The National Insurance Company Limited Vs Gajropan Yadav

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AFR

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Digitally signed by AKHILESH AKHILESH BEOHAR BEOHAR Date: 2025.10.30 16:52:41 +0530

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HIGH COURT OF CHHATTISGARH AT BILASPUR

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MAC No. 36 of 2016

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Judgment Reserved on 16.10.2025 Judgment Delivered on 30.10.2025

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The National Insurance Company Limited, Through Branch Manager, National Insurance Company Limited, Branch Office, Ambikapur, District Surguja Chhattisgarh Through Authorised Signatory National Insurance Company Limited, Divisional Office B-1, Taha Complex, Ring Road-2, Priydarshani Nagar, Bilaspur, Chhattisgarh. (Insurer) ...Appellant

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versus

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Gajropan Yadav, S/o Baldev Yadav, aged about 60 Years,

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Leelavati, W/o Gajropan Yadav, aged about 55 Years, Both are R/o Village and Post Petla, Patrapali, P. S. And Tahsil Sitapur, District Surguja Chhattisgarh. (Claimants)

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T. S. Singhdeo, S/o Shri M. S. Singhdeo, aged about 65 Years Occupation Business, R/o Kothighar, Hospital Road, Ambikapur, District Surguja Chhattisgarh. (Owner)

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Sandeep Gupta, S/o Shri Satyanarayan Gupta, aged about 40 Years, Occupation Agriculture / Contractor, R/o Sitapur, P. S. and Tahsil Sitapur, District Surguja Chhattisgarh. (Contractor) ... Respondents

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For Appellant	: Mr. B.N. Nande and Mr. Shivendra, Advocates.
For Respondent Nos. 1, 2 & 4	: None, though served.
For Respondent No.3	: Mr. Kabir Kalwani, Advocate on behalf of Mr. Vaibhav A. Goverdhan, Advocate.

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(Hon'ble Shri Justice Radhakishan Agrawal)

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CAV Judgment

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This appeal has been preferred by the appellant / Insurance Company under Section 173 of the Motor Vehicles Act, 1988, against

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the award dated 04.04.2015 passed by the 4^th Additional Motor Accident Claims Tribunal, Ambikapur, District Surguja (C.G.) in Claim Case No. 56/2008, whereby a total compensation of Rs.4,39,000/has been awarded along with interest at the rate of 6% per annum from the date of application till realization, while fastening the liability jointly and severally on the Insurance Company (non-applicant No.3) and the owner (non-applicant No.1). However, the Tribunal further held that the primary liability of paying the compensation would be of Insurance Company.

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As per averments made in the claim petition, on 03.04.2000 at about 10:00 am, deceased- Madhusudhan Yadav was driving a Tractor bearing registration No.CG-L-9297 attached with trolley (hereinafter called as 'offending vehicle'). During the course of driving, the said offending vehicle turned turtle, due to which, deceased got crushed under the said offending vehicle and died on the spot. At the time of accident, the offending vehicle was owned by non-applicant No.1 and insured with appellant/Insurance Company.

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On claim petition being filed by the claimants under Section 163-A of the Motor Vehicles Act seeking compensation to the tune of Rs.8,70,000/- under various heads, inter alia, stating that at the time of accident, deceased- Madhusudhan Yadav was aged about 25 years and was working as driver under the employment of nonapplicant No.1 and used to earn Rs.2,000/- per month. The Tribunal, considering the evidence led by both the parties, passed an award as mentioned above.

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Learned counsel for the appellant / Insurance Company would submit that the learned Claims Tribunal has erred in fastening liability upon

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the Insurance Company as on the date of the incident, the offending vehicle was not insured with the appellant / Insurance Company. He would further submit that the alleged deposit challan (Ex.D-18), which pertains to an Act-only policy, was not issued by any officer duly authorized by the Insurance Company. The authority of Shri B.L. Khess, Development Officer, who is said to have issued the said deposit challan, to issue cover notes was revoked on 22.05.1992, and he was subsequently suspended on 02.12.1999. To inform the said fact amongst the public, a notice was published in various newspapers, including ' Navbharat Daily '. Thereafter, the insurance proposal submitted by non-applicant No.1 along with the premium amount by cheque dated 31.03.2000 was returned to Shri B.L. Khess and a written intimation of the same was also sent to non-applicant No.1 by registered post. Thus, it is evident that no valid policy or cover note was ever issued by the Insurance Company which would construe that the offending vehicle was not insured with the appellant / Insurance Company on the date of incident. Therefore, the Insurance Company cannot be held liable for payment of compensation to the claimants. On these premises, learned counsel for the appellant would urge that the Insurance Company deserves to be exonerated from its liability. With regard to quantum of compensation, counsel for the appellant would submit that the amount of compensation assessed by the learned claims Tribunal is on higher side and needs to be reduced suitably.

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Learned counsel for respondent No.3, the owner of the offending vehicle, would submit that at the time of the accident, the offending vehicle was duly insured with the appellant / Insurance Company, and

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that for payment of premium, cheque dated 31.03.2000 had been handed over to Shri B.L. Khess, Development Officer of the Insurance Company. Therefore, the Insurance Company is liable to pay the compensation amount and that the learned Claims Tribunal, after appreciating the evidence available on record, has rightly fastened the liability upon the Insurance Company and the same calls for no interference by this Court.

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Heard learned counsel for the parties and perused the record.

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The question that arises for consideration before this Court is whether the learned Tribunal was justified in fastening liability upon the Insurance Company or not.

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In order to appreciate the arguments, it is necessary to examine the evidence led by the parties. NAW-1 Imil Tirkey, Senior Assistant of National Insurance Company Limited, has stated on oath that as per the rules of the Company, any Development Officer who is not under suspension is authorized to insure vehicles on behalf of the Insurance Company. He has further stated that from 22.05.1992, the Insurance Company had deprived Shri B.L. Khess, Development Officer, of the authority to issue cover notes and receive premium amounts on behalf of the Insurance Company. He has also stated that the services of Shri B.L. Khess were suspended with effect from 02.12.1999 and to inform the general public about the suspension, the Insurance Company had published notices in various daily newspapers, copies of which are marked as Ex.D-6(C) to Ex.D-9(C).

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On the other hand, Mithlesh Tiwari, examined as NAW-2 on behalf of the owner of the offending vehicle/non-applicant No.1, has stated that

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non-applicant No.1 had issued a power of attorney to him. He has further stated that the registration details of the offending vehicle, as per the Regional Transport Office, Ambikapur, are marked as Ex.D-17 and cover note is marked as Ex.D-18, but actually Ex.D-18 is a deposit challan and not a cover note.

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Before proceeding further, it is necessary to examine Section 147 of the Motor Vehicles Act, 1988 and Section 64-VB of the Insurance Act, 1938.

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Section 147 of the Act, 1988 reads as under:-

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“ 147. Requirement of policies and limits of liability. (1) In order

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to comply with the requirements of this Chapter, a policy of insurance must be a policy which-

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(a) is issued by a person who is an authorised insurer; and

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(b) insures the person or classes of persons specified in the policy to the extent specified in sub-section (2)-

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(i) against any liability which may be incurred by him in respect of the death of or bodily injury to any person including owner of the goods or his authorised representative carried in the motor vehicle or damage to any property of a third party caused by or arising out of the use of the motor vehicle in a public place;

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(ii) against the death of or bodily injury to any passenger of a transport vehicle, except gratuitous passengers of a goods vehicle, caused by or arising out of the use of the motor vehicle in a public place.

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Explanation . For the removal of doubts, it is hereby clarified that the death of or bodily injury to any person or damage to any property of a third party shall be deemed to have been caused by or to have arisen out of, the use of a vehicle in a public place, notwithstanding that the person who is dead or injured or the property which is damaged was not in a public place at the time of the accident, if the act or omission which led to the accident occurred in a public place.

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(2) Notwithstanding anything contained under any other law for the time being in force, for the purposes of third party insurance related to either death of a person or grievous hurt to a person, the Central Government shall prescribe a base premium and the liability of an insurer in relation to such premium for an insurance policy under sub-section (1) in consultation with the Insurance Regulatory and Development Authority.

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(3) A policy shall be of no effect for the purposes of this Chapter unless and until there is issued by the insurer in favour

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of the person by whom the policy is effected, a certificate of insurance in the prescribed form and containing the prescribed particulars of any condition subject to which the policy is issued and of any other prescribed matters; and different forms, particulars and matters may be prescribed in different cases.

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(4) Notwithstanding anything contained in this Act, a policy of Insurance issued before the commencement of the Motor Vehicles (Amendment) Act, 2019 shall be continued on the existing terms under the contract and the provisions of this Act shall apply as if this Act had not been amended by the said Act.

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(5) Where a cover note issued by the insurer under the provisions of this Chapter or the rules or regulations made thereunder is not followed by a policy of insurance within the specified time, the insurer shall, within seven days of the expiry of the period of the validity of the cover note, notify the fact to the registering authority or to such other authority as the State Government may prescribe.

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(6) Notwithstanding anything contained in any other law for the time being in force, an insurer issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons.”

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12.Section 64VB of the Insurance Act, 1938 reads as under:-

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“64VB. 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.

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(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.

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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........”

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Upon a careful and combined reading of Section 147 of the Act, 1988

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and Section 64VB of the Insurance Act, 1938 and considering the evidence brought on record, it is clearly established that the offending vehicle involved in the accident was not validly insured with the Appellant/Insurance Company at the time of the accident. The nonapplicant No.1 has produced a document marked as Ex.D-18, which is a

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deposit challan , purportedly indicating that an Act-only policy was taken for the offending vehicle. However, upon detailed scrutiny, it emerged that the said deposit challan (Ex.D-18) was not issued by any officer duly authorized by the Insurance Company. The record shows that Shri B.L. Khess, who is stated to have accepted the premium by bank cheque and allegedly issued the deposit challan (Ex.P-18), was not authorized to accept premium on behalf of the Insurance Company at the relevant time because his authority to issue cover notes was revoked on 22.05.1992 and he was subsequently suspended on 02.12.1999 and to inform the general public and prevent any further misuse of his name or position, the Insurance Company published a public notice in various newspapers, including Navbharat Daily, warning against dealings with Shri B.L. Khess and the same is evident from the documents marked as Exs.D-6C to D-9C and also from the statement of NAW-1 Imily Tirkey. Importantly, the insurance proposal form and premium amount allegedly submitted by non-applicant No.1 through cheque dated 31.03.2000 were returned to Shri B.L. Khess and the same was not encashed by the Insurance Company and a written intimation of this fact was also sent to non-applicant No.1 by registered post which is evident from the document marked as Ex.D-15C. This apart, non-applicant No.1 has neither examined himself nor the person who had allegedly given the alleged cheque to Shri B.L. Khess. Moreover, NAW-2 Mithlesh Tiwari has also not stated that he had actually handed over the cheque to Shri B.L. Khess. It is pertinent to mention here that there is no cover note or previous insurance policy on record to show that the vehicle was actually insured with the Insurance Company on or before the time of the accident by any of the authorized

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person. Generally, when any insurance policy is renewed after its expiry, the previous policy is expected to be produced, not as a mandatory requirement, but only to show that the vehicle was regularly insured. However, in the present case, the non-applicant No.1 has failed to produce the previous policy. It is well-settled that the mere deposit of premium through cheque without issuance of a cover note or policy does not create a binding contract of insurance, especially when the alleged cheque has not been encashed and, in fact, returned it to Shri B.L. Khess under intimation to non-applicant No.1. The statement of NAW-1 Imiley Tirkey and document Ex.D-15C (intimation given by Insurance Company) further corroborate the fact that no valid insurance, in fact, existed. Moreover, it has come on record that criminal proceedings were initiated against Shri B.L. Khess and he has since passed away, making it impossible to verify the authenticity of the alleged transaction through his testimony.

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It is also crucial to note that under Section 64VB(1) of the Insurance Act, no risk can be assumed by the Insurance Company unless the premium is actually received. Here, the alleged cheque given by the non-applicant No.1 through Shri B.L. Khess was not accepted by the Insurer as he was not authorized and, therefore, returned the same, which clearly indicates that no risk was ever assumed by the insurer. Further, as provided in Section 147 of the Act, 1988, issuance of a policy of insurance is mandatory for liability to arise. In the present case, neither a valid cover note as per Rule 142(2) Sub-Rule (1) of the Central Motor Vehicles Rules, 1989 nor a policy was ever issued and that the premium was not retained or accepted by the Insurance Company. Accordingly, in the absence of a valid contract of insurance and based

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on overall evidence on record, it is held that the appellant/Insurance Company cannot be held liable for the compensation arising out of the accident. The entire liability is, therefore, fastened upon the owner of the offending vehicle/non-applicant No.1.

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So far as the quantum of compensation is concerned, considering the facts and circumstances of the case and the evidence available on record, this Court is of the opinion that the amount of compensation awarded by the Tribunal requires no interference by this Court.

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In view of the above findings, the appellant/Insurance Company is hereby exonerated from liability and the owner of the offending vehicle/non-applicant No.1 shall be solely responsible for payment of compensation to the claimants. However, rest of the conditions of the impugned award shall remain intact.

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In the result, the appeal filed by the Appellant/Insurance Company is allowed in part.

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(Radhakishan Agrawal) Judge

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Akhilesh

The National Insurance Company Limited v. Gajropan Yadav

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The National Insurance Company Limited v. Gajropan Yadav

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