National Insurance Co. Ltd. v. Balkar Ram & Ors.

Case Details & Bench

Court: High Court
Hon'ble Judges: Gyan Sudha Misra
Kurian Joseph
Judgment Date: 2013-07-09
Court Decision / Holding: Appeal dismissed. No order as to costs.
Final Disposition: Appeal dismissed in terms of the order. No order as to costs.

Parties to the Case

Appellants / Petitioners

National Insurance Co. Ltd.

Respondents

Balkar Ram
Others

Legal Representation & Advocates

Counsels for Petitioners

• Kiran Suri
• Nakibur Rahman Barbhuiya
• Ritika Gambhir
• Kirti Renu Mishra

Counsels for Respondents

• Ashok Mathur
• Varinder Kumar Sharma

Case Synopsis & Summary

This appeal concerns liability under the Motor Vehicles Act, 1988 in a motor-accident compensation claim. The Motor Accidents Claims Tribunal held the owner of the insured vehicle and the insurer jointly and severally liable to pay compensation to the claimants, who had been awarded Rs. 1,24,035 along with interest. The insurer challenged the award before the High Court of Punjab and Haryana on the ground that the premium cheque for the policy had been dishonoured before the accident, rendering the policy invalid and the insurer not liable to indemnify. The insurer argued that a cheques-dishonoured policy cannot support indemnity. The High Court dismissed the insurer’s appeal, noting a precedent (relying on United India Insurance Co. Ltd. v. Laxmamma) that if intimation of the cheque’s dishonour and cancellation of the policy is communicated after the accident, the insurer remains liable for the award. The Supreme Court accepted this ratio, explaining that the defence of invalid policy due to pre-accident dishonour does not exonerate the insurer where the intimation post-dates the accident. Following this reasoning, the appeal was dismissed and the liability of both insurer and owner to pay the independent Tribunal award remained intact. No order as to costs.

Provisions of Law Cited

Motor Vehicles Act, 1988

Submissions & Arguments

Contentions of Appellants / Petitioners

The appellant-insurance company contended that the policy could not be held valid since the cheque towards premium was dishonoured prior to the accident; hence the insurer was not liable to indemnify the claimants; the policy, being invalid on account of pre-accident dishonour, should not support payment of compensation.

Contentions of Respondents

The claimants contended that the owner and the insurer were jointly and severally liable to pay compensation; the policy's validity defence could not exonerate the insurer, particularly in light of the principle that intimation of dishonour after the accident does not relieve the insurer of liability; the award and the tribunal’s order should stand.

Cited Precedents (1)

Case Name	Citation	Treatment	Explanation
United India Insurance Co. Ltd. v. Laxmamma & Ors.	(2012) 5 SCR 261	Positive	Cited and applied to hold the insurer liable for payment of the award when intimation of dishonour and cancellation of policy is communicated after the accident.

Extracted Judgment Text

Exact text extracted from official judgment records.

A ## [2013] 8 S.C.R. 74 ## NATIONAL INSURANCE CO. LTD. _V._ BALKAR RAM & ORS. (Civil Appeal No. 2159 of 2007) B JULY 9, 2013 ## **[GYAN SUDHA MISRA AND KURIAN JOSEPH, JJ.]** - - _Motor Vehicles Act, 1988 Motor a.ccident Claim for_ - - _compensation Liability of Insurance Company Motor_ C _Accident Tribunal held Insurance company as well as the owner of the insured vehicle jointly and severely liable_ - - _Appeal dismissed by High Court Plea of Insurance company that the policy holder was not holding valid policy because his cheque towards premium was dishonoured prior_ D _to the date of accident and hence insurance company not_ - _liable Held: Though the cheque was dishonoured prior to the date of accident, intimation thereof was given to the holder_ - _after the accident Therefore Insurance company was liable to pay the compensation._ E _United India Insurance_ Co. _Ltd. vs. Laxmamma and Ors._ **(2012) 5 sec 234: 2012 (5) SCR 261 - relied on.** ## **Case Law Reference:** F **2012 (5) SCR 261 relied on Para 4** CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2159 of 2007. From the Judgment and Order dated 28.09.2004 of the G High Court of Punjab & Haryana at Chandigarh in F.A.O. No. 2941 of 2004. Kiran Suri, Nakibur Rahman Barbhuiya, Ritika Gambhir, Kirti Renu Mishra for the Appellant. H 74 NATIONAL INSURANCE CO. LTD. _v._ BALKAR RAM & 75 ORS. Ashok Mathur, Varinder Kumar Sharma for the A Respondets. The following Order of the Court was delivered ## **ORDER** B 1. This appeal has been preferred by way of special leave against the judgment and order passed by the High Court of Punjab and Haryana in F.A.O. No. 2941 of 2004 dated 28.09.2004 wherein the appeal filed by the Appellant-insurance company was dismissed holding therein that the intimation by c the Appellant-Insurance Company regarding dishonour of the cheque towards the issuance of policy was communicated to the policy-holder after the accident. Hence, it was liable to pay the compensation to the claimants/ Respondents and it could not recover the same from the owner. D 2. To clarify the position, it may be stated that the vehicle which was insured with the appellant met with an accident and a compensation of Rs.1,24,035/- was ordered to be paid to the respondents-claimants along with interest and the owner as also the insurance company were jointly and severally held liable by the Motor Accidents Claims Tribunal ('Tribunal' for short)to pay the amount of compensation to the claimants. E 3. The Appellant/Insurance Company assailed the award passed by the Tribunal essentially on the ground that the cover note for the policy of insurance was issued on 7.04.2000 for which a cheque was submitted by the owner. However, the cheque was dishonoured by the bank on 17.04.2000. Subsequently, the vehicle which was insured with lhe appellantinsurance company met with an accident on 19.04.2000. The appellant-insurance company, therefore, contended that as the policy of insurance could not be held to be a valid document in view of the fact that the cheque towards the policy had been dishonoured even before the accident had taken place, the insurance company was not liable to indemnify the claimants F G H 76 SUPREME COURT REPORTS [2013] 8 S.C.R. A by paying the amount which fell into its share as per the Tribunal's award and it is the owner which is liable to pay the entire amount of compensation to the respondents/ claimants. 4. However, we compliment Ms. Kiran Suri, learned 8 counsel for the appellant for cutting short the controversy by fairly pointing out the ratio of the judgment (2012) 5 sec 234 titled _United India Insurance_ Co. _Ltd._ Vs. _Laxmamma_ & Ors. wherein it has been held that the insurance company is liable to satisfy the award if the intimation regarding the dishonour of C the cheque and cancellation of policy is communicated to the policy-holder after the date of the accident. Thus, the defence of the insurance company that the policy of insurance was _not_ valid since the cheque had been dishonoured prior to the accident would not exonerate them from making the payment 0[of ][compensation. In this matter, admittedly the accident had ] taken place on 19.04.2000 and the cheque although had been dishonoured prior to the accident on 17 .04.2000, the intimation to the policy-holder had been given by the insurance company on 26.04.2000, in view of which the insurance company cannot be allowed to contend that the policy-holder was not holding a E valid policy of insurance in regard to the vehicle which met with an accident. Admittedly, the policy-holder had already issued another cheque substituting the cheque which had earlier been dishonoured. 5. In that view of the matter and following the ratio of the judgment referred to hereinbefore, this appeal has no substance and accordingly it is dismissed. No order as to costs. K.K.T. Appeal dismissed.