New India Assurance Co. Ltd. v. Riyas and M. Abuthahir

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE A. BADHARUDEEN** **THURSDAY, THE 23[RD] DAY OF JUNE 2022 / 2ND ASHADHA, 1944** ## **MACA NO. 603 OF 2009** **AGAINST THE AWARD DATED 04.08.2008 IN OPMV 185/2004 OF MOTOR** ## **ACCIDENT CLAIMS TRIBUNAL, PALAKKAD** ## **APPELLANT/3RD RESPONDENT:** THE NEW INDIA ASSURANCE COMPANY LIMITED PALAKKAD NOW REPRESENTED BY ITS MANAGER, REGIONAL OFFICE, M.G.ROAD, KOCHI-11 BY ADVS. MATHEWS JACOB (SR.) P.JACOB MATHEW ## **RESPONDENTS/PETITIONER AND 1ST RESPONDENT:** 1 RIYAS, S/O. P.;ABDUL SALAM, PETTAYL HOUSE, NAGARIPURAM PO,PATHIRIPALA, PALAKKAD DISTRICT. 2 M.ABUTHAHIR, SO. P.K.MOHAMMED DOOR NO.19/82, H.M.P.R.STREET, FORT ,COIMBATORE, TAMILNADU. BY ADV SRI.A.R.GANGADAS THIS MOTOR ACCIDENT CLAIMS APPEAL HAVING BEEN FINALLY HEARD ON 21.06.2022, THE COURT ON 23.06.2022 DAY DELIVERED THE FOLLOWING: M.A.C.A.No.603/2009 2 _**“C.R”**_ ## _**A. BADHARUDEEN, J.**_ ================================ _M.A.C.A.No.603 of 2009_ ================================ _Dated this the 23[rd] day of June, 2022_ _**J U D G M E N T**_ The 3[rd] respondent in O.P(MV).No.185/2004 on the file of the Motor Accidents Claims Tribunal, Palakkad is the appellant in this appeal, filed under Section 173 of the Motor Vehicles Act. Respondents herein are respondents 1 and 2 as well as the original petitioner. 2. Heard Advocate Jacob Mathew, the learned counsel for the insurance company and also Advocate A.R.Gangadas appearing for the 1[st] respondent/original claimant. No representation for other respondents, though they were served with notice. M.A.C.A.No.603/2009 3 3. The parties in this appeal shall be referred as `petitioner' for the `original petitioner', `insurer' for `appellant' and `insured' for the `owner of the vehicle'. 4. The relevant questions emerge for consideration in this appeal are as under: (i) What are the requirements to be established by the insurer to avoid its liability in cases, where policy issued after collecting premium by way of cheque got dishonoured and on resultant cancellation of the policy issued thereon? (ii) What is the mode of giving notice/intimation to the insured, and the Regional Transport Officer regarding dishonour of cheque and cancellation of policy issued on the basis of the dishonoured cheque, by the insurer? 5. Briefly spelt, the facts of the case runs on the premise that original petitioner, who sustained injuries in consequence of a motor accident occurred on 30.07.2003, when he was hit down by a M.A.C.A.No.603/2009 4 lorry bearing Reg.No.TN-37/H-6099, while the petitioner was riding on his motorcycle, claimed compensation under Section 166 of the Motor Vehicles Act. According to the petitioner, the accident was the contribution of negligence on the part of the 2[nd] respondent, the driver of the lorry. 6. The 3[rd] respondent insurer, the appellant herein, resisted the claim attributing negligence on the part of the petitioner himself since he had driven the motorcycle at the time of accident without a licence and highlighting registration of crime against him under Section 3(1) of the Motor Vehicles Act on that premise. 7. Additional written statement was also filed by the insurer with specific contention that the policy was issued on the basis of a postdated cheque issued by the insured and in turn the same got dishonoured and subsequently the policy was cancelled. Therefore, liability also was disputed. 8. The Tribunal, while granting compensation to the tune M.A.C.A.No.603/2009 5 of Rs.4,10,794/- in favour of the petitioner, held the insurer liable, negativing the contention of the insurer. 9. The learned counsel for the insurer placed a Division Bench decision of this Court reported in [2017 KHC 1039] : 2018 (1) KLT SN 50 : 2018 (1) KLJ 199], _**Prasannna B. v. Kabeer P.K & anr.**_ , to contend that in this matter on dishonour of the cheque issued towards payment of premium, policy was cancelled and due intimation was given to the insured as well as the Regional Transport Officer and, therefore, following the ratio of this decision, the company is entitled to get exoneration from liability and the finding of the Tribunal in the negative is unsustainable. 10. Disarming this argument, the learned counsel for the petitioner highlighted a decision of the Apex Court reported in [2008 (1) KLT 296 : 2008 KHC 4390 : AIR 2008 SCC 767], _**Deddappa & Ors. v. Branch Manager, National Insurance Co. Ltd.**_ to assert the point that in this case no evidence let in by the M.A.C.A.No.603/2009 6 insurer to show issuance of notice regarding issuance of notice/intimation to the insured and the concerned Regional Transport Officer. In the said decision, the Apex Court held, after pointing out the distinction between the statutory liability of the insurance company, viz. a viz., a third party in the context of Sections 147 and 149 of the Motor Vehicles Act that the liabilities arising under a contract of insurance would have to be met if the contract is valid. If contract of insurance had been cancelled and all concerned have been intimated thereabout, the insurance company would not be liable to satisfy the claim. Going by the award impugned, the Tribunal relied on the decisions reported in _**Deddappa & Ors. v. Branch Manager, National Insurance Co. Ltd.**_ 's case ( _supra_ ) and another decision of this Court reported in [2006 ACJ 106], _**Oriental Insurance Co. Ltd. v. Sivankutty & Ors.**_ . It was observed by the Tribunal that the company failed to comply with the formalities after dishonour of the cheque and subsequent cancellation of the policy, therefore, the company is M.A.C.A.No.603/2009 7 ## liable. ## 11. In _**Prasannna B. v. Kabeer P.K & anr.**_ 's case ( _supra_ ), ## Division Bench of this Court also held as under: _"8. On a scanning of the legal precedents referred as above, the position which remains settled now is that, if the insurer had cancelled the policy before the accident and if due intimation has been given with respect to such cancellation to the insured and to the motor vehicle authorities concerned, there is no liability for the insurer to indemnify the insured with respect of claims of third parties."_ In the said decision, the Division Bench of this Court considered almost all decisions prior to 2017, starting from the decision reported in [1998 KHC 198 : 1998 (1) KLT SN 23 : 1998 (1) SCC 371 : AIR 1998 SC 588], _**Oriental Insurance Co. Ltd. v. Inderjit Kaur & Ors.**_ The other decisions are; [2000 KHC 505 : AIR 2000 SC 1082 : 2000 (3) SCC 195 : 2000 (2) KLT SN 31 : 2000 AIR SCW 788], _**New India Assurance Co. Ltd. v. Rula & Ors.**_ , [2001 KHC 193 : 2001(1) KLT 822 : 2001 (3) SCC 151 : 2001 (1) KLJ NOC 73 : AIR 2001 SC 1197], _**National Insurance Co.Ltd. v.**_ M.A.C.A.No.603/2009 8 _**Seema Malhotra & Ors.**_ and [2012 KHC 4273 : AIR 2012 SC 2817 : 2012 (2) KHC SN 19 : 2012 (2) KLT SN 75 : 2012 (5) SCC 234], _**United India Insurance Co.Ltd. v. Laxmamma & Ors.**_ Thus the ratio of the decision in _**Prasannna B. v. Kabeer P.K & anr.**_ 's case ( _supra_ ) is that the insurer should be absolved from the liability if it is proved that the policy was duly cancelled and that intimation with respect to such cancellation of the policy is duly sent to the insured as well as to the RTO, through regular methods of service acceptable under law. It was also held therein that the insurer shall discharge the burden of proof in the matter of giving intimation regarding cancellation of the policy in the address of the insured given in the proposal submitted while taking the policy and also to the RTO concerned. In the said decision, the Division Bench referred the question, regarding receipt of intimation by the insured and the burden of proof, to a larger Bench. As per the decision reported in [2018 (4) KLT 722 (F.B)], _**Prasanna v. Kabeer**_ , a Full Bench of this Court held as under: M.A.C.A.No.603/2009 9 _"A period of one week from the date of dispatch can safely be adopted as the time necessary to serve the letter in the ordinary course after which the intimation is presumed to have been served on the addressee. The period is so fixed in the absence of any provision to the contrary for the limited purpose of the cases of this nature to avoid disputes as to the date of receipt of the intimation. The insured in some cases may try to evade the service of notice and the letter would be returned with postal remarks like `addressee left', `house locked', `insufficient address' etc. The burden is on the addressee to rebut the presumption by conclusive evidence that he did not really receive the letter and it is not a case of deliberate avoidance. The burden is not on the insurer to establish conclusively that the intimation of cancellation of insurance coverage was in fact served on the insured or the registering authority. The judgment in M.A.C.A.No.2471/2015 to the effect that it is the obligation of the insurer to establish the service of the intimation on the addressee is hereby overruled."_ 12. In paragraph No.3 it has been held further that _the surest_ _way to prove that the intimation has been sent by the insurer about the cancellation of the insurance coverage is to dispatch it by registered post with or without postal acknowledgment. The production of the receipt evidencing the dispatch by registered post and other modes of service raises a presumption in favour of the insurer that the intimation has been sent to the addressee for_ M.A.C.A.No.603/2009 10 _secured delivery._ 13. Thus the law emerges is that the insurer should be absolved from the liability if it is proved that the policy was duly cancelled and the intimation with respect to such cancellation of the policy is duly informed to the insured as well as to the RTO, through methods of service known to law. If the burden regarding issuance of notice/intimation not discharged, pay and recovery can only be justified. The first question is answered thus. 14. Coming to the second question, it is the duty of the insurer to prove that intimation was given to the insured and the Regional Transport Officer concerned by the mode known to law. The modes can be by issuance of notice/intimation by speed post, registered post, e-mail, courier and by direct service. The production of the receipt evidencing the dispatch by registered post and other modes of service or acknowledgement of receipt of such notice by the insured raises a presumption in favour of the M.A.C.A.No.603/2009 11 insurer that the intimation has been sent to the addressee for secured delivery. Thus it is mandatory for the insurer to prove that the notice/intimation was given to the insured and the Regional Transport Officer concerned. 15. To be on the facts of this case, here, RW1, Senior Assistant of New India Insurance company, Divisional Office, Palakkad got examined on the side of the insurer. It was through him, Exts.B1 to B8 were marked. RW1 given evidence that the vehicle was insured by paying premium for Rs.7,624/- by cheque dated 01.08.2002, but the cheque got dishonoured on 03.08.2002 when it was presented for collection. Ext.B1 is the original cheque so dishonoured. Ext.B2 is the copy of dishonour memo. Ext.B3 is the letter of intimation regarding dishonour. Ext.B4 is the copy of letter alleged to be issued to M.Abuthahir (the insured) with title "registered AD" dated 05.08.2002. Ext.B5 is the copy of the said letter issued to the Regional Transport Officer, Coimbatore with M.A.C.A.No.603/2009 12 some endorsement. Ext.B6 is the endorsement schedule regarding collection of premium by way of cheque. Ext.B7 is the premium refund intimation voucher showing refund of Rs.24/- in the name of the insured. Ext.B8 is the bank statement showing dishonour of the cheque. During cross examination, RW1 given evidence that the receipt showing issuance of Exts.B4 and B5 intimations is not available. Further he had given evidence that the A.D card acknowledging receipt of the same also could not be traced from the office. 16. Thus to be on the evidence available, absolutely no evidence before this Court to find that notice/intimation was despatched to the insured by the insurer to grant exemption in the matter of payment of compensation pursuant to cancellation of policy consequent to dishonour of cheque issued towards premium. Thus it has to be held that once the insurer miserably failed to prove issuance of intimation or notice regarding the dishonour of M.A.C.A.No.603/2009 13 the cheque which was issued towards premium and pursuant to cancellation of policy by showing documents regarding forwarding of the said notices, cannot canvass exemption from liability. Therefore, the award impugned herein doesn't require interference, for want of evidence regarding the issuance of intimation to the insured as well as the Regional Transport Officer regarding cancellation of policy and dishonour of a cheque issued towards premium. In the above circumstances, the appeal fails and is dismissed. _Sd/-_ - _**(A. BADHARUDEEN, JUDGE)**_ _rtr/_