Ally John v. Saramma Simon, Byju @ Bijesh, National Insurance Co. Ltd. and connected cases

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT :** **THE HONOURABLE MR. JUSTICE M.N.KRISHNAN** ## **WEDNESDAY, THE 24TH SEPTEMBER 2008 / 2ND ASWINA 1930** **MACA.No. 2072 of 2005(Y)** **-----------------------OPMV.312/2001 of MOTOR ACCIDENT CLAIMS TRIBUNAL, MUVATTUPUZHA** **....................** ## **APPLLANT/PETITIONER:** **-------------------------------------** **ALLY JOHN, W/O.JOHN, AGED 34 YEARS, KALLUPURACKAL HOUSE, KARIPATHATTU.P.O, ARPOOKARA VILLAGE, KOTTAYAM.** **BY ADV. SRI.GEO PAUL SRI.SANU MATHEW** ## **RESPONDENTS:RESPONDENTS:** **-------------------------------------------------** **1. SARAMMA SIMON, W/O.SIMON, KUSANILATHIL HOUSE, KARIPADAM.P.O, THALAYOLAPARAMBU, VAIKOM.** **2. BYJU @ BIJESH, S/O.KUNJAPPAN, SARPPATHARAYIL HOUSE, KARIPADAM.P.O, THALAYOLAPARAMBU, VAIKOM.** **3. NATIONAL INSURANCE CO. LTD., TRIPUNITHURA BRANCH.** **ADV. SRI.LAL GEORGE FOR R3** **THIS MOTOR ACCIDENT CLAIMS APPEAL HAVING COME UP FOR ADMISSION ON 24/09/2008 ALONG WITH MACA NO. 2150 OF 2005 AND CONNECTED CASES,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** Kss ## **M.N.KRISHNAN, J.** **-------------------------M.A.C.A. Nos. 2072, 2138, 2150, 2151, 2152 OF 2005 & 306, 307, 785, 846, 940 and 1037 OF 2006 --------------------Dated this the 24[th ] day of September, 2008** ## **JUDGMENT** All these appeals are preferred against the award passed by the Motor Accident Claims Tribunal, Muvattupuzha. The claimants are the appellants before the court. The question raised in all these appeals are relating to the liability of the Insurance Company to pay the amount. In MACA Nos. 846/06, 785/06, 1037/06, 2072/05, 2151/05, 2152/05 & 2138/05 there is an additional contention for enhancement of compensation as well. 2. First I will deal with the question of liability of the Insurance Company. Learned counsel for the appellants would contend before me that the Tribunal was not justified in exonerating the Insurance Company from the liability just on account of the cancellation of the policy. On the other hand, the Insurance Company would contend that as the policy has been cancelled prior to the date of accident, there was no contract of insurance between the Insurance Company and the insured and so the Tribunal was perfectly right in holding that the Insurance Company was not liable. MACA No. 2072/05 & Conn. Cases 2 The vehicle involved in the accident is a bus. The accident took place on 4.2.01. The policy was issued for the period between 3.6.00 and 2.6.01 on the strength of a cheque issued by the insured on 2.6.00. On 16.6.00, when the cheque was presented for encashment, it was returned to the Insurance Company as dishonoured for want of sufficiency of funds. The intimation was given to the insured regarding the return of the cheque as well as cancellation of the policy on 3.7.00. The acknowledgment given to the owner returned on 29.8.00. It is also contended by the Insurance Company that the intimation was given to the RTO and it is evidenced by the evidence of its witnesses RW1 and RW2. So the question to be considered firstly is whether the owner can be safeguarded when a policy is issued and subsequently cancelled and secondly what will be the impact of cancellation, when the premium is not paid on a third party. Admittedly, the claimants are third parties. Under section 146 of the Motor Vehicles Act, it is mandatory that the vehicle should be plied on the road only on obtainment of a policy from the Insurance Company. Sec. 149 of the Motor Vehicles Act cast the liability on the Insurance Company to satisfy the award MACA No. 2072/05 & Conn. Cases 3 subject to the defences available to it under section 149(2) of the Motor Vehicles Act. So far as these cases are concerned, the policy was issued prior to the accident and the policy was also cancelled by the Insurance Company prior to the accident. The evidence available regarding those aspects is acceptable. Then there is a contention by the Insurance Company that the transport authorities also have been duly intimated and it is evidenced by the oral evidence of RW1 and RW2. They would depose before the court that they had informed the authorities. But when a question is put to them as to whether it is there in the file, the answer was that without referring to it they cannot say and if it is there, they can produce it. Subsequently, they had not chosen to produce it at all. When a statutory body like the Insurance Company cancels a policy of Insurance and intimates the owner and the transport authorities, then definitely there must be copy of the intimation sent to them in the office file. Mere oral assertion by the officer of the Insurance Company is not sufficient to establish the same especially when they are not able to produce the documents with reference to the intimation given to the owner of the vehicle. So, from the materials available, the court has to proceed MACA No. 2072/05 & Conn. Cases 4 on the basis that the insured has been properly intimated about the cancellation of the policy. But the transport authorities have not been duly intimated about the same. Learned counsel for the Insurance Company had cited before me the decision of the Apex Court in **Deddappa v. National Insurance Co. Ltd** . [2008 (1) KLT 296 (SC)]. It was a case where a cheque was issued on 15.10.97. On the strength of the same, a policy was issued for the period from 17.10.97 to 16.10.98. The cheque was dishonoured on 21.10.97. Both the insured and the R.T.O were informed about the cancellation of the policy. The accident took place on 6.2.98 . The Apex Court held that if contract of insurance has been cancelled and all concerned have been intimated thereabout, the Insurance Company would not be liable to satisfy the claim. In the said decision, the Apex Court had considered various other decisions of that court. While considering the decision reported in **Oriental Insurance Co. Ltd. v. Inderjit Kaur & Ors.** [1998(1) SCC 371] the court held that “the question came up for consideration before this Court in Inderjit Kaur (supra), wherein it was opined that a policy of insurance which is issued in public interest would prevail over the interest of the MACA No. 2072/05 & Conn. Cases 5 insurance company. In that case a bus met with an accident. The policy of insurance was issued on 30.11.1989. A letter stating that the cheque had been dishonoured was sent by the Insurance Company to the insurer on 23.1.1990. The premium was paid in cash on 2.5.1990. The accident took place on 19.4.1990. Despite noticing S.64-VB of the 1938 Act, but having regard to the underlying public policy behind the statutory scheme in respect of insurance as evidenced by Ss.147 and 149 of the Act and in particular having regard to the fact that policy of insurance to cover the bus without receiving the premium had already been issued, this court held that the Insurance Company was liable to indemnify the insured.” The court also held that We may, however, notice that in terms of sub-s. (5) of S.147 and sub-s.(1) of S.149 of the Act, the Insurance Company became liable to satisfy awards of compensation in respect thereof, notwithstanding its entitlement to avoid or cancel the policy for the reason that the cheque issued for payment of premium thereon had not been honoured . The Apex Court observed that the said question was left open in Inderjit's case. The Apex Court after elaborately considering the matter held that in “We are not oblivious MACA No. 2072/05 & Conn. Cases 6 of the distinction between the statutory liability of the Insurance Company vis-a-vis a third party in the context of Ss.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.” 3. So far as these cases are concerned, as discussed by me earlier, there is no acceptable evidence to show that the RTO or the transport authority has been intimated about the cancellation of the policy. Learned counsel for the Insurance Company would contend before me that such an intimation is not contemplated under any provisions of the Act and therefore, even if there is no compliance, it will not make the Insurance Company liable. The spirit behind intimating the RTO and transport authorities is only in the light of the mandatory provisions of the Motor Vehicles Act. Under section 146 of the Motor Vehicles Act one cannot ply the vehicle without insurance. The insurance policy is issued in favour of the insured by the Insurance Company for satisfying the statutory requirements MACA No. 2072/05 & Conn. Cases 7 under section 146 of the Motor Vehicles Act. When such a policy is issued under law and subsequently it is cancelled, it is incumbent upon the Insurance Company to intimate all concerned including the RTO regarding the cancellation of the policy so that it can take appropriate action against the owner of the vehicle or even seize the vehicle and disallow it from plying on the road. That is the statutory spirit behind section 146 of the Motor Vehicles Act. Therefore the intimation to the RTO is a must in order to get away from the liability totally by the Insurance Company. 4. So far as these cases are concerned, the insured has been intimated. So far as the third party is concerned, he or she may not know about the cancellation of the policy. When a vehicle is allowed to ply on the road one will be under the impression that it is covered by a policy especially when once the policy has been issued. Therefore, the non compliance of informing the RTO will certainly does not absolve the liability of the Insurance Company so far as a third party is concerned. Third party is not put to the knowledge or the authority is put to the knowledge about the cancellation of the policy. Therefore, I find that the Insurance Company is bound to pay MACA No. 2072/05 & Conn. Cases 8 the amount to the third parties. 5. The next question is what will be the liability of the owner. The owner is a person who is bound to take a policy under the Act. He has been duly intimated about the non payment of the premium. Sec.64(V)(b) of the Insurance Act and especially Sec.64(V) (b)(2) of the Insurance Act makes it clear that the liability of the Insurance Company would start only when the premium is received. It is true that the premium can also be paid through cheque. When the owner makes the Insurance Company believe that the cheque will be honoured, it accepts cheque and issues the policy. Therefore, when a cheque is issued without funds on the account, it is only a way by which the company is defrauded. So far as theses cases are concerned, the accident had taken place on 4.2.01 whereas the Insurance Company has intimated about the dishonour of the cheque to the owner on 3.7.00 and received the same on 29.8.00. So the owner cannot complain that the Insurance Company has been intimated. Therefore, the owner is bound to reimburse the amount to the Insurance Company. He cannot escape from the liability under the shade of a statutory coverage that is given to a third party. MACA No. 2072/05 & Conn. Cases 9 Therefore, from the foregoing discussions, I hold that since the RTO or the transport authorities has not been intimated about the cancellation of the policy, the Insurance Companies' liability with respect to payment of compensation to third party does not get discharged as the statute requires the same. But the Insurance Company is certainly entitled to realise that amount from the insured after making the payment. 6. Now let me consider about the request for enhancement of compensation in certain cases. ## 7. In **MACA No. 846/06,** the appeal is preferred against the award passed in OP(MV) 1383/01, which is dealt with at para.120 of the award. The claimant had sustained a laceration with contusion on the right side of the forehead and the Tribunal awarded her a compensation of Rs.10,000/-. She was treated in the hospital for a period of 5 days. On a reading of the entire paragraph, it can be seen that the Tribunal has only awarded a just and reasonable compensation, which does not call for any interference. 8. In **MACA No. 785/06** , the appeal is preferred against the award passed in OP(MV) 1486/01, which is dealt with at para.124 of MACA No. 2072/05 & Conn. Cases 10 the award. It was a case where the claimant had sustained some pain on the elbow left ankle and contusion of the vertex. He was treated as inpatient in the hospital for a period of 6 days with no serious complication. The Tribunal has considered the documentary evidence and awarded him a reasonable compensation of Rs.8,000/-, which need not be disturbed. 9. In **MACA No. 1037/06** , the appeal is preferred against the award passed in OP(MV) 1376/01, which is dealt with at para.26 of the award. The claimant was treated as inpatient in the hospital from 4.2.01 to 7.2.01 and the Tribunal has only awarded him actual loss of earning for 10 days and did not award him any amount for damages to clothing etc. There was no serious injuries sustained by him. He had sustained injury on the thigh and had undergone hospitalisation for a period of 4 days. So it is certain that he would not have been in a position to do any work atleast for a period of 20 days. Considering the nature of injuries sustained by him, I enhance the compensation awarded to him by Rs.1,500/-. 10. In **MACA No. 2072/05** , the appeal is preferred against the award passed in OP(MV) 312/01, which is dealt with at para.40 of MACA No. 2072/05 & Conn. Cases 11 the award. A perusal of the award would reveal that the claimant had sustained pain and swelling on the forehead and a laceration of the lip with one broken incisor. It is clear from the documentary evidence produced that she was treated in the hospital for a period of two days. But the fact remains that one tooth has to be removed and root canal treatment has to be done. She would not have been in a position to do any work for some days and similarly there would have been damages to her clothes as well. Considering those aspects, I am inclined to grant her Rs.1,500/- more as compensation. 11. In **MACA No. 2151/05** , the appeal is preferred against the award passed in OP(MV) 383/01, which is dealt with at para.44 of the award. The claimant had sustained fracture of the 3[rd] and 4[th] ribs and was treated in the hospital for a period of 5 days. The Tribunal awarded him a total compensation of Rs.16,800/-. I had perused the award. The Tribunal has awarded a reasonable compensation on almost all heads including the compensation for pain and suffering, actual loss of earning and loss of amenities. I do not find any mistake committed by the Tribunal and therefore it does not call for any interference. MACA No. 2072/05 & Conn. Cases 12 12. In **MACA No. 2152/05,** the appeal is preferred against the award passed in OP(MV) 409/01, which is dealt with at para.50 of the award. It would show that the claimant had sustained a fracture on the lower end of the radius with laceration on the forehead. She was treated as inpatient for 2 days and thereafter was referred to Excelsior Hospital where she had undergone treatment and a short arm slab was given. The Tribunal did not award her any compensation for disability but awarded a compensation of Rs.8,000/- for pain and suffering and Rs.5,000/- for loss of amenities and enjoyment in life. I feel this is a case where considering the fact that the plaster cast was applied for a long time, the compensation for pain and suffering has to be enhanced by Rs.2,000/- and loss of amenities to be enhanced to Rs.8,000/- for the temporary disability. Thus the claimant will be entitled to an additional compensation of Rs.5,000/-. 13. In **MACA No. 2138/05** , the appeal is preferred against the award passed in OP(MV) 618/01, which is dealt with at para.61 wherein the Tribunal has awarded a compensation of Rs.1,00,000/with which I do not want to interfere. MACA No. 2072/05 & Conn. Cases 13 In the result, all the appeals are disposed of holding that in all the cases the Insurance Company is to deposit the amount due to the claimants and on satisfaction of the award, the Insurance Company is entitled to recover it from the owner of the bus. So far as MACA No. 1037/06 is concerned, the claimant is awarded an additional compensation of Rs.1,500/-. So far as MACA No. 2072/05 is concerned, the claimant is awarded an additional compensation of Rs.1,500/-. So far as MACA No. 2152/05 is concerned, the claimant is awarded an additional compensation of Rs.5,000/-. In all these cases the respective compensation shall bear interest of 6% from the date of petition till realisation and this amount also can be recovered by the Insurance Company from the owner of the vehicle after depositing the same. In all other cases, the the claim for enhancement is negatived. The appeals are disposed of accordingly. ## **M.N.KRISHNAN, JUDGE** vps MACA No. 2072/05 & Conn. Cases 14