a period of six months and an amount of

Rs.4,800/- x 6 = Rs.28,800/- is awarded towards loss of earnings. As no amount

is awarded towards extra nourishment and transportation, it is considered fit to

award an amount of Rs.5,000/- each under both these heads.

38. As such, the compensation awarded to the petitioner under various heads

is as follows:

         S. No.   Heads                          Compensation Awarded
         1.       Loss of earnings due to        Rs.6,85,440/-
                  partial    and     permanent
                  disability
         2.       Loss of earnings for a         Rs.28,800/-
                  period of six months during
                  the period of treatment
         3.       Pain and Suffering             Rs.50,000/-
         4.       Loss of amenities in life      Rs.50,000/-
         5.       Medical Expenses               Rs.44,525/-
         6.       Future Medical Expenses        Rs.20,000/-
         7.       Attendant Charges              Rs.20,000/-
         8.       Transportation                 Rs.5,000/-
         9.       Extra nourishment              Rs.5,000/-
         Total:                                  Rs.9,08,765/-

39. As such, it is considered fit to enhance the compensation awarded by the

Tribunal from Rs.3,73,525/- to Rs.9,08,765/- which is considered as just and

reasonable.

Dr.GRR, J macma_3797_2011 & cross objection _15_2019

P O I N T No.3: