The Manager v. Srinivas

Karnataka HC7 Aug 2025MFA/8867/2018

Case brief

AI extract

What is this about?

Reliance General Insurance appeals against MACT Kanakapura awards fastening liability despite cancellation of policy for cheque dishonour. Held: policy stood cancelled from inception per special condition Ex.R8; intimation sent by certificate of posting on 31.03.2012; owner admitted knowledge of dishonour and did not pay premium thereafter; no policy existed on date of accident (20.01.2013); insurer liability set aside; owner liable to pay compensation with interest. Relied on United India Insurance v. Laxmamma (2012 AIR SCW 2657); distinguished Shilpa and Kishwari cases.

What did the court decide?

Both appeals allowed; finding fixing liability on insurance company set aside; owner directed to pay compensation with interest as awarded by Tribunal. ¶89-95

The Manager Vs Srinivas — Karnataka HC (2025) — LawSathi Research

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MFA No.8867of 2018 C/W MFA No.9194of 2018

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 07^TH DAY OF AUGUST, 2025 BEFORE

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THE HON'BLE MRS. JUSTICE P SREE SUDHA

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MISCELLANEOUS FIRST APPEAL NO. 8867/2018 (MV-I) C/W MISCELLANEOUS FIRST APPEAL NO. 9194/2018 (MV-I)

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IN MFA NO.8867/2018:

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BETWEEN:

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THE MANAGER, M/S RELIANCE GENERAL INSURANCE COMPANY LTD., NO.3, MAHEDRA PLAZA, 1^ST FLOOR, NORTH WING, ST. MARKS ROAD, BESIDES ST. MARKS HOTEL, BENGALURU-560 001. NOW REP. BY ITS MANGAR, RELIANCE GENERAL INSURANCE CO. LTD., NO.28, CENTENARY BUILDING, EAST WING, 5^TH FLOOR, M.G. ROAD, BENGALURU-560 001.

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…APPELLANT

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(BY SRI. ASHOK N. PATIL, ADVOCATE)

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AND:

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SRINIVAS @ SRINIVAS D., S/O DODDABYRAPPA, NOW AGED ABOUT 30 YEARS, R/A KULUME BEEDI, KURUPET, KANAKAPURA TOWN, RAMANAGARA DIST-581 453.

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MFA No.8867of 2018 C/W MFA No.9194of 2018

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VISHWANATHA RAO,

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S/O VITTAL RAO, R/AT SRIRAMPURA, MYSORE ROAD, KANAKAPURA TWON, RAMANAGAR DIST-581 453

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…RESPONDENTS

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(BY SRI. M.G. SRINATHA GOWDA, ADVOCATE FOR R1, SRI. K. SHANTHARAJ, ADVOCATE FOR R2)

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THIS APPEAL IS FILED U/S 173(1) OF MV ACT AGAINST THE JUDGMENT AND AWARD DATED:22.06.2018 PASSED IN MVC NO.81/2024 ON THE FILE OF THE SENIOR CIVIL JUDGE AND MACT, KANAKAPURA, AWARDING COMPENSATION OF RS.4,88,700/- WITH INTEREST @ 7.5% P.A. FROM THE DATE OF PETITION TILL REALIZATION.

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IN MFA NO.9194/2018:

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BETWEEN:

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THE MANAGER, M/S RELIANCE GENERAL INSURANCE COMPANY LTD., NO.3, MAHEDRA PLAZA, 1^ST FLOOR, NORTH WING, ST. MARKS ROAD, BESIDES ST. MARKS HOTEL, BENGALURU-560 001.

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NOW REP. BY ITS MANGAR, RELIANCE GENERAL INSURANCE CO. LTD., NO.28, CENTENARY BUILDING, EAST WING, 5^TH FLOOR, M.G. ROAD, BENGALURU-560 001.

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…APPELLANT

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MFA No.8867of 2018 C/W MFA No.9194of 2018

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(BY SRI. ASHOK N. PATIL, ADVOCATE)

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AND:

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RAJU, S/O LATE SANNAPPA, NOW AGED ABOUT 39 YEARS, R/A ACHARYA STREET, (KOTE), KANAKAPURA TOWN, RAMANAGARA DIST-562 117.

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VISHWANATHA RAO, S/O VITTAL RAO, 2^ND CROSS, R/AT SRIRAMPURA, MYSORE ROAD, KANAKAPURA TWON, RAMANAGAR DIST-562 117

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…RESPONDENTS

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(R1 AND R2 SERVED)

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THIS APPEAL IS FILED U/S 173(1) OF MV ACT AGAINST THE JUDGMENT AND AWARD DATED:22.06.2018 PASSED IN MVC NO.79/2024 ON THE FILE OF THE SENIOR CIVIL JUDGE AND MACT, KANAKAPURA, AWARDING COMPENSATION OF RS.2,31,900/- WITH INTEREST @ 7.5% P.A. FROM THE DATE OF PETITION TILL THE DATE OF REALIZATION OF ENTIRE AMOUNT.

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THESE APPEALS HAVING BEEN HEARD AND RESERVED ON 06.08.2025, COMING ON FOR PRONOUNCEMENT OF JUDGMENT THIS DAY, P SREE SUDHA J., DELIVERED THE FOLLOWING:

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CORAM: HON'BLE MRS. JUSTICE P SREE SUDHA

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MFA No.8867of 2018 C/W MFA No.9194of 2018

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CAV JUDGMENT

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Though the above matters have come up for admission, with consent of learned counsel for the parties, they are taken up for hearing and disposed of by this judgment.

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M.F.A. No.8867/2018 is filed by the appellantinsurance company against the judgment and award dated 22.06.2018 passed by the Senior Civil Judge and MACT, Kanakapura in M.V.C. No.81/2014 (Old M.V.C.No.271/2013).

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M.F.A. No.9194/2018 is filed by the appellantinsurance company against the judgment and award dated 22.06.2018 passed by the Senior Civil Judge and MACT, Kanakapura in M.V.C. No.79/2014 (Old M.V.C.No.269/2013).

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Both the appeals arose out of the same accident that occurred on 20.01.2013 near Mother Theresa School, Bangalore Road, Kanakapura Town, when the driver of Bolero Luggage Jeep bearing registration No.KA-42-5427 drove the same in in rash and negligent manner and dashed against the claimant in M.F.A. No.9194/2018, who was riding Suzuki Motor cycle bearing registration No.KA-51-S-2558 and the claimant in M.F.A. No.8867/2018 was pillion rider. Both the claimants

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MFA No.8867of 2018 C/W MFA No.9194of 2018

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sustained injuries and the Tribunal awarded compensation of Rs.4,88,700/- and Rs.2,31,900/- to the claimants respectively and directed the appellant insurance company to pay compensation with interest. The appellant-insurance company has filed these appeals disputing fastening of liability on it.

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Heard the arguments of both sides.

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Learned counsel for the appellant-insurance company

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has contended that premium of the insurance policy was not paid by the respondent No.2-owner of Suzuki Motor cycle bearing registration No.KA-51-S-2558 and they sent notice of cancellation of the policy. The accident occurred in the year 2013. The policy was issued for the period from 27.03.2012 to 26.03.2013. A cheque was given by respondent-owner of the vehicle for payment of premium of Rs.13,550/- drawn on SBM, but it was dishonoured on 28.03.2012. The insurance company addressed a letter of intimation to the respondent-owner regarding the cancellation of policy on 31.03.2012 under the certificate of posting.

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Learned counsel for the appellant-insurance company

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further contended that in a written statement filed by the

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MFA No.8867of 2018 C/W MFA No.9194of 2018

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respondent-owner of the vehicle, he has simply stated that the policy was in existence as on the date of accident and thus the claim petition against him is not maintainable. But in his affidavit filed before the Tribunal, he admitted regarding the issuance of cheque and further admitted that he has the knowledge of dishonour of the cheque and dishonour charges were deducted from his account. But, he came up with a plea that, later, he paid cash and the original policy was issued to him after receiving the cash amount. He also stated that insurance company will not issue policy without encashment of the cheque amount and without receiving the cash amount. As the policy was issued in his name, they cannot deny the liability.

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Learned counsel for Insurance Company examined

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two witnesses on its behalf and also filed the copy of the cheque, endorsement by the bank and the notice sent under the certificate of posting and a copy of the cancellation policy. The learned counsel for the insurance stated that on the day of payment of the premium, the policy would be issued subject to the payment of premium. As such, in the copy of the policy at

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MFA No.8867of 2018 C/W MFA No.9194of 2018

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Ex.R8, it was specifically mentioned under head ‘special condition’ as follows:

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“ In the event of dishonor of cheque, this policy document automatically stands cancelled from inception irrespective of whether a separate communication is sent or not. No Claim Bonus will only be allowed, provided the policy is renewed within 90 days of the expiry of the previous policy. ”

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Though respondent-owner of the vehicle stated that he paid the cash, subsequently, he has not filed any receipt or he has not mentioned the date of payment. Admittedly, the certificate of posting was sent on 31.03.2012 itself. As per the facts of the case, the policy was valid from 27.03.2012 for one year. The cheque for premium amount was given on 26.03.2012, but it was dishonoured and the said fact was known to the owner of the vehicle and the accident occurred in the January of next year, i.e. on 20.01.2013. Till that time, he has not paid the premium or renewed the policy. Whereas, the insurance company addressed a letter on 31.03.2012 itself by duly cancelling the policy. As such, the policy was not in existence as on the date of accident.

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MFA No.8867of 2018 C/W MFA No.9194of 2018

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Learned counsel for the appellant-insurance

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company has relied upon the judgment of the Hon'ble Supreme Court in the case of UNITED INDIA INSURANCE CO. LTD.,

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Vs. LAXMAMMA AND OTHERS reported in 2012 AIR SCW

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2657 , in which it was held as follows:

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“Where the policy of insurance is issued by an authorized insurer on receipt of cheque towards payment of premium and such cheque is returned dishonoured, the liability of authorized 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 M.V.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 dishonoured 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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Learned counsel for respondent No.2-owner of the

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vehicle has also relied upon the judgment of the Hon'ble Supreme Court in the case of DEDDAPPA AND OTHERS VS.

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MFA No.8867of 2018 C/W MFA No.9194of 2018

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BRANCH MANAGER, NATIONAL INSURANCE CO. LTD .

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reported in (2008) 2 SCC 595 , wherein the Hon'ble Supreme Court has held that the contract of insurance stood rescinded due to failure of consideration and intimation to this effect was given to all the concerned i.e. to the vehicle owner and RTO and accordingly the Hon’ble Supreme Court in exercise of its jurisdiction under Article 142 of Constitution of India directed the insurance company to pay and recover the amount from the vehicle owner.

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The learned counsel for the respondent-owner raised an objection that no notice was given to the RTO and as such, the insurance company is liable to pay the compensation. In Deddappa’s case, supra, extraordinary jurisdiction was exercised by the Supreme Court under Article 142 of the Constitution of India and this Court has no such power.

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Learned counsel for respondent No.2-owner has also relied upon the judgment of the Hon'ble Supreme Court in case

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of PREMA AND OTHERS VS. SAMPATHKUMAR AND

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OTHERS reported in 2020 ACJ 2283 , in which it was held, cancellation of the policy is not a bar to satisfy the claims of

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MFA No.8867of 2018 C/W MFA No.9194of 2018

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third party and directed the insurance company to pay and recover. Relying upon this citation, the counsel of the respondent-owner requested this Court to order for pay and recovery. Here, in this case, when the policy was not in existence, the question of fastening the liability on the insurance company does not arise.

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The learned counsel for respondent-owner has also relied upon the judgment of the Hon'ble Supreme Court in the case of DIVISIONAL MANAGER, UNITED INDIA INSURANCE CO. LTD. Vs. SHILPA AND ANOTHER reported in 2020 ACJ 1778 , wherein the Hon'ble Supreme Court has held that owner of the vehicle was not aware of the cancellation of the policy as on the date of accident. In the present case, the owner, in particular, aware of non-payment of the premium and non-existence of the policy.

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In the judgment in the case of NEW INDIA ASSURANCE CO. LTD., VS. KISHWARI AND OTHERS reported in 2017 ACJ 2674 , it was held that letter of communication sent by the insurance company was not sent to the correct address of the owner and thus, the company is

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MFA No.8867of 2018 C/W MFA No.9194of 2018

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liable to satisfy the award. It is not the case of the respondent-

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owner herein that the notice was not sent to the correct address and it was not received by him. Therefore, the said citation is not applicable to the facts of this case.

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It was rightly pointed out by the Apex Court that when once the contract of insurance ceases, by virtue of issuance of cancellation of the policy, the insurance company is not liable to satisfy the award of compensation. Therefore, the finding of the Tribunal in the present cases, to an extent of fixing liability on the appellant-insurance company, has to be set aside and as there was no existence of the insurance policy on the date of accident, pay and recovery cannot be ordered.

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Accordingly, I pass the following:

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(i) Both the appeals are allowed.

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(ii) The finding of the Tribunal to an extent of fixing liability on the appellant-insurance company, in both appeals, is hereby set aside.

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(iii) The award to an extent of assessment of compensation made by the Tribunal holds good.

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MFA No.8867of 2018 C/W MFA No.9194of 2018

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(iv) Respondent No.2-owner of the vehicle is hereby

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directed to pay the compensation with interest as awarded by the Tribunal in both cases.

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(v) The claimants are at liberty to recover the compensation awarded by the Tribunal with interest, from the respondent-owner of the vehicle, by due process of

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law.

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Sd/(P SREE SUDHA) JUDGE

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CS List No.: 1 Sl No.: 57

The Manager v. Srinivas

Case brief

What is this about?

What did the court decide?

The Manager v. Srinivas

Case brief

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