Telangana High Court
Hdfc Ergo General Insurance Co. Ltd. vs Nadigoti Rajeshwari on 18 March, 2024
THE HON'BLE SRI JUSTICE SAMBASIVARAO NAIDU
M.A.C.M.A.NO.521 OF 2019
JUDGMENT :
Being aggrieved by the Judgment dated 12.10.2018
in M.V.O.P.No.79 of 2017 on the file of Chairman, Motor
Accident Claims Tribunal-cum-II Additional District Judge,
Mancherial, whereunder the petition filed by the
respondents/claimants under Section 166 (1) (c) of M.V.Act
for compensation was partly allowed by the Tribunal,
granting a sum of Rs.6,58,200/- with interest @ 9% per
annum, the 3rd respondent/Insurance Company against
which joint liability was fastened with the other
respondents, filed this civil miscellaneous appeal under
Section 173 of M.V.Act and sought for setting aside the
impugned Judgment.
2. The main ground on which this appeal is filed
according to the appellant is lack of valid policy to
indemnify the owner of the vehicle involved in the accident.
According to the grounds on which this appeal is filed, the
appellant/Insurance Company has contended that the
Tribunal in spite of sufficient evidence to believe that the
cheque issued by 5th respondent herein i.e., 2nd respondent
owner of the vehicle towards premium of the policy was
dishonored due to insufficient funds, therefore, as on the
date of accident there was no policy/coverage in existence
of the vehicle. Therefore, the Tribunal ought not to have
fastened the liability against the appellant herein.
3. The appellant has claimed that the owner of the
vehicle while seeking policy against his vehicle issued a
cheque on 21.02.2014 and on the basis of cheque, a policy
was offered. But, the said cheque was returned dishonored
on 03.04.2014. A notice was sent to the owner as well as
the Regional Transport Officer on 08.04.2014. The accident
on the basis of which the above referred M.V.O.P.No.79 of
2017 was occurred on 06.07.2014 i.e., much later to the
date of dishonor of the cheque, and notice issued by the
appellant. But, the Tribunal did not consider this aspect
and passed an award against the driver, owner and insurer
of the vehicle.
4. As could be seen from the impugned Judgment,
the respondents/claimants have filed the above petition by
claiming a sum of Rs.27,84,984/- as compensation for the
death of one N.Rajesh in a road traffic accident.
5. The respondents being mother and siblings of
the said Rajesh (hereinafter be referred as deceased) have
claimed that on 06.07.2014 at about 2:30 p.m., while the
deceased was at Polytechnic college at CCC club, Naspur,
the driver of a car bearing No.AP-01-AF-8910 by driving the
car in rash and negligent manner and in high speed,
dashed the deceased, due to which he fell down and
received severe injuries to the head. He was immediately
shifted to Government hospital, Mancherial and from there
he was taken to Pratima hospital, Karimnagar. But, the
deceased died while undergoing treatment. The
respondents have claimed that the deceased was 19 years
old. He was working as private electrician and earning
Rs.10,000/- per month. Therefore, they filed petition
seeking compensation from the driver, owner and insurer of
the vehicle.
6. The respondent Nos.1 and 2 i.e., driver and
owner of the vehicle have filed common counter, claiming
that there is valid insurance policy obtained from the 3rd
respondent i.e., present appellant. Therefore, they sought
for dismissal of the petition.
7. It appears from the record that the respondents
have filed the said petition initially against the owner and
driver of the vehicle. But, subsequently on the basis of the
averments made in the counter filed by respondent Nos.1
and 2, they have added the 3rd respondent i.e., the present
appellant.
8. The present appellant has filed a counter stating
that the cheque which was issued towards premium for the
policy was not realized as the cheque was dishonored due to
lack of sufficient funds in the account of the 5th
respondent/respondent No.2. Therefore, they have claimed
that they need not pay any compensation.
9. The Tribunal has framed the following (4) issues:
1. Whether Nadigoti Rajesh died in the accident that
occurred on 06.07.2014 at about 2:30 p.m., Bunglows
area, near Polytechnic college, CCC Naspur,
Mancherial?
2. Whether the said accident occurred due to rash and
negligent driving of car bearing No.AP-1-AF-8910?
3. Whether the petitioner is entitled to claim
compensation for the accidental death of Nadigoti
Rajesh, if so how much? If so, against which of the
respondents?
4. To what relief?
10. During enquiry, the respondents/claimants have
examined PWs 1 to 3 and marked Exs.A1 to A6. The
respondent Nos.4 and 5 i.e., driver and owner of the vehicle
have examined RWs 1 to 4. A representative from the
present appellant herein was examined as RW5. Ex.B1 to
B4 were marked on behalf of the respondents.
11. The Tribunal having appreciated the pleadings
and evidence of both parties, having held that the accident
occurred due to rash and negligent driving by the 4th
respondent herein and having assessed the compensation
as Rs.6,58,200/-, passed an award by fixing the liability
against the driver, owner and insurer of the vehicle.
12. Heard both parties.
13. Now the following points arose for consideration:
1. Whether the contentions raised by the appellant with
regard to dishonor of the cheque due to which, the
policy cannot be considered, was not properly
appreciated by the Tribunal?
2. Whether the appellant herein cannot be made
liable to pay compensation along with other
respondents of the main original petition.
14. POINTS:
The learned counsel for the appellant has submitted
that as per the conditions of the policy marked as Ex.B2,
there was a clear note that in the event of dishonor of a
cheque(s), insurance coverage provided under the
documents, automatically stands cancelled from inception,
irrespective of whether a separate communication is sent or
not.
15. Therefore, the counsel has argued that by virtue
the endorsement itself, it is very clear that the liability of
the insurance company will commence only on a valid
policy. But, in the present case, there is evidence to believe
that the cheque issued by 5th respondent/respondent No.2
towards premium was dishonored. The same was intimated
to the owner, but there was no proper response. Therefore,
the insurance company is not liable to pay any
compensation as such sought for exonerating the appellant
herein from making payment of compensation.
16. It is a fact that the respondents/claimants have
filed O.P.No.79 of 2017 claiming compensation against the
driver, owner and insurer of the car bearing No.AP-01-AF
8910. There is no serious dispute about the accident in
which Rajesh died. The main ground, on which the appeal
is filed, is with regard to liability to pay compensation.
17. The other respondents against whom the liability
was fixed with the present appellant did not question the
award. As per the material placed before the Court i.e., oral
evidence of PW5 and Exs.B1 to B4 goes to show that when
the respondent No.5/appellant herein in order to obtain a
policy, he has paid an amount of Rs.14,866/- on
21.02.2014 through a cheque bearing No.20665 and as per
the return memo which is marked as Ex.B3, it is quite clear
that the cheque issued by the 5th respondent was
dishonored by the bank due to lack of sufficient funds in
the account of the 5th respondent i.e., owner of the vehicle.
18. The appellant has claimed that soon after the
dishonor of the cheque, they sent intimation to the owner
and Regional Transport Officer vide Ex.B4/intimation. It is
true the appellant herein did not file any postal
acknowledgement to prove the service of the said intimation
to the owner of the vehicle.
19. However, as rightly contended by the appellant,
the said intimation was sent to the address which is
mentioned in the main original petition by virtue of General
Clauses Act, it is deemed that the notice which was sent to
proper address was served on the owner of the vehicle. Even
otherwise when once he has issued a cheque towards
payment of premium on 21.02.2014 it was the duty of
owner to verify whether the cheque was properly encashed.
As per return memo dated 03.04.2014, it is quite clear that
the cheque issued by respondent No.5 was dishonored. The
appellant has claimed that in view of endorsement on the
policy itself, the policy which was issued on the basis of
cheque which was subsequently dishonored, shall be
treated as void from inception.
20. In a judgment between New India Assurance
Co., Ltd., vs Kotana Appanna & Ors 1 the erstwhile High
Court of Andhra Pradesh having referred the judgment in
1 197 (3) A.P.L.J. 465 (HC)
United India Insurance Co. Ltd., vs Ayeb Mohammed 2
made an observation as under:
"In view of Section 64-VB of the Insurance Act and
in view of Section 96 2 (c) Motor Vehicle Act (old)
which refer to the grounds on which the Insurance
Company can defer the claim filed by the
claimants."
"Mere issuing of a cheque which could not be
honoured for want of funds in the Bank, does not
amount to issuing of a cheque as contemplated in
the explanation to Section 64VB of the Insurance
Act. For the purpose of Section 64-VB of the
Insurance Act, a cheque would be a cheque if on
presentation it is capable of being encashed
immediately and is not returned for insufficiency
of funds. The risk can be assumed on the part of
the insurer and such risk commences only on
payment of premium by the insured in advance by
a cheque or in cash which is a condition precedent
for assuming the risk."
21. In the case on hand there is ample evidence to
believe that the cheque which was issued by 5th respondent
towards premium was dishonored. The respondent No.5 did
not place any material to believe that he has verified the
2 1991 ACJ 650 (SC)
records and was satisfied that his cheque was honored by
the bank and there was valid payment towards the
premium.
22. According to Section 64VB 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.
23. In the judgment of Kotana Appanna & Ors,
the erstwhile High Court of Andhra Pradesh while accepting
the contention raised by the Insurance Company held that
the insurance policy was in effective and will not clock the
insurance company that any liability to pay compensation
amount to the claimants.
24. Therefore, as rightly contended by the present
appellant, though a policy was issued, in view of
subsequent developments viz., dishonor of the cheque
issued towards the premises, it shall be deemed that there
was no valid policy covering the risk of the 5th respondent.
On the endorsement on the policy it is very clear that the
liability of the insurance company will commence only on a
valid policy. Therefore, the appeal filed by the
appellant/insurance company deserves to be allowed and
the appellant can be exonerated in making payment of
compensation. However, in view of the findings recorded by
the Tribunal the liability of the driver and owner has been
established and as they did not file any appeal, questioning
the quantum of compensation, the driver and owner of the
vehicle are still liable to pay compensation.
25. In the result, the appeal is allowed. The
Insurance Company which is shown as respondent No.3 in
M.V.O.P.No.79 of 2017 is exonerated from making payment
of the compensation.
As a sequel, pending Miscellaneous Applications, if
any, shall stand closed.
___________________________________
JUSTICE SAMBASIVARAO NAIDU
Date:18.03.2024
PSSK
