An insurer is liable to indemnify third parties under an insurance policy issued in exchange for a premium cheque even if the cheque is subsequently dishonoured, unless the insurer, prior to the accident, cancels the policy and effectively communicates the cancellation to the insured.

Reserved on 10.10.2025

Pronounced on 28.11.2025

Uploaded on 28.11.2025

Appeal filed under Order 41 of CPC praying that the Highcourt may be pleased to against the Order and Decree passed on dt.25.06.2013 in O.P.No.626 of 2011 on the file of the MACT-cum-II Addl Dist Judge (FTC), Parvathipuram.

IA NO: 1 OF 2014(MACMAMP 348 OF 2014)

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased

IA NO: 2 OF 2014(MACMAMP 485 OF 2014)

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased

Counsel for the Appellant: 1.A JAYANTHI

Counsel for the Respondent(S): 1.TADDI NAGESWARA RAO, 2.G SAI NARAYANA RAO

The Court made the following:

JUDGMENT:

Heard,

Sri Ravi Teja, learned counsel representing Smt. A.Jayanthi, learned counsel for the appellant and Ms. T.Soumya, learned counsel representing Sri Taddi Nageswara Rao, learned counsel for the respondent Nos.1 to 4/claimants as well as Sri G.Sai Narayana Rao, learned counsel for the respondent No.6, who have submitted their arguments and placed reliance on the judgments of the Hon’ble Supreme Court.

1. Assailing the Award and Decree dated 25.06.2013 passed in M.V.O.P.No.626 of 2011 by the Motor Accidents Claims Tribunal-cum-II Additional District Judge (FTC), Parvathipuram (hereinafter referred to as “the Tribunal”), the present appeal has been filed by the appellant/insurance company.

2. The parties herein are referred as they were before the Tribunal.

3. The facts leading to the case are that, on 23.04.2010 at about 08:30 P.M., the deceased along with one Suvvada Prasad were going to their duty at Jagiram Jute Mill on a motor bike keeping themselves on extreme left side of the road and when they reached the Lorry Union Office at Salur, the crime vehicle i.e., Lorry bearing No.APA 35 V 3604 driven by its driver, who is the 1st respondent in a rash and negligent manner with high speed and without any caution, signal or horn dashed behind the deceased. As a result, the deceased and his colleague fell down and received injuries and that the colleague died on the spot. The deceased was shifted to Government Hospital at Salur, where he succumbed to injuries on the same day and that due to the sudden demise of the deceased, the claimants became destitutes having lost their livelihood as dependents of the deceased besides incurring huge amount towards transport and funeral expenses.

4. In oppugnance, the 3rd respondent-insurer of the crime vehicle filed his counter, denying all the allegations particularly with respect to the manner of accident resulting in death of the deceased, relationship, legal heir ship and dependency in between the claimants and the deceased, the age and avocation along with income. He averred that the claimants are not entitled for any compensation. The claim against the 1st respondent, who is the driver was dismissed as per the docket order dated 31.01.2012 and the 2nd respondent, who is the owner of the crime vehicle remained ex parte.

5. The principal contention of the 3rd respondent is that the insurance company is not liable to pay the compensation since there is no contract of indemnity in between the 2nd respondent and the 3rd respondent, since the cheque issued by the 2nd respondent-owner towards premium was dishonoured on the ground of insufficient funds after issuance of the policy and as such, the policy was cancelled to the knowledge of the 2nd respondent-owner and his case is that the 2nd respondent-owner is alone liable to pay the compensation, if any awarded.