National Insurance Co. Ltd. vs Mahesh and Others

S. Sujatha, J.—The insurer is before this Court challenging the judgment and award passed by the Addl. Motor Accident Claims Tribunal, Gadag, in MVC No. 74/2003.

The facts in brief are that, it transpires that on 7.4.2002 the injured and his friend Mahabaleshwar were travelling in a motorcycle No. KA-37/J-215. It is alleged that when they reached near Jakkali cross, the claimant has parked his motorcycle by the side of the road and his friend Mahabaleshwar has gone to fetch some goods, at that time a truck proceeding from Gajendragad to Naregal came in a rash and negligent manner and collided with the motorcycle in which the claimant was sitting. Due to the said accident the claimant fell down and sustained grievous injuries and fracture. Based on these grounds the claim petition filed before the Tribunal was allowed in part awarding the compensation of Rs. 1,24,500/- with interest at 6% p.a.

Being aggrieved by the said judgment and award, the insurer is before this Court challenging the liability fastened on the insurer to pay the compensation amount and to recover it from the owner.

The learned counsel for the appellant contended that the Tribunal having accepted the defence taken by the insurer that the insurance company is not liable to make payment of compensation awarded by the Tribunal due to the fact that the offending vehicle was not covered by the insurance policy at the time of accident particularly, the owner of the offending vehicle having paid the premium towards the insurance policy on 5.4.2002 by cheque, the same being dishonoured by the bank as per endorsement dated 26.4.2002, vide Ex. R.2, on account of which the insurance policy was cancelled. The same having been informed to the insurer as per Ex. R.3, and the concerned RTO, the insurer was not liable to indemnify the owner. The Tribunal having accepted the said facts held that the insurance company is not liable to pay the compensation. In view of the said decision taken by the Tribunal, the further directions issued to the insurer to pay the compensation and to recover it from the owner is totally against the principles of law laid down by the Apex Court.

The learned counsel also placed reliance on the judgment of the Apex Court in the case of National Insurance Co. Ltd. Vs. Parvathneni and Another, .

On the other hand, the learned counsel for the claimants supports the judgment and award passed by the Tribunal. The learned counsel contends that the cheque towards payment of premium was paid by the owner on 5.4.2002. The accident occurred on 7.4.2002. The intimation regarding the dishonour of the cheque was sent to the owner after cancelling the insurance policy, on 26.4.2002, as per Ex. R.6. It is also pointed out by the learned counsel that the endorsement in Ex. R.6 specifies that the cancellation of the policy was made w.e.f. 26.4.2002. In such circumstances the Tribunal ought to have saddled the liability on the insurer, in view of the judgment of the Apex Court in the case of United India Insurance Company Limited v. Laxmamma, reported in AIR 2012 SCW 2657.

I have given my anxious consideration to the arguments advanced by the learned counsel for the parties. The undisputed facts are that the policy of the insurance was issued by the insurer on receipt of cheque towards payment of premium on 5.4.2002 and the said cheque is said to have been dishonoured on 26.4.2002. In the interregnum period accident has occurred on 7.4.2002. Subsequent to the endorsement received from the bank regarding dishonour of the cheque, the insurer has cancelled the insurance policy on 26.4.2002 as per Ex. R.3. In such circumstances, it would be safely held that the policy of insurance which was issued by authorized insurer on receipt of the cheque being cancelled only on 26.4.2002 subsequent to the occurrence of the accident the insurer is bound to indemnify the owner. The defence of the insurer that the insurer is not liable to indemnify the owner would not have been appreciated by the Tribunal, but any how, neither the claimants nor the owner are before this Court challenging the said liability fastened on the owner and the insurer is directed to pay the awarded amount and then recover it from the owner. In such circumstances, this Court is of the opinion that the liability fastened on the insurer to pay the compensation awarded by the Tribunal and then recover it can not be find fault with. The claimants are the third parties. As per Section 147 of the Motor Vehicles Act, 1988, the third parties right are safeguarded. Insurance policy covering third party risks is a social security to the third parties. In view of such security, the Tribunal has fastened the liability on the insurance company to make the payment and then to recover it from the owner, which is sustainable.

This view is supported by the judgment of the Apex Court in Laxmamma''s case, supra, wherein the facts before the Apex court was similar to that of this case, the facts therein are that the owner of the bus obtained policy of insurance from the insurer for the period from April 2004 to April 2005 for which premium was paid through cheque on 14.4.2004. The accident occurred on 11.5.2004. It was only thereafter the cancellation of policy by communication dated 21.5.2004 on the ground of dishounour of cheque was received by the owner of the vehicle on 21.5.2004. The cancellation of policy having been done by the insurer after the accident, the insurer became liable to satisfy the award of compensation passed in favour of the claimants.

In view of the said law enunciated by the Apex Court, the liability fastened on the insurer to pay compensation and to recover it from the owner of the vehicle does not warrant interference by this Court. The appeal being devoid of merit is accordingly dismissed.

The amount in deposit, if any, shall be transmitted to the Tribunal. The claimants are at liberty to withdraw the same.