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2016 Supreme(J&K) 477
IN THE HIGH COURT OF JAMMU AND KASHMIR AT JAMMU
R. SUDHAKAR, J.
Oriental Insurance Company Limited - Appellant
Versus
Rani Devi and Ors. - Respondents
CIMA No. 47 of 2013 and MP No. 01 of 2016
Decided On : 06-10-2016
For the Appellant :D.S. Chauhan and Meharban Singh, Advocates.
For the Respondents:Rajesh Kumar, Advocate.
The central legal point established in the judgment is that the Insurance Company's liability to compensate claimants is not extinguished by the cancellation of the policy due to a bounced cheque, unless the cancellation has been properly communicated to all relevant parties, including the Regional Transport Officer.
Headnote:
Insurance - Policy Cancellation - Liability of Insurance Company
Fact of the Case:
The appellant-Insurance Company appealed the award passed by the Motor Accident Claims Tribunal, Jammu, claiming that the policy for the offending vehicle was cancelled due to a bounced cheque for the premium. The company argued that they had communicated the cancellation to the owner and the Regional Transport Officer.
Finding of the Court:
The court found that the Insurance Company failed to prove the intimation of cancellation of the policy to the Regional Transport Officer, as required by law. Therefore, the Insurance Company was held liable to compensate the claimants, with the right to recover the amount from the owner of the vehicle due to the dishonored cheque.
Issues: The main issue was whether the Insurance Company could be exonerated from liability due to the bounced cheque for the premium and the subsequent cancellation of the policy.
Ratio Decidendi: The court relied on the legal requirement for the Insurance Company to communicate the cancellation of the policy to the Regional Transport Officer, as per Sections 147(5) and 149(1) of the Act. The failure to provide this intimation made the Insurance Company liable to compensate the claimants.
Final Decision: The court confirmed the award in favor of the claimants, holding the Insurance Company liable to compensate them and allowing the claimants to withdraw the amount awarded.
R. Sudhakar, J.
1. This appeal is of the year 2013. In this instant appeal the short issue raised for consideration is whether the appellant-Insurance Company would stand exonerated in a case where a cheque issued by the owner of the vehicle towards premium for the policy had bounced for want of sufficient funds.
2. The appellant-Insurance Company is on appeal challenging the award dated 20th November, 2012 passed by the Motor Accident Claims Tribunal, Jammu by stating that on the date of accident there was no valid insurance policy coverage to TATA 407 vehicle No. JK02AA-0955 which was involved in the accident.
3. Learned counsel for the appellant-Insurance Company submits that the cheque issued for insurance cover by the owner of the aforesaid offending vehicle got dishonoured, and on bank intimation to the Insurance Company, the same was informed to the owner. Therefore, the policy was cancelled from its very inception. It is pleaded that communication relating to cancellation of policy was sent to the owner of the vehicle as well as to the Regional Transport Officer, Jammu, therefore, on the date of accident i.e. 20.07.2005, Insurance Company was not liable to compensate the claimants.
4. For the above said plea, two factors are relevant, one is intimation to the owner of the vehicle and other one is intimation to the Regional Transport Officer. According to the learned counsel for the appellant-Insurance Company intimation was sent to the owner of the vehicle through registered cover, however, the registered envelope was received back with the report "try again, Address not traceable, returned to sender."
5. In this case intimation for cancellation of the policy was sent to the owner of the vehicle to the address originally given by him. Appellant-Insurance Company cannot be faulted if it has sent the intimation to the given address.
6. The reasoning of the Tribunal that it was incumbent upon the Insurance Company to lookout for the fresh address of the owner-respondent No. 2 and intimate him about the cancellation of the policy is erroneous and improper. It is not for the Insurance Company to chase the policy holder. It is for the policy holder to intimate the Insurance Company about the change of address or of other particulars, if there is any change. It is not vice versa.
The next requirement in a case of this nature is intimation of cancellation of policy to the Regional Transport Officer.
7. The said issue has been considered by the Division Bench of High Court Kerala in case MACA No. 2910 of 2009 titled Wilson v. Vasantha Kumar, Vasantha Bhavan, Karakulam and ors. decided on 23.08.2013. In the said case the Hon'ble Division Bench in Para 14 held as follows:-
"14. We are not going into those aspects now regarding the binding nature of the later Division Bench decision of the Honourable Apex Court because, in this case, admittedly, the insurer had not informed the Regional Transport Authority concerned about the cancellation of the policy. Merely because they have informed the insured along they cannot claim exoneration from their liability to pay the amount to the third parties, which they are bound to honour by virtue of Sections 147(5) and 149(1) of the Act. They are not entitled to contend that their liability is extinguished on account of cancellation of the policy, long prior to the accident. Further in this case, it is seen from the documents produced before the Court, namely, Ext. A 35 that the temporary permit was granted to this vehicle in the name of the first respondent from 5.12.2006 to 24.12.2006 on 5.12.2006, i.e., one day prior to the date of accident. If the insurer had informed about the cancellation of policy to the Regional Transport Officer concerned, then they would not have issued the permit and the vehicle would not have been put on road, which would have prevented the unfortunate incident, resulting in injuries to several persons carried in the vehicle. A third party is entitled to board a p
