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2025 DIGILAW 1505 (JHR)

New India Assurance Company Ltd. v. Niyati Mahato

2025-07-16

SANJAY KUMAR DWIVEDI

body2025
JUDGMENT : SANJAY KUMAR DWIVEDI, J. Heard Mr. Ganesh C. Jha, learned counsel for the appellant and Mr. Aditya Banerjee, learned counsel for the respondent nos. 1 to 3-claimants and Mr. Vipul Poddar, learned counsel for the respondent nos. 5 to 9 who are the legal heirs/successors of the original owner. 2. This appeal has been preferred against the judgment and award dated 04.01.2023 passed by the learned District Judge-II-cum-Motor Vehicle Accidents Claims Tribunal, Jamshedpur in Motor Accident Case No. 90 of 2018 whereby, the learned Tribunal awarded sum of Rs. 55,11,207/- to the claimants along with interest @ 7.5 % per annum from the date of filing the appeal till realization, payable within 30 days. 3. Mr. Ganesh C. Jha, learned counsel for the appellant submits that the claim case was filed before the learned Tribunal alleging that the deceased, namely, Bharat Mahato aged about 28 years was a permanent employee of Tata Steel Limited, working as Operator in Coke Plant Department and having Personal No. 156834 and on 26.04.2018, he along with his friend Subhankar Mohanty (pillion driver) were going by motorcycle bearing registration No. JH- 05P-8960, belonging to the deceased and when they were near Railway Bridge, Parcel Gate and were preceding downward, the driver of 407 Truck bearing registration No.JH-05X-8561 driving it in rash and negligent manner lost control over the vehicle and dashed the motorcycle causing injuries to the deceased and the pillion rider. It was also claimed that the deceased was admitted to TMH with the help of traffic police, but could not survive and succumbed to death. He further submits that the learned Tribunal has been pleased to award the compensation without appreciating the facts in its right perspective that at the time of accident, the vehicle in question was not insured with the present appellant. He submits that the policy, which was issued prior to the accident was valid from 28.11.2017 to 27.11.2018. He also submits that the owner Natwar Kumar Jha had visited the office of the insurance company on 15.11.2017 for renewing the insurance policy which was going to expire, requesting issuance of policy for the period from 28.11.2017 to 27.11.2018 i.e. 13 days prior to expiry of the insurance, submitting a cheque of Rs. 17,098/-. He submits that the Cheque No. 254264 of Rs. 17,098/-. He submits that the Cheque No. 254264 of Rs. 55,461/- was issued by the owner of the vehicle not only for the offending vehicle, but for few other vehicles i.e. JH-05X-8561, JH-05-BG-1137, JH-05K-1260, JH-05AV-4544 and in view of that, the policy has been issued. He submits that on 18.11.2017, the bank intimated the insurance company that the said cheque has not been honoured as the signatures of the drawer differed and in view of that, the said policy was cancelled on 21.11.2017 prior to commencement of new policy on 28.11.2017. He further submits that the accident took place on 26.04.2018 at 10:30 AM and on that day, the vehicle in question was not insured as earlier policy period has already been expired and the renewal policy issued by the insurance company, has already been cancelled by the company as the cheque was not honoured and intimation to that effect has been made by way of Ext. Y/1. He submits that however, the owner has reached to the office of the insurance company and by way of cash payment, he has obtained the new policy on 26.04.2018 at 12:27:46 PM. He further submits that the contention has been made before the learned Tribunal that subsequently the payment has already been made and policy has been issued. He submits that in light of the intimation made by the insurance company, the owner was knowing the fact of cancellation of the insurance policy and when the accident took place on 26.04.2018 at 10:30 A.M. on the given day i.e. 26.04.2018 at 12:27:46 PM, the policy was obtained as fresh policy. He submits that this clearly shows the conduct of the owner of the vehicle in question and at the time of obtaining fresh policy, it was not informed by the owner to the insurance company that the vehicle in question has met with an accident on 26.04.2018 at 10:30 A.M. He submits that however, the learned Tribunal in spite of that has been pleased to allow the claim against the insurance company. To buttress this argument, he relied upon the judgment passed by the Hon’ble Supreme Court in the case of United India Insurance Co. Ltd. v. Laxmamma and others , reported in AIR 2012 Supreme Court 2817. He refers paragraph no. 19 of the said judgment, which reads as under: “19. To buttress this argument, he relied upon the judgment passed by the Hon’ble Supreme Court in the case of United India Insurance Co. Ltd. v. Laxmamma and others , reported in AIR 2012 Supreme Court 2817. He refers paragraph no. 19 of the said judgment, which reads as under: “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 ceased and the insurance company is not liable to satisfy awards of compensation in respect thereof.” 4. Mr. Ganesh C. Jha, learned counsel for the appellant further submits that in view of the above judgment, the communication was already made to the owner about cancellation of the policy prior to accident and in spite of that, the learned Tribunal has fastened the liability upon the insurance company, which is not in accordance with law. He further submits that a petition under order XLI Rule 27 of the CPC was filed before this Court, which was allowed by the Co-ordinate Bench of this Court vide order dated 4 th December, 2024. He draws attention of the Court to I.A. No.11652 of 2024 filed by the appellant and submits that the SMS delivery report on cancellation of policy has been brought on the record, wherein it is clearly was delivered on the registered mobile number of Late Natwar Kumar Jha on insurance company. He draws attention of the Court to I.A. No.11652 of 2024 filed by the appellant and submits that the SMS delivery report on cancellation of policy has been brought on the record, wherein it is clearly was delivered on the registered mobile number of Late Natwar Kumar Jha on insurance company. He submits that the letter of intimation of cancellation of the policy in question was issued to the owner on 21.11.2017 which was marked as Ext. Y/1. In that letter, request was also made to the owner to surrender the insurance policy for cancellation. By way of inviting attention of the Court to the policy obtained on 26.04.2018 at 12:27:46 P.M., he submits that on the given date, the policy was obtained on cash payment in the office of the insurance company on 26.04.2018 and the cash payment receipt is also brought on the record. On these grounds, he submits that the insurance company is not liable and in spite of that, the learned Tribunal has fastened the liability upon the insurance company and, as such, this appeal may kindly be allowed. 5. On the other hand, Mr. Vipul Poddar, learned counsel appearing for the owner who has been subsequently substituted by his legal heirs/successors submits that the policy was already obtained and in view of that, the learned Tribunal has rightly passed the order. According to him, prior communication was not made and the owner was not knowing about the cancellation of the policy and in view of that, the learned Tribunal has rightly passed the order. He relied in the cases of National Insurance Company Limited V. Abhaysing Pratapsing Waghela & Others , reported in (2008) 9 SCC 133 and New India Assurance Co. Ltd. V. Rula and Others , reported in (2000) 3 SCC 195 . Relying on these two judgments, he submits that the intimation was not received and in view of two judgments of the Hon’ble Supreme Court, the owner is not liable and the learned Tribunal has rightly passed the award for payment of compensation by the insurance company. 6. Mr. Aditya Banerjee, learned counsel appearing for the claimants submits that the claimants are entitled and dispute is between the insurance company and the owner about the policy. He further submits that this is the beneficial piece of legislation and the claimants’ right is there to receive the compensation amount. 6. Mr. Aditya Banerjee, learned counsel appearing for the claimants submits that the claimants are entitled and dispute is between the insurance company and the owner about the policy. He further submits that this is the beneficial piece of legislation and the claimants’ right is there to receive the compensation amount. He also supported the argument of Mr. Vipul Poddar the learned counsel, who represents the owner. According to him, the documents brought on the record by way of I.A. No.11652 of 2024, under order XLI Rule 27 of the CPC the certification in light of Section 65 B (4) of the Indian EVIDENCE ACT is not there and in view of that, that may not be considered by the Court. He relied in the case of Arjun Panditrao Khotkar v. Kailash Kushanrao Gorantyal & others , reported in (2020) 7 SCC 1 He also submits that in light of Section 4 of the Indian CONTRACT ACT , the communication was not complete and in view of that, the appeal may kindly be dismissed. 7. In reply, Mr. Ganesh C. Jha, learned counsel for the appellant submits that the insurance company has also laid evidence on the issue in question and the Administrative Officer, namely, Sanjay Kumar was examined as D.W.-1 and he has supported the case of the insurance company and identified the letter dated 21.11.2017 which was marked as Ext. Y/1. He further submits that vide order dated 04.12.2024, the petition under Order XLI Rule 27 of the CPC was allowed by the Co-ordinate Bench of this Court and the respondent-owner was allowed to rebut the same by way of filing any documentary evidence. He submits that however no rebuttal has been filed to the said document, which has been allowed by this Court under Order XLI Rule 27 of the CPC. He submits that in view of not filing any rebuttal, it is admitted by the owner that intimation was made prior to cancellation of the insurance policy. 8. In view of the above submissions of the learned counsel for the parties, the Court has gone through the material on record including Trial Court Record and finds that admittedly the accident took place on 26.04.2018 at 10:30 A.M. Pursuant to that, FIR was registered being Dhalbhum Bagbeda P.S. Case No. 73 of 2018. 8. In view of the above submissions of the learned counsel for the parties, the Court has gone through the material on record including Trial Court Record and finds that admittedly the accident took place on 26.04.2018 at 10:30 A.M. Pursuant to that, FIR was registered being Dhalbhum Bagbeda P.S. Case No. 73 of 2018. Looking into the FIR, it transpires that the accident took place on 26.04.2018 at 10:30 A.M. and that is also recorded in the fardbeyan of Subhankar Mohanty and charge-sheet was submitted on 01.06.2018 finding the case true. In view of the FIR and charge sheet, the accident on 26.04.2018 at 10:30 P.M. is proved. The cheque was marked as Ext. A and the bank communication dated 18.11.2017 with regard to the dishonor of the cheque is marked as Ext. B and the communication by the insurance company dated 21.11.2017 was marked as Ext. Y/1 and all these facts have been proved by the insurance company by bringing the evidence of the Administrative Officer, namely, Sanjay Kumar, who was examined as D.W.-1. In view of the above, it has been proved that the cheque issued by the owner was dishonoured of which communication of this was made by the bank on 18.11.2017 (Ext.B). Ext. Y/1 dated 21.11.2017 further suggests that the communication has been made to the owner about cancellation of the policy, which was issued in anticipation that the cheque will be honoured and in view of that, the premium of insurance policy cannot be said to have been paid to the insurer in view of the provisions of Section 64-VB of the INSURANCE ACT , 1938 and in view of that, such policies are ineffective and insurance company cannot be held liable to compensate the claimants. 9. In two of the judgments relied by Mr. Vipul Poddar, learned counsel appearing for the owner in the cases of National Insurance Company Limited V. Abhaysing Pratapsing Waghela & Others , and New India Assurance Co. Ltd. V. Rula and Others (supra) , the Hon’ble Supreme Court has held that the insurer cannot escape his liabilities under the insurance policy as prior intimation was not made in those cases. The facts of the present case is otherwise. The contention of the insurance company is that after receiving the Ext. Ltd. V. Rula and Others (supra) , the Hon’ble Supreme Court has held that the insurer cannot escape his liabilities under the insurance policy as prior intimation was not made in those cases. The facts of the present case is otherwise. The contention of the insurance company is that after receiving the Ext. B, which is a bank letter from the bank intimating that the cheque could not be honoured, the insurance company has issued Ext. Y/1. intimating about the cancellation of the policy in view of dishonor of the cheque. Further, all these facts have been proved by D.W.-1. The document brought on record under Order XLI Rule 27 of the CPC clearly suggests that the fresh policy was obtained on 26.04.2018 at 12:27:46 P.M. and the said policy was made effective w.e.f. 26.04.2018 at 12:27:46 P.M. to 25.04.2019 till 11:59:59 P.M. By the order dated 04.12.2024 while allowing the petition under Order XLI Rule 27 of CPC, liberty was provided to the owner to rebut the documents brought on record. However, till date no rebuttal has been filed and even no document to controvert the stand of the insurance company has been filed by the owner. Thus, it is an admitted position that the cheque in question was dishonoured on 18.11.2017 and intimation to that effect was made by way of Ext. Y/1 to the owner on 21.11.2017, which has been further proved by way of the evidence of D.W.- 1 and the document on the record taken under Order XLI Rule 27 of the CPC the registered mobile number of Late Natwar Kumar Jha, who was the original owner. Thus, mere issuing the cheque which could not be honoured for whatever reasons, does not amount to issue of the cheque as contemplated in explanation in Section 64-VB of the INSURANCE ACT . For the purpose of Section 64(vb) of the INSURANCE ACT , the cheque if on presentation it is capable of being encashed immediately and is not returned for any reason, the risk can be assumed on the part of the insurer and such risk commences only on payment of premium by insured in advance, by a cheque or in cash which is a condition precedent for assuming the risk. In view of that, the Court finds that the finding of the issue in question by the learned Tribunal is perverse and the issue in question has been considered by the Hon’ble Supreme Court in the case of United India Insurance Co. Ltd. v. Laxmamma and others (supra) , which has been relied by the learned counsel for the appellant. In light of Ext. Y/1, which has been proved by the D.W.-1, the intimation prior to accident of the insurance policy has been made to the owner, whereas, the accident took place on 26.04.2018 at 10:30 A.M. and in view of that, even earlier existing policy was already expired on 26.11.2017 and the accident took place 26.04.2018 at 10:30 A.M. whereas the policy which has been brought on record clearly suggests at the premium was paid in cash on the given date i.e. 26.04.2018. Thus, at the time of accident the policy was not existing. 10. In view of the above facts, reasons and analysis, the Court finds that the finding of the learned Tribunal cannot sustain in the eyes of law. Accordingly, part of the award dated 04.01.2023 passed by the learned District Judge-II-cum-Motor Vehicle Accidents Claims Tribunal, Jamshedpur in Motor Accident Case No. 90 of 2018, whereby, the insurance company has been directed to pay the compensation, is hereby set-aside and the said award is further modified to the effect that the owner will be liable to pay the said awarded amount to the claimants. 11. The statutory amount, deposited by the insurance company, shall be retuned back to the insurance company and the amount deposited by the insurance company before the learned Tribunal, shall be returned back to the insurance company. 12. The appeal is, accordingly, allowed in above terms and disposed of. 13. Let Trial Court Record be sent back to the concerned Tribunal forthwith.