An insurance company is not liable for compensation when the policy is canceled due to dishonor of the premium cheque, and the insured has been duly informed.

JUDGMENT :

P. SREE SUDHA, J.

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.

2. M.F.A. No.8867/2018 is filed by the appellant-

insurance 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).

3. M.F.A. No.9194/2018 is filed by the appellant-

insurance 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).

4. 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 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.

5. Heard the arguments of both sides.

6. Learned counsel for the appellant-insurance company 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.

7. Learned counsel for the appellant-insurance company further contended that in a written statement filed by the 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.

8. Learned counsel for Insurance Company examined 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 Ex.R8, it was specifically mentioned under head ‘special condition’ as follows:

“In the event of dishonor of cheque, this policy document automatically stands cancelled from inception irrespective of