National Insurance Co. Ltd. vs Bachubhai Chandubhai Vasava and Others

H.K. Rathod, J.—Heard learned advocate Ms. Megha Jani appearing on behalf of Appellant National Insurance Co. Ltd.

Appellant has challenged the award passed by M.A.C.T., Panchmahalas at Godhra decided on 30.12.2008 in M.A.C.P. No. 826 of 1995. The Claims Tribunal has awarded Rs. 1,54,500 with 9 per cent interest up to 31.12.2000 thereafter and at 7.5 per cent interest. The claimant has filed application u/s 166 of the Motor Vehicles Act.

Learned advocate Ms. Jani raised contention that cheque paid by owner of vehicle towards payment of premium for insurance policy was dishonoured and subsequently, policy of insurance was cancelled by Appellant insurance company and informed to owner of vehicle and R.T.O., Agra which documents are on record and admitted by claimant, even though Claims Tribunal has come to the conclusion that policy was not cancelled and it remained in existence because intimation to owner about dishonour of cheque and intimation to R.T.O., Agra as to whether it has reached the owner of vehicle and R.T.O., Agra or not, for that there was no evidence on record which established facts by insurance company. Therefore, the Claims Tribunal has come to conclusion that in absence of acknowledgment, it is not proved by insurance company before Claims Tribunal that intimation which has been given to owner of vehicle and R.T.O., Agra has reached to both parties. The documents which have been placed before this Court for perusal of this Court, i.e., written statement filed by Appellant insurance company, copy of cover note, copy of cancelled renewal notice, copy of cancelled cover note, copies of cheque, bank memo and debit advice, copy of notice of cancellation of policy, copy of application given by the claimants to cancel exhibited documents and copy of reply to application of cancellation of exhibited documents filed by Appellant insurance company.

I have considered these documents which have been placed before this Court for perusal.

The second contention raised by the learned advocate Ms. Jani is that against driver and owner, claim petition is dismissed by Claims Tribunal. Therefore, in absence of driver and in absence of owner, insurance company is not at all liable to pay compensation to claimant. Learned advocate Ms. Jani referred to documents which are placed before this Court for perusal and she also referred para 14, where finding is given by Claims Tribunal and para 4, where claim petition is dismissed by the Claims Tribunal against Respondent Nos. 1 and 2.

The facts, which are almost between parties, are not in dispute. The claim petition is dismissed against Respondent Nos. 1 and 2 means driver and owner, therefore, insurance company is not liable, that contention was not raised in written statement, even that contention was not argued before Claims Tribunal by advocate of insurance company, then, it has been raised first time taking advantage before this Court being a legal contention, this Court cannot permit Appellant to raise first time such contention which was not raised before Claims Tribunal. The opportunity was available to Appellant because in their presence, Claims Tribunal has dismissed the claim petition against the Respondent Nos. 1 and 2, even though the Appellant insurance company remained silent for reasons best known to them, but, one fact is very clear that no such contention was raised before Claims Tribunal. Therefore, this Court cannot permit Appellant to raise such contention first time before this Court.

The other contention is that intimation was sent to owner of vehicle as well as R.T.O., Agra which is required u/s 64-VB of 1938 Act, which provides that no risk is to be assumed unless premium is received in advance in the following terms. It is observed by Apex Court in case of Deddappa and Others Vs. The Branch Manager, National Insurance Co. Ltd., relevant para 14 is quoted as under:

(14) Section 64-VB of the 1938 Act provides that no risk is to be assumed unless premium is received in advance in the following terms:

''Section 64-VB. No risk to be assumed unless premium is received in advance.--

(1) No insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily payable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and until deposit of such amount as may be prescribed, is made in advance in the prescribed manner.

(2) For the purposes of this section, in the case of risks for which premium can be ascertained in advance, the risk may be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the insurer.

Explanation.--Where the premium is tendered by postal money order or cheque sent by post, the risk may be assumed on the date on which the money order is booked or the cheque is posted, as the case may be.

(3) Any refund of premium which may become due to an insured on account of the cancellation of a policy or alteration in its terms and conditions or otherwise shall be paid by the insurer directly to the insured by a crossed or order cheque or by postal money order and a proper receipt shall be obtained by the insurer from the insured, and such refund shall in no case be credited to the account of the agent.

(4) Where an insurance agent collects a premium on a policy of insurance on behalf of an insurer, he shall deposit with, or dispatch by post to, the insurer, the premium so collected in full without deduction of his commission within twenty-four hours of the collection excluding bank and postal holidays.''

(15) The said provision, therefore, in no unmistakable term provides for issuance of a valid policy only on receipt of payment of the premium.

Therefore, question is that intimation of cancellation of policy or cover note whether it had reached owner of vehicle or not and whether it had reached R.T.O., Agra or not. For that there was no evidence on record produced by insurance company before Claims Tribunal. Therefore, contention raised by learned advocate Ms. Jani cannot be accepted when third party liability being a statutory liability arise because of accident occurred on 22.7.1995. The contention is that duration of insurance policy is from 26.5.1995 to 25.5.1996 and cheque has been dishonoured on 5.6.1995 and informed to the insured on 26.6.1995. Thereafter, accident has occurred.

The accident occurred on 22.7.1995, a 15 years girl named Surya died in accident who was third party undisputedly. So, there is a statutory liability arising u/s 147 of Motor Vehicles Act which is required to be discharged by insurance company when premium has been accepted from the insured. The facts remain that cheque of premium was accepted by insurance company, but it was dishonoured, then procedure must have to be completed by the insurance company for cancellation of such policy. Section 147 (4) requires specific procedure which is to be followed by insurance company to intimate R.T.O. immediately when cheque has been dishonoured by bank. An officer has come with all records, affidavit is also prepared and along with affidavit, documents are also produced on record which are exhibited, subsequently application given by claimant to de-exhibit that was not pressed ultimately by the claimant. But question is that documents which are exhibited in that document, intimation to insured and R.T.O., Agra whether it has reached to both or not? For that there is no acknowledgment produced by insurance company before Claims Tribunal.

In light of this background, Claims Tribunal has observed in para 14 which is quoted as under:

(14) I have gone through all the documents produced by both the parties. On perusal of the documents produced by the insurance company, it is not proved that insurance company has intimated to the vehicle owner as well as R.T.O. office for the cancellation of policy. If it is assumed for a moment that insurance company had written letter to the owner as well as R.T.O., there is no acknowledgment receipt for the same which is received by the applicants. Therefore, the opponents failed to prove that they had informed to the owner of the vehicle as well as concerned R.T.O. for the cancellation of the policy due to dishonour of cheque as there was insufficient balance and, therefore, as the policy was in existence on the date of accident, the insurance company held liable to pay the compensation.

Recently, Division Bench of Allahabad High Court in case of National Insurance Co. Ltd. v. Jitendra Kumar 2010 ACJ 739 (Allahabad), has considered issue that intimation to R.T.O. which amounts to intimation to public, but that must have to be proved by insurance company. The relevant discussion is made in paras 10 to 18 which are quoted as under:

(10) From the plain reading of several provisions of the Act, it appears to us that insurance of the vehicle to run it in public places is mandatory in nature. Therefore, it is implied that insurance company will inform all concerned inclusive of Regional Transport Authority and also the appropriate police authority dealing with traffic simultaneously with the information of cancellation of the insurance coverage to the owner-insured. Insurance is an assurance. As per the scheme of the Act such assurance is to be given not only to the insured but also to the third parties who sustained injury or succumbed to death due to road accident and their legal representatives. They are not aware about the cover period and extent of the contract between the insurer and the insured. They are also not aware about any default. They presuppose that when a vehicle runs in the public place, it has all valid documents to run. One of such valid documents is contract of insurance between the insurer and insured to cover the third party risk. In that way, knowledge or information for not having valid insurance coverage by the insurance company to the Regional Transport Authority and the appropriate police authority which deals with traffic is mandatory in nature. Insurers cannot be allowed to wait and watch like usual commercial enterprises and take defence of not having insurance coverage only after the accident when the claim will arise. As soon as an insurer enters into a contract with insured under the Act, it becomes statutorily liable to the third parties. On the other hand, the Act itself is a beneficial piece of legislation for the third parties. Therefore, whenever we sit in this jurisdiction, we should not be forgetful about predominant effect of such Act. Interest of the affected persons will be considered at first. Equity follows law by applying the maxim of acquitas sequitur legem but sometimes law follows equity by the maxim of lex aliquando sequitur aequitatem particularly when equity emerges into the law relevant for the purpose. Therefore, it is essential for the insurer to take a defence before the Tribunal that it had not only cancelled the insurance coverage and informed the insured, but also simultaneously intimated all concerned to prevent the vehicle from plying on the road otherwise it cannot avoid the liability to pay compensation to the third parties specially in the form of stopgap arrangement and recover from the owner, i.e., insured. When the insurance coverage under the Act is compulsory, it has twofold duties, i.e., prevention and compensation. When they have discharged their duty of prevention in absence of coverage by notice to the appropriate authorities, their liability can be extinguished and the authorities will be strictly liable to ensure seizure of such vehicle from the public place for not having insurance coverage. Notice to them means notice to public. In absence of the same an insurance company cannot be discharged from their liability to make payment of compensation to a third party even as a stopgap arrangement. Facilities under the statute cannot be frustrated by means of solitary intimation of the insurer to the insured about cancellation of insurance contract for dishonour of the requisite cheque(s). It is ''strict liability'' of the insurer under the law. An insurance company is doing business about risk as per its own policy. Therefore, if the insurance company is allowed to avoid the risk, the same will go against their own policy of business particularly when they are entitled to get back their money even by way of land revenue in case the contract does not seem to be in existence for any reason. There is, in general, no duty for the sufferer to anticipate that another will be negligent and to avoid the effects of that negligence by anticipation. The position of a sufferer and the position of an insurer cannot be equated at all.

(11) We have considered various judgments as available to us. In Oriental Insurance Co. Ltd. Vs. Inderjit Kaur and Others, three-Judge Bench of the Apex Court held that the insurer is not entitled to avoid liability towards a third party for not having premium since third party risk is a public interest to be served by the insurance company in accordance with law. It has a prevailing effect over the insurer''s own interest.

(12) The aforesaid judgment is squarely applicable in this field. But since other judgments of two-Judge Bench carved out the question of entitlement of the insurer to avoid relief in case of dishonourment of the cheque we require further discussion.

(13) In National Insurance Co. Ltd. Vs. Seema Malhotra and Others, two-Judge Bench of the Supreme Court has held that the insurance company is governed by a contract between it and the insured. Therefore, an agreement without consideration is void. Hence, when a contract becomes void any person who has received any advantage under such contract is bound to restore it to the person from whom he received it. So, even if the insurer has disbursed the amount covered by the policy to the insured before the cheque was returned dishonoured, insurer is entitled to get the money back. In any event, the Supreme Court also observed that in case the insured paid the premium before the date of accident then it is a different aspect altogether. In paras 9 and 10 of the said judgment two-Judge Bench distinguished the three-Judge Bench judgment of Inderjit Kaur (supra) by saying that the three-Judge Bench refrained from expressing any opinion on the question of insurer''s entitlement to avoid or cancel the policy as against the insured when the cheque issued for payment of premium was dishonoured. Such point is further discussed in another judgment. Such referred judgment is Deddappa and Others Vs. The Branch Manager, National Insurance Co. Ltd., . There the Supreme Court has taken note of both the judgments in para 8 therein and again held in para 16 that in the case of Inderjit Kaur (supra) although the three-Judge Bench of the Apex Court opined that by applying the provisions of the Motor Vehicles Act, 1988, the insurance company is liable to indemnify third party in respect of the policy and to satisfy the award of compensation in respect of award thereof but the cause of its entitlement to avoid or cancel the policy for the reason that cheque issued in respect of premium therein had not been honoured, was left open. It was further held there that judgment reported in New India Assurance Co. Ltd. Vs. Rula and Others, was considered and held on the basis of such judgment that if on the date of accident the policy subsists, then only the third party would be entitled to avail the benefit thereof. Thereafter, it has followed the ratio of two-Judge Bench judgment of the Apex Court, i.e., Seema Malhotra (supra) and held that a contract is based on reciprocal promise. Reciprocal promises by the parties are the condition precedent for a valid contract. A contract furthermore must be for consideration. If the contract of insurance has been cancelled and all concerned have been intimated therein, the insurance company would not be liable to satisfy the claim. A beneficial legislation, as is well-known, should not be construed in such a manner so as to bring within its ambit a benefit which was not contemplated by the legislature to be given to the party. Thereafter, it has quoted a part of the judgment reported in Regional Director, Employees'' State Insurance Corporation, Trichur Vs. Ramanuja Match Industries, which is as follows:

We do not doubt that beneficial legislation should have liberal construction with a view to implementing the legislative intent but where such beneficial legislation has a scheme of its own there is no warrant for the court to travel beyond the scheme and extend the scope of the statute on the pretext of extending the statutory benefit to those who are not covered by the scheme.

(14) Even thereafter the Supreme Court considered the claimants as people from lowest strata of society and by applying Article 142 of the Constitution directed to pay and recover the amount.

(15) On the other hand a three-Judge Bench of the Supreme Court in Inderjit Kaur (supra) held on the basis of the judgment of the Privy Council in Montreal Street Rly. Co. v. Normandin AIR 1917 PC 142, as follows:

When the provisions of a statute relate to the performance of a public duty and the case is such that to hold null and void acts done in neglect of this duty would work serious general inconvenience or injustice to persons who have no control over those entrusted with the duty and at the same time would not promote the main object of the legislature, it has been the practice to hold such provisions to be directory only, the neglect of them, though punishable, not affecting the validity of the acts done.

(16) Thereafter categorically held that the public interest will prevail over the interest of the Appellant insurance company therein.

(17) From the judgments of New India Assurance Co. Ltd. Vs. Rula and Others, and Deddappa and Others Vs. The Branch Manager, National Insurance Co. Ltd., we find an observation of Roskill, L.J. in Cehave N.V. v. Bremer Handelsgesellschaft mbH, (1975) 3 All ER 739 at 756, that the law relating to contracts of insurance is part of the general law of contract. In spite of following such observation the Apex Court in Rula (supra) held that though purpose relating to an ordinary contract of insurance is to be understood in its proper prescription but the contract of insurance relating to motor vehicle has to be understood in the light of various provisions contained in the Act. In the said judgment it is further held that there are provisions of necessity of insurance against third party risks and duty of the insurer is to satisfy the judgments and awards against persons insured in respect of third party risk. It has also been held that Section 149 of the Act casts duty on the insurer to satisfy judgment and award against the persons insured in respect of third party risk. A two-Judge Bench of the Apex Court also followed the ratio of the three-Judge Bench judgment, as in the case of Oriental Insurance Co. Ltd. Vs. Inderjit Kaur and Others, , which is as follows:

''(10) The contract of insurance in respect of motor vehicles has, therefore, to be construed in the light of the above provisions. Section 146 (1) contains a prohibition on the use of the motor vehicles without an insurance policy having been taken in accordance with Chapter XI of the Motor Vehicles Act. The manifest object of this provision is to ensure that the third party, who suffers injuries due to the use of the motor vehicles, may be able to get damages from the owner of the vehicle and recoverability of the damages may not depend on the financial condition or solvency of the driver of the vehicle who caused the injuries.''

(18) Even in the cases of other statutory lapse or lapses u/s 149 of the Act three-Judge Bench of the Supreme Court in National Insurance Co. Ltd. Vs. Swaran Singh and Others, held that the insurance company will make the payment and then recover the same from the owner even as a land revenue. Therefore, the interest of the insurer is fully protected even if lapses on the part of the insured is available. On the other hand, the claimants will be nowhere if for no fault of themselves payment of compensation in any form is refused or withheld. Hence, any of the statutory lapses are to be controlled by the statute itself to give the benefit to the ultimate beneficiary under the beneficial piece of legislation because he has no protection against the payment of compensation in such circumstances. In doing so, if any Tribunal directs any insurance company to pay the amount of compensation to the claimants with a direction upon them to recover such amount from the owner the same cannot be said to be departure from the statutory obligation. In both the cases, i.e., National Insurance Co. Ltd. Vs. Seema Malhotra and Others, and Deddappa and Others Vs. The Branch Manager, National Insurance Co. Ltd., we find that the court was swayed away with the general principle of contract sitting in the jurisdiction of motor accident claim cases of the claimants. The excluding sentence of the three-Judge Bench of the Apex Court in Oriental Insurance Co. Ltd. Vs. Inderjit Kaur and Others, i.e., ''upon which we do not express any opinion'', does not give implied permission to the two-Judge Bench to take contrary stand sitting in the similar jurisdiction of the motor accident claim cases. It has only meant and kept open for the appropriate court to consider the general principle of contract between insurer and insured without frustrating claim of the claimants which is paramount consideration under such law. Supreme Court in New India Assurance Co. Ltd. Vs. Harshadbhai Amrutbhai Modhiya and Another, categorically held that liability of the insurance companies under the Act is statutory but not contractual unlike other Act(s). Therefore, the court cannot go beyond the statute and confer upon the general conditions of contract. Even thereafter if we go by the composite reading of Seema Malhotra (supra) and Daddappa (supra), we find that there are two aspects in both the judgments. One is whether insurance company has informed all concerned or not and another is whether payment of compensation to the third parties is absolute or in the nature of stopgap arrangement with a right of recovery. When all concerned are intimated, an insurance company both under the Act and under the contract can have a defence about refusal of compensation to the third parties even as a stopgap arrangement, failing which it would be treated to be statutory default on the part of the insurance company. Thus, the insurance company cannot avoid its liability in such circumstances. Secondly, stopgap arrangement cannot be treated to be a liability. It is a device of the court to get a statutory compliance to facilitate the sufferer keeping pace with the intention of the legislature. Hence, such type of accommodation of the court cannot be treated to be the liability on the part of the insurer and as such reference on that score seems to be academic in nature.

The said view has been taken by Division Bench of this Court in case of National Insurance Co. Ltd. v. Abhesing Pratapsing Waghela 2006 (3) GLH 173. The relevant para 8 is quoted as under:

(8) We are, however, of the view that by subsequently issuing the formal document of policy of insurance and giving it effect from 30.1.1995, the Appellant insurance company cannot avoid its liability which it had undertaken on 23.1.1995 by accepting the premium by cheque. The reliance placed by learned Counsel for the insurance company on the provisions of Section 64-VB of the Act is also of no avail to the insurance company. The section provides that ''no risk shall be assumed by the insurance company unless premium is received in advance''. This provides that the risk may be assumed earlier than the date on which the premium has been paid in cash to the insurer. Hence, it was open to the insurance company to assume the risk on receiving the cheque on 23.1.95 and by issuing the document, Exh. 38, which has to be treated as a cover note though it purported to be a Motor Input Advice-cum-Receipt. Any dishonour of the cheque, thereafter, would confer on the insurance company the right to avoid liability already incurred, only by following the procedure u/s 147(4) of the Act. We are, therefore, of the view that the Tribunal did not commit any error in holding the insurance company jointly and severally liable with the owner and driver of the vehicle in question.

This Court had occasion to decide the very issue in case of National Insurance Co. Ltd. v. Pareshbhai Harshadbhai Brahmbhatt, F.A. No. 1073 of 2009 with Civil Application No. 3194 of 2009 dated 23.3.2009. The relevant para Nos. 8 to 12 are quoted as under:

(8) The secondary evidence produced by insurance company that cheque has been dishonoured, intimation was given to insured and R.T.O. about cancellation of policy, but important fact is that whether such intimation of cancellation of policy issued by the insurance company has been duly served to insured or not or whether it has been duly served to R.T.O. or not. For that, there is no evidence on record produced by insurance company. Whatever the secondary evidence suggests intimation, but, no proof that such intimation is received by insured from the insurance company, so long, cancellation of policy is not received by insured, the policy remained intact. This aspect has been examined by Claims Tribunal that mere intimation to the insured and R.T.O. is not enough but that intimation must be received by the insured and R.T.O. The insurance company has placed on record secondary evidence and also evidence is recorded by Mr. Pratapsinh Bheemsinh Sisodiya, Exh. 43, but in both, oral and documentary evidence, there is no evidence on record produced by insurance company which proved the facts that the insurance policy is cancelled by intimation whether that intimation was received by insured or not. Not a single document is produced on record which established the fact that intimation of cancellation is received by insured. So long insured is not aware about cancellation of policy remained in existence for the purpose of insured and that insurance company is duty-bound to comply the condition of policy for third party by making payment of compensation. Claims Tribunal has discussed this aspect that defence of the insurance company that cancellation of policy has not been proved when documentary evidence in this regard is available in the possession of the insurance company, the oral testimony in this regard cannot be believed and accepted.

(9) The insurance company has failed to establish the fact before the Claims Tribunal concerned that intimation was received by the insured, because no acknowledgment received from insured and R.TO. is produced on record by the insurance company before the Claims Tribunal. The insurance company after the cheque is dishonoured, according to them, insurance policy cancelled prior to accident, then insurance company must have to prove the facts producing the receipt or acknowledgment from insured to the effect that insured has received intimation from insurance company that policy or cover note is cancelled, but no such document even secondary evidence was produced on record by insurance company for establishing the facts before Claims Tribunal. The intimation of cancellation of cover note or insurance policy must have to be reached to the insured, otherwise, there is no purpose of sending such intimation to insured. Whatever secondary evidence produced on record except acknowledgment of insured and acknowledgment from R.T.O. in respect of cancellation of insurance policy. This being a relevant document, but even for that secondary evidence is also not produced by the insurance company. If the insurance company has sent such intimation through registered A.D., then, original acknowledgment of insured and R.T.O. must be sent, even though, not produced and proved by leading proper evidence before Claims Tribunal. In case of National Insurance Co. Ltd. Vs. Abhaysing Pratapsing Waghela and Others, , where the effect of dishonour of cheque when subsequently the amount of premium has been accepted in cash by insurer has been considered with Section 64-VB of the Insurance Act, 1938. In facts of this case, claimant was riding motor cycle on 14.5.2004. At that time, opponent No. 1, driver of luxury bus came from behind driving bus in a rash and negligent manner dashed with motor cycle on which claimant was riding, therefore, claimant for luxury bus is considered to be a third party. So the liability of insurance company for claimant is statutory liability u/s 147 of the Motor Vehicles Act. In light of this undisputed facts that claimant is third party, following observations are made by Apex Court in paras 15 to 18 which are relevant, therefore, quoted as under:

(15) One of the grounds which are available to the insurance company to deny its statutory liability as envisaged under Sub-section (2) of Section 149 of the Act is that the policy is void on the ground that it was obtained by nondisclosure of a material fact or by a representation of fact which was false in some material particulars.

(16) Indisputably, the Respondent No. 1 is a third party in relation to the contract of insurance which had been entered into by and between the Appellant and the owner of the vehicle in question. We have noticed hereinbefore that a document was produced before the Tribunal. Even according to Appellant, although it was only a Motor Input Advice-cum-Receipt, it contained the cover note No. 279106. We, therefore, have to suppose that a cover note had, in fact, been issued. If a cover note had been issued which in terms of Clause (b) of Section 145 of the Act would come within the purview of definition of certificate of insurance; it also would come within the purview of the definition of an insurance policy. If a cover note is issued, it remains valid till it is cancelled. Indisputably, the insurance policy was cancelled only after the accident took place. A finding of fact, therefore, has been arrived at that prior to the deposit of the premium of insurance in cash by the owner of the vehicle, the cover note was not cancelled.

(17) It is in the aforementioned situation, we are of the opinion that judgment of the High Court cannot be faulted. No doubt, a contract of insurance is to be governed by the terms thereof, but a distinction must be borne in mind between a contract of insurance which has been entered into for the purpose of giving effect to the object and purport of the statute and one which provides for the reimbursement of the liability of the owner of the vehicle strictly in terms thereof. In that limited sense, a contract of insurance entered into for the purpose of covering a third party risk would not be purely contractual. We may place on record that an ordinary contract of insurance does not have a statutory flavour. The Act merely imposes an obligation on the part of the insurance company to reimburse the claimant both in terms of the Act as also the contract. So far as the liability of insurance company which comes within the purview of Sections146 and 147 is concerned, the same subserves a constitutional goal, namely, social justice. A contract of insurance covering the third party risk must, therefore, be viewed differently vis-a-vis a contract of insurance qua contract.

(18) In National Insurance Co. Ltd. Vs. Laxmi Narain Dhut, this Court opined:

''(24) As noted above, there is no contractual relation between the third party and the insurer. Because of the statutory intervention in terms of Section 149, the same becomes operative in essence and Section 149 provides complete insulation.

(25) In the background of the statutory provision, one thing is crystal clear, i.e., the statute is beneficial one qua the third party. But that benefit cannot be extended to the owner of the offending vehicle. The logic of fake licence has to be considered differently in respect of third party and in respect of own damage claims.''

The same view was reiterated in The Oriental Insurance Company Limited Vs. Meena Variyal and Others, stating:

''(11) The object of the insistence on insurance under Chapter XI of the Act thus seems to be compulsorily cover the liability relating to their person or properties of third parties and in respect of employees of the insured employer, the liability that may arise under the Workmen''s Compensation Act, 1923 in respect of driver, conductor and the one carried in goods vehicle carrying goods.''

This Court in Oriental Insurance Co. Ltd. Vs. Sudhakaran K.V. and Others, held:

''(14) The provisions of the Act and, in particular, Section 147 of the Act were enacted for the purpose of enforcing the principles of social justice. It, however, must be kept confined to a third party risk. A contract of insurance which is not statutory in nature should be construed like any other contract.''

This Court in Oriental Insurance Co. Ltd. Vs. Inderjit Kaur and Others, has held that once a certificate of insurance is issued, the insurance company would not be absolved of its obligations to third parties.

Yet again in Deddappa and Others Vs. The Branch Manager, National Insurance Co. Ltd., having regard to the provisions contained in Section 64-VB of Insurance Act, 1938, in the fact situation obtaining therein, it was opined:

''(22) A contract is based on reciprocal promise. Reciprocal promises by the parties are condition precedent for a valid contract. A contract furthermore must be for consideration''."

(10) The Claims Tribunal has also considered that before the accident, the policy in question was cancelled and intimation thereof has been duly served to the insured or not, for that, there is no proof is produced on record by insurance company before Claims Tribunal and, therefore, on the date of accident, there was a valid insurance policy in existence and insurance company cannot deny the liability.

(11) Learned advocate Ms. Megha Jani submitted that Claims Tribunal has not admitted documents produced by insurance company as a secondary evidence. The witness was examined by insurance company before Claims Tribunal. The witness admitted that original documents are lying with insurance company and person who has dealt with is working in Ahmedabad office. Even though the insurance company has not explained as to why original documents were not produced and person who has dealt with was not examined before the Claims Tribunal. The contention raised by learned advocate Ms. Megha Jani relying upon the various provisions of the Evidence Act in respect of secondary evidence are not applicable to the facts of this case, because, when original documents are lying with the party and without explaining the same, if secondary evidence is produced naturally court will not accept such documents as a secondary evidence. The person who was examined by insurance company was not aware about the facts of present case and who has not dealt with correspondence with insurance company, R.T.O. and insured. Therefore, the contentions raised by the learned advocate Ms. Jani cannot be accepted, hence, the same are rejected. The witness has not admitted the facts that letter for cancellation of insurance policy was received by the insured and R.T.O. The original acknowledgment must have been received by insurance company. Even xerox copy of that was not produced by the insurance company as a secondary evidence. So, there is no evidence on record produced by insurance company to the effect that insurance policy is cancelled and that intimation received by insured bears the signature and also received by R.T.O. also bears the signature.

(12) So the procedure prescribed u/s 64-VB is not followed by the insurance company for cancellation of insurance policy, then policy issued by insurance company remained in existence for third party and liability of third party cannot be denied on such ground by insurance company. Therefore, also, contentions raised by learned advocate Ms. Megha Jani are rejected. The insurance company has not examined owner of vehicle who is insured. The owner, Respondent No. 2, remained absent before Claims Tribunal. No written statement is filed. Matter remained ex parte against owner. If according to insurance company, intimation of cancellation sent to owner and owner has received it then it should be proved by cogent evidence if receipt from owner was not produced then owner can be examined before the Claims Tribunal by insurance company or original document which are lying in office must have to be produced before Claims Tribunal, but, insurance company failed to prove the said facts.

Considering aforesaid decisions, one fact is clear that procedure prescribed u/s 147(4) of Motor Vehicles Act is not followed by Appellant insurance company. The finding given by Claims Tribunal in para 14 remained unchallenged because there is no evidence on record produced by Appellant insurance company that intimation to insured and R.T.O., Agra is received by both parties. If this intimation is not received by insured and R.T.O., Agra, then cancellation of policy by letter of insurance cannot come into effect and liability of Appellant insurance company continues from the date on which cheque of premium was accepted by Appellant insurance company. If there is a breach committed by insured because of dishonour of cheque for premium by bank, then it is an inter se dispute between the insurance company and insured, third party cannot be involved in such dispute when statutory liability is accepted by insurance company u/s 147(1) of Motor Vehicles Act. Therefore, this being a beneficial legislation and compulsory insurance under the Motor Vehicles Act by insurance company having accepted cheque of premium then vehicle has been put on road and due to that if third party has died, insurance company cannot avoid such liability and insurance company would have to pay the compensation and, therefore, contention raised by the learned advocate Ms. Jani cannot be accepted, hence, contentions are rejected. Except that no other contention is raised before this Court by the learned advocate Ms. Jani.

Therefore, this Court has considered only those contentions which have been raised before this Court by learned advocate Ms. Jani and have dealt with the same. Therefore, there is no substance in present petition. Accordingly, present petition is dismissed.

When first appeal is dismissed by this Court today, no order is required to be passed in civil application. Accordingly, civil application is disposed of.

The amount, if any, deposited by Appellant before Registry of this Court, be transmitted to Claims Tribunal concerned immediately.