Shaju Mathew v. Ammini, Santhamma @ Santha, Sajitha, Sanish, Sumesh, Rajesh, The New India Assurance Co. Ltd., State Bank of Travancore

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE S.SIRI JAGAN & THE HONOURABLE MR. JUSTICE K.RAMAKRISHNAN** **TUESDAY, THE 19TH DAY OF NOVEMBER 2013/28TH KARTHIKA, 1935** ## **MACA.No. 1188 of 2009** **-------------------------AGAINST THE AWARD IN OPMV 485/2006 of MACT PALA DATED 05-09-2008** **APPELLANT(S)/IST RESPONDENT: ------------------------------------------------------** **SHAJU MATHEW, KALLIDANTHIYIL HOUSE, KANNARKUNNU, ATHIRAMPUZHA, KOTTAYAM DISTRICT.** **BY ADV. SRI.SUBHASH CYRIAC** **RESPONDENT(S)/APPLICANTS AND RESPONDENTS 2 AND 3:** - **----------------------------------------------------------------------------------------** **1. AMMINI, W/O. LATE NARAYANANKUTTAPPAN, PARAPPURATHU HOUSE, KANAKKARY.P.O, ETTUMANOOR KOTTAYAM.** **2. SANTHAMMA @ SANTHA, W/O. KRISHNANKUTTY, -DO-----DO---** **3. SAJITHA, D/O. LATE KRISHNAKUTTY, -DO----DO----** **4. SANISH, S/O. LATE KRISHNAKUTTY, -DO-----DO-----** **5. SUMESH, S/O. LATE KRISHNAKUTTY, -DO------DO----** **6. RAJESH, S/O. SREEDHARAN, SREERANGAM HOUSE, PEROOR, KOTTAYAM.** **7. THE NEW INDIA ASSURANCE CO. LTD., ETTUMANOOR BRANCH, KOTTAYAM DISTRICT.** **8. CHIEF MANAGER, STATE BANK OF TRAVANCORE, ETTUMANOOR.** **R1 TO R5 BY ADV. SRI.MATHEW JOHN (K) R1 TO R5 BY ADV. SRI.AJEESH K.SASI R7 BY ADV. SMT.T.C.SOWMIAVATHY R8 BY ADV. SRI.ABRAHAM GEORGE JACOB** **THIS MOTOR ACCIDENT CLAIMS APPEAL HAVING BEEN FINALLY HEARD ON 19-11-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **AS** ## **S.SIRI JAGAN & K.RAMAKRISHNAN, JJ.** --------------------------------------------------------------- M.A.C.A.No.1188 of 2009 --------------------------------------------------------------Dated this, the 19[th] day of November 2013 ## Judgment ## Ramakrishnan, J. The first respondent-owner of the vehicle in OP(MV) No.485/2006 on the files of the Motor Accidents Claims Tribunal, Pala, is the appellant herein. Respondents 1 to 5, as the dependants of Krishnankutty, filed an application for compensation for the death of Krishnankutty, who died in a motor vehicle accident, caused on account of the negligent driving of a vehicle driven by the 6[th] respondent owned by the appellant and insured with the 7[th] respondent. The 8[th] respondent-bank was impleaded as a proper party as per order dated 24.05.2008 in IA No.1875/08 before the Tribunal, but, they remained ex parte. The insurance company contended that though they had issued a policy in respect of the vehicle involved in the accident earlier, later, it was cancelled. The appellant herein had remitted the premium by way of cheque on 4.11.2005 for issuance of policy and on that basis, the policy was issued. The 7[th] respondent presented the cheque MACA 1188/09 2 for collection with the 8[th] respondent bank and the amount was credited in their account and the policy was issued on 6.11.2005. After 11 months, the 8[th] respondent informed the 7[th] respondent that the cheque was dishonoured for insufficient funds in the account of the appellant in their bank and on that basis, they cancelled the policy, rescinding the contract and informed the authorities like Police and Motor Vehicles Departments and also the appellant, regarding the dishonour of the cheque and cancellation of the policy. But, the accident occurred on 23.11.2005 before the policy was cancelled. After considering the evidence on record, the Tribunal found that the accident occurred due to the negligent driving of the vehicle by the 6[th] respondent and awarded a total compensation of Rs.3,04,000/- in favour of the claimants and found that the insurance company is liable to pay the amount, but, they are entitled to realise the same from the appellant, who is the insured. The right of the insurance company to proceed against the bank was also left open, to be pursued in a civil court. Dissatisfied with the finding of the Court below, giving right to the insurance company to realise the amount from the appellant, the MACA 1188/09 3 appellant has filed this appeal before this Court. 2. We have heard the learned counsel for the appellant, claimants, the insurance company and the bank. 3. The learned counsel for the appellant submitted that the premium was paid by way of cheque on 4.11.2005 and the policy was issued on 6.11.2005. It is also evident that the bank had credited the amount covered by the cheque in the account of the insurance company, it was after 11 months that they had informed the insurance company regarding dishonour of the cheque and so, there is no fault on the part of the appellant in not paying the amount. No evidence was adduced on the side of the insurance company or the bank to prove that as on the date of issuance of the cheque, there was no amount in his account. He cannot be mulcted with the liability for the negligence on the part of the insurance company or the bank in collecting the amount within the validity period of the cheque, is the contention of the appellant. So, the Tribunal was not justified in making him liable to reimburse the amount payable by the insurance company to them, is the submission made before us. MACA 1188/09 4 4. On the other hand, the learned counsel for the insurance company submitted that though they are liable to pay the amount by virtue of the issuance of the policy to a third party, since the policy was cancelled after the accident, their right to recover the amount from the insured is not lost to them because once the contract is rescinded for want of consideration, it becomes void and the appellant is not entitled to get unlawful enrichment on account of his fault. They have got a right to proceed against the bank also. Their right to recover the amount from the insured is not lost to them and as such, the Tribunal was perfectly justified in giving the right of recovery of the amount to the insurance company from the appellant and that finding does not call for any interference at the hands of this Court, is their contention. 5. The learned counsel for the Bank submitted that the insurance company has already filed a suit against the bank for recovery of the amount and the suit was decreed and an appeal has been preferred before this Court, which is pending. 6. The learned counsel for the claimants submitted that the judgment of the Tribunal is perfectly legal and does not call for MACA 1188/09 5 interference at the hands of this Court. 7. We have considered the rival contentions of both sides in detail. 8. On the facts of the case, an interesting legal question has arisen for consideration in this appeal i.e, whether the insurance company is entitled to recover the amount paid to the claimants from the insured on the ground that the cheque issued towards premium was dishonoured, whereby the contract was rescinded and the policy was cancelled after a lapse of eleven months after the accident. 9. It is an admitted fact that the appellant was the owner of the vehicle involved in the accident. It is also an admitted fact that the appellant issued the original of Ext.B1 cheque dated 4.11.2005 in favour of the insurance company towards premium payable for issuance of the policy. It is also not in dispute that on the basis of acceptance of the cheque, the insurance company had issued the policy on 6.11.2005, covering the risk of people like the claimants, for the period from 6.11.2005 to 5.11.2006. The accident in this case occurred on 23.12.2005 at 9 pm. It is also admitted, MACA 1188/09 6 which is also evident from Ext.B2 that the amount covered by Ext.B1 cheque was credited in the account of the insurance company on 18.11.2005. Thereafter, the 8[th] respondent bank informed the insurance company by Ext.B4 letter dated 17.10.2006 that the cheque had been dishonoured for insufficient funds in the account of the appellant, which is evidenced by Ext.B5 dishonour memo and this fact was entered in the account of the insurance company, as evidenced by Ext.B3. Thereafter, by Ext.B6 letter dated 20.10.2006, the insurance company informed the appellant regarding dishonour of the cheque and cancelled the policy, rescinding the contract. This was accepted by the appellant, evidenced by Ext.P7 postal acknowledgment on 3.11.2006. The insurer also informed the Transport Authority by Ext.B8 letter dated 20.10.2006 about the cancellation of the policy. The insurance company had issued Ext.B9 letter dated 29.11.2006 to the bank, informing that in case any award is passed against them, the bank would be liable to reimburse the amount paid by them. They also issued Ext.B10 letter dated 25.06.2007, informing the bank that since 6 months have lapsed and no reply was sent to Ext.B9 letter, MACA 1188/09 7 the bank would be liable to reimburse the loss, if any, suffered by them on account of the negligence of the bank as stated in Ext.B9 letter. 10. It is settled law that if the policy issued under Section 147 of the Motor Vehicles Act was in force at the time when the accident occurred, the subsequent cancellation of the policy on the ground of dishonour of the cheque is not a ground to exonerate the insurance company from paying the amount to the claimants. Even before the accident, if the policy was cancelled for the above reasons, unless the insurance company had informed the concerned authorities, namely Police department and the Motor Vehicles Department about the cancellation, their liability to pay the amount to the claimants will not cease even if the repudiation was before the accident. This was so held in the decision in **Oriental Insurance Company Limited v. Inderjit Kaur** (AIR 1998 SC 588). The said dictum has been followed in the decisions reported in **New India Assurance Company Limited v Rula and others** (2000) 3 SCC 195) and **Deddappa v. Branch Manager, National Insurance Company Limited** (AIR 2008 SC 767). This decision MACA 1188/09 8 was followed by this Court in the decision reported in **Wilson v. Vasantha Kumar and others** (2013(3) KHC 764 (DB). In all these cases, the right of recovery from the insured was given, invoking Section 149(4) of the Motor Vehicles Act. In all the cases, the dishonour was immediately after the issuance of the cheque, but, after the policy was issued. 11. But, in the present case, it is seen from the records that the information regarding dishonour was received from the bank by the insurance company after nearly 11 months of the issuance of the cheque. There is no explanation forthcoming from the side of the Bank as to the reason for the delay as well. There is no evidence adduced on the side of the insurance company or the bank or the insured regarding the factum as to whether there was amount in the account of the appellant to honour the cheque if it had been presented during its validity period. But, there was a duty cast on the drawer of the cheque to see that amounts are made available in his account to honour the cheque during the period of validity of the cheque to enable the payee to get the amount by presenting the cheque issued by the drawer in favour of MACA 1188/09 9 the payee. This responsibility is more on the appellant, especially when the insurance company had issued the policy covering the risk of a third party as per the statute under Section 147 of the Motor Vehicles Act in favour of the appellant on the basis of the issuance of the cheque by the appellant towards payment of premium for the policy. 12. In this case, it appears from the evidence that the cheque was presented for collection by the insurance company within time. But, they received intimation regarding dishonour after nearly 11 months of presentation of the cheque So, the insurance company cannot be said to be at fault. So, if a cheque is dishonoured on a later date, though not on account of the fault of the insurance company, then, their right to recover the loss, if any, suffered by them on account of non-payment of the premium by the appellant will not be lost to them. If the appellant had availed of the benefit on the basis of a void contract, then, he is liable to reimburse the loss to the other contracting party on the principle that he is not entitled to get unlawful enrichment on account of his fault. There is a burden cast on the appellant to prove by producing MACA 1188/09 10 his accounts that there were funds in his account during the validity period of the cheque and if the cheque was presented within that time, the cheque would have been honoured. That burden was not discharged by the appellant. Probably, he may have a right to proceed against the bank for the negligence on their part. But the right of the insurance company to realise the amount from the appellant cannot be denied to them. The appellant has no case that he had remitted the amount on getting information regarding dishonour as well. So, he is not entitled to get the benefits of the policy, which has resulted in cancellation on account of dishonour of cheque issued towards premium for the reason of ' _insufficient funds'_ in his account and if the contract is void for want of consideration, he is liable to reimburse the insurance company for the benefit he had availed of on the basis of that void contract. But, he may have a right to proceed against the bank for their negligence in informing the dishonour of the cheque only after the lapse of 11 months. So, the Tribunal was perfectly justified in giving right to the insurance company to get reimbursement of the amount from the appellant. The Tribunal was justified in giving right to the MACA 1188/09 11 insurance company to proceed against the bank for realisation of the amount for their negligence independently as well. It is made clear that if the insurance company has realised the amount from the bank pursuant to the litigation already initiated by them, then, they cannot proceed against the appellant also for recovery of the amount as that will amount to double benefit. So, the Tribunal was perfectly justified in passing the order giving right to get reimbursement from the appellant to the insurance company. So, there is no merit in the appeal and the same is liable to be dismissed. In the result, the appeal is dismissed. **S.SIRI JAGAN, JUDGE** **K.RAMAKRISHNAN,JUDGE** sta MACA 1188/09 12 MACA 1188/09 13