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2020 DIGILAW 1613 (KAR)

Tuljabai Ramasing Mansawale v. Abdulaziz Ismail Shekha

2020-08-28

NATARAJ RANGASWAMY

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JUDGMENT : NATARAJ RANGASWAMY, J. 1. This appeal is filed by the claimants seeking enhancement of the compensation and also challenging the fixation of liability of payment of compensation on the insured. 2. The claimants contended that on 05.10.2007 when the deceased was riding his bicycle on Bijapur-Hyderabad highway, a truck owned by respondent No.1 driven in rash and negligent manner dashed against the deceased. As a result of the impact the deceased died at the spot. It was claimed that deceased was employed as a tile layer at Pragathi Associates at Solapur and was paid monthly salary of Rs.6,500/-. The claimants claimed that they were dependents on the deceased and due to untimely death of the deceased, the claimant No.1 had lost her companionship at a very young age, while petitioner Nos. 2 to 4 had lost the parental love and affection. The claimants therefore sought for payment of compensation of Rs.24,40,000/-. 3. The Tribunal assessed the monthly income of the deceased at Rs.5,000/- and having regard to his age, employed the multiplier of 16 and granted loss of future th income of Rs.7,20,000/- after deducting 1/4 towards expenses of the deceased. The Tribunal noticed that the insurance policy was not subsisting as on the date of the accident, and therefore, the Tribunal fixed the liability of payment of compensation on the insured. 4. It is not in dispute that the accident caused due to rash and negligent driving of the driver of the offending lorry, which was owned by the respondent No.1. It is also not in dispute that the deceased died due to accident. It is also not in dispute that deceased was employed as a tile layer and that the claimants were dependents on the deceased. It is relevant to note that the Tribunal had taken the monthly income of the deceased at Rs.5,000/- though the salary certificate issued indicated the monthly income of the deceased as Rs.6,500/-. Be that as it may, even if a sum of Rs.5,000 is taken as monthly income of the deceased and of the income is deducted towards his personal expenses, then the monthly dependency of the claimants would be Rs.7,20,000/-(3,750x12x16). Be that as it may, even if a sum of Rs.5,000 is taken as monthly income of the deceased and of the income is deducted towards his personal expenses, then the monthly dependency of the claimants would be Rs.7,20,000/-(3,750x12x16). The Tribunal has not awarded compensation for future prospects at 40% as per judgment of the Apex Court in the case of National Insurance Company Limited vs. Pranay Sethi and Others, (2017) 16 SCC 680 : AIR 2017 SC 5157 . If we take that into account a sum of Rs.2,88,000/- would be the amount payable towards loss of future prospects. In addition, the claimants are entitled to loss of love and affection, loss of estate, funeral and other expenses at a sum of Rs.75,000/-. Thus, the claimants are entitled to a sum of Rs.10,83,000/- as against a sum of Rs.7,50,000-00 (wrongly mentioned as Rs.7,30,000/-) awarded by the Tribunal. 5. Now coming to the question of liability, it is not in dispute that respondent No.1 issued a cheque dated 04.01.2007 to avail the insurance policy for the term 05.01.2007 to 04.01.2008. The respondent No.2 contended that cheque so issued was dishonoured on 06.01.2007. Subsequent thereto, the accident occurred on 15.10.2007 and the respondent No.1 availed a new policy on 26.10.2007 for a term of one year. The respondent No.2 contended that after dishonour of the cheque, a notice dated 09.01.2007 was addressed to the respondent No.5 intimating him the dishonour of the cheque and it was mentioned therein: "Please note that the above mentioned policy stands cancelled since inception and we are not on risk in respect of the above policy and certificate of insurance." 6. This was followed by a notice addressed by respondent No.2 to the Regional Transport Officer on 09.01.2007 intimating the Authority regarding the cancellation the policy. This was followed by another notice dated nil intimating that the endorsement was cancelled due to dishonour of the cheque towards insurance premium. The notice issued to respondent No.1 dated 06.01.2007 was served in terms of Ex.D6. Likewise the intimation addressed to Regional Transport Officer was served on 11.01.2007 as per Ex.D7. The cheque which is placed on record and marked as Ex.D10 would disclose that the cheque was issued to the respondent No.2. The notice issued to respondent No.1 dated 06.01.2007 was served in terms of Ex.D6. Likewise the intimation addressed to Regional Transport Officer was served on 11.01.2007 as per Ex.D7. The cheque which is placed on record and marked as Ex.D10 would disclose that the cheque was issued to the respondent No.2. The Tribunal noticing these dates and events held that the respondent No.2 was not liable and thus absolved the respondent No.2 of its liability to pay the award passed by the Tribunal. 7. The learned counsel for the claimants submitted that the issue is no longer res integra in view of the judgment of the full bench of the Apex Court in the case of Oriental Insurance Company Ltd. vs. Indrajit Kaur and Others, 1998 SAR Civil 48. The Apex Court disagreed with its earlier judgment in United India Insurance Company Limited vs. Ayub Mohammed and further held we have, therefore, this position. Despite the bar created by Section 64-VB of the Insurance Act, the appellant, an authorized insurer, issued a policy of insurance to cover the bus without receiving the premium therefor. By reason of the provisions of Sections 147(5) and 149 (1) of the Motor Vehicles Act, the appellant became liable to indemnify third parties in respect of the liability which that policy covered and to satisfy awards of compensation in respect thereof notwithstanding its entitlement (upon which we do not express any opinion) to avoid or cancel the policy for the reason that the cheque issued in payment of the premium thereon had not been honoured. The policy of insurance that the appellant issued was a representation upon which the authorities and third parties are entitled to act. The appellant was not absolved of its obligations to third parties under the policy because it did not receive the premium. Its remedies in this behalf lay against the insurer. 8. Following the above, the Apex Court again in the New India Assurance Company Limited vs. Rula and Others, (2000) AIR SC 1082, held: "Thus any contract of insurance under Chapter 11 of the Motor Vehicles Act, 1988 contemplates a third party who is not a signatory or a party to the contract of insurance but is, nevertheless, protected by such contract. As pointed out by this Court in New Asiatic Insurance Company Limited vs. Pessumal Dhanama Aswani, (1964) AIR SC 1736, the rights of the third party to get indemnified can be exercised only against the insurer of the vehicle. It is thus clear that the third party is not concerned and does not come into the picture at all in the matter of payment of premium. Whether the premium has been paid or not is not the concern of the third party, who is concerned with the fact that there was a policy issued in respect of the vehicle involved in the accident and it is on the basis of this policy, the claim can be maintained by the third party against the insurer. The Apex Court following the judgment in the case of Indrajit Kaur held this decision, which is a 3-Judge Bench decision, squarely covers the present case also. The subsequent cancellation of the insurance policy in the instant case on the ground that a cheque through which the 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 the accident there was 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 non payment of premium would not affect the rights already accrued in favour of the third party." 9. Later in the judgment of the apex court in the case of Deddappa and Others vs. Branch Manager, National Insurance Company Limited, (2008) 1 TAC 417 (SC) : AIR 2008 SC 767 , the Apex Court while deviating from its earlier judgment held: "We are not oblivious of the distinction between the statutory liability of the Insurance 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. 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." 10. The Apex Court in National Insurance Company Limited vs. Seema Malhotra, (2001) 3 SCC 151 : AIR 2001 SC 1197 , was concerned with the question whether the insurer is liable to honour the contract of insurance where the insured gave a cheque to the insurer towards premium amount but the cheque was dishonoured by the drawee bank due to insufficiency of funds in the account of the drawer. In Seema Malhotra s case, the above question arose from the following facts and the Apex Court held: "In a contract of insurance when the insured gives a cheque towards payment of premium or part of the premium, such a contract consists of reciprocal promise. The drawer of the cheque promises the insurer that the cheque on presentation would yield amount in cash. It cannot be forgotten that a cheque is a bill of exchange drawn on a specified banker." 11. Following the above, the Apex court in another judgment in United India Insurance Company Limited vs. Laxmamma and Others, (2012) 5 SCC 234 : AIR 2012 SC 2817 , held: "In our view, the legal position is this: where the policy of insurance is issued by an authorized insurer on receipt of cheque towards the payment of premium and such a cheque is returned dishonoured, the liability of the authorized insurer to indemnify the third parties in respect of the liability which that policy covered subsists and it has to satisfy the award of compensation by reason of the provisions of Section 147(5) and 149 (1) of the Motor Vehicles Act unless the policy of insurance company 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 dishonoured 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 to third parties which that policy covered ceases and the insurance company is not liable to satisfy awards of compensation in respect of third party." 12. Thus, while in Ayeb Mohammad, the insurer agreed to pay the compensation which was meagre, but at its request for a ruling on the question of liability of the insurer on the dishonour of the cheque issued towards the insurance premium, a finding was rolled out. The Apex Court answered the issue in favour of the insurer but such finding was arrived at without issuing notice to the respondent. 13. In Inderjit Kaur, the Court was confronted with a situation where, the insurer had disowned liability on the ground of dishonour of cheque, but had subsequently received the premium in cash. Between the date of disho-nour and receiving the premium by cash the accident occurred and the insurer denied the liability contending that there is no policy in force as on the date of the accident. It was in this context, that the Court held that the insurer is liable to indemnify the third parties by reason of Sections 147 (5) and 149 (1) of the Motor Vehicles Act, notwithstanding its entitlement to avoid or cancel the policy for the dishonour of the cheque issued towards payment of premium. The Apex Court consciously did not comment on the entitlement of the insurer to avoid or cancel the policy. 14. In Rula s case, the Court was vexed with a somewhat similar set of facts that obtained in Inderjit Kaur and thus the Court reiterated its earlier view. But the Court in Deddappa, Seema Malhotra and Laxmamma held that if the insurer had cancelled the policy and had taken steps to intimate the concerned authorities, then the insurer was not liable, notwithstanding the statutory liability under the Act. 15. Coming to the case on hand, the insurance policy was in force for the term 05.01.2007 till 05.01.2008. But the Court in Deddappa, Seema Malhotra and Laxmamma held that if the insurer had cancelled the policy and had taken steps to intimate the concerned authorities, then the insurer was not liable, notwithstanding the statutory liability under the Act. 15. Coming to the case on hand, the insurance policy was in force for the term 05.01.2007 till 05.01.2008. The cheque in question was dishonoured on 06.01.2007 and thereafter the respondent No.2 has intimated the respondent No.1/insured on 10.01.2007 and contemporaneously informed the Regional Transport Officer on 10.01.2007. The documents placed on record in the form of notices and the postal acknowledgements prove the aforesaid fact. Though, an attempt was made by respondent No.1 that the signatures found on the cheque and the signatures found in the acknowledgement are different, yet, the respondent No.1 cannot escape from the liability as the respondent No.1 has not proved that the first policy was availed by paying cash and that the first policy was still in force. If the respondent No.2 has done everything that it could, then it is difficult to fasten the liability on the respondent No.2. 16. In the case on hand, the cheque in question was dishonoured on 06.01.2007 and the respondent No.2 has intimated the respondent No.1 on 10.01.2007. The accident has occurred on 15.10.2007. The respondent No.1 has admittedly obtained a policy on 26.10.2007. It is therefore clear from the conduct of respondent No.1 that he knew that the insurance policy that was first availed by him had expired and after the accident, he obtained a new policy from the respondent No.2. Thus, the situational facts are clearly covered by the Judgment of the Apex Court in the case of Deddappa, Seema Malhotra and Laxmamma. 17. In that view of the matter, the engagement of the parties and the contractual obligation under the first policy dated 05.01.2007 came to an end on its cancellation. The liability of the respondent No.2 was exonerated. Consequently, since there was no insurance policy in force as on the date of the accident, the liability to pay the compensation is solely upon the respondent No.1. I do not find any error in the reasoning of the Tribunal in fixing the liability of payment of compensation on respondent No.1. 18. The liability of the respondent No.2 was exonerated. Consequently, since there was no insurance policy in force as on the date of the accident, the liability to pay the compensation is solely upon the respondent No.1. I do not find any error in the reasoning of the Tribunal in fixing the liability of payment of compensation on respondent No.1. 18. Hence the following order: The impugned order of the Tribunal granting compensation of a sum of Rs.7,50,000/- (wrongly mentioned as Rs.7,30,000/-) is modified and the appeal is partly allowed. The compensation of a sum of Rs.10,83,000/- is granted as against a sum of Rs.7,50,000/- (wrongly mentioned as Rs.7,30,000/-) awarded by the Tribunal. Respondent No.1 shall be liable to pay the compensation to the claimants and the respondent No.1 shall deposit the compensation within a period of one month from the date of receipt of certified copy of this order. If the respondent No.1 deposits the amount within the time stipulated 50% of the award amount shall be kept in a fixed deposit in a Nationalized bank for a term of 03 years. The enhanced amount shall bear interest @ 6% per annum from the date of claim petition till the date of payment.