FAO (MVA) No.18 of 2012

7th October, 2016.

Petitioner Counsel: Mr. PRANEET GUPTA
Respondent Counsel: Mr. RAJIV RAI

Cases Cited:
Smt. Kishwari and others Vs. Shri Krishan Lal and others, MAC Petition No.170 MAC/2 of 2006 [Para 1]
New India Assurance Co. Ltd. Vs. Rula and others, AIR 2000 SC 1082 [Para 8]
Deddappa & Ors. Vs. The Branch Manager, National Insurance Co. Ltd., 2008(1) ALL MR 968 (S.C.)=2007 AIR SCW 7948 [Para 9]
United India Insurance Co. Ltd. Vs. Laxmamma & Ors., 2012 ALL SCR 1906=2012 AIR SCW 2657 [Para 10]
M/s New Prem Bus Service Vs. Laxman Singh & another, Latest HLJ 2014 (HP) 579 [Para 11]
United India Insurance Company Ltd. Vs. Smt. Sanjana Kumari & others, Latest HLJ 2014 (HP) 1140 [Para 11]

JUDGMENT

Mansoor Ahmad Mir, C.J. :- Subject matter of this appeal is the judgment and award dated 30.9.2011, passed by the Motor Accident Claims Tribunal-I Sirmaur, H.P. hereinafter referred to as "the Tribunal", for short, in MAC Petition No.170-MAC/2 of 2006, titled Smt. Kishwari and others versus Shri Krishan Lal and others, whereby compensation to the tune of Rs.2,80,000/- alongwith interest @ 7.5% per annum came to be awarded in favour of the claimants and insurer was saddled with the liability, for short "the impugned award", on the grounds taken in the memo of appeal.

2. Claimants, owner and driver have not questioned the impugned award on any ground, thus it has attained the finality, so far as it relates to them.

3. The insurer has questioned the impugned award on the grounds taken in the memo of appeal.

4. The learned counsel for the insurer/appellant has argued that the premium was paid by cheque, had bounced and the insurer has taken all steps as per the mandate of the Motor Vehicles Act, for short "the Act" and intimation was given to the insured about the bouncing of the cheque in terms of the mandate of law. He further argued that the insurer has proved communication Ext. RW2/C which was sent to the owner at his address. While going through the said communication, it appears that it has not been sent on the correct address. In claim petition, the address of the owner/insured is "H. No. 1161, Pushpal Society, Sector-49-B, Chandigarh" whereas in the communication it appears to have been sent at the address "H. No. 1161, Pushpak Society, Sector 49-B, Chandigarh".

5. The Tribunal has rightly recorded the findings in paras 13 and 14 of the impugned award. It is apt to reproduce last seven lines of para 13 and para 14 in toto herein.

"13......However, for reasons aforesaid, when, this Tribunal has inferred that, for, want of adduction of best evidence qua proof of service of notice comprised in Ext. RW2/C upon the insured, resultantly, the consequent conclusion, is , that the communication comprised in Ext. RW2/C cannot, be said to have been served upon the insured as a sequitur, the act of the insurer, to proceed to cancel the policy, is to be construed to be untenable for want of such cancellation having been preceded by, a notice having been proved to have served upon the insured.

14. What compounds the above inference, is that despite various attempts of this Tribunal, to effect service through ordinary mode upon the owner, of the vehicle at his last known address, the said concerted efforts proved abortive. The failure to effect service by ordinary mode upon the owner of the vehicle compelled this Tribunal to serve him by substituted service, which mode too, proved abortive. Hence, he was proceeded against ex parte. Obviously, he did not step into the witness box, for enabling an elicitation from him, qua the veracity of the address recited, in the communication purportedly made by the insurer. Therefore, since steps to effect service upon the owner of the vehicle remained unfruitful as such the necessary inference which emerges is that the address recited in the communication aforesaid of the insurer was also not the address of the owner of the vehicle. As such, when proof has not been led by adduction of apposite evidence, to prove delivery of the communication Ext. RW2/C upon the addressee, the obvious deduction is that even the address of the insured recited in the communications at which address the commutations were to proceed would not also have come to be served upon the addressee, as he was not residing at the address recited in the registered AD."

6. The argument of the learned counsel for the appellant-insurer is not tenable for the reason that the insurer has not been able to prove that it has followed the mandate of law.

7. In terms of Section 64-VB of the Insurance Act, 1938 (hereinafter referred to as "the Insurance Act") read with the provisions of Sections 147 to 149 of the Motor Vehicles Act, 1988 (for short "MV Act"), the insurer has to intimate the insured, which has not been done in the present case, and if intimation is not given and during that period, the accident happens, it is the insurer, who is liable.

8. The Apex Court in the case titled as New India Assurance Co. Ltd. versus Rula and others, reported in AIR 2000 Supreme Court 1082, has held that the insurer has to mandatorily intimate the owner by way of notice about the cancellation of insurance policy and if the accident occurs between the period till the cancellation is conveyed, it is the insurer, who is liable. It is apt to reproduce para 11 of the judgment herein:

"11. This decision, which is a 3-Judge 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 non-payment of premium would not affect the rights already accrued in favour of the third party."

9. The matter again came up for consideration before the Apex Court in Deddappa & Ors. versus The Branch Manager, National Insurance Co. Ltd., reported in 2007 AIR SCW 7948 : [2008(1) ALL MR 968 (S.C.)], and the same principle has been laid down. It is apt to reproduce para 26 of the judgment herein:

"26. We are not oblivious of the distinction between the statutory liability of the Insurance Company visa- vis a third party in the context of Sections 147 and 149 of the Act and its liabilities in other cases. But the same liabilities arising under a contract of insurance would have to be met if the contract is valid. If the contract of insurance has been cancelled and all concerned have been intimated thereabout, we are of the opinion, the insurance company would not be liable to satisfy the claim."

10. In the case titled as United India Insurance Co. Ltd. versus Laxmamma & Ors., reported in 2012 AIR SCW 2657 : [2012 ALL SCR 1906], the Apex Court has discussed the law developed on the issue and ultimately held that if cancellation order is not made and conveyed and if the accident occurs till the cancellation is made, the insurer is liable. It is profitable to reproduce para 19 of the judgment herein:

"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."

11. The same view has been taken by this Court in the cases titled as M/s New Prem Bus Service versus Laxman Singh & another, reported in Latest HLJ 2014 (HP) 579, and United India Insurance Company Ltd. Versus Smt. Sanjana Kumari & others, reported in Latest HLJ 2014 (HP) 1140.

12. Having said so, the Tribunal has rightly made the conclusion and the impugned award is well reasoned, needs no interference.

13. Viewed thus, the impugned award is upheld and the appeal is dismissed.

14. The Registry is directed to release the amount in favour of the claimants, strictly in terms of the conditions contained in the impugned award, through payees' cheque account, or by depositing the same in his bank account, after proper verification.

15. Send down the record forthwith, after placing a copy of this judgment.

Appeal dismissed.