Dismissed

Bajaj Allianz General Insurance Company Limited v. Parikirala Radha

Telangana HC11 Aug 2014MACMA/2565/2008

Case brief

AI extract

What is this about?

Appeal by insurer challenging compensation awarded for death in motor accident. Court held insurer liable as policy was subsisting because cancellation/intimation of premium cheque dishonour was not proven to be communicated before the accident. Quantum of compensation affirmed.

What did the court decide?

Appeal dismissed with no order as to costs; pending miscellaneous petitions closed.

Bajaj Allianz General Insurance Company Limited Vs Parikirala… — Insurance | Telangana HC (2014)

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THE HON’BLE SRI JUSTICE C. PRAVEEN KUMAR

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M.A.C.M.A.No.2565 of 2008

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JUDGMENT:-

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The appellant/Insurer filed the present appeal, under Section 173 of the Motor Vehicles Act, aggrieved by the order dated 29-02-2008 passed by the Motor Accident Claims Tribunalcum-II Additional District Judge, Warangal (for short ‘the Tribunal’) in O.P.No.731 of 2007.

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For the sake of convenience, the parties will hereinafter be referred to as arrayed in the main O.P.

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The claimants 1 to 6 filed an application, under Section 166 (c) (i) of the Motor Vehicles Act, 1988, claiming compensation of Rs.5,75,000/- for the death of one Parikirla Poshalu in a motor vehicle accident that occurred on 30-11-2006. The first claimant is the wife, claimants 2 to 5 are the minor children and claimant No.6 is the mother of the deceased. It was stated that on the fateful day at about 9.30 A.M. deceased was proceeding from Palakurthy village to Pasaragonda village and when he reached near agricultural well of Bollam Buchimallu, a tractor and trailor Nos.AP 36 P 4223 and 4225 driven by its driver in rash and negligent manner came from behind and dashed the deceased. As a result of which the deceased fell down and thereafter the crime vehicle ran away on the body of the deceased. Immediately thereafter he was shifted to MGM Hospital, Warangal, where he succumbed to injuries. On the basis of the above incident, a case in Crime No.187 of 2006 of Atmakur Police Station came to be registered for an offence punishable under Section 304-A of IPC. Since the accident took place due to rash and

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negligent act of the driver of the 1^st respondent and 2^nd and 3^rd respondents being the insurer of the crime vehicle an application was filed making all of them jointly and severally liable to pay compensation.

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The 1^st and 2^nd respondents remained ex parte, and the 3^rd respondent, the insurer of the vehicle, filed a counter denying the allegations made in the petition. It was specifically stated that they are not aware of the criminal proceedings in the case and the matter of accident was also not reported to them by the owner of the vehicle in collusion with the petitioner.

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On the basis of the above pleadings, the Tribunal framed the following issues for its consideration:

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1) Whether the accident that took place due to rash and negligent driving of driver of Tractor and Trailor No.AP 36 Plaintiff 4223 and 4225?

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2) Whether the petitioners are entitled for compensation, if so, to what amount and from whom?

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3) To what relief?

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In support of his case, the first petitioner examined herself as PW-1 and also examined an eyewitness to the accident as PW2. The claimants also got marked Exs.A1 to A6. Though no oral evidence was adduced on behalf of the respondents, but they got marked Ex.B.1, a copy of insurance policy with consent.

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After analyzing the material available on record, the Tribunal awarded a sum of Rs.3,95,000/- as compensation to be paid jointly and severally by the respondents with interest @ 7.5% per annum from the date of petition till the date of realization. Challenging the same, the second and third respondents filed the present appeal.

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Learned counsel for the appellants submitted that the Insurance Company is not liable to pay any compensation since the policy was cancelled much prior to the accident. He also submitted that the income of Rs.2,000/- per month which was taken into consideration as salary of the deceased was without any basis. In any event it is stated that the loss of dependency awarded by the Tribunal is also on higher side.

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Per contra, learned counsel for the respondents submitted that the issue of expiry of the policy long prior to the accident was never raised before the Tribunal and for the first time the documents are placed before this Court to show that the policy was cancelled by the date of accident. He further submitted that even accepting the documents at their face value the Insurance Company cannot escape from its liability.

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Along with the appeal the Insurance Company filed documents namely affidavit of the Deputy Manager of the Insurer, dishonoured cheque, memorandum of cheque showing dishonour of cheque and also the letter said to have been sent by the Insurance Company to the first claimant.

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Before proceeding further it is to be noted that the Insurance Company did not raise the plea of cancellation of policy prior to the accident. For the first time documents are filed before this Court to show that the cheque dated

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19-01-2006 issued by the owner of the vehicle was disnohoured due to insufficiency of funds. On intimation about the dishonour of cheque the insurer wrote a letter to the first claimant on 09-032006 demanding for payment of amount covered under the cheque. It is contended that the contract of insurance has to be treated as

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void ab initio and no liability can be fastened on the insurer. It may be necessary to note that the Insurance Company has not filed any documents to show proof of service of letter dated 09-03-2006 on the claimant. Even the acknowledgment card was not filed to show service of the said letter.

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As stated earlier the main ground raised by the learned counsel for the appellants is that the policy was cancelled due to non-payment of premium. The Apex Court in case of UNITED INDIA INSURANCE COMPANY LIMITED V. LAXMAMMA AND OTHERS^[1] , while dealing with the aspect as to the dishonour of cheque issued for payment of premium held as follows (paragraph Nos.24 to 26):

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“24. We find it hard to accept the submission of the learned counsel for the insurer that the three-Judge Bench decision in Oriental Insurance Co. Limited v. Inderjit Kaur [(1998) 1 SCC 371] has been diluted by the subsequent decisions in National Insurance Co. Ltd v. Seema Malhotra [(2001) 3 SCC 151] and Deddappa v. National Insurance Co. Ltd. [(2008) 2 SCC 595]. Seema Malhotra’s and Deddappa’s cases turned on the facts obtaining therein.

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25. In Seema Malhotra’s case, the claim was by the legal heirs of the insured for the damage to the insured vehicle. In this peculiar fact situation, the Court held that when the cheque for premium returned dishonoured, the insurer was not obligated to perform its part of the promise. Insofar as Deddappa’s case is concerned, that was a case where the accident of the vehicle occurred after the insurance policy had already been cancelled by the insurance company.

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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 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 in receipt of the cheque paid towards premium and the cheque gets dishonoured and

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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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A reading of the above judgment makes it clear when the policy of Insurance was issued by an authorized insurer on receipt of cheque towards payment of premium and the said cheque was 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 was cancelled by the authorized insurer and intimation of such cancellation reached the insured prior to the accident.

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In the instant case the Insurance Company has not filed any documents to show that the cheque which was given prior to the expiry of insurance policy was returned due to insufficiency of funds in the month of March, 2006 i.e., after issuance of policy. The intimation of dishonour of cheque by the bank was alleged to have been intimated by the first respondent on 09-03-2006. The mode in which such intimation was sent is not forthcoming. Even in the affidavit filed by the Deputy Manager of the company before this Court is silent on that aspect. No proof or any material is filed to show that the said intimation was communicated to the claimant, leave alone prior to the accident as required.

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In view of the judgment of the Apex Court referred to above, the argument of the learned counsel for the appellants that Insurance Company should be exempted from payment of

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compensation cannot be accepted.

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Coming to the quantum of compensation, learned counsel for the appellant contended that the Tribunal erred in fixing the income of deceased at Rs.3,000/- per month.

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As seen from the record, the deceased was aged about 35 years on the date of accident and was eking out his livelihood by doing masonary work. The said fact was spoken by the wife of the deceased. Though she was cross-examined at length nothing useful was elicited to disbelieve the same. Hence, there is no reason to disbelieve her evidence in the absence of any contra evidence. In fact, the evidence of PW1 is supported by Ex.A2 the inquest report with regard to occupation of deceased. Considering these circumstances and taking the income of a Mason at Rs.100/- per day, the Tribunal fixed monthly income of deceased as Rs.3,000/- per month which needs no interference. After deducting 1/3^rd towards personal expenditure and applying multiplier ‘15’ the Tribunal assessed the loss of dependency at Rs.3,60,000/-. Therefore, the finding of the Tribunal in taking the salary of the deceased at Rs.3,000/- per month i.e., Rs.100/- per day cannot be said to be on higher side. For the reasons mentioned above, the finding of the Tribunal with regard to quantum of compensation warrants no interference.

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In the result, the appeal is dismissed. There shall be no order as to costs. Consequently, miscellaneous petitions, if any, pending in the appeal shall stand closed.

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________________________ C. PRAVEEN KUMAR, J 11^th August, 2014

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THE HON’BLE SRI JUSTICE C. PRAVEEN KUMAR

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M.A.C.M.A.No.2565 of 2008

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11^th August, 2014

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[1] (2012) 5 Supreme Court Cases 234