Allowed

Divisional Manager,M/S.Oriental Insurance Co.Ltd. v. Sarbeswar Sahu

Orissa HC1 Aug 2024MACA/632/2017

Case brief

AI extract

What is this about?

Insurer appeals two MACT awards arising from a fatal bus accident, contending the policy was cancelled after premium cheque dishonour with intimation to the RTO and owner before the accident. Applying presumptions of service by registered post and precedent, the High Court discharged the insurer of liability while permitting claimants to recover from the owner.

What did the court decide?

Appeals allowed; insurer discharged of liability to indemnify the award amounts; claimants free to recover from the owner.

Divisional Manager,M/S.Oriental Insurance Co.Ltd. Vs Sarbeswar Sahu — Insurance | Orissa HC (2024)

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Signature Not Verified

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Digitally Signed Signed by: SANGRAM DAS Reason: Authentication Location: High Court of Orissa, C utta ck Date: 02-Aug-2024 16:57:01

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IN THE HIGH COURT OF ORISSA AT CUTTACK MACA No.1297 of 2017 &MACA No.632 of 2017

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(From the judgment dated 29^th August 2017 & 30^th March 2017 of learned 3^rd MACT, Balasore passed in MAC Nos.1753 of 2014 and 1695 of 2014)

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MACA No.1297 of 2017 & 632 of 2017

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Divisional Manager, Oriental Insurance Co.Ltd. (in MACA No.1297/2017) Divisional Manager, Oriental Insurance Co.Ltd. (in MACA No.632/2017) …. Appellant -versus- Hemanta Bag & Ors (In MACA No.1297/2017) Sarbeswar Sahu & Ors. (In MACA No.632/2017) …. Respondents

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Advocate(s) appeared in this case:-

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For Appellant : Mr.G.P.Dutta, Advocate (in MACA No.1297 of 2017 & MACA No.632 of 2017) For Respondents : Mr. B.Singh, Advocate for Respondents (in MACA No.1297 of 2017 & MACA No.632 of 2017)

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CORAM: JUSTICE B.P. ROUTRAY

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JUDGMENT

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1^st August 2024

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B.P. Routray, J.

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The matters are taken up through hybrid mode.

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MACA No.1297 of 2017 & 632 of 2017

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Page 1 of 7

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Signature Not Verified

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Digitally Signed Signed by: SANGRAM DAS Reason: Authentication Location: High Court of Orissa, C utta ck Date: 02-Aug-2024 16:57:01

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Heard Mr.G.P.Dutta, learned counsel for the insurerAppellant and Mr. B.Singh, learned counsel for the claimantRespondents.

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Both the awards being related to the same accident causing death of two persons are heard together and disposed of by this common judgment.

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MACA No.1297 of 2017 has been filed challenging the impugned award dated 29^th August 2017 of learned 3^rd MACT, Balasore passed in MAC No.1753 of 2014 and MACA No.632 of 2017 has been filed challenging the impugned award dated 30^th March 2017 of learned 3^rd MACT, Balasore passed in MAC No.1695 of 2014.

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The learned Tribunal has directed for payment of compensation of Rs.6,00,000/- and Rs.7,35,000/- along with interest @7.5% per annum in MAC No.1753 of 2014 & MAC No.1695 of 2014 on account of death of the deceased persons namely Sudhamani Bag and Krushna Kanhya Sahu respectively in the motor vehicle accident dated 1^st September 2014.

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MACA No.1297 of 2017 & 632 of 2017

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Page 2 of 7

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Signature Not Verified

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Digitally Signed Signed by: SANGRAM DAS Reason: Authentication Location: High Court of Orissa, C utta ck Date: 02-Aug-2024 16:57:01

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The entire contention of challenge advanced by Mr.Dutta on

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behalf of the Insurer is that, the policy was not valid on the date of accident and it was cancelled much prior to that with due intimation to the authority and the owner.

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The accident took place on 1^st September 2014 involving offending vehicle bearing registration No.OR-01-L-0391 (Bus). The Insurance policy was applied for on 6^th September 2013 by submission of cheque towards premium and accordingly the policy certificate was issued on 6^th September 2013 valid till 5^th September 2014. The cheque submitted towards premium at the time of taking the policy was subsequently dishonoured and the intimation was sent by the bank on 4^th October 2013 under Ext.E. Then immediately the Insurer cancelled the policy and intimated the same to the Registering Authority i.e. RTO, Balasore vide letter dated 11^th October 2013 (Ext.G) and the owner also.

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This cancellation of policy of insurance granted on 6^th September 2013 in respect of the offending vehicle has been intimated vide letter dated 11^th October 2013 under Ext.G through registered post to the RTO and the Insured owner on 28^th October

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MACA No.1297 of 2017 & 632 of 2017

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Page 3 of 7

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Signature Not Verified

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Digitally Signed Signed by: SANGRAM DAS Reason: Authentication Location: High Court of Orissa, C utta ck Date: 02-Aug-2024 16:57:01

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The receipts of the registered post letters have been filed under Ext.H.

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Mr.Singh submits that the acknowledgement receipts

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produced by the Insurer do not establish the proof of service of cancellation of policy and therefore, the liability of the Insurer still remains to indemnify the compensation.

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The issuance of letter by registered post to the addressee carries certain presumption of delivery of the same. It is acknowledged in Order 5 Rule 19 of the Civil Procedure Code. Similarly, Section 27 of the General Clauses Act prescribes that the if the addressee is properly made and the letter is sent by registered post, then delivery of the same is presumably effected unless the contrary is proved. Reading Section 27 along with Section 114(f) of the Indian Evidence Act draws the presumption of delivery of the letter sent in registered post to the addressee without proof to the contrary.

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In M/s. Indo Automobiles vs. M/s. Jai Durga Enterprises &

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Ors., 2008 AIR SCW 7436, the Hon’ble Supreme Court has observed that, it is well-settled that once notice has been sent by

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MACA No.1297 of 2017 & 632 of 2017

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Page 4 of 7

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Signature Not Verified

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Digitally Signed Signed by: SANGRAM DAS Reason: Authentication Location: High Court of Orissa, C utta ck Date: 02-Aug-2024 16:57:01

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registered post with acknowledgment due in a correct address, it must be presumed that the service has been made effective. In M/s.

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Ajeet Seeds Ltd vs.K.Gopala Krishnaiah, AIR 2014 SC 3057 , the Supreme Court has held as follows;-

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“10. It is thus clear that Section 114 of the Evidence Act enables the Court to presume that in the common course of natural events, the communication would have been delivered at the address of the addressee. Section 27 of the GC Act gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. It is not necessary to aver in the complaint that in spite of the return of the notice unserved, it is deemed to have been served or that the addressee is deemed to have knowledge of the notice. Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business.”

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From the analysis of law as stated above, it can be well presumed that the letter of cancellation of policy dated 11^th October 2013 (Ext.G) has been duly served on the Registering Authority as well as the insured owner in due course. In the case of United India Insurance Company Limited vs. Laxmamma and

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others, (2012) 5 SCC 234, it is held by the Supreme Court that:-

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MACA No.1297 of 2017 & 632 of 2017

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Page 5 of 7

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Signature Not Verified

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Digitally Signed Signed by: SANGRAM DAS Reason: Authentication Location: High Court of Orissa, C utta ck Date: 02-Aug-2024 16:57:01

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“26. 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 the authorized 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 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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In the case at hand , the Insurer has produced the copy of the cancellation letter and the registered post receipts under Ext.G & H to substantiate their contention about cancellation of policy and intimation of the same to the Registering Authority as well as the owner in support of their evidence stated by O.P.W.1. Accordingly, the Insurer is discharged of its liability from indemnification pursuant to the insurance policy upon its cancellation and due intimation sent to the registering authority and the insured. Therefore, the direction of the Tribunal to the

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MACA No.1297 of 2017 & 632 of 2017

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Page 6 of 7

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Signature Not Verified

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Digitally Signed Signed by: SANGRAM DAS Reason: Authentication Location: High Court of Orissa, C utta ck Date: 02-Aug-2024 16:57:01

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Insurer to indemnify the award amount cannot sustain. The Insurer is discharged of its liability. However, it is open for the Claimants

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to realize the amount from the owner.