Back
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR
GOVERDHAN BARDHAR, J.
THE ORIENTAL INSURANCE CO LTD THROUGH MANAGER, PAOTA, JODHPUR – Appellant
VS
SMT. KULSUM BANO W/O LATE SHRI NAWAB KHAN – Respondent
CIVIL MISC. APPEAL (CMA) No. 310 of 2006
Decided on : 30-09-2016
Insurance - Motor Vehicles Act - Section 173 - 1988 - [1. Whether on 10.04.2002 at 6:30 PM Near Gattani Hospital, Banar Road the non applicant no.1 Driver of vehicle No. RNM 38889 while driving the vehicle in rash and negligent manner caused the accident due to which Nawab Khan succumbed to injuries ? 2. Whether at the time of accident, non-applicant no.1 was in employment of the owner of vehicle non-applicant no.2 and driving the vehicle in the interest and benefit of non-applicant no.2? 3. Whether non-applicant no.1 was not having valid driving license at the time of accident and whether the Insurance company can be absolved from its liability and if not then what shall be the effect? 4. Whether the claimants are entitled to get compensation as claimed in the claim petition, if yes, from who and how much and in what proportion the claimants shall be entitled to receive the amount of compensation ?] - The court discussed the liability of the insurance company in cases where the cheque relating to payment of premium amount has been dishonoured and the subsequent cancellation of the insurance policy. The court analyzed various legal provisions, including Section 64-VB of the Insurance Act, Sections 147(5) and 149(1) of the Motor Vehicles Act, and relevant case laws to determine the insurer's liability. The court emphasized the importance of valid consideration in a contract, the effect of dishonoured cheques on insurance contracts, and the insurer's obligation to indemnify third parties. The court ultimately held that the insurance company was not liable to indemnify the insured due to the cancellation of the policy before the accident.
Fact of the Case:
A claim petition was filed by the respondents before the Motor Accident Claims Tribunal, stating that the deceased Nawab Khan died in a road accident involving a private bus and a truck. The insurance company raised a preliminary objection, stating that the vehicle was not insured on the date of the accident. The court considered the evidence and awarded compensation to the claimants, holding the insurance company, owner, and driver jointly and severally liable. The insurance company appealed the decision, challenging its liability due to the cancellation of the insurance policy before the accident.
Finding of the Court:
The court found that the insurance company was not liable to pay compensation as the policy was cancelled before the accident, and the insured failed to prove payment of the premium amount after the dishonour of the cheque. The court emphasized the importance of valid consideration in a contract, the effect of dishonoured cheques on insurance contracts, and the insurer's obligation to indemnify third parties. The court ultimately held that the insurance company was not liable to indemnify the insured.
Issues: The issues included determining the liability of the driver for the accident, the employment relationship between the driver and the vehicle owner, the validity of the driver's license, and the entitlement of the claimants to compensation.
Ratio Decidendi: The court's decision was based on the legal principles related to the effect of dishonoured cheques on insurance contracts, the insurer's obligation to indemnify third parties, and the importance of valid consideration in a contract. The court emphasized the need for the insurance policy to be in existence at the time of the accident for the insurer to be liable to pay compensation.
Final Decision: The appeal was allowed, and the court quashed the award holding the insurance company liable for compensation, stating that the insurance company was not liable to indemnify the insured due to the cancellation of the policy before the accident.
1. Instant appeal has been filed by the appellant Insurance company under Section 173 of the Motor Vehicles Act, 1988 against the judgment and award dated 05.10.2005 passed by learned Addl. District and Sessions Judge (FT) No.4, MACT Cases, Jodhpur [hereinafter referred to as Judge, MACT Cases] in Claim Case No. 189/2004 whereby, the learned Judge, MACT Cases has awarded compensation in the sum of Rs. 4,19,000/- to the claimant respondents.
2. Succinctly stated, facts of the case are that a claim petition was filed by the respondent no.1 to 4 before the Motor Accident Claims Tribunal, Jodhpur which was later on transferred to the court of learned Judge, MACT Cases, stating therein that on 10.04.2002, when the deceased Nawab Khan was coming to Jodhpur from Banar road in Truck No. RSN- 4881 carrying limestone, at around 6:30 PM, a private bus No. RNS 3989 being driven rash and negligently by the driver hit the truck from behind due to which Nawab Khan who was sitting on the other side of the driver of truck fell down on the road. It is further stated that the private bus No. RNS 3989 coming behind the truck ran over him, consequently due to grievous injuries, he died on the spot. As per claim petition, the deceased was earning Rs. 5000/- per month, therefore, it was prayed in the claim petition that a sum of Rs. 16,07,000/- may be awarded as compensation in favour of the claimants.
3. The non-applicant no.2 Ugam Singh, owner/insured of the vehicle remained ex parte despite service. The non-applicant no.1 Driver Jitendra Singh filed reply to the claim petition and stated that no accident was caused due to negligence of non-applicant no.1. The appellant insurance company non-applicant no.3 filed its reply and raised preliminary objection that Vehicle No. RNS 3989 was not insured with the insurance company on the date of accident and therefore, the insurance company is not liable to make payment of compensation. In para no.17 of the reply, the insurance company has specifically stated that owner Ugam Singh applied for insurance of Vehicle No. RNS-3989 and an account payee cheque No. 045026 dated 14.01.2002 of Jodhpur Central Co-operative Bank Ltd, Bhopalgarh Branch for a sum of Rs. 7815/- was given towards payment of premium amount and in lieu thereof, a cover note being valid for 15 days was issued. It is stated in the reply that the Insurance company presented the cheque for clearance but the same was dishonoured due to insufficient funds. The information with regard to dishonouring was received by the company on 30.01.2002 and thereafter, on 06.02.2002 the company informed the owner of the vehicle Shri Ugam Singh about dishonouring of cheque and the insurer cancelled the cover-note issued for Policy No. 242202/31/4340/2002/2302 on 16.02.2002. In reply it has further been stated that the contract of insurance was cancelled much before the date of accident and in absence of a subsisting and valid insurance contract on the date of accident, the insurer has no obligation to indemnify the insured.
4. Non-applicant no.1 driver did not produce any evidence. On behalf of non-applicant Insurance company DW/1 Mahendra Kumar Jain was examined as witness in evidence and Ex.A/1 Policy cancellation certificate, Ex.A/2 original cheque, Ex.A/3 memo of dishonour of cheque of Rs. 7815/- by Jodhpur Central Co-operative Bank Ltd, Ex.A/4 information to the owner, Ex.A/5 & 6 postal receipts and Ex.A/7 intimation letter dated 06.02.2002 regarding cancellation of policy were produced as documentary evidence.
5. On the basis of pleadings, the learned Judge, MACT Cases framed following issues for consideration :-
“1. Whether on 10.04.2002 at 6:30 PM Near Gattani Hospital, Banar Road the non applicant no.1 Driver of vehicle No. RNM 38889 while driving the vehicle in rash and negligent manner caused the accident due to which Nawab Khan succumbed to injuries ?
2. Whether at the time of accident, non-applicant no.1 was in employment of the owner of vehic
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
