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2015 DIGILAW 1148 (HP)

National Insurance Co. Ltd. v. Madan Lal

2015-08-21

MANSOOR AHMAD MIR

body2015
Judgment Mansoor Ahmad Mir, J. Subject matter of this appeal is the judgment and award, dated 20.09.2008, made by the Motor Accident Claims Tribunal, Solan, Camp at Nalagarh, H.P. (for short "the Tribunal") in MAC Petition No. 3NL/2 of 2005/04, titled as Madan Lal versus Suresh Kumar and others, whereby compensation to the tune of Rs. 2,58,400/with interest @ 9% per annum from the date of filing of the claim petition till its realization came to be awarded in favour of the claimant-injured and against the owner and the driver and the insurer was directed to satisfy the award (for short "the impugned award"). 2. The claimant-injured, the owner-insured and the driver of the offending vehicle have not questioned the impugned award on any count, thus, has attained finality so far it relates to them. 3. The appellant-insurer has questioned the impugned award on the ground that the premium cheque was bounced, thus, the insurer was not liable to satisfy the award. 4. Thus, the only question to be determined in this appeal is whether the Tribunal has rightly saddled the appellant-insurer with liability or otherwise? The answer is in the affirmative for the following reasons: 5. It was for the appellant-insurer to prove that the owner-insured has violated the mandate of Section 64VB of the Insurance Act, 1938 (hereinafter referred to as "the Insurance Act") read with the mandate of Sections 147 to 149 of the Motor Vehicles Act, 1988 (for short "MV Act"), has not performed its duty and has not informed the owner-insured about the bouncing of the premium cheque or about the cancellation of the insurance policy. Thus, it can not lie in the mouth of the appellant-insurer that the owner-insured has committed willful breach. 6. It was the duty of the appellant-insurer to prove the said factum by leading positive evidence, which it has failed to do so. 7. My this view is fortified by the judgment rendered by the Apex Court in a case titled as New India Assurance Co. Ltd. versus Rula and others, reported in AIR 2000 Supreme Court 1082. It is apt to reproduce para 11 of the judgment herein: “11. This decision, which is a 3Judge Bench decision, squarely covers the present case also. My this view is fortified by the judgment rendered by the Apex Court in a case titled as New India Assurance Co. Ltd. versus Rula and others, reported in AIR 2000 Supreme Court 1082. It is apt to reproduce para 11 of the judgment herein: “11. This decision, which is a 3Judge Bench decision, squarely covers the present case also. The subsequent cancellation of the Insurance Policy in the instant case on the ground that the cheque through which premium was paid was dishonoured, would not affect the rights of the third party which had accrued on the issuance of the Policy on the date on which the accident took place. If, on the date of accident, there was a Policy of Insurance in respect of the vehicle in question, the third party would have a claim against the Insurance Company and the owner of the vehicle would have to be indemnified in respect of the claim of that party. Subsequent cancellation of Insurance Policy on the ground of nonpayment of premium would not affect the rights already accrued in favour of the third party.” 8. The matter again came up for consideration before the Apex Court in Deddappa & Ors. versus The Branch Manager, National Insurance Co. Ltd., reported in 2007 AIR SCW 7948, and the same principle has been laid down. 9. In the case titled as United India Insurance Co. Ltd. versus Laxmamma & Ors., reported in 2012 AIR SCW 2657, the Apex Court has discussed the law developed on the issue and ultimately held that if cancellation order is not made or if the accident occurs till the cancellation is made and conveyed, the insurer is liable. It is profitable to reproduce para 19 of the judgment herein: “19. In our view, the legal position is this where the policy of insurance is issued by an authorized insurer on receipt of cheque towards payment of premium and such cheque is returned dishonoured, the liability of authorized insurer to indemnify third parties in respect of the liability which that policy covered subsists and it has to satisfy award of compensation by reason of the provisions of Sections 147(5) and 149(1) of the M.V. Act unless the policy of insurance is cancelled by the authorized insurer and intimation of such cancellation has reached the insured before the accident. In other words, where the policy of insurance is issued by an authorized insurer to cover a vehicle on receipt of the cheque paid towards premium and the cheque gets dishonored and before the accident of the vehicle occurs, such insurance company cancels the policy of insurance and sends intimation thereof to the owner, the insurance company's liability to indemnify the third parties which that policy covered ceases and the insurance company is not liable to satisfy awards of compensation in respect thereof.” 10. This Court has also laid down the same principle in the cases tilted as M/s New Prem Bus Service versus Laxman Singh & another, being FAO No. 316 of 2008, decided on 23rd May, 2014 and FAO No. 35 of 2009, titled as National Insurance Company Ltd. versus Smt. Anjana Sharma & others, being the lead case, decided on 4th July, 2014. It is apt to reproduce paras 15 and 16 of the judgment rendered in Anjana Sharma's case (supra) herein: "15. Admittedly, the cover note was issued alongwith the insurance policy. The cover note and the insurance policy are Ext. RW2/B & Ext. RW2/A in M.A.C.P. No. 38G/2004 and Ext. RW3/B and Ext. RW3/A in MACP RBT No. 68G/2010/2004, respectively. While going through the insurance policy and the cover note, one comes to an inescapable conclusion that it was issued on 28th April, 2003 and was valid up to 27th April, 2004. But, were cancelled on 29th April, 2003, without mentioning any reason. It is nowhere mentioned in the cover note that the premium amount was not received. Further, there is no evidence on the file in support of the fact that the amount was not deposited. 16. Learned counsel for the appellant(s) was asked to show whether there is any evidence on the file to the effect that notice was given to the ownerinsured about the cancellation of the insurance policy and the cover on 29th April, 2003, he failed to reply the same." 11. Having said so, the Tribunal has rightly made discussion in para 20 of the impugned award. 12. Viewed thus, the impugned award is legal one, needs no interference. 13. Accordingly, the impugned award is upheld and the appeal is dismissed. 14. Registry is directed to release the awarded amount in favour of the claimant-injured strictly as per the terms and conditions contained in the impugned award after proper identification. 12. Viewed thus, the impugned award is legal one, needs no interference. 13. Accordingly, the impugned award is upheld and the appeal is dismissed. 14. Registry is directed to release the awarded amount in favour of the claimant-injured strictly as per the terms and conditions contained in the impugned award after proper identification. 15. Send down the record after placing copy of the judgment on Tribunal's file.