Partly allowed

Gowramma v. Asham

Karnataka HC7 Dec 2023MFA/1974/2015

Case brief

AI extract

What is this about?

The High Court held that an insurance company is not liable when the policy is void ab initio due to a bounced premium cheque, provided notice of cancellation is served before the accident. Regarding quantum, the Court enhanced compensation for the deceased and an injured claimant based on higher notional income and proper dependency deductions.

What did the court decide?

Insurance company exonerated from liability; compensation enhanced to Rs. 15,40,400 for death claim and Rs. 3,07,700 for personal injury, plus interest; insurer deposit refunded.

Gowramma Vs Asham — Insurance | Karnataka HC (2023)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 7^TH DAY OF DECEMBER, 2023

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BEFORE

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THE HON’BLE MR. JUSTICE RAJENDRA BADAMIKAR MISCELLANEOUS FIRST APPEAL NO.1974/2015 (MV-D)

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C/W

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MISCELLANEOUS FIRST APPEAL NO.6255/2014 (MV), MISCELLANEOUS FIRST APPEAL NO.6256/2014 (MV-I), MISCELLANEOUS FIRST APPEAL NO.1975/2015 (MV-I)

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IN MFA NO.1974/2015:

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BETWEEN :

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GOWRAMMA, W/O LATE RAMANNA, AGED ABOUT 33 YEARS,

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JEEVITHA, D/O LATE RAMANNA, AGED ABOUT 12 YEARS,

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PREETHAM, S/O LATE RAMANNA, AGED ABOUT 10 YEARS,

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MANOJ, S/O LATE RAMANNA, AGED ABOUT 8 YEARS,

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THIMMAMMA,

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W/O LATE RANGAPPA, AGED ABOUT 58 YEARS,

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APPELLANTS 2 TO 4 ARE MINORS, REPRESENTED BY THEIR NATURAL

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GUARDIAN AND MOTHER-FIRST APPELLANT,

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ALL ARE RESIDING AT VARAHASANDRA VILLAGE, TURUVEKERE TALUK, NOW RESIDING AT BANDEPALYA, NEAR SIDDAGANGA MUTT, TUMKUR-572 103.

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... APPELLANTS

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(BY SRI. SHANTHARAJ .K, ADVOCATE)

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AND:

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ASHAM S/O GADIBABA SAB, AGE MAJOR, R/AT 3^RD CROSS, GANDHINGAR TIPTUR-572 201.

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SRIRAM GENERAL INSURANCE CO. LTD., NO.10003-E-8, RIICO INDUSTRIAL AREA, SITAPURA, JAIPUR, RAJASTHAM,

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NOW REPRESENTED SRIRAM GENERAL INSURANCE CO. LTD., BY ITS MANGER, NO.302, 3^RD FLOOR, S & S CORNER BUILDING, FLAT NO.48, HOSPITAL ROAD, SHIVAJINAGAR, BENGALURU-560 001.

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... RESPONDENTS

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(BY SRI. O. MAHESH, ADVOCATE FOR R2, R1 IS SERVED)

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THIS APPEAL IS FILED UNDER SECTION 173(1) OF MV ACT AGAINST THE JUDGMENT AND AWARD DATED:23.4.2014, PASSED IN MVC NO.108/2012 ON THE FILE OF THE ADDITIONAL SENIOR CIVIL JUDGE, MACT-11, TUMKUR, PARTLY ALLOWING THE CLAIM PETITION FOR COMPENSATION AND SEEKING ENHANCEMENT OF COMPENSATION.

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IN MFA NO.6255/2014:

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BETWEEN :

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THE REGIONAL MANAGER, SRIRAM GENERAL INSURANCE CO. LTD., NO.10003-E-8, RIICO INDUSTRIAL AREA, SITAPURA, JAIPUR, RAJASTHAM,

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NOW REPRESENTED BY SRIRAM GENERAL INSURANCE CO. LTD., NO.302, 3^RD FLOOR, S & S CORNER BUILDING, FLAT NO.48, HOSPITAL ROAD, SHIVAJINAGAR, BENGALURU-560 001, BY IT’S MANAGER.

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... APPELLANT

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(BY SRI. O. MAHESH, ADVOCATE)

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AND:

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GOWRAMMA, W/O LATE RAMANNA, AGED ABOUT 32 YEARS,

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JEEVITHA, D/O LATE RAMANNA, AGED ABOUT 11 YEARS,

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PREETHAM, S/O LATE RAMANNA, AGED ABOUT 9 YEARS,

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MANOJ, S/O LATE RAMANNA, AGED ABOUT 7 YEARS,

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RESPONDENTS 2 TO 4 ARE MINORS, REPRESENTED BY THEIR NATURAL GUARDIAN AND MOTHER-FIRST RESPONDENT,

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THIMMAMMA, W/O LATE RANGAPPA, AGED ABOUT 57 YEARS,

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ALL ARE RESIDING AT VARAHASANDRA VILLAGE, TURUVEKERE TALUK-572 227 NOW RESIDING AT BANDEPALYA, NEAR SIDDAGANGA MUTT, TUMKUR, NOW RESIDING AT TUMKUR-572 101.

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ASHAM, MAJOR, S/O. GADIBABA SAB, 3^RD CROSS, GANDHINAGAR, TIPTUR, TUMKUR DIST.-572 201.

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... RESPONDENTS

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(BY SRI. K. SHANTHARAJ, ADVOCATE FOR R1 TO R5, V/O DATED 26.3.2018, NOTICE TO R6 IS HELD SUFFICIENT)

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THIS APPEAL IS FILED UNDER SECTION 173(1) OF MV ACT AGAINST THE JUDGMENT AND AWARD DATED:23.4.2014, PASSED IN MVC NO.108/2012 ON THE FILE OF THE ADDITIONAL SENIOR CIVIL JUDGE, MACT-11, TUMKUR, AWARDING COMPENSATION OF RS.6,11,000/- WITH INTEREST @ 6% P.A. FROM THE DATE OF PETITION TILL REALIZATION.

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IN MFA NO.6256/2014:

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BETWEEN :

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THE REGIONAL MANAGER, SRIRAM GENERAL INSURANCE CO. LTD., NO.10003-E-8, RIICO INDUSTRIAL AREA, SITAPURA, JAIPUR, RAJASTHAM,

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NOW REPRESENTED BY SRIRAM GENERAL INSURANCE CO. LTD., NO.302, 3^RD FLOOR, S & S CORNER BUILDING,

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FLAT NO.48, HOSPITAL ROAD, SHIVAJINAGAR, BENGALURU-560 001, BY IT’S MANAGER.

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... APPELLANT

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(BY SRI. O. MAHESH, ADVOCATE)

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AND:

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V.L. MUNESH S/O LAKKANNA, AGED 26 YEARS, R/O VARAHASANDRA, MAYASANDRA HOBLI, TURUVEKERE TALUK, NOW R/A SREENAGARA, NEAR HMT GATE, TUMKUR-572 201.

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ASHAM S/O GADIBABA SAB, MAJOR, 3^RD CROSS, GANDHINAGARA, TIPTUR, TUMKUR DIST.-572 201.

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... RESPONDENTS

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(BY SRI. K. SHANTHARAJ, ADVOCATE FOR R1, R2 IS SERVED)

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THIS APPEAL IS FILED UNDER SECTION 173(1) OF MV ACT AGAINST THE JUDGMENT AND AWARD DATED:23.4.2014, PASSED IN MVC NO.109/2012 ON THE FILE OF THE ADDITIONAL SENIOR CIVIL JUDGE, MACT-11, TUMKUR, AWARDING COMPENSATION OF RS.2,80,100/- WITH INTEREST @ 6% P.A. FROM THE DATE OF PETITION TILL REALIZATION.

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IN MFA NO.1975/2015:

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BETWEEN :

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V.L. MUNESH S/O LAKKANNA, AGED ABOUT 26 YEARS, RESIDING AT VARAHASANDRA VILLAGE, MAYASANDRA HOBLI, TURUVEKERE TALUK,

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NOW RESIDING AT SRINAGAR, NEAR H.M.T. GATE, TUMKUR-572 103

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... APPELLANT

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(BY SRI. SHANTHARAJ .K, ADVOCATE)

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AND:

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ASHAM S/O GADIBABA SAB, AGE MAJOR, R/AT 3^RD CROSS, GANDHINGAR TIPTUR-572 201.

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SRIRAM GENERAL INSURANCE CO. LTD., NO.10003-E-8, RIICO INDUSTRIAL AREA, SITAPURA, JAIPUR, RAJASTHAM,

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NOW REPRESENTED SRIRAM GENERAL INSURANCE CO. LTD., BY ITS MANGER, NO.302, 3^RD FLOOR, S & S CORNER BUILDING, FLAT NO.48, HOSPITAL ROAD, SHIVAJINAGAR, BENGALURU-560 001.

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... RESPONDENTS

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(BY SRI. O. MAHESH, ADVOCATE FOR R2, R1 IS SERVED)

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THIS APPEAL IS FILED UNDER SECTION 173(1) OF MV ACT AGAINST THE JUDGMENT AND AWARD DATED:23.4.2014, PASSED IN MVC NO.109/2012 ON THE FILE OF THE ADDITIONAL SENIOR CIVIL JUDGE, MACT-11, TUMKUR, PARTLY ALLOWING THE CLAIM PETITION FOR COMPENSATION AND SEEKING ENHANCEMENT OF COMPENSATION.

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THESE APPEALS HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON 20.11.2023, COMING ON FOR ‘PRONOUNCEMENT OF JUDGMENT’ THIS DAY, THE COURT DELIVERED THE FOLLOWING:

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COMMON JUDGMENT

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These appeals are filed by the claimants as well as respondent No.2, challenging the judgment and award passed by the Additional Senior Civil Judge and MACT-XI, Tumkur, in MVC No.108/2012 and MVC No.109/2012, dated 23.04.2014.

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MFA No.6255/2014 is filed by the Insurance Company, while MFA No.1974/2015 is filled by the claimants challenging the judgment and award in MVC No.108/2012, while MFA No.6256/2014 and MFA No.1975/2015 are filed by Insurance Company and the claimant challenging the judgment and award in MVC No.109/2012. As these appeals are arising out of the same accident and since common judgment was passed, all these appeals are heard together and disposed of through this common judgment.

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For the sake of convenience, the parties herein

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are referred as per the ranks occupied by them before the Tribunal.

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The brief factual matrix leading to the case are

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as under:

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On 13.09.2011, the petitioner Munesh, Nagamma and deceased-Ramanna were proceeding in auto-rickshaw bearing registration No.KA-44-3228 in order to attend a function at Tiptur. When they were returning after attending the function near Dasegowda’s house of Balagarahalli Village, the driver of the lorry bearing registration No.KA03A-0131 came in a rash and negligent manner and dashed against the auto-rickshaw. As a result, Ramanna succumbed on the spot and other inmates sustained injuries. The legal heirs of deceased Ramanna filed a claim petition in MVC No.108/2012 and the other injured Munesh filed a claim petition in MVC No.109/2012 under Section 166 of the Motor Vehicle Act, 1988 (for short ‘MV Act’) claiming compensation.

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Respondent No.1 did not appear before the Court, but respondent No.2-Insurance Company filed objection statement disputing the issuance of policy and disputing the driving license , negligence act on the part of the driver of the lorry and alleging negligence on the part of the driver of the auto. They have also denied the age, income and occupation of the deceased and claimant injured and it is specifically asserted that respondent No.1 had made a proposal for issuance of the policy and remitted a premium amount of Rs.15,780/- by way of cheque on 11.07.2011 and on the basis of the same, policy came to be issued subject to realisation of the cheque. But when the said cheque was presented for encashment, it returned with endorsement that signature of the drawer differs. Then it is alleged that Insurance Company has cancelled the policy and the premium amount has not been realized and there is no contractual liability and the same was intimated to the owner long before the accident as well as the RTO. Hence, respondent No.2 has disputed the claim.

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The Tribunal after appreciating the oral and documentary evidence, has allowed MVC No.108/2012 by awarding compensation of Rs.6,11,000/-, while MVC No.109/2012 is partly allowed by awarding compensation of Rs.2,80,100/- with interest. The liability is fastened on respondent No.2-insurer.

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Being aggrieved by this judgment and award, the claimants filed MFA No.1974/2015 & MFA No.1975/2015 seeking enhancement, while Insurance Company has filed MFA No.6255/2014 and MFA No.6256/2014 challenging the liability itself.

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Heard the arguments advanced by the learned

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counsel for appellant/Insurance Company and the learned counsel for respondents/claimants. Perused the records.

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The learned counsel for appellant would contend that the cheque is dated 10.08.2011 and it was presented on the same day and bounced on the same day. It is alleged that the accident has occurred on 30.09.2011 and

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long before the notice was issued on 12.08.2011 cancelling the policy and intimation was already issued to the owner.

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He would contend that since policy was cancelled, no liability can be fastened as there is no contract and contract is unenforceable and is void abinitio as per regulation (iv) of the Insurance Company regulations. He would also contend that owner has not appeared and has not disputed the cancellation of policy and service of notice and the evidence of Insurance Company was not at all challenged. The learned counsel for appellant further asserts that the vehicle was also planted since complaint disclose that some lorry hit him and it was night hours and they were not in a position to ascertain the lorry number and Investigating Officer is not examined. Hence, he would also contend that since vehicle was also planted, question of fastening the liability on Insurance Company does not arise at all.

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Per contra, the learned counsel for

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appellant/claimants would contend that Ex.R4 is dated

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14.12.2013 issued by HDFC bank on the ground that signature of drawer differs, but accident has occurred on 30.09.2011 itself and notice is not served and original cheque and relevant Bank endorsement of State Bank of Mysore is not produced. He would contend that regarding planting of the vehicle absolutely no pleadings and no evidence and notice ought to have been served and in the absence of postal acknowledgement and non-production of the bounced cheque, the liability of the Insurance Company cannot be exonerated and it is required to pay the compensation and recover the same from the owner. He would also contend that in case of death, the deceased was aged about 35 years and his income was taken as Rs.4,500/- which is on lower side and there are five members in the family and deduction to the extent of 1/3^rd is on higher side and future prospects ought to be granted. As regards injury case, he would contend that disability is to the extent of 32% as per evidence of PW2 and income was also taken on lower side and hence, he would seek for enhancement by allowing the appeals filed by the claimants

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and by dismissing the appeals filed by the Insurance Company.

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After having heard the arguments and perusing the records, it is evident that there is no serious dispute of the fact that the deceased-Ramanna and claimant Munesh were travelling in auto bearing registration No.KA-44-3228 when it met with an accident on 30.09.2011. There is no series dispute of the accident and further, death of Ramanna is also undisputed. The Insurance Company has raised an issue of planting the vehicle, but no such pleadings are forthcoming and no evidence is also lead in this regard. When the issue pertaining to payment of policy is involved, the question of planting the vehicle pertaining to which the premium was not paid does not arise at all. If at all the claimants intend to plant the vehicle, they could have planted the vehicle having clear insurance and in this instant case, the insurance itself is under dispute in view of bouncing of cheuqe. Hence, the said ground is not acceptable.

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First let us consider the quantum of

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compensation. In MVC No.108/2012 the deceased-Ramanna was admittedly succumbed to the injuries. Claimants are the widow, minor children and mother of the deceased. Though claimants assert that the deceased was doing milk vending business and earning Rs.15,000/- per month, they have not produced any material documents to substantiate this contention. In the absence of any evidence regarding the income, the notional income is required to be taken. Admittedly, accident has occurred in 2011 and this Court is consistently taking income of Rs.6,500/- in respect of the accidents that occurred in the year 2011. The Tribunal has taken the income as Rs.4,500/- which is on lower side. Apart from that, the Tribunal has deducted 1/3^rd towards personal expenses. But when there are five dependants, the deduction should be 1/4^th . Hence, the Tribunal has also committed an error in deducting 1/3^rd . Apart from that, as per postmortem report, the deceased was aged about 35 years. Hence, multiplier of ‘16’ is applicable and since he is

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self-employed below 40 years 40% is required to be added towards future prospects. If the income is taken as Rs.6,500/- and if 1/4^th is deducted, the income of the deceased would workout as under: [(6500x1/4=1625) 6500-1625= 4,875 ] to which 40% has to be added (4875x40/100= 1,950 ) i.e., Rs.6,825/-which he would have contributed to the family. Hence, monthly dependency would workout to Rs.6,825/-.

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As such, the loss of dependency would workout as 6825 x 12 X 16=Rs.13,10,400/-. Hence, claimant would be entitled for a total compensation of Rs.13,10,400/-. as against Rs.5,76,000/- awarded by the Tribunal under the head of loss of dependency.

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The claimants are the widow, children and mother of the deceased. As such, each of them are entitled for Rs.40,000/- under the head of loss of Consortium and hence, they are entitled for Rs.2,00,000/- in all. Further, under the head of loss of estate they are entitled for Rs.15,000/- and under the head of funeral expenses, they

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are entitled for Rs.15,000/-. Hence, claimants would be entitled for a total compensation under various heads as under:

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Sl. No.	Particulars	Amount
1	Loss ofdependency	Rs.13,10,400/-
2	Loss ofconsortium	Rs.2,00,000/-
3	Loss of estate	Rs.15,000/-
4	Funeral expenses	Rs.15,000/-
	Total	Rs.15,40,400/-
	Award of Tribunal	Rs.6,11,000/-
	Enhanced compensation	Rs.9,29,400/-

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As such, the claimants would be entitled for an total compensation of Rs.15,40,400/- as against Rs.6,11,000/awarded by the Tribunal. Therefore, the claimants are entitled for an enhanced compensation of Rs.9,29,400/-.

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As regards the claimant in MVC NO.109/2012, it is evident that he suffered fracture of right femur. Ex.P16 establishes that he was taken to BGS Global Hospital and he was admitted as an inpatient from 02.10.2011 to 10.10.2011. The discharge summary records at Ex.P8

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disclose that he has undergone surgery of ORIF with CCP and other procedure.

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surgeon at Turvekere. He is not a treated doctor, but his evidence discloses that he has only examined the petitioner as an outpatient. The petitioner admittedly suffered right femur fracture and was inpatient for 8 days. PW4 claims that he has examined the claimant on 03.10.2013, but the accident has occurred on 30.11.2011, which means 2 years after he has examined him just before the evidence. His evidence discloses that he examined only for assessment of disability and he assessed disability to the extent of 32%. His cross-examination reveals that the fracture was well united and he claims that he do not have knowledge of avocation of the petitioner. Without having knowledge of avocation of the petitioner, the question of he giving disability does not arise at all. Though he asserts that there is shortening of right leg to the extent of 5cm, but he has not disclosed how much length of each leg. Though this

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witness claims that he was regularly treating him, but no such documents are produced. Further, this witness has produced Ex.P14 without summoning and Ex.P14, which is pertaining to clinical notes, it should be in possession of the claimant. There are no details as to how this witness has calculated the disability. Hence, the Tribunal has taken functional disability only to the extent of 5% to the whole body and it has in detail appreciated all these aspects. The observation of the Tribunal cannot be said to be erroneous. Hence, the disability taken by the Tribunal to the extent of 5% is proper. The Tribunal has applied multiplier ‘18’ considering the age of claimant as 24 years. However, Tribunal has again taken income as Rs.4,500/- instead of Rs.6,500/- as observed above. Hence, if the income is taken at Rs.6,500/- considering the disability at 5%, the loss of income would workout to (6500 x 12 x 18 x 5/100=Rs.70,200/-) Rs.70,200/-.

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Hence, claimant would be entitled for compensation under the head of loss of future earning

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capacity to Rs.70,200/- as against Rs.48,600/- awarded by the Tribunal. The Tribunal has awarded Rs.1,70,000/- under the head of medical expenses, conveyance, food and nourishment and attendant charges which is a reasonable one and does not call for any interference. Further, under the head of loss of amenities and unhappiness Rs.10,000/was awarded and towards future medical expense Rs.8,000/- was awarded and it is on proper appreciation. These aspects do not call for any interference. Under the head of loss of income during laid up period for a period of 3 months Rs.13,500/- was awarded, which is on lower side as it was based on income of Rs.4,500 and when income is taken as Rs.6,500/- it would be Rs.19,500/-. Under the head pain and suffering Rs.30,000/- came to be awarded, which is just and proper. Hence, the claimant would be entitled for a total compensation under the following various

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heads:

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Sl.	Particulars	Amount
No.
1	Pain & Sufferings	Rs.30,000/-
2	Medical expenses, conveyance,	Rs.1,70,000/-

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	food and nourishment, attendant charges
3	Loss of income during laid up period	Rs.19,500/-
4	Loss of future income due to permanent disability	Rs.70,200/-
5	Loss ofamenities	Rs.10,000/-
6	Futuremedicalexpenses	Rs.8,000/-
	Totalcompensation	Rs.3,07,700/-

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Hence, the claimant would be entitled for total compensation of Rs.3,07,700/- as against Rs.2,80,100/awarded by the Tribunal.

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Now let us consider the liability. It is the specific contention of the Insurance Company that the cheque issued by respondent No.1 towards payment of premium was returned as ‘signature differs’ and hence, policy stands cancelled. In this regard, the respondent has placed reliance on evidence of RW1 and Ex.R1 to Ex.R4. Ex.R1 is the cancelled copy and Ex.R2 is the notice issued to the owner under registered post dated 12.08.2011 regarding cancellation of the policy.

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Ex.R2 also discloses that postal receipt is also enclosed and that clearly disclose that on 12.08.2011 itself the notice came to be issued to the owner to the address given in the policy proposal by respondent No.1 cancelling the policy for dishonour of the cheque. Whether cheque was dishonored for difference in signature or insufficient of funds, is irrelevant. But the fact that the cheque was dishonoured and it is not under serious dispute. Ex.R3 is a letter issued by respondent No.2-Insurance Company to RTO also regarding cancellation of the policy on account of dishonour of the cheque. Ex.R4 is an intimation issued by HDFC Bank regarding dishonour of the cheque.

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There is no serious dispute of the fact that respondent No.1-owner has issued a cheque pertaining to State Bank of Mysore. The said cheque was bounced as per the case of the Insurance Company and Ex.R4 is relied. But Ex.R4 is pertaining to HDFC Bank. The intimation issued by concerned State Bank of Mysore is not produced. Even the cheque was also not produced. But it is important to note

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here that under Ex.R1 Policy was cancelled and a notice was issued under Ex.R2 and Ex.R3 to respondent No.1 and the concerned RTO. Respondent No.1 never disputed the receipt of the notice under Ex.R2. The notice was issued to the address given in the policy and hence, it is deemed service. In the absence of dispute of service of notice is raised by respondent No.1-owner, question of claimants raising this issue does not arise at all. The owner never appeared and never asserted that his cheque was honoured and he has not received intimation pertaining to the Policy. Under such circumstances, the presumption shall be drawn against respondent No.1 regarding he receiving the intimation of dishonour of the cheque. Admittedly, Ex.R2 was issued on 12.08.2011 and accident has occurred on 30.09.2011. The accident has occurred almost after more than 48 days of issuance of intimation. The same is also not disputed by the owner-respondent No.1.

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Further, when premium itself is not paid, the question of liability under contract does not arise at all. A

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contract without consideration is void. Further, under Section 64 of Insurance Act if the cheque is dishonoured, then the policy is void abinitio .

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The learned counsel for respondent/claimants placed reliance on a decision reported in (2000) 3 SCC 195 [ NEW INDIA ASSURANCE CO. LTD., vs. RULA AND OTHERS ] and contended that claimants being third parties, the Insurance Company cannot escape the liability. It is observed that when the cheque received towards premium bounced and consequently, the policy is cancelled and the rights accrued in favour of the third party, prior to the cancellation of the policy held would remain unaffected by cancellation, irrespective of any provision to the contrary contained in the contract act or insurance act. In the said case, before cancellation of the policy and issuance of intimation, the accident has occurred. Hence, the said observation has been made. But in the instant case, the accident has occurred on 30.09.2011, but the intimation of the cancellation of Policy was issued on 12.08.2011 itself

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long before. Hence, the said principles would not come to the aid of the respondents/claimants in any way and the said principles cannot be made applicable to the facts & circumstances of the case in hand.

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Further, the learned counsel for respondents/ claimants placed reliance on (2008) 7 SCC 526 [NATIONAL INSURANCE COMPANY LIMITED vs. YELLAMMA AND ANOTHER] . But in the said case, the Apex Court has exercised the powers under Article 142 of Constitution and that power is not vested with any High Courts. As such, this Court cannot exercise any power under Article 142 and exercising of the power under Article 142 by the Hon’ble Apex Court cannot act as a precedent. As such, the said principles will not come to the aid of the claimants in any way.

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The learned counsel for claimants has placed reliance on a decision reported in (2012) 5SCC 234 [ UNITED INSURANCE COMPANY LIMITED vs LAXMAMMA

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AND OTHERS ]. He has invited the attention of the Court to

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observation made in para 26 of the said judgment, wherein it is observed as under:

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“In our view, the legal position is this: where the policy of insurance is issued by an authorized insurer on receipt of cheque towards the payment of premium and such a cheque is returned dishonoured, the liability of authorised 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 MV 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 ceases and the insurance company is not liable to satisfy awards of compensation in respect thereof.”

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But there itself, the Hon’ble Apex Court has clearly observed that when Insurance Company cancels policy of the insurance and sends intimation thereof to the owner, the Insurance Company is not liable to indemnify the third parties and Insurance Company is not liable to satisfy the

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award. In fact this observation would assist Insurance Company rather than the claimants and admittedly, in the instant case, intimation of cancellation of policy was issued long before the accident as per Ex.R2 and the owner never claimed that he did not receive any such intimation. Hence, the said principles will not come to the aid of the claimants in any way.

¶150

In view of the provisions of Insurance Act and under contract act, when the premium paid by way of cheque is not encashed, automatically contract ceases and as per the insurance act the policy becomes void abinitio . Apart from that, in the instant case, the intimation was also delivered by the Insurance Company as per Ex.R2 and owner never asserted encashment of his cheque or nonreceipt of the intimation. Under such circumstances, the liability, if any, is required to be on respondent No.1-owner and not the insurance company.

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In view of these facts and circumstances, the

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appeals filed by the claimants need to be allowed so far as

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quantum alone is concerned. But the appeals filed by the

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Insurance Company need to be allowed pertaining to liability. Accordingly, I proceed to pass the following:

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ORDER

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(i) MFA No.6255/2014 and MFA No.6256/2014 are allowed by exonerating Insurance Company to pay the compensation.

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(ii) MVC No.108/2012 and MVC No.109/2012 are dismissed as against respondent No.2-Insurer who is appellant in MFA No.6255/2014 and MFA No.6256/2014.

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(iii) Simultaneously MFA No.1974/2015 and MFA No.1975/2015 are also allowed in part.

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(iv) The claimants in MFA No.1974/2015 arising out of MVC No.108/2012 are held entitled for total compensation of Rs.15,40,400/as against Rs.6,11,000/- awarded by the Tribunal from respondent No.1-owner of lorry bearing registration KA03-A-0131. The enhanced of compensation shall carry interest at the rate 6% per annum.

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(v) The claimant in MVC No.109/2012 is held entitled for a total compensation Rs.3,07,700/as against Rs.2,80,100/awarded by the Tribunal from respondent No.1-Owner of lorry

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bearing Registration No.KA03-A-0131. The enhanced compensation of Rs.27,600/- shall carry interest at the rate of 6% per annum.

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(vi) The deposit and disbursement shall be as per the terms of the order of the Tribunal and entire enhance compensation shall be released in favour of the claimants.

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(vii) The amount deposited by the insurance company shall be refunded to the insurance company.

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Sd/JUDGE

¶167

Gowramma v. Asham

Case brief

What is this about?

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Gowramma v. Asham

Case brief

What is this about?

What did the court decide?

What the court decided

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Coram

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