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1992 Supreme(Ori) 150
IN THE HIGH COURT OF ORISSA
K.C. Jagadeb Roy, J.
NEW INDIA ASSURANCE CO. LTD. - APPELLANT
Versus
RAMBHA DEI AND OTHERS - RESPONDENT
M.A. No. 308 of 1989
Decided On : 14-12-1992
M. Sinha, for the Appellant; S.N. Satpathy, I. Mohanty, Rajib Dass and L. Pradhan, for the Respondent
A policy of insurance issued by an insurance company remains valid until it is canceled. A mere notice of cancellation issued by the insurance company does not automatically render the policy void.
Headnote:
MOTOR VEHICLES ACT, 1939 - SECTION 96(2)(C), 105 - INSURANCE POLICY - CANCELLATION - VALIDITY - LIABILITY OF INSURANCE COMPANY - COMPENSATION - QUANTUM.
Fact of the Case:
The appellant, an insurance company, challenged the award made by the Motor Accidents Claims Tribunal, Cuttack, granting compensation to the respondents for the death of their son/husband in a road accident. The insurance company claimed that the policy of insurance was canceled before the accident and hence it had no liability to pay compensation.
Finding of the Court:
The court held that the policy of insurance continued to be valid on the date of the accident as the letter intimating the cancellation of the policy was issued after 5 days of the accident. The court also held that the insurance company could not avoid its liability under the policy merely because the cheque for the premium bounced.
Issues: 1. Whether the policy of insurance was valid on the date of the accident? 2. Whether the insurance company was liable to pay compensation to the respondents?
Ratio Decidendi: 1. A policy of insurance issued by an insurance company remains valid until it is canceled. A mere notice of cancellation issued by the insurance company does not automatically render the policy void. 2. An insurance company cannot avoid its liability under a policy of insurance merely because the cheque for the premium bounced.
Final Decision: The court dismissed the appeal filed by the insurance company and allowed the cross-appeal filed by the respondents, enhancing the compensation amount from Rs. 36,000/- to Rs. 54,000/-.
JUDGMENT :
K.C. Jagadeb Roy, J. - This Misc. Appeal has been filed by the insurer appellant challenging the award made by the Second Motor Accidents Claims Tribunal, Cuttack, in Misc. Case No. 142 of 1985 granting a sum of Rs. 36,000/- excluding interest which will run at the rate of 12 per cent per annum from the date of claim till payment. It was indicated in the award that out of the said amount of compensation respondent No. 1, mother of the deceased, will be entitled to a sum of Rs. 16,000/- and the respondent No. 2, the widow of the deceased, will be entitled to the balance. There was also further direction that out of the said amount as far as the amount awarded to the mother is concerned a sum of Rs. 12,000/- and Rs. 15,000/- as far as the amount awarded to the widow of the deceased is concerned be kept in fixed deposit in a nationalised bank for a term of six years and that fixed deposits shall not be withdrawn or pledged. The amount of Rs. 36,000/- has already been deposited in the court along with the interest pursuant to the direction of the court and is lying in the judicial deposit.
2. The appellant, however, challenges this award made by the 2nd Motor Accidents Claims Tribunal only on the ground that it had no liability to pay any amount of compensation since the policy of the insurance, Exh. C, which was taken out on 14.3.1985 and was valid up to 13.3.1986 was already cancelled by the insurance company and it was communicated by the letter dated 19.4.1985, Exh. E. Admittedly, the occurrence took place on 14.4.1985 and the deceased who was a mason doing colouring work of buildings, doors and windows succumbed to death by the accident leaving behind respondent No. 1, the mother and respondent No. 2, the widow.
3. Mr. Indrajit Mohanty, learned counsel appealing for the owner, however, challenges this assertion and argument of the learned counsel appealing for the insurance company on the ground that there was indeed a valid insurance policy at the time of accident. Exh. C, the insurance policy, continued to be valid in spite of notice of cancellation issued by the insurance company on 19.4.1985. The entire Misc. Appeal No. 308 of 1989 is only confined to the validity of the policy from which the liability of the insurance company flows. The claimants, however, have filed a cross-appeal claiming higher amount of compensation alleging that the learned Tribunal failed to consider the evidence on record relating to the quantum of contribution of the deceased to his family and relying only on the single statement of claimant No. 2, the widow of the deceased, that they were spending Rs. 7 per day towards maintenance of the entire family consisting of the claimants and the deceased. Tribunal accepting the total income of the deceased to be Rs. 250/- per month and accepting Rs. 150/- to be the contribution towards the family and applying 20 years' multiplier came to award a sum of Rs. 36,000/- as compensation in the case. Learned counsel appealing for the claimants, however, submits that the court can take judicial notice of income of such a mason at the relevant time, i.e., in the year 1985 and on the materials available on record regarding the income and contribution of the deceased towards the family should adequately increase the amount of compensation in the interest of justice.
4. It is admitted that the insurance company had issued a letter of cancellation to the owner of the vehicle on 19.4.1985 after 5 days of the accident which is filed as Exh. E and a copy of which was submitted to the R.T.O. The ground of cancellation is that a cheque for the premium of the policy had been issued by the owner of the vehicle to the insurance company, having been drawn on Indian Bank and on receipt of the said cheque, the policy of insurance was issued in favour of the owner of the vehicle insuring the vehicle for the period from 14.3.1985 to 13.3.1986. The policy was issued in original and was not subject to any confirmation in fut
