The New India Assurance Co. Ltd. vs Durga Prasad and Others

B.C. Kandpal, J.—This appeal, u/s 173 of Motor Vehicles Act, 1988, has been preferred by the appellant i.e. The New India Assurance Co. Ltd., who is the insurer of vehicle No. H.R.55A/2368, against the judgment and award dated 28.06.2007 passed by the Motor Accident Claims Tribunal/Additional District Judge/1st Fast Track Court, Haldwani, District Nainital, in M.A.C.P. No. 147 of 2003, Durga Prasad v. Romi @ Rama and Ors. whereby the appellant i.e. insurance company was directed to pay a sum of Rs. 82,000/- as compensation to the claimant and to recover the same from the owner of offending vehicle i.e. opposite party No. 1 Romi @ Rama.

Brief facts of the case are that claimant-Durga Prasad filed a claim petition before the Tribunal alleging therein that on 28.01.2003 he was travelling towards Bardana from Kaushani in Mini Truck No. U.P.02C/0653. When the said truck reached near village Manad P.S. Someshwar, at about 1.00 p.m. a Toyota Qualis Car bearing Registration No. H.R.55A/2368 being driven by its driver rashly and negligently, hit the said Mini Truck which was stationed to the left side of the road, due to which the said Mini Truck fell into 100 ft. deep ditch and claimant sustained injuries. The injured-claimant was taken to Civil Hospital, Almora from where he was referred to Krishna Hospital, Haldwani. In this way, an amount of Rs. 5,00,000/- had been claimed as compensation.

Opposite parties No. 1 and 2 did not appear before the Tribunal inspite of sufficient service of notice upon them, hence an order was passed to proceed exparte against them.

Opposite party No. 3- The New India Assurance Co. Ltd.-appellant filed its written statement and contested the case. It has been alleged that the owner and the insurer of Mini Truck No. U.P.02C/0653 have not been made party in the claim petition. The insurance company took the plea that the accident was not caused on account of rash and negligent driving of driver of vehicle Qualis Car H.R.55A/2368, rather it was caused on account of rash and negligent driving of driver of vehicle No. U.P.02C/0653. It has also been alleged that driver of said Qualis Car had no valid driving licence at the relevant time and thus vehicle was being driven in breach of policy conditions. It has further been alleged that offending vehicle had no permit for being plied in hill routes. Therefore, the claimant is not entitled to get any compensation from opposite party No. 3.

Opposite party No. 4-Rohit Kumar, owner of vehicle No. U.P.02C/0653 filed his written statement admitting therein the factum of accident. It has been alleged that his vehicle No. U.P.02C/0653 was insured with National Insurance Co. Ltd. at the time of accident w.e.f. 12.11.2002 to 11.11.2003 and his driver was holding valid driving licence at the time of accident. It has also been alleged that said accident was not caused on account of rash and negligent driving of his driver.

Opposite party No. 5-National Insurance Co. Ltd., insurer of vehicle No. U.P.02C/0653 filed its written statement and contested the case. It has been alleged that insurance company had not been given any information with regard to the accident. It has also been alleged that insurance company is liable to pay the compensation only when owner of vehicle proves the fact that offending vehicle had valid registration, permit and fitness certificate at the relevant time and driver had valid driving licence at the time of accident.

On the basis of the pleadings, the learned Tribunal framed necessary issues in the case and ultimately, the learned Tribunal had come to the conclusion that the accident took place due to rash and negligent driving of driver of Qualis Car No. H.R.55A/2368, in which claimant-injured suffered grievous injuries on his person. It was further held that driver of vehicle No. H.R.55A/2368 was not holding valid driving licence and the said vehicle was not insured at the time of accident. It was further observed that cheque No. 602589 dated 06.11.2002 issued by the owner of vehicle towards the premium was dishonoured by the Bank on 11.11.2002 due to insufficient fund, as a consequence of which insurance company had cancelled the policy of the said vehicle. The learned Tribunal awarded a sum of Rs. 67,000/- towards expenses incurred on medicines and further a sum of Rs. 5,000/- towards pain and agony and a sum of Rs. 10,000/- towards economic loss. Thus, a total sum of Rs. 82,000/- was awarded as compensation to the claimant with interest at the rate of 7% per annum from the date of the claim petition.

Feeling aggrieved by this, The New India Assurance Co. Ltd.-appellant has preferred the present appeal before this Court.

Heard Sri M.K. Goyal, learned Counsel for the appellant, Sri Z.U. Siddiqui, learned Counsel for respondent No. 1, Sri Bindesh Kumar Gupta, learned Counsel for respondent No. 5 and perused the record.

Perusal of the record reveals that an application u/s 170 of Motor Vehicles Act moved by The New India Assurance Co. Ltd. for permission to contest the case on all grounds. The learned Tribunal had allowed the application vide its order dated 18.12.2004.

Learned Counsel for the appellant-insurance company has submitted that cheque issued by the owner of vehicle towards the premium was dishonoured by the Bank due to insufficient funds and as such the insurance company had not received any premium for insurance of vehicle, therefore, the insurance company cannot be held liable to pay compensation to the claimant.

On the other hand, learned Counsel for the respondents have supported the award of the Tribunal.

Before considering the rival contentions of the parties it would be necessary to take into consideration the relevant evidence especially the documentary evidence. Paper No. 55C/9 is the photocopy of the insurance cover note of Car No. H.R.55A/2368, which shows that said vehicle was insured with The New India Assurance Co. Ltd. on the date of accident and insurance of vehicle was valid from 06.11.2002 to 05.11.2003. The insurance company took the plea that cheque issued by the owner of vehicle towards the premium was dishonoured by the Bank due to insufficient funds. The insurance company has examined Shri Ramesh Nagpal as DW-1. He has stated that the cover note number 209615 was issued in favour of the insurance company through cheque No. 602589 dated 6.11.2002 amounting to Rs. 20,375/-, which was sent back on 12.11.2002 by the Bank with the remark ''insufficient fund''. This witness has also stated that after receiving information regarding dishonourment of cheque the policy issued on the basis of said cheque was cancelled and its information was sent to the owner of vehicle on 12.11.2002 on his correct address through registered post, original copy of which is on record and certified copy is paper No. 65C/1. The information regarding cancellation of insurance policy was also sent to the R.T.O. New Delhi through registered post, which is paper No. 65C/2. Thus, the insurance company has pleaded before the court below that on the date of accident the said vehicle was not insured with it as the premium which was paid by the owner of vehicle through cheque, its payment was not received by the insurance company. The insurance company has further pleaded before the court below that since Car No. H.R.15A/2368 was not insured with it on the date of accident, the insurance company is not liable to pay any compensation to the claimant. The learned Tribunal after having considered the evidence adduced by the parties came to the conclusion that on the date of accident driver of vehicle No. H.R.15A/2368 was not holding valid driving licence and the said vehicle was not insured as the cheque by which the premium was to be paid was dishonoured by the Bank due to insufficient funds and consequently policy was cancelled.

Now, it has to be seen as to whether the insurance company is liable to pay the compensation in absence of payment of premium by the owner of vehicle to the insurance company. The claimant has pleaded before the Tribunal that the insurance company cannot escape its liability to pay the compensation. In support of his contention, the claimant has cited the decision of the Hon''ble Supreme Court rendered in the case of Oriental Insurance Co. Ltd. v. Indrajeet and Ors., in which it has been held that where an insurance policy has been issued by the authorized insurance company without receiving any premium, the insurance company cannot escape its liability with respect to the third party merely on the ground that premium has not been received. The claimant has further relied upon the decision passed in the case of Mittar Singh v. Gian Singh and Ors. reported in 2006 (1) T.A.C. 217 H.P., in which it has been held that the Insurance Company cannot escape its liability to pay compensation to third parties even if it has cancelled the policy because the third parties who benefit under the terms of the contract cannot be put to risk. The Insurance Companies, once they accept premium in cheque and issue a cover note or a policy of insurance take the risk of paying the amount of compensation, if any, payable to third parties even if the cheque bounces. Third party insurance is compulsory under the Motor Vehicles Act. The purpose of this is that people who suffer in accidents are able to recover the amount of compensation from the Insurance Companies. The learned Tribunal in view of the decisions (supra) recorded a finding that though the claimant shall be entitled to get the amount of compensation from the insurer of vehicle No. H.R.55A/2368, but the insurance company shall have the recoverable rights to recover the same from the owner of the said vehicle.

In this view of the matter, I do not find any infirmity in the said finding recorded by the Tribunal fastening the liability to pay the compensation upon the insurance company and giving it the recoverable rights to recover the amount of compensation from the owner of the vehicle.

Learned Counsel for the appellant then challenged the quantum of the compensation assessed by the Tribunal. From perusal of the impugned award it reveals that the Tribunal has awarded a sum of Rs. 67,000/- towards expenses incurred on medicines and further a sum of Rs. 5,000/- towards pain and agony and a sum of Rs. 10,000/- towards economic loss suffered by the claimant on account of injuries sustained by him. I do not find any infirmity in the said method of calculation in awarding the compensation as well as finding recorded by the Tribunal in this regard. Thus, the compensation of Rs. 82,000/- assessed by the Tribunal cannot be termed as meagre.

For the reasons stated above, appeal lacks merit and is liable to be dismissed.

Accordingly, appeal is dismissed. The impugned judgment and award dated 28.06.2007 is hereby confirmed.

The statutory amount deposited by the appellant with this Court be remitted to the Tribunal concerned.