2015(3) ALL MR 542
IN THE HIGH COURT OF JUDICATURE AT BOMBAY

R. D. DHANUKA, J.

Smt. Usha Rajesh Thapa & Ors. Vs. Smt. Kalpana Arun Hankar & anr.

First Appeal No.1062 of 2013

7th October, 2014.

Petitioner Counsel: Mr. SATISH ADSUL
Respondent Counsel: Mr. SANDESH DESHPANDE alongwith Mr. H.C. THANAWALA

Motor Vehicles Act (1988), Ss.147, 149 - Accident claim - Liability of insurer towards third party - Cheque issued by insured towards issuance of policy was dishonoured - Insurer already intimated about dishonored cheque and cancellation of policy much prior to date of accident to insured - Liability of insurer company to indemnify third party ceased to exist - Insurance company not liable to pay any compensation to third party. (Paras 6, 15)

Cases Cited:
New India Assurance Co. Ltd. Vs. Rula and Others, Civil Appl No.1985-1987/2000, Dt.7.3.2000 [Para 9,14]
Oriental Insurance Co. Ltd. Vs. Prakash Chunilal Mirgany and Ors., 2006 ACJ 15 [Para 10,14]
Oriental Insurance Co. Vs. Sivankutty, 2006 (1) T.A.C. 631 (Ker) [Para 11]
United India Insurance Co. Ltd. Vs. Laxmamma, 2002 Laws (SC) 415 [Para 12,14]


JUDGMENT

JUDGMENT :- This appeal is directed against the judgment and order dated 19th October, 2012 passed by the learned Member of the Motor Accident Claim Tribunal in Application No. 229 of 2003 which was filed by the appellants herein directing only opposite party i.e. respondent no.1 herein to pay compensation of Rs.13.75 lacs to the appellants (original appellants) and rejecting the claim of compensation against the insurer i.e. M/s. National Insurance Company Limited. Some of the relevant facts for the purpose of deciding this appeal are as under :

2. The appellant no.1 is widow, appellant no. 2 is the daughter of the deceased, appellant no. 3 is the mother of the appellant, appellant no. 4 is the handicapped sister of the deceased. On 30th December, 2002 at 8.30 p.m. deceased Rajesh Thapa was driving his motor cycle bearing registration No. MH03P7481 through Aarey Colony for going to Saki Naka. It is the case of the appellants that in front of Picnic Point Chowky, Goregaon (E), Mumbai, a bus bearing registration No. MWD 855, came from opposite direction, being drived in rash and negligent manner. It dashed against the motor cycle causing the said deceased fatal injuries who died on 3rd January, 2003.

3. The appellants being legal heirs of the said deceased filed claim before MACT, Bombay. The opposite party failed to appear. The matter proceeded exparte against him. The insurer filed written statement and raised a plea that the premium cheque dated 7th January, 2002 of Rs.4523/- issued towards the policy commencing from 7th January, 2002 to 6th January, 2003 was handed over to National Insurance Company, Division No. 13 and was dishonoured on 10th January, 2002. The insurer issued notice to the opposite party on 23rd January, 2002 cancelling the policy since inception. Motor Accident Claim Tribunal framed following issues :

1. Whether applicants prove that due to rash and negligent driving by driver of motor Bus No. MWD-855 owned by opponent death of Rajesh Gokulsingh Thapa was caused?

2. Whether the insurer proves that the policy was cancelled from inception due to the dishonour of the cheque?

3. Whether the applicants are entitled for the quantum of compensation? If yes, what amount?

4. What order ?

4. Tribunal rendered a finding that the appellants had proved that due to rash and negligent driving by the driver of the bus owned by the opponent, death of the said deceased was caused. In so far as issue no. 2 is concerned, the tribunal rendered finding in the affirmative that the insurer had proved that the policy was cancelled since inception due to dishonour of cheque.

5. Being aggrieved by the findings rendered by the tribunal against issue no. 2, that the policy was cancelled since inception due to dishonour of cheque, the appellants have preferred this appeal.

6. The admitted facts are that the insurance policy was issued by the insurer for the period 7th January, 2002 to 6th January, 2003. On 7th January, 2002, the insured had paid premium by cheque. On 10th January, 2002 the said cheque was dishonoured for want of sufficient fund. On 23rd January, 2002, the insurer sent notice by R.P.A.D., vide Exh. 55 informing about dishonour of the cheque and about cancellation of the the insurance policy. The accident took place on 30th December, 2002. On 3rd January, 2003 the said deceased expired.

7. Insurance company also examined a witness who was cross examined by the appellant's advocate. Learned counsel for the appellants invited my attention to the cross examination of the witness examined by the insurance company. In the cross examination the said witness admitted that the date of cancellation of policy was not mentioned on the policy. The witness deposed in the cross examination that in this case the agent was communicated about the bouncing of the premium cheque. On 23rd January, 2002, the notice regarding dishonouring of cheque Exh. 55 was issued to the opposite party. Witness identified the signature of Mr. Wagh who was then Divisional Manager. Witness deposed that Mr. Wagh had signed Exh. 55 on 28th January, 2002. Exh. 55 did not bear the address of the opposite party. In the cross examination, he further deposed that the insurance company had communicated to the concerned R.T.O. regarding cancellation of the policy but he could not produce any document in support thereof.

8. Learned counsel for the appellant submits that since the alleged letter of intimation was admittedly signed on 28th January, 2002, though it was dated 23rd January, 2002, the said document cannot be considered as proof of intimation of cancellation of policy and about dishonoured cheque. It is submitted that in any event since there was no intimation of cancellation of the policy, policy was in force on the date of accident and not only the opposite party but the insurance company was also liable to pay the compensation. It is submitted that tribunal thus could not have passed order for payment of compensation only against the opposite party but insurance company was also liable and thus both ought to have been made jointly and severally liable to pay the compensation.

9. Learned counsel placed reliance on the judgment of the Supreme Court in case of New India Assurance Co. Ltd. Versus Rula and Others, delivered on 7th March, 2000 in Civil Appeal Nos. 1985-1987 of 2000. It is submitted that whether the premium is paid or not by the insured is not concern of the third party. Subsequent cancellation of insurance policy on the ground of dishonour of a cheque through which premium was paid, would not affect the rights of the third party which had accrued on the issuance of policy on the date when accident took place. Reliance is placed on paragraphs, 7, 8 and 10 which read thus :

"7. The contract of insurance in respect of motor vehicles has, therefore, to be construed in the light of the above provisions. Section 146(1) contains a prohibition on the use of the motor vehicles without an insurance policy having been taken in accordance with Chapter 11 of the Motor Vehicles Act. The manifest object of this provision is to ensure that third party, who suffers injuries due to the use of the motor vehicle, may be able to get damages from the owner of the vehicle and recoverability of the damages may not depend on the financial condition or solvency of the driver of the vehicle who had caused the injuries.

8. Thus, any contract of insurance under Chapter 11 of the Motor Vehicles Act, 1988 contemplates a third party who is not a signatory or a party to the contract of insurance but is, nevertheless, protected by such contract. As pointed out by this Court in New Asiatic Insurance Co. Ltd. vs. Pessumal Dhanamal Aswani & Ors. AIR 1964 SC 1736, the rights of the third party to get indemnified can be exercised only against the insurer of the vehicle. It is thus clear that the third party is not concerned and does not come into the picture at all in the matter of payment of premium. Whether the premium has been paid or not is not the concern of the third party who is concerned with the fact that there was a policy issued in respect of the vehicle involved in the accident and it is on the basis of this policy that the claim can be maintained by the third party against the insurer.

10. This decision, which is a 3Judge Bench decision, squarely covers the present case also. The subsequent cancellation of the Insurance Policy in the instant case on the ground that the cheque through which premium was paid was dishonoured, would not affect the rights of the third party which had accrued on the issuance of the Policy on the date on which the accident took place. If, on the date of accident, there was a Policy of Insurance in respect of the vehicle in question, the third party would have a claim against the Insurance Company and the owner of the vehicle would have to be indemnified in respect of the claim of that party. Subsequent cancellation of Insurance Policy on the ground of nonpayment of premium would not affect the rights already accrued in favour of the third party."

10. Learned counsel also placed reliance on the judgment of this court in the case of Oriental Insurance Co. Ltd. Vs. Prakash Chunilal Mirgany and Ors. 2006 ACJ 15 and would submit that since the insurer had not complied with the requirement of informing the registering authority, the insurer cannot escape its liability to pay the compensation. Paragraph 6 of the said judgment reads thus :

"6. In the present case, there is no doubt, a factual distinction which must be noted. However, to my mind, that distinction would not make any difference to the ultimate result. The factual distinction in the present case is that the accident took place on 25th November, 1981 after the insurance company had purported to endorse a cancellation of the insurance policy on 19th November, 1991 on the ground of the dishonour of the cheque. This to my mind would not make any difference to the position as it obtained atleast under the Act of 1939. Section 105 of the Act of 1939 enunciated that where a policy of insurance is cancelled, the insurer shall within seven days notify such cancellation or suspension to the registering authority in whose records the registration of the vehicle covered by the policy of insurance is recorded. The object of this provision is obvious. Section 94 of the Act contained a specific prohibition on the use of a motor vehicle unless there is in force a policy of insurance complying with the provisions of the chapter. The provisions of Section 96(1) which correspond to the provisions of Section 149(1) of the Motor Vehicles Act, 1988 have already been noted. Sub-section 2 of Section 96 of the Act of 1939 enabled the insurer to defend the action against him on certain specified grounds. Clause (a) thereof was that the policy was cancelled by mutual consent or by virtue of any provision contained therein before the accident giving rise to any liability or that either before or not later than 14 days after the happening of the accident the insurer has commenced proceedings for cancellation of the certificate after compliance with the provisions of Section 105. The requirement that the insurer must notify the registering authority under Section 105 was, therefore, tied up with the defence which was available to the insurer under Section 96(2)(a) that he had either before or within 14 days of the accident, commenced proceedings for the cancellation of the contract of insurance after notice as contemplated in Section 105. In the present case, the admitted position is that neither was any notice given to the registering authority under Section 105 nor were any proceedings for cancellation after such notice adopted. That being the position, the liability of the insurer cannot stand excluded. The circumstances and particularly having regard to the law laid down by the Supreme Court, I am of the view that the First Appeal has to be rejected, since the only ground which has been raised on behalf of the insurer in these proceedings has not been found to be tenable. The First Appeal is accordingly dismissed with costs."

11. Learned counsel also placed reliance on the judgment of Kerala High Court in the case of Oriental Insurance Co. Vs. Sivankutty, 2006 (1) T.A.C. 631 (Ker) in support of the submission that liability of the insurer for damages for the third party risk continues for the entire period covered by the policy though the cheque issued towards the payment of premium was dishonoured and subsequently policy was cancelled by the insurer. Paragraph 19 reads thus :

"19. Neither from the three member decision of the Apex Court in Inderjit Kaur's case (1998 (1) KLT (SC)(SN) 23 P.27 : AIR 1998 SC 588) nor from the provisions of Sections 147(5) and 149(1) of the Motor Vehicles Act, 1988 do we get any support to hold the view that the liability to pay compensation for injuries sustained to third parties ceases to exist after the cancellation of the policy. The situation is not akin to that of an owner of a vehicle not having taken any insurance at all for the vehicle as on the date of the accident, as is observed by the Division Bench of this Court in New India Assurance Co. Ltd. v. Raghu (2001 (3) KLT 515). We therefore hold that the decision of the Division Bench of this Court in New India Assurance Co. Ltd. v. Raghu (2001 (3) KLT 515) does not lay down the correct law. The position is that the liability of the Insurance Company in damages for third party risks continues for the entire period covered by the policy in spite of the cheque issued towards payment of premium was dishonoured and consequently policy was cancelled by the Insurance Company. The remedy of the Insurance Company lies against the "insured" to have the amount paid by them by way of compensation for third party risks to be got reimbursed."

12. Learned counsel appearing for the insurer on the other hand invited my attention to the findings rendered by the tribunal and would submit that the cheque was bounced on 10th January, 2002. Insurer had already informed the insured vide letter dated 23rd January, 2002. It is submitted that the acknowledgement card of the notice sent by R.P.A.D. was produced before the tribunal in evidence and was marked as exhibit which was not questioned by the appellants. It is submitted that admittedly the accident took place much latter i.e. 30th December, 2002 which was much after the cancellation of the policy. Learned counsel placed reliance on the judgment of the Supreme Court in the case of United India Insurance Co. Ltd. Vs. Laxmamma, 2002 Laws (SC) 415 which is adverted to by the tribunal in paragraph 28 of the impugned judgment and award. It is submitted that once the cancellation of the policy was already intimated to the insured much prior to the accident, the liability of the insurance company to indemnify the third party under that policy covered ceases and the insurance company is not liable to satisfy awards of compensation in respect thereof. Paragraph 19 of the said judgment reads thus :

"19. In our view, the legal position is this : where the policy of insurance is issued by an authorized insurer on receipt of cheque towards payment of premium and such cheque is returned dishonoured, the liability of authorized insurer to indemnify third parties in respect of the liability which that policy covered subsists and it has to satisfy award of compensation by reason of the provisions of Sections 147(5) and 149(1)of the M.V. Act unless the policy of insurance is cancelled by the authorized insurer and intimation of such cancellation has reached the insured before the accident. In other words, where the policy of insurance is issued by an authorized insurer to cover a vehicle on receipt of the cheque paid towards premium and the cheque gets dishonored and before the accident of the vehicle occurs, such insurance company cancels the policy of insurance and sends intimation thereof to the owner, the insurance company's liability to indemnify the third parties which that policy covered ceases and the insurance company is not liable to satisfy awards of compensation in respect thereof."

13. Perusal of the record clearly indicates that the policy was issued by the insurer for the period commencing from 7th January, 2002 to 6th January, 2003. It is not in dispute that the cheque issued by the insured came to be dishonoured. Perusal of the record indicates that the insurer had communicated the fact that the cheque was dishonoured for want of sufficient funds vide notice dated 23rd January, 2002 which was marked as Exhibits 53 and 54 by the tribunal. Signature of the recipient on the notice and postal stamp of 27th January, 2002 was not questioned by the appellants. The fact remains that the accident took place much later than the receipt of such intimation cancelling the policy of the insured by the insurer.

14. In so far as judgment of the Supreme Court in the case of New India Assurance Company (supra) and the judgment of this court in the case of Oriental Insurance Co. Ltd. Vs. Prakash Chunilal Mirgany and Ors. relied upon by the learned counsel for the appellant is concerned, in my view both these judgments do not assist the appellants. In so far as the judgment of this court is concerned, this court has considered section 105 of the Act of 1939 whereas there is no such corresponding provisions under Motor Vehicles Act, 1988. The judgment in the case of Oriental Insurance Co. Ltd. (supra), therefore does not assist the appellant. Similarly in so far as judgment of Supreme Corut in case of New India Assurance Co. Ltd. (supra) and Kerala High Court is concerned, in my view, the judgment of Supreme Court and Judgment of Kerala High Court need not be considered by this court in view of the subsequent judgment of the Supreme Court in the case of United India Insurance Co. Ltd. Vs. Laxmamma (supra).

15. Supreme Court in the said judgment in terms held that the liability of the insurer in the policy covered subsists and it has to satisfy award of compensation by reason of the provisions of Section 147(5) and 149(1) of the Motor Vehicles Act unless the policy of insurance is cancelled by the authorized insurer and intimation of such cancellation has reached the insured before the accident. In my view, since the insurer had already intimated about the dishonoured cheque and also cancellation of policy, much prior to the date of accident to the insured, liability of the insurer company to indemnity third party ceased to exist and thus insurance company is not liable to pay any compensation to such third party. In my view, Motor Accident Claim Tribunal is thus right in not passing any order for payment of compensation against the insurer.

16. Appeal is devoid of merits and the same is accordingly dismissed. It is made clear that since the opposite party has not challenged the other part of the judgment and award rendered by the tribunal, the appellants are at liberty to execute the said award against the opposite party. There shall be no order as to costs.

Appeal dismissed.