1991 Supreme(MP) 670

IN THE HIGH COURT OF MADHYA PRADESH
T.N. Singh, J.
United India Assurance Co. Ltd. – Appellant
Versus
Babu Shah – Respondent
M.A. No. 79 of 1991 (G)
Decided On : 24-04-1991

Headnote:(1) Insurance Act, 1938 – S. 64 – VB – amount of premium paid through cheque – cheque not en – cashed but refused by the Bank – insurer is not liable.

       (2) Motor Vehicles Act, 1939 – S. 92 – A and 110 – B – amount of premium paid through cheque – cheque not en – cashed but refused by Bank – insurer is not liable to pay amount of either interim award or final one.

       (3) Motor Vehicles Act, 1939 – S. 92 – A – interim award under – should not be passed against the insurer alone – it should be jointly and severally against insurer, insured and driver.

        Short Note

       1. Shri Malhotra has submitted that Rs. 7,500/ – being 50% of the sum awarded has been deposited and appeal is in form and it merits hearing and decision. However, I am making a direction further that within a period of one month from today the remaining amount of Rs. 7,500/ – shall be deposited by the insurer in the Tribunal and the entire amount shall be kept in deposit until the matter is heard and disposed of afresh in accordance with directions herein made. That amount shall not be disbursed to the claimants without fresh disposal or the matter. I have considered it unnecessary to notice the respondents to protract the proceedings further in this Court, but their interest I propose to protect by maintaining the award as an interim measure and when the matter is reheard the claimant shall be given a hearing before a final decision – indeed, rendered afresh on their claim for interim award.

       2. Shri Malhotra's grievance is that the Tribunal has not disposed of the application or the claimants for interim award judicially as manifested in para 4 of the impugned order. He has submitted that a very substantial contention was raised by the insurer based on section 64 VB of the Insurance Act 1938. Before saddling any liability on the insurer the Tribunal was required to consider if the vehicle was July insured in accordance with law and that mere issuance of a cover – note was not sufficient in that risk is covered only when payment is received and that is provided in section 64 VB of the Insurance Act. Although a cheque was given, against that cover – note the cheque issued was dishonoured there was no payment and no risk. That question of law is a serious question but on that no decision is rendered by the Tribunal and prima – facie I am satisfied that the contention pressed by Shri Malhotra is meritorious because in the impugned order the Tribunal has itself given the date or accident as 28.1.1989. The cover – note was issued on 23.8.1988. The risk to be covered was upto 22.8.1989. He has also produced before me a copy of the receipt issued on 25.8.1988 in regard to the cheque of which payment was made against the cover – note. It appears from copy of the communication which the bank sent returning the cheque to the insurer that the cheque was not honoured and the payment the insurer did not receive. Rightly, therefore, Shri Malhotra has submitted that trial Court's reliance on this Court's decision in New India Assurance Company Ltd. vs. Laxmansingh, 1990 (2) MPWN 197, was inappropriate because that question never came before that Court for decision. He is correct and his another submission which I find substantial is that, the award is not in accordance with law. When any award under section 92 – A or section 110 – B is passed there shall be consideration by the Tribunal of the requirement to specify the person who is to discharge the liability under the award and when the owner and driver arc exonerated for that reason has to be given. On the other hand, the instant award is passed solely against the insurer though usually the award should be jointly and severally against the insurer, owner/driver, so that if the insurer is exonerated on any ground, claimant do not suffer. It is still to be decided if the award in this case in to be passed against the owner/driver only.

       3. For the reasons aforesaid I suspend conditionally operation of the impugned award passed by the Tribunal for a period to two months. I direct that in the meantime the respondents – claimants and also owner and driver – shall also be heard by the Tribunal and a fresh order shall be passed in accordance with law bearing in mind the observations herein made. Once again I reiterate if the award is sustained on inquiry made that payment had otherwise been made dehors the cheque, in cash, against the cover – note and risk was therefore covered, full amount deposited by the insurer – appellant shall he disbursed without further delay to the claimant. If it is found that insurer had not been made payment in any manner of the premium due to cover – note issued, he shall be exonerated and liability shall be fixed on owner/driver. The sum deposited shall he refunded to the appellant – insurer in that case. 1990 (2) MPWN 197 distinguished. Appeal allowed.