Iffco Tokio General Ins. Co. Ltd. Vs Gowri

¶1

CMA No. 2582 of 2021

¶2

CMA No. 2582 of 2021 and CMP No.14789 of 2021

¶3

C.V.KARTHIKEYAN, J. and K.RAJASEKAR, J.

¶4

(Order of the Court was made by C.V.Karthikeyan, J.)

¶5

Today, this matter has been listed under the caption ‘for being mentioned’.

¶6

2.It is stated that in paragraph Nos.23 and 36, the last word has been wrongly typed as ‘insurer’ instead of ‘insured’. It is also stated that certain corrections are also required in paragraph Nos.38, 39 and 40.

¶7

3.The Registry is directed to issue a fresh order copy after correcting the word ‘insurer’ as ‘insured’ in paragraph Nos.23 and 36 and also by substituting paragraph Nos.38, 39 and 40 as follows:

¶8

38. Applying the above, while the monthly income would be Rs.13,000 + 40% of Rs.13,000/- = Rs.18,200/-. Since there are three dependents including the father of the deceased (as there is no contrary evidence produced to show that the father was not dependent on the deceased), ¼ share of the income (Rs.4,550/-) is deducted towards his personal expenses. Th e total monthly

¶9

1/35

¶10

https://www.mhc.tn.gov.in/judis

¶11

CMA No. 2582 of 2021

¶12

income would thus be Rs.13,650/- (18,200 - Rs.4,550). The annual income of the deceased would be Rs.13,650 x 12 = Rs.1,63,800/-. Since the deceased was aged 24 years at the time of accident, applying the appropriate multiplier, namely, 18, as per the decision of the Hon’ble Supreme Court in Sarla Verma and others vs. Delhi Transport Corporation and another reported in (2009) 6 SCC 121 , ‘ Loss of Income ’ would be Rs.29,48,400/-.

¶13

39.In addition, the claimants are entitled to Rs.1,60,000/- (40,000 X 4), Rs.15,000/- and Rs.15,000/- towards Loss of Consortium, Funeral Expenses and Loss of Estate respectively. A s per the decision in United India Insurance Co. Limited v. Satinder Kaur and Ors. reported in [MANU/SC/0500/2020 : (2021) 11 SCC 780], loss of love and affection is included in loss of consortium. Hence, the amount awarded under the head loss of love and affection is hereby removed. Thus, the claimants are entitled to a total compensation of Rs.31,38,400/- as shown in the following tabular column:

¶14

*S.No.*	*Head*		*Amount granted by* *this court Rs.*
1.	Loss of dependency		29,48,400/-
2.	Loss of consortium (Rs.40,000/- x 4)		1,60,000/-
3.	Funeral expenses		15,000/-
4.	Loss of Estate		15,000/-
		Total	31,38,400 /-

¶15

2/35

¶16

https://www.mhc.tn.gov.in/judis

¶17

CMA No. 2582 of 2021

¶18

In the result,

¶19

i. the Civil Miscellaneous Appeal is partly allowed.

¶20

ii. The compensation of Rs.40,00,000/- awarded by the Tribunal is hereby reduced to Rs .31,38,400 /-.

¶21

iii. The appellant Insurance Company is directed to deposit the reduced compensation of Rs .31,38,400 /- (Rupees Thirty One Lakhs Thirty Eight Thousand and Four Hundred only), less the amount already deposited, together with interest at 7.5% p.a. from the date of petition till the date of deposit to the credit of M.C.O.P.No.2244 of 2014 on the file of the Motor Accidents Claims Tribunal, (In the II Court of Small Causes) at Chennai , within a period of six (6) weeks from the date of receipt of this judgment and recover it from the insured / fifth respondent.

¶22

iv. On such deposit being made by appellant Insurance Company, the respondents/claimants 1, 3 and 4 are permitted to withdraw their respective shares, as apportioned by Tribunal, along with accrued interest and costs, less the amount, if any already withdrawn by them, by filing necessary application before the Tribunal.

¶23

v. The share of the minor respondent (second respondent) is directed to be deposited in any one of the Nationalised Bank till he attains majority.

¶24

vi. The first respondent being the mother of the minor respondent is

¶25

3/35

¶26

https://www.mhc.tn.gov.in/judis

¶27

CMA No. 2582 of 2021

¶28

permitted to withdraw the accrued interest once in three months for the

¶29

welfare of the minor.

¶30

No costs. Connected miscellaneous petition is closed.

¶31

sli

¶32

(C.V.K.J., ) (K.R.S.J.,) 27.04.2026

¶33

To:

¶34

The Motor Accidents Claims Tribunal, (In the II Court of Small Causes) at Chennai.

¶35

2.The Section Officer, VR Section, Madras High Court, Chennai.

¶36

4/35

¶37

https://www.mhc.tn.gov.in/judis

¶38

CMA No. 2582 of 2021

¶39

C.V.KARTHIKEYAN, J. and K.RAJASEKAR, J.

¶40

sli

¶41

CMA No. 2582 of 2021 and CMP No.14789 of 2021

¶42

27.04.2026

¶43

5/35

¶44

https://www.mhc.tn.gov.in/judis

¶45

CMA No. 2582 of 2021

¶46

IN THE HIGH COURT OF JUDICATURE AT MADRAS

¶47

DATED: 02-04-2026

¶48

CORAM

¶49

THE HONOURABLE MR JUSTICE C.V. KARTHIKEYAN AND THE HONOURABLE MR.JUSTICE K.RAJASEKAR

¶50

CMA No. 2582 of 2021 and CMP No.14789 of 2021

¶51

M/s.Iffco Tokio General Insurance Company Limited, Customer Service Centre, ‘Iffco Bhavan’, IV Floor, No.128, Habibullah Road, T.Nagar, Chennai 600 017.

¶52

Appellant Vs

¶53

Gowri

¶54

2.Minor Sk.Jyothish Rep. by her Mother and next Friend Gowri

3.Sakuntala

4.Raja @ Raji

5.Kumar

Respondents

PRAYER Civil Miscellaneous Appeal filed under Section 173 of the Motor Vehicles Act, 1988, seeking to set aside the Decree and Judgment dated 12.02.2020, passed in M.C.O.P.No.2244 of 2014 by the Motor Accidents Claims Tribunal, (In the II Court of Small Causes) at Chennai.

¶60

6/35

¶61

https://www.mhc.tn.gov.in/judis

¶62

CMA No. 2582 of 2021

¶63

For Appellant: Mr.J.Michael Visuvasam For Respondents: Mr.S.R.Raghu for R1 to R4 No appearance for R5

¶64

JUDGMENT

¶65

(Order of the Court was made by C.V.Karthikeyan,J.)

¶66

The 2^nd respondent in MCOP No.2244 of 2014 aggrieved by the award,

¶67

dated 12.02.2020 granted by the Motor Accident Claims Tribunal, II Court of Small Causes, Chennai, is the appellant herein.

¶68

MCOP No.2244 of 2014 had been filed by the first – fourth Respondents herein seeking compensation for the death of one Karthik, who was aged 24 years in a motor accident on 18.02.2014 at about 01.00 p.m., near Tada Satyavedu Main Road in front of Colgate Company, the husband of the first respondent / father of the second respondent and son of the third and fourth respondents. It was stated that he was riding a new unregistered motorcycle

¶69

from his company to his house and at that time, a Tipper Lorry driven by the driver of the fifth respondent herein bearing Registration No.AP 31 TA 1567 in a rash and negligent manner had dashed against the motor cycle. The deceased sustained head injury and died on spot. The fifth respondent herein is the owner

¶70

of the Tipper Lorry. The appellant herein is the Insurer of the said Tipper Lorry.

¶71

7/35

¶72

https://www.mhc.tn.gov.in/judis

¶73

CMA No. 2582 of 2021

¶74

Before the Tribunal, the appellant herein had resisted the claim petition

¶75

on the ground that there was no policy of Insurance nor contract of the Insurance between the fifth respondent and the appellant herein. It had been contended that the Policy was issued on 16.12.2013 and a cheque was issued by the fifth respondent on the same day. On 06.01.2014, the cheque was dishonoured on the ground of insufficient funds. On 06.01.2014 this fact was intimated by the appellant herein to the Insured / 5^th respondent. Further communication was also issued to the Road Transport office.

¶76

The appellant placed reliance on the postal receipts produced before the Tribunal, indicating forwarding and sending of the said communication through Registered post. However they could not file the acknowledgement cards or any other letter from the post office, indicating that the letters had been delivered to the addressee.

¶77

Before the Tribunal, the appellant herein had stated that since the cheque issued towards the premium had been dishonoured owning to insufficient funds, contract was never entered into between the appellant and the fifth respondent. It was also pointed out that the deceased was working as a Painter and appropriate compensation alone should be granted by the Tribunal.

¶78

8/35

¶79

https://www.mhc.tn.gov.in/judis

¶80

CMA No. 2582 of 2021

¶81

The Tribunal by its Judgement dated 12.02.2020, while examining the

¶82

liability of the appellant herein, had stated that the acknowledgement cards for Registered post sent regarding the dishonour of cheque by the bankers had not been filed. It had therefore been stated that the Tribunal cannot presume that the cancellation of the policy has been intimated to the Road Transport Office, Nellore. It was finally held that the appellant as an Insurer, was liable to pay compensation with right to recover the same from the fifth respondent herein.

¶83

With respect to quantum of compensation to be paid, the Tribunal had

¶84

granted a total sum of Rs.40,00,000/- in the following manner:

¶85

S.No.	Heads	Amount of Compensation Rs.
1	Loss of Dependency	36,45,000.00
2.	Loss of Consortium	40,000.00
3.	Loss of Love and Affection	1,50,000.00
4.	Parental Consortium	1,00,000.00
5.	Filial Consortium	50,000.00
6.	Funeral Expenses	15,000.00
	Total	40,00,000.00

¶86

This appeal has been filed challenging both the liability and quantum.

¶87

9/35

¶88

https://www.mhc.tn.gov.in/judis

¶89

CMA No. 2582 of 2021

¶90

The learned counsel for the appellant first pointed out that the cheque which had been issued towards payment of premium by the fifth respondent herein, the owner of the Tipper Lorry, had been dishonoured for want of insufficient funds. The learned counsel pointed out that the responsibility in such cases on the part of the Insurance Company was to intimate this particular fact to the insured / fifth respondent and also to the concerned Regional Transport Office.

¶91

The learned counsel in this connection, produced the postal receipts for forwarding the communication through Registered Post and placed reliance on Section 27 of the General Clauses Act, 1897 which is as follows:

¶92

“27. Meaning of service by post:- Where any (Central Act) or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression “serve” or either of the expressions “give” or “send” or any other expression is used, then, unless, a different intention, appears the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post, a letter containing the document, and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.”

¶93

10/35

¶94

https://www.mhc.tn.gov.in/judis

¶95

CMA No. 2582 of 2021

¶96

The learned counsel, interpreted such provision as stating that when there has been a posting by a Registered post, unless the contrary is proved, it would deem to have been effected at the time at which the letter would be delivered in ordinary course of post. It had been argued that the service shall be deemed to be effected by mere sending the intimation by Registered post.

¶97

The learned counsel in this connection placed reliance on a Full Bench Judgment of the Kerala High Court reported in 2019 (1) TN MAC 274 (FB) (Ker.) in Prasanna.B Vs.Kabeer and Anr. wherein the Full Bench had examined the liability of the Insurer when a cheque issued towards premium was dishonoured. The Full Bench also examined the import of Section 27 of the General Clauses Act. The reasoning of the Full Bench was as follows:

¶98

“3. The surest way to prove that the Intimation has been

¶99

sent by the Insurer about the cancellation of the Insurance coverage is to dispatch it by Registered Post with or without Postal Acknowledgment. The production of the receipt evidencing the dispatch by registered post raises a presumption in favour of the insurer that the intimation has been sent to the addressee for secured delivery. The fundamental difference between speed post and registered post is that the former is address specific and time bound whereas the latter is addressee specific. A presumption in

¶100

11/35

¶101

https://www.mhc.tn.gov.in/judis

¶102

CMA No. 2582 of 2021

¶103

favour of the sender for a properly addressed and prepaid post is supported in law too by Section 27 of the General Clauses Act, 1897 which is extracted hereunder:

¶104

“27. Meaning of service by post.- Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression 'serve' or either of the expression 'give' or 'send' or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post, a letter containing the document, and unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.”

¶105

It would suffice if the insurer establishes prima facie that the letter about the cancellation of insurance coverage sent under Certificate of Posting or by registered post would have been delivered in the ordinary course.

¶106

4.A period of one week from the date of dispatch can safely be adopted as the time necessary to serve the letter in the ordinary course after which the intimation is presumed to have been served

¶107

12/35

¶108

https://www.mhc.tn.gov.in/judis

¶109

CMA No. 2582 of 2021

¶110

on the addressee. The period is so fixed in the absence of any provision to the contrary for the limited purpose of the cases of this nature to avoid disputes as to the date of receipt of the intimation. The insured in some cases may try to evade the service of notice and the letter would be returned with postal remarks like 'addressee left', 'house locked', 'insufficient address' etc. The burden is on the addressee to rebut the presumption by conclusive evidence that he did not really receive the letter and it is not a case of deliberate avoidance. The burden is not on the insurer to establish conclusively that the intimation of cancellation of insurance coverage was in fact served on the insured or the registering authority. The judgment in M.A.C.A.No.2471/2015 to the effect that it is the obligation of the insurer to establish the service of the intimation on the addressee is hereby overruled. Needless to say that no liability can be fastened on the insurer for any compensation payable in respect of an accident that occurs after the service of the intimation aforesaid. The reference is answered accordingly. The appeal shall be listed for hearing before the Division Bench as per roster.”

¶111

13/35

¶112

https://www.mhc.tn.gov.in/judis

¶113

CMA No. 2582 of 2021

¶114

The learned counsel also placed reliance on the Insurance

¶115

Regulatory and Development Authority (Manner of Receipt of Premium)

¶116

Regulations, 2002 which came into effect on and from 16.10.2002 wherein

¶117

with respect to commencement of risk. It had been provided as follows:

¶118

“ 4. Commencement of risk- In all cases of risks covered by

¶119

the policies issued by an insurer, the attachment of risk to an insurer will be in consonance with the terms of section 64-VB of the Act and except in the cases where the premium has been paid in cash, in all other cases the insurer shall be on risk only after the receipt of the

¶120

premium by the insurer:

¶121

Provided that in the case of a policy of general insurance that where the remittance made by the proposer or the policy holder is not realised by the insurer, the policy shall be treated as void ab initio:

¶122

Provided further that in the case of a policy of life insurance, the continuance of the risk or otherwise shall depend on the terms and conditions of the policy already entered into.”

¶123

Pointing out that the said provisions, the learned counsel argued that when the remittance made by the proposer or Policy holder, is not realised which in effect would mean that when the cheque issued had been dishonoured, the policy shall be treated as void ab initio . The learned counsel therefore

¶124

14/35

¶125

https://www.mhc.tn.gov.in/judis

¶126

CMA No. 2582 of 2021

¶127

argued that the policy which had been issued by the appellant herein, should be construed as void ab initio, which would in effect mean it has no effect from the date of its creation and therefore, the appellant herein would not be liable for any claim based on the said policy.

¶128

Placing his arguments on the above grounds relating to liability, the learned counsel urged that this Court should hold that the appellant herein was not liable to pay compensation for the death of Karthik who died in the motor accident and on behalf of whose death, the claim petition had been preferred by his legal representatives including his father.

¶129

The learned counsel for the appellant also placed reliance on the Judgment of the Hon’ble Supreme Court, in United India Insurance Company Limited Vs. Laxmamma and Ors. reported in (2012) 5 Supreme Court Cases 234 wherein, it had been held that the statutory liability of the Insurer to indemnify third parties, always subsists except when the insurer satisfies the Court that the policy of insurance was cancelled and intimation of such cancellation had reached the insured before the accident. The legal position had been reduced as follows:

¶130

“26. In our view, the legal position is this: where the policy

¶131

of insurance is issued by an authorised insurer on receipt of

¶132

15/35

¶133

https://www.mhc.tn.gov.in/judis

¶134

CMA No. 2582 of 2021

¶135

cheque towards the payment of premium and such a cheque is returned dishonoured, the liability of the authorised insurer to indemnify the third parties in respect of the liability which that policy covered subsists and it has to satisfy the 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 authorised 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 authorised 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.”

¶136

In that particular case, however factually it was noted that the intimation was delivered after the date of accident.

¶137

16/35

¶138

https://www.mhc.tn.gov.in/judis

¶139

CMA No. 2582 of 2021

¶140

The learned counsel pointed out that in the instant case, the intimation

¶141

was forwarded on 06.01.2014 much prior to the date of accident on 18.02.2014 and therefore claimed that the appellant herein having satisfied the condition of cancellation of the policy and intimation of the policy prior to the date of the accident both to the insured / fifth respondent and also to the Road Transport officer, Nellore, it should be absolved of all liability to pay compensation as claimed by the first – fourth Respondents herein.

¶142

It is also pointed out by the learned counsel that the fifth respondent herein who is the owner of the Tipper Lorry had taken a conscious decision not to participate in the judicial proceedings and remained exparte before the Tribunal and even before this Court.

¶143

The learned counsel for the respondents however argued that the claimants were third parties to the policy of insurance and had a reasonable and legitimate expectation that when the policy had been issued and the death occurred owing to the accident caused by the vehicle which had been insured, the legal representatives would stand compensated by the insurer.

¶144

17/35

¶145

https://www.mhc.tn.gov.in/judis

¶146

CMA No. 2582 of 2021

¶147

The learned counsel argued that alternatively the insurer can pay the

¶148

compensation and recover it from the insured. The learned counsel stated that that this particular line of reasoning had also been adhered to by Courts of law.

¶149

In this connection, the learned counsel had placed reliance on the

¶150

decision of the Division Bench of this Court in The New India Assurance Company Limited Vs. Azhagusumathi reported in (2015) 1 TN MAC 179 (DB) , wherein the Division Bench had held as follows:

¶151

“14. As per Section 27 of General Clauses Act, 1897

¶152

which deals with topic 'Meaning of service by post' says that

¶153

where any Central Act or regulation authorizes or requires a document to be served by post, then unless a different intention appears, the service shall be deemed to be effected by properly addressing', prepaying and posting it by registered post, a letter containing the document, and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in ordinary course of post. The Section, thus, raises the presumption of due service or proper service if the document sought to be served is sent by properly addressing, prepaying and posting by registered post to the addressee and

¶154

such presumption is raised irrespective of whether any

¶155

18/35

¶156

https://www.mhc.tn.gov.in/judis

¶157

CMA No. 2582 of 2021

¶158

acknowledgment due is received from the addressee or not. Of course, the said presumption is rebuttable. But in the present case Exs.B4, B6 and B7 would show that the letter intimating

¶159

about the dishonour of cheque followed by cancellation of policy has been sent to the address of the owner given in the

¶160

policy by registered post, of course, without any acknowledgement due. The said letter having been sent properly addressing and posting it by registered post, it would raise a presumption that the service been effected on the addressee to whom the communication was sent. Therefore, the appellant having intimated the notice of cancellation by registered post to the owner and the RTO, the service of notice of cancellation can be treated as sufficient and the insurance company can take advantage that it has duly intimated to the owner of the offending vehicle and the authorities concerned regarding cancellation of policy due to the dishonour of cheque. Hence, the insurer cannot be held liable to indemnify the owner and it is absolved from liability. The reasoning given and the finding recorded by the Tribunal in this regard is

¶161

erroneous. Both the questions are answered accordingly.

¶162

However, the claim of third party cannot be defeated for the

¶163

19/35

¶164

https://www.mhc.tn.gov.in/judis

¶165

CMA No. 2582 of 2021

¶166

self created predicament of the insurer in issuing the policy without actually receiving the premium. Hence, the insurance

¶167

company shall pay the compensation to the claimants which it

¶168

may realise from the owner of the offending vehicle.”

¶169

Placing reliance on the observation that the claim of a third party

¶170

cannot be defeated for the self created predicament of the insurer in issuing the policy, the learned counsel argued that the appellant herein should pay the compensation and should recover it from the Insurer.

¶171

Reference was also made to the Judgment of the Hon’ble Supreme Court in Deddappa and Ors. Vs. Branch Manager, National Insurance Co. Ltd., reported in (2008) 2 Supreme Court Cases 595, wherein, it had been held as follows:

¶172

“24. We are not oblivious of the distinction between the statutory liability of the Insurance Company vis-a-vis a third party in the context of Sections 147 and 149 of the Act and its liabilities in other cases. But the same liabilities arising under a contract of insurance would have to be met if the contract is valid. If the contract of insurance has been cancelled and all concerned have been intimated thereabout, we are of the opinion, the insurance company would not be liable to satisfy the claim.”

¶173

20/35

¶174

https://www.mhc.tn.gov.in/judis

¶175

CMA No. 2582 of 2021

¶176

The learned counsel for the respondents also pointed out the Judgment

¶177

of the Hon’ble Supreme Court reported in (1998)1 Supreme Court Cases 371 in Oriental Insurance Co. Ltd., Vs. Inderjit Kaur and Ors . wherein also, the cheque issued towards the premium had been dishonoured and the insurer had informed the insured that the cheque had been dishonoured and that the insurer would not be at risk, but still it had been held that the Insurer though was entitled to avoid the policy, was however liable for third party risks as the public interest served by an Insurance policy must prevail over the Insurers’ interest.

¶178

In this connection, the following paragraphs of the said Judgment are extracted for better appreciation:

¶179

“6. We find it is difficult to conclude that the judgment in

¶180

the case of United India Insurance Co. Ltd. v. Ayeb Mohd.

¶181

[(1991) 2 ACJ 650] decides a principle of law because no notice had been issued on the special leave petition. At the same time, the opinion is expressed in the judgment that the High Court was

¶182

in error in holding, in the absence of steps to cancel the cover note, the risk would subsist.

¶183

7. Chapter 11 of the Motor Vehicles Act, 1988, provides for the insurance of motor vehicles against third-party risks. Section

¶184

21/35

¶185

https://www.mhc.tn.gov.in/judis

¶186

CMA No. 2582 of 2021

¶187

146 thereunder states that no person shall use or cause or allow any other person to use a motor vehicle in a public place unless there is in force in relation to the use of the vehicle a policy of insurance that complies with the requirements of the chapter. Section 147 sets out the requirements of policies and the limits of liability. A policy of insurance, by reason of this provision, must be a policy which is issued by a person who is an authorised insurer. Sub-section (5) reads thus:

¶188

“147. (5) Notwithstanding anything contained in any law

¶189

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.”

¶190

8. Section 149 refers to the duty of insurers to satisfy

¶191

judgments and awards against persons insured in respect of third-party risks. Sub-section (1) thereof reads thus:

¶192

“149. (1) If, after a certificate of insurance has been issued under sub-section (3) of Section 147 in favour of the person by whom a policy has been effected, judgment

¶193

22/35

¶194

https://www.mhc.tn.gov.in/judis

¶195

CMA No. 2582 of 2021

¶196

or award in respect of any such liability as is required to

¶197

be covered by a policy under clause (b) of sub-section (1) of Section 147 (being a liability covered by the terms

¶198

of the policy) or under the provisions of Section 163-A is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment-debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments.”

¶199

9. We have, therefore, this position. Despite the bar created by Section 64-VB of the Insurance Act, the appellant, an authorised insurer, issued a policy of insurance to cover the bus without receiving the premium therefor. By reason of the provisions of Sections 147(5) and 149(1) of the Motor Vehicles Act, the appellant became liable to indemnify third parties in

¶200

23/35

¶201

https://www.mhc.tn.gov.in/judis

¶202

CMA No. 2582 of 2021

¶203

respect of the liability which that policy covered and to satisfy awards of compensation in respect thereof notwithstanding its entitlement (upon which we do not express any opinion) to avoid

¶204

or cancel the policy for the reason that the cheque issued in payment of the premium thereon had not been honoured.

¶205

10. The policy of insurance that the appellant issued was a representation upon which the authorities and third parties were entitled to act. The appellant was not absolved of its obligations to third parties under the policy because it did not receive the premium. Its remedies in this behalf lay against the insured.

¶206

11. We may note in this connection the following passage

¶207

in the case of Montreal Street Rly. Co. v. Normandin [AIR 1917 PC 142] :

¶208

“When the provisions of a statute relate to the performance of a public duty and the case is such that to hold null and void acts done in neglect of this duty would work serious general inconvenience or injustice to persons who have no control over those entrusted with

¶209

the duty and at the same time would not promote the main object of the legislature, it has been the practice to hold such provisions to be directory only, the neglect of

¶210

24/35

¶211

https://www.mhc.tn.gov.in/judis

¶212

CMA No. 2582 of 2021

¶213

them, though punishable, not affecting the validity of the acts done.”

¶214

12. It must also be noted that it was the appellant itself

¶215

who was responsible for its predicament. It had issued the policy of insurance upon receipt only of a cheque towards the premium

¶216

in contravention of the provisions of Section 64-VB of the Insurance Act. The public interest that a policy of insurance serves must, clearly, prevail over the interest of the appellant.

¶217

13. We are of the view, in the circumstances, that the observations in the case of United India Insurance Co. Ltd. v. Ayeb Mohd. [(1991) 2 ACJ 650] do not lay down good law.

¶218

14. The appeal is dismissed. The respondents not having

¶219

appeared, there shall be no order as to costs.

¶220

It must also be pointed out that this Judgment was rendered by a Larger Bench of the Hon’ble Supreme Court.

¶221

It must be pointed out that though the Larger Bench decision in Inderjit Kaur had been diluted by subsequent Judgments, the Courts had refused to accept such dilution and had upheld and followed the view held in

¶222

Inderjit Kaur and Ors . referred supra.

¶223

25/35

¶224

https://www.mhc.tn.gov.in/judis

¶225

CMA No. 2582 of 2021

¶226

We have carefully considered the arguments advanced by the learned

¶227

counsels and perused the records.

¶228

The following facts are not in dispute:

¶229

(1) the appellant had issued the Policy of Insurance on 16.12.2013 for the

¶230

Tipper Lorry bearing Registration No.AP 31 TA 1567 which was owned by the fifth respondent herein.

¶231

(2) the fifth respondent had issued a cheque towards the payment of

¶232

premium on the same day / 16.12.2013.

¶233

(3) the cheque was returned by the bankers of the appellant on the ground

¶234

of insufficient funds on 06.01.2014;

¶235

(4) the appellant had intimated this fact to the insured by Registered post with acknowledgement due on 06.01.2014;

¶236

(5) The appellant herein had also intimated this fact to the Road Transport

¶237

Office at Nellore by Registered post with acknowledgement due on 06.01.2014.

¶238

(6) The accident for which the claim was made on the basis of the policy which had been issued, occurred on 18.02.2014.

¶239

During the course of trial, the appellant had produced the postal receipts towards the posting of the intimation and about the cancellation of the policy [notice to the fifth respondent herein (Ex.R3), to the Road Transport

¶240

26/35

¶241

https://www.mhc.tn.gov.in/judis

¶242

CMA No. 2582 of 2021

¶243

Office, Nellore (Ex.R4), to the Financier, Larsen & Toubro Limited (Ex.R5)] . It is thus evident that the fifth respondent had issued a cheque which was returned on the ground of insufficient funds.

¶244

32. In the Insurance Regulatory and Development Authority (Manner

¶245

of Receipt of Premium) Regulations, 2002 , it had been provided that when the remittance made by the proposer, in this case by the fifth respondent, had not been realized by the appellant owing to, in this case, the cheque being returned for want of sufficient funds, the policy shall be treated as void ab initio .

¶246

However, we would also have to refer to Section 64 (V) (b) of the Insurance Act, which is as follows:

¶247

“64VB. No risk to be assumed unless premium is received

¶248

in advance:-

¶249

(1)No insurer shall assume any risk in India in respect of

¶250

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

¶251

and until deposit of such amount as may be prescribed, is made in

¶252

advance in the prescribed manner.

¶253

27/35

¶254

https://www.mhc.tn.gov.in/judis

¶255

CMA No. 2582 of 2021

¶256

(2)For the purposes of this section, in the case of risks for

¶257

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.

¶258

Explanation.--Where the premium is tendered by postal

¶259

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.

¶260

The provision of the Central legislation prevails over every other regulation or circular issued. The Act very clearly provides that no policy shall be issued unless the premium is received.

¶261

In the instant case, the policy had actually been issued. Later, as a fact, since the cheque had been dishonoured, the appellant has cancelled it but there is no proof for delivery of the said intimation. The appellant falls back to Section 27 of the General Clauses Act. However, the Larger Bench of the Hon’ble Supreme Court in Inderjit Kaur and Ors . referred supra had held that third party risks are a public interest served by an Insurance Policy and must prevail over the insurers’ interest. This Judgment was rendered because of conflicting Judgments in United India Insurance Co. Ltd., Vs. Ayeb Mohd.

¶262

28/35

¶263

https://www.mhc.tn.gov.in/judis

¶264

CMA No. 2582 of 2021

¶265

reported in (1991) 2 ACJ 650. It was finally held that the ratio laid in the aforementioned Judgment ( Ayeb Mohd.) did not laid down good law. This particular Judgment of Inderjit Kaur has been subsequently referred in (2012) 5

¶266

Supreme Court Cases 234 , ( Laxmamma and ors. case referred supra) wherein after examining subsequent Judgments (after Inderjit Kaur referred supra), particularly Deddappa and ors. referred supra, the Hon’ble Supreme Court had again reiterated the position of law as laid down in Inderjit Kaur. The position of law which the Supreme Court again reiterated in Laxmamma case in paragraph 24 is as under:

¶267

“24. We find it hard to accept the submission of the learned

¶268

counsel for the insurer that the three-Judge Bench decision in Inderjit Kaur has been diluted by the subsequent decisions in Seema Malhotra and Deddappa. Seema Malhotra and Deddappa turned on the facts obtaining therein.”

¶269

The one fact which plays on our mind is that no document had been produced to prove intimation of the communication on either the Insured or on the Road Transport Office, Nellore. It is also necessary that the Policy should have been cancelled by the appellant herein. However, we are bound by the deduction laid down by the Larger Bench of the Hon’ble Supreme Court in Inderjit Kaur (referred supra) wherein they had stated very clearly that

¶270

29/35

¶271

https://www.mhc.tn.gov.in/judis

¶272

CMA No. 2582 of 2021

¶273

honouring third party risks prevails over interest of the insurer. The ratio laid down therein that the compensation amount should be paid and thereafter recovered, subserves justice, and we would therefore follow that particular

¶274

reasoning and direct the appellant herein to pay the compensation amount and recover it from the insurer.

¶275

With respect to the quantum of compensation awarded, a perusal of the Award of the Tribunal, it is seen that the future prospects of the deceased had been taken as 50%, which is on the higher side. In the light of the judgment of the Hon’ble Supreme Court in National Insurance Co. vs Pranay Sethi and others reported in 2017 (2) TNMAC 601 we are inclined to fix the future prospects of the deceased at 40% and the notional income of the deceased is also reduced from Rs.15,000/- to Rs.13,000/- p.m. as the deceased was working as a Painter.

¶276

38. Applying the above, while the monthly income would be Rs.13,000 + 40% of Rs.13,000/- = Rs.18,200/-. Since there are three dependents including the father of the deceased (as there is no contrary evidence produced to show that the father was not dependent on the deceased), ¼ share of the income is deducted towards his personal expenses. Th e total monthly income would thus be Rs.4,550/-. The annual income of the deceased would be Rs.4,550 x 12 =

¶277

30/35

¶278

https://www.mhc.tn.gov.in/judis

¶279

CMA No. 2582 of 2021

¶280

Rs.54,600/-. Since the deceased was aged 24 years at the time of accident, applying the appropriate multiplier, namely, 18, as per the decision of the Hon’ble Supreme Court in Sarla Verma and others vs. Delhi Transport

¶281

Corporation and another reported in (2009) 6 SCC 121 , ‘ Loss of Income ’ would be Rs.9,82,800/-.

¶282

39. In addition, the claimants are entitled to Rs.1,60,000/- (40,000 X 4), Rs.1,50,000/-, Rs.15,000/- and Rs.15,000/- towards Loss of Consortium, Loss of love and affection, Loss of Estate and Funeral Expenses respectively, a s per the decision in National Insurance Co. vs Pranay Sethi and others (cited supra). Thus, the claimants are entitled to a total compensation of Rs.13,22,800/- (9,82,800 + 1,60,000 + 1,50,000 + 15,000 + 15000 = 13,22,800) as shown in the following tabular column:

¶283

*S.No.*	*Head*	*Amount granted by* *this court Rs.*
1.	Loss of dependency	9,82,800 /-
2.	Loss of consortium (Rs.40,000/- x 4)	1,60,000/-
3.	Loss of Love and affection	1,50,000/-
4.	Funeral expenses	15,000/-
5.	Loss of Estate	15,000/-
	Total	13,22,800/-

¶284

31/35

¶285

https://www.mhc.tn.gov.in/judis

¶286

CMA No. 2582 of 2021

¶287

In the result,

¶288

i. the Civil Miscellaneous Appeal is partly allowed.

¶289

ii. The compensation of Rs.40,00,000/- awarded by the Tribunal is hereby reduced to Rs .13,22,800 /-.

¶290

iii. The appellant Insurance Company is directed to deposit the reduced compensation of Rs .13,22,800 /- (Rupees Thirteen Lakhs Twenty Two Thousand Eight Hundred only), less the amount already deposited, together with interest at 7.5% p.a. from the date of petition till the date of deposit to the credit of M.C.O.P.No.2244 of 2014 on the file of the Motor Accidents Claims Tribunal, (In the II Court of Small Causes) at Chennai , within a period of six (6) weeks from the date of receipt of this judgment and recover it from the insurer / fifth respondent.

¶291

iv. On such deposit being made by appellant Insurance Company, the respondents/claimants 1, 3 and 4 are permitted to withdraw their respective shares, as apportioned by Tribunal, along with accrued interest and costs, less the amount, if any already withdrawn by them, by filing necessary application before the Tribunal.

¶292