http://JUDIS.NIC.IN

SUPREME COURT OF INDIA

Page 1 of 6

CASE NO.:

Appeal (civil) 5829 of 2007

PETITIONER:

Deddappa & Ors

RESPONDENT:

The Branch Manager, National Insurance Co. Ltd.

DATE OF JUDGMENT: 12/12/2007

BENCH:

S.B. Sinha & Harjit Singh Bedi

JUDGMENT:

J U D G M E N T

CIVIL APPEAL NO. 5829 OF 2007

(Arising out of SLP (C) NO.7746 of 2006)

S.B. Sinha, J.

1. Leave granted.

2. This appeal is directed against the judgment and order dated

15.6.2005 passed by a learned Single Judge of the High Court of Karnataka

in M.F.A No.5751 of 2002, whereby and whereunder an appeal preferred by

the respondent herein from the judgment and order dated 12.06.2002 passed

by the Motor Accidents Claims Tribunal in M.C.A. No.113 of 2001 was

allowed.

3. Shantamma, daughter of the appellant herein was sleeping in her hut.

A tempo bearing No.KA 37 \026 2257 which was being rashly and negligently

driven by Respondent No.2 herein ran over her. She died on the spot.

Household articles of the appellant also were damaged in the said accident.

4. An application for grant of compensation was filed by the appellants

herein under Section 166 of the Motor Vehicles Act, 1988 (for short "the

Act") in the Court of C.J. (SD) & Motor Accidents Claims Tribunal at

Gangavati in the district of Koppal on 12.06.2006.

5. The said vehicle was insured with the National Insurance Company.

A plea was taken therein by the Insurance Company that although the

vehicle in question was insured by the owner for the period 17.10.1997 and

16.10.1998, but the cheque issued therefor having been dishonoured, the

policy was cancelled and, thus, it was not liable therefor.

6. By an Award dated 12.06.2002, the learned Motor Vehicles Accidents

Claims Tribunal allowed the said claim application directing payment of

compensation for a sum of Rs.1,58,000/- with interest @ 12% per annum

holding that the Insurer was liable to pay the said awarded amount despite

cancellation of the contract of insurance. As noticed hereinbefore the High

Court of Karnataka on an appeal preferred by the first respondent herein

allowed the same relying on the judgment of the Karnataka High Court in

M.F.A. No.6430 of 2001.

7. Mr. C.M. Angadi, the learned counsel appearing on behalf of the

appellant in support of this appeal inter alia submitted that the High Court

committed a serious error in passing the impugned judgment in so far as it

failed to take into consideration that when the insurance cover was issued,

the liability of the Insurance Company subsists despite dishonour of cheque

evidencing payment of the insurance premium.

8. Strong reliance in this behalf has been placed on Oriental Insurance

Co. Ltd. v. Inderjit Kaur and Ors. [(1998) 1 SCC 371] and National

Insurance Co. Ltd. v. Seema Malhotra and Ors. [(2001) 3 SCC 151].

http://JUDIS.NIC.IN

SUPREME COURT OF INDIA

Page 2 of 6

9. Before embarking on the said question we may notice the admitted

facts. Second respondent who was driving the vehicle was also the owner

thereof. The insurance policy was to remain valid for the period 17.10.1997

to 16.10.1998. Respondent No.3 issued a cheque on 15.10.1997. The said

cheque was presented for encashment before the Syndicate Bank. The Bank

by its letter dated 21.10.1997 issued a ’Return Memo’ disclosing dishonour

of the cheque with the remarks "fund insufficient". First Respondent

thereupon cancelled the policy of insurance. The said information was

communicated to Respondent No.2. An intimation thereabout was also

given to the R.T.O. concerned.

10. Before the Motor Vehicle Accidents Claims Tribunal, the insurer has

also examined witnesses, inter alia, to prove cancellation of the policy of

insurance, postal acknowledgement showing intimation thereabout which

was served to the insured and a copy of the letter dated 6.11.1997 issued to

the R.T.O. and the memo issued by the Bank as regards d