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2002 Supreme(All) 1038
IN THE HIGH COURT OF ALLAHABAD
U. S. Tripathi, J.
NATIONAL INSURANCE CO. LTD. - Appellant
Versus
FARUKH - Respondents
F. A. F. O. 1257 Of 2002
Decided On : 08/19/2002
VIVEK KUMAR BIRLA
An insurance company is liable to indemnify a third party in case of a dishonoured premium cheque and subsequent policy cancellation.
Headnote:
Insurance - Motor Accident Claim - Insurance Act, 1938, Section 64VB; Motor Vehicles Act, 1988, Sections 147(5) and 149(1) - Oriental Insurance Co. Ltd. v. Indrajit Kaur and Ors., 1998 ACJ 123; New India Assurance Co. Ltd. v. Rula and Ors., 2000 ACJ 630 - The judgment discusses the liability of an insurance company to indemnify a third party in case of dishonoured premium cheques and subsequent policy cancellation.
Fact of the Case:
The claimant sustained injuries in a motor accident and filed a claim petition against the vehicle owner, driver, and the insurance company. The insurance company contested the petition on the grounds of non-insurance and dishonoured premium cheque.
Finding of the Court:
The court found that the accident occurred due to rash and negligent driving of the vehicle. It held that the insurance company was liable to pay compensation despite the dishonoured premium cheque and subsequent policy cancellation.
Issues: The issues included the cause of the accident, insurance coverage, and entitlement to compensation.
Ratio Decidendi: The court relied on the judgments in Oriental Insurance Co. Ltd. v. Indrajit Kaur and Ors., 1998 ACJ 123 and New India Assurance Co. Ltd. v. Rula and Ors., 2000 ACJ 630 to establish the liability of the insurance company to indemnify the third party despite the dishonoured premium cheque and subsequent policy cancellation.
Final Decision: The appeal was dismissed, and the insurance company was held liable to indemnify the award given in favor of the claimant.
( 1 ) THIS appeal has been directed against the judgment and award dated 26. 4. 2002 passed by motor Accidents Claims Tribunal/xiith Additional District Judge, Ghaziabad, in Motor accident Claim Petition No. 596 of 1999, awarding a sum of Rs. 55,000 to the claimant/respondent No. 1 on account of injuries sustained by him in a motor accident.
( 2 ) THE claimant/respondent No. 1 filed Claim Petition No. 596 of 1999 against the appellant and respondents No. 2 and 3 for award of Rs. 15 lac as compensation with the allegations that on 15. 4. 1999 at about 5 p. m. , he was standing near bus stand at village Batt on Garh-Delhi Road to cross the road. In the meantime, car No. DL 4c-4379, owned by respondent No. 2 and driven by respondent No. 3, came there and by rash and negligent driving of its driver, dashed against the claimant due to which he sustained head injury as well as injuries on jaw resulting in breaking of teeth. The report of the occurrence was lodged by his uncle. He had to take treatment for above injuries and on account of above injuries, his working capacity was reduced and he had also to close his business of barber during the period he was under treatment.
( 3 ) THE respondent Nos. 2 and 3, owner and driver of the vehicle, did not contest the petition.
( 4 ) THE petition was contested only by the appellant/national Insurance Company Ltd. on the ground that the Maruti van involved in the accident was not insured with it and, therefore, it was not liable to indemnify the amount of compensation.
( 5 ) THE Tribunal framed following issues : (1) Whether on the date of accident, i. e. , 15. 4. 1999 at about 5 p. m. the accident took place due to rash and negligent driving of the driver of Maruti Van No. DL 4c-4379? (2) Whether Maruti Van was not insured? (3) Whether claimant was entitled to receive any compensation? If so, to what amount and against which of the opposite party?
( 6 ) THE claimant-respondent No. 1 examined himself and Mohd. Hanif (P. W. 2) and also filed report of the occurrence lodged by Mohd. Hanif. As mentioned above, owner and driver of the vehicle had not appeared to contest the petition. The Insurance Company had also not led any evidence on issue No. 1. The Tribunal on considering the evidence of claimant held that accident in question took place due to rash and negligent driving of the driver of Maruti Van. On issue no. 2, the Tribunal held that the contention of the Insurance Company was that cheque in lieu of payment of premium was issued by owner on 27. 2. 1999 and on the basis of it, it issued cover note on same day and policy was issued subsequently. But the cheque given by the owner/insured, was dishonoured and the Insurance Company cancelled the policy, vide endorsement dated 24. 3. 1999. But in view of Apex Court decision in Oriental Insurance Co. Ltd. v. Indrajit Kaur and Ors. , 1998 ACJ 123, dishonour of the cheque and subsequent cancellation of policy would not absolve the liability of the Insurance Company to pay compensation to a third party. Regarding quantum of damages, the Tribunal held that considering the papers regarding expenses incurred in treatment, which could not be rebutted by the Insurance Company, the claimant was entitled to Rs. 55,000 as compensation. With these findings, the Tribunal awarded a sum of Rs. 55,000 as compensation along with interest at the rate of Rs. 9% per annum.
( 7 ) THE above award of the Tribunal has been challenged by the Insurance Company in this appeal.
( 8 ) HEARD Sri V. K. Birla, learned counsel for the appellant.
( 9 ) THE finding of the Tribunal that accident took place due to rash and negligent driving of the driver of Maruti Van No. DL 4c-4379 was based on evidence of the claimant and his witness. The owner and driver of the vehicle had not contested the petition and the Insurance Company, which alone contested the petition, had also not led any evidence on this point. Thus, there is no challenge of the evidence of the cl
