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2016 DIGILAW 519 (JK)

Oriental Insurance Company Limited v. Rani Devi

2016-10-06

R.SUDHAKAR

body2016
JUDGMENT : R. Sudhakar, J. 1. This appeal is of the year 2013. In this instant appeal the short issue raised for consideration is whether the appellant-Insurance Company would stand exonerated in a case where a cheque issued by the owner of the vehicle towards premium for the policy had bounced for want of sufficient funds. 2. The appellant-Insurance Company is on appeal challenging the award dated 20th November, 2012 passed by the Motor Accident Claims Tribunal, Jammu by stating that on the date of accident there was no valid insurance policy coverage to TATA 407 vehicle No. JK02AA-0955 which was involved in the accident. 3. Learned counsel for the appellant-Insurance Company submits that the cheque issued for insurance cover by the owner of the aforesaid offending vehicle got dishonoured, and on bank intimation to the Insurance Company, the same was informed to the owner. Therefore, the policy was cancelled from its very inception. It is pleaded that communication relating to cancellation of policy was sent to the owner of the vehicle as well as to the Regional Transport Officer, Jammu, therefore, on the date of accident i.e. 20.07.2005, Insurance Company was not liable to compensate the claimants. 4. For the above said plea, two factors are relevant, one is intimation to the owner of the vehicle and other one is intimation to the Regional Transport Officer. According to the learned counsel for the appellant-Insurance Company intimation was sent to the owner of the vehicle through registered cover, however, the registered envelope was received back with the report "try again, Address not traceable, returned to sender." 5. In this case intimation for cancellation of the policy was sent to the owner of the vehicle to the address originally given by him. Appellant-Insurance Company cannot be faulted if it has sent the intimation to the given address. 6. The reasoning of the Tribunal that it was incumbent upon the Insurance Company to lookout for the fresh address of the owner-respondent No. 2 and intimate him about the cancellation of the policy is erroneous and improper. It is not for the Insurance Company to chase the policy holder. It is for the policy holder to intimate the Insurance Company about the change of address or of other particulars, if there is any change. It is not vice versa. It is not for the Insurance Company to chase the policy holder. It is for the policy holder to intimate the Insurance Company about the change of address or of other particulars, if there is any change. It is not vice versa. The next requirement in a case of this nature is intimation of cancellation of policy to the Regional Transport Officer. 7. The said issue has been considered by the Division Bench of High Court Kerala in case MACA No. 2910 of 2009 titled Wilson v. Vasantha Kumar, Vasantha Bhavan, Karakulam and ors. decided on 23.08.2013. In the said case the Hon'ble Division Bench in Para 14 held as follows:- "14. We are not going into those aspects now regarding the binding nature of the later Division Bench decision of the Honourable Apex Court because, in this case, admittedly, the insurer had not informed the Regional Transport Authority concerned about the cancellation of the policy. Merely because they have informed the insured along they cannot claim exoneration from their liability to pay the amount to the third parties, which they are bound to honour by virtue of Sections 147(5) and 149(1) of the Act. They are not entitled to contend that their liability is extinguished on account of cancellation of the policy, long prior to the accident. Further in this case, it is seen from the documents produced before the Court, namely, Ext. A 35 that the temporary permit was granted to this vehicle in the name of the first respondent from 5.12.2006 to 24.12.2006 on 5.12.2006, i.e., one day prior to the date of accident. If the insurer had informed about the cancellation of policy to the Regional Transport Officer concerned, then they would not have issued the permit and the vehicle would not have been put on road, which would have prevented the unfortunate incident, resulting in injuries to several persons carried in the vehicle. A third party is entitled to board a public transport vehicle with the honest belief that the owner, the Insurance company and the regional Transport Authority must have properly complied with their respective duties, cast on them by the statute. A third party is entitled to board a public transport vehicle with the honest belief that the owner, the Insurance company and the regional Transport Authority must have properly complied with their respective duties, cast on them by the statute. Therefore, if a policy has already been issued, the cancellation thereof by the insurance company cannot affect the right of third parties, to claim payment of compensation by the insurance company, as per the policy unless the cancellation of the policy has been communicated to all the persons concerned including the Regional Transport Authority and the Traffic Police appropriately, So, the lapse on the part of the insurance company in not informing the Regional Transport office concerned, who would not have issued the temporary permit, if it was brought to their notice that there was no valid policy in force, would make the insurance company liable to pay the damages caused to the third party as per the policy issued by them in favour of the insured." 8. In the instant case, the Tribunal has observed that Insurance Company has not placed on record the postal receipt regarding intimation of cancellation of Policy to the Regional Transport Officer, therefore, the Insurance Company has failed to prove that intimation regarding cancellation of policy of insurance was conveyed to Regional Transport Officer. 9. In the absence of intimation as required under law, the plea of Insurance Company to exclude them from liability does not arise. The appellant-Insurance Company has to compensate the claimants. However, Insurance Company would be entitled to recover the same from the owner of the vehicle in the case of admitted dishonor of cheque, as per law. The award in favour of the claimants is confirmed. They are entitled to withdraw the same and they will not be liable to refund the same in any circumstances.