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2006 DIGILAW 1556 (AP)

Andekar Laxmi Bai v. Syed Rahmathulla Quadri

2006-12-12

C.Y.SOMAYAJULU

body2006
ORDER :-Appellants, who are the widow and children of Andekar Manoji (deceased) filed a claim petition under Section 166 of the Motor Vehicles Act, 1988 seeking compensation of Rs.1,00,000/- from the respondents alleging that the deceased died due to an accident caused by the driver of the lorry belonged to the first respondent and insured with the second respondent due to his rash and negligent driving. 2. First respondent chose to remain ex parte both before the Tribunal and this Court. Second respondent contested the claim inter alia on the ground that inasmuch as the cheque issued by the first respondent towards the premium for the policy bounced, it cancelled the policy issued in favour of the first respondent and so it is not liable to pay the compensation payable to the claimants. 3. After considering the evidence on record, the Tribunal awarded an amount of Rs. 96,880/- as compensation to the appellants and passed an award only against the first respondent, but dismissed the claim against the second respondent on the ground that it cancelled the policy due to the bouncing of the cheque issued by the first respondent relying on Section 64VB(1) of Insurance Act, 1938. Questioning the dismissal of the claim against the second respondent, the claimants have preferred this appeal. 4. The point for consideration is. Whether the second respondent is not liable to pay the compensation as contended by it? 5. Learned Counsel for the appellant strongly relying on Oriental Insurance Co. Ltd v. Inderjit Kaur, AIR 1998 SC 588 and New India Assurance Company Limited v. Rula, 2003 (2) SCC 223 , contended that in view of Section 147(5) of the Motor Vehicles Act, 1988, the respondent is bound to pay the amount payable to the appellants though it might have cancelled the policy subsequently. 6. The documentary evidence adduced by the second respondent before the Tribunal is in the shape of Exs.B1 to B7. EX.B1 is the bounced cheque, Exs.B2 and B3 are the intimations received from the bank regarding the bouncing of the cheque issued by the first respondent. EX.B4 is the receipt prepared by the second respondent. EX.B5 is the office copy of the telegram dated 21-2-1995 issued by the second respondent to the first respondent and others. EX.B1 is the bounced cheque, Exs.B2 and B3 are the intimations received from the bank regarding the bouncing of the cheque issued by the first respondent. EX.B4 is the receipt prepared by the second respondent. EX.B5 is the office copy of the telegram dated 21-2-1995 issued by the second respondent to the first respondent and others. EX.B6 is the receipt which shows that the first respondent received the intimation sent to him regarding the cancellation of policy sent by the second respondent. EX.B7 is the policy cancelled on 21-2-1995. From Exs.B2 to B7, it is clear that the cancellation of insurance was only on 21-2-1995. The accident, admittedly, occurred on 9-2-1995 at 8.00 a.m. i.e. long prior to the cancellation of policy by the second respondent. In Inderjit Kaurs case (supra), the apex Court, held that despite the bar created by Section 64VB of the Insurance Act, if an authorized insurer issued a policy of insurance to cover the risk without receiving the premium, by reason of the provisions of Sections 147(5) and 149(1) of the Motor Vehicles Act, 1988 it would become liable to indemnify third parties in respect of their liability, and has to satisfy the award for compensation in respect thereof, notwithstanding its entitlement to avoid or cancel the policy for the reason that the cheque issued in payment of the premium thereon had not been honoured. In Para-II of the judgment, their Lordships observed: "It must also be noted that it was the appellant itself who was responsible for its predictment. It had issued the policy of insurance upon receipt only of a cheque towards the premium in contravention of the provisions of Section 64- VB of the Insurance Act. The public interest that a policy of insurance serves must, clearly, prevail over the interest of the appellant." The said observation amply applies to the facts of the case. In this case also the second respondent issued a policy by receiving a cheque so it cannot be heard to say that as it had cancelled the policy on 21-2-1995 with retrospective effect it cannot be made liable for payment of compensation for the accident that as took place long prior to the date of cancellation, i.e. on 9-2-1995. In this case also the second respondent issued a policy by receiving a cheque so it cannot be heard to say that as it had cancelled the policy on 21-2-1995 with retrospective effect it cannot be made liable for payment of compensation for the accident that as took place long prior to the date of cancellation, i.e. on 9-2-1995. Therefore, the Tribunal was in error in dismissing the claim against the second respondent and so I hold that second respondent also is liable to pay the compensation payable to the appellants. If the second respondent feels that it is entitled to recover the amount from the first respondent, if advised, it can take such proceedings, but it could not avoid its liability to the appellants. 7. Therefore, the appeal is allowed and the order of dismissal of claim against the second respondent is set aside, and an award is passed for Rs.96,880/- in favour of appellants against both respondents with interest thereon at 9% p.a. from the date of petition till the date of deposit into the Court with proportionate costs throughout.