Shriram General Insurance Company Limited v P.V Saju S/o Varghese and Subaidha W/o Mohammedali and C.M. Niyas

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR. JUSTICE P.D.RAJAN** **THURSDAY, THE 19TH DAY OF OCTOBER 2017/27TH ASWINA, 1939** **MACA.No. 619 of 2017 ()** **-----------------------AGAINST THE AWARD IN OPMV 166/2014 of M.A.C.T.,ERNAKULAM DATED 26-11-2016** **APPELLANT(S)/3RD RESPONDENT: --------------------------SHRIRAM GENERAL INSURANCE COMPANY LIMITED ERNAKULAM NOW REPRESENTED BY THE LEGAL OFFICER, AZAD TOWER, AMMANCOIL CROSS ROAD, KOCHI-35** **BY ADVS.SRI.MATHEWS JACOB (SR.) SRI.P.JACOB MATHEW** **RESPONDENT(S)/PETITIONER AND RESPONDENTS 1&2:** **---------------------------------------------** **1. P.V SAJU S/O.VARGHESE, PERUMPILLY HOUSE, KUMARAPURAM ROAD, NETTOOR.P.O., MARADU, ERNAKULAM-682304** **2. SUBAIDHA W/O.MOHAMMADALI, 10/170 CHALIYATHPARAMPU HOUSE, NETTOOR.P.O., MARADU, ERNAKULAM-682304** **3. C.M.NIYAS S/O. MUHAMMADALI 10/170 CHALIYATHPARAMPU HOUSE, NETTOOR.P.O., MARADU, ERNAKULAM-682304** **R1 BY ADV. SRI.K.V.RAJAN** **THIS MOTOR ACCIDENT CLAIMS APPEAL HAVING BEEN FINALLY HEARD ON 19-10-2017 ALONG WITH MACA NO.631/2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **acd** ## **P.D.RAJAN, J.** --------------------------------------M.A.C.A.Nos.619/2017 & 631/2017 --------------------------------------Dated this the 19[th] day of October, 2017 ## **JUDGMENT** These appeals are preferred by the insurer against the common award in O.P.(MV)Nos.166/2014 & 167/2014 of the Motor Accidents Claims Tribunal (for short 'MACT'), Ernakulam. One P.V. Saju and N.K. Paramu sustained injuries in a motor accident on 13.10.2013 at 7.15 p.m, while they were travelling in a motorcycle along Nettoor PWD Road. The learned MACT awarded ₹76,250/in O.P.(MV)No.166/2014 and ₹78,250/in O.P.(MV) No.167/2014 with interest and costs. The insurer was directed to satisfy the amount within thirty days from the date of the award. Being aggrieved by that, the insurer preferred this appeal. 2. The claimants' case in the tribunal was that they were travelling in a motorcycle KL 7 AB 6709 along Nettoor PWD Road and when they reached at Kallath bus stop, M.A.C.A.No.619/2017 & con.case 2 another autorickshaw KL 39/9600 driven in a rash and negligent manner came from the opposite direction and hit against their motorcycle, as a result both of them sustained serious injuries. The driver and owner of the the autorickshaw were set ex parte. The appellant contended that they issued a policy in respect of the above said autorickshaw by accepting a cheque for 6244/- drawn on₹ Axis Bank towards premium but it was dishonoured for the reason of funds insufficient, consequently, they sent a letter to the insured informing her that the policy was cancelled due to non-receipt of consideration, hence the insurer has no liability. The injured did not adduce any oral evidence, but his documents were marked as Exts.A1 to A11. The respondents' evidence consists of documentary evidence of Exts.B1 to B5. 3. The learned counsel appearing for the appellant contended that as the cheque issued towards the premium of the policy was dishonoured, there is no liability to indemnify M.A.C.A.No.619/2017 & con.case 3 the owner. ## 4. Section 147 of the M.V. Act reads as follows: - “147. **Requirements of policies and limits of liability.** (1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which- (a) is issued by a person who is an authorised insurer; and (b) insures the person or classes of persons specified in the policy to the extent specified in sub-section (2)- (i) against any liability which may be incurred by him in respect of the death of or bodily injury to any person, including owner of the goods or his authorised representative carried in the vehicle or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place; (ii) against the death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of the vehicle in a public place: provided that a policy shall not be required- (i) to cover liability in respect of the death, arising out of and in the course of his employment, of the employee of a person insured by the police or in respect of bodily injury sustained by such an employee arising out of and in the course of his employment other than a liability arising under the Workmen's Compensation Act, 1923 (8 of 1923) in respect of the death of, or bodily injury to, any such employee,- (a) engaged in driving the vehicle or (b) if it is a public service vehicle engaged as a conductor of the vehicle or in examining tickets on the vehicle or (c) if it is a goods carriage, being carried in the vehicle or (ii) to cover any contractual liability. Explanation.- For the removal of doubts, it is hereby declared that the death of or bodily injury to any person or damage to any property of a third party shall be deemed to have been caused by or to have arisen out of, the use of a M.A.C.A.No.619/2017 & con.case 4 vehicle in a public place notwithstanding that the person who is dead or injured or the property which is damaged was not in a public place at the time of the accident, if the act or omission which led to the accident occurred in a public place. (2) Subject to the proviso to sub-section (1), a policy of insurance referred to in sub-section 91), shall cover any liability incurred in respect of any accident, up to the following limits, nameluy:- (a) save as provided in clause (b), the amount of liability incurred; (b) in respect of damage to any property of a third party, a limit of rupees six thousand: Provided that any policy of insurance issued with any limited liability and in force, immediately before the commencement of this Act, shall continue to be defective for a period of four months after such commencement or till the date of expiry of such policy whichever is earlier. (3) A policy shall be f no effect for the purposes of this Chapter unless and until there is issued by the insurer in favour of the person by whom the policy is effected a certificate of insurance in the prescribed form and containing the prescribed particulars of any condition subject to which the policy is issued and of any other prescribed matters; and different forms, particulars and matters may be prescribed in different cases. (4) Where a cover note issued by the insurer under the provisions of this Chapter or the rules made thereunder is not followed by a policy of insurance within the prescribed time, the insurer shall, within seven days of the expiry of the period of the validity of the cover note, notify the fact to the registering authority in whose records the vehicle to which the cover note relates has been registered or to such other authority as the State Government may prescribe. (5) Notwithstanding anything contained in any law for the time being in force, an insurer issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case M.A.C.A.No.619/2017 & con.case 5 of that person or those classes of persons.” Section 145 of the M.V. Act, 1988 deals with the insurance of Motor Vehicles against third party risks. According to Section 146 of the M.V. Act, no person shall use the motorcycle in a public place unless a policy of insurance has been taken with regard to such vehicle complying with requirements as set out in Chapter XI. Therefore, the owner is statutorily liable to obtain the insurance policy for the motor vehicles to cover third party risks. The only ground u/s.146 of the Act is an exemption from the operation of sub section (1), which is granted to such category set out u/s.146 alone. The owner of the vehicle approached the appellant for policy. Accordingly, they issued policy coverage from 21.1.2013 to 20.1.2014. The policy was issued by accepting a cheque dated 20.1.2013 for 6,244/- drawn on Axis Bank, which₹ was dishonoured on 1.2.2013 for the reason of funds insufficient. Subsequently, the insurer cancelled the policy. The appellant contended that they intimated about the M.A.C.A.No.619/2017 & con.case 6 cancellation of the policy to the insured. Now the question is whether non-payment of the premium and subsequent cancellation were properly intimated to the insured by the appellant. 5. The learned counsel for the injured contended that even though Exts.B1 to B5 were produced in the tribunal, no evidence has been adduced by the appellant to prove that they had properly intimated the cancellation of the policy to the owner of the vehicle. Ext.B1 is the letter issued to the owner Subaida on 1.2.2013. Postal receipt was also attached along with Ext.B1. The postman, who delivered the letter was not examined as a witness. The appellant also failed to produce and mark the postal acknowledgment card. Ext.B2 is the letter issued to the Regional Transport Authority, Thripunithura about the dishonour of the cheque and cancellation of the policy. Ext.B3 is the dishonoured cheque drawn on Axis Bank Ltd, Kochi. Ext.B4 is the cheque return memo and Ext.B5 is the M.A.C.A.No.619/2017 & con.case 7 statement issued from HDFC Bank. Analysing the aforesaid documents Exts.B1 to B5, it is found that proper intimation was not given to the insured by the insurer, for that there is no evidence. ## 6. Apex Court in _**United India Insurance Co. Ltd**_ v. _**Laxmamma and others**_ [2012 ACJ 1307] held as follows: “In our view, the legal position is this: where the policy of insurance is issued by an authorised insurer on receipt of cheque towards payment of premium and such cheque is returned dishonoured, the liability of authorised 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 authorised 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 authorised insurer to cover a vehicle on receipt of the cheque paid for premium and the cheque gets dishonoured 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.” M.A.C.A.No.619/2017 & con.case 8 7. Section 64-VB of the Insurance Act, 1938 reads as ## follows: “64-VB. _No risk to be assumed unless premium is received in advance_ .- (1) No insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily payable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and until deposit of such amount, as may be prescribed, is made in advance in the prescribed manner. (2) For the purpose of this section, in the case of risks for which premium can be ascertained in advance, the risk may be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the insurer. Explanation.- Where the premium is tendered by postal money order or cheque sent by post, the risk may be assumed on the date on which the money order is booked or the cheque is posted, as the case may be. (3) Any refund of premium which may become due to an insured on account of the cancellation of a policy or alteration in its terms and conditions or otherwise shall be paid by the insurer directly to the insured by a crossed or order cheque or by postal money order and a proper receipt shall be obtained by the insurer from the insured, and such refund shall in no case be credited to the account of the agent. (4) Where an insurance agent collects a premium on a policy of insurance on behalf of an insurer, he shall deposit with, or dispatch by post to, the insurer the premium so collected in full without deduction of his commission within twenty-four hours of the collection excluding bank and postal holidays. (5) The Central Government may, by rules, relax the requirements of sub section (1) in respect of 9 M.A.C.A.No.619/2017 & con.case particular categories of insurance policies. (6) The Authority may, from time to time, specify, by the regulations made by it, the manner of receipt of premium by the insurer.” 8. Apex Court in _**Oriental Insurance Company Ltd**_ . v. _**Inderjit Kaur**_ [1998 ACJ 123], held that _the insurance company was liable to indemnify third parties in respect of the liability which the policy covered despite the bar created by Section 64-VB of the Insurance Act._ The same question was considered by the Apex Court in _**New India Assurance Co.Ltd**_ v. _**Rula**_ [2000 ACJ 630(SC), in which it was held that _the cancellation of the policy on the ground that the cheque through which premium was paid was dishonoured, would not affect the rights of the third party_ . On a perusal of Ext.B1, it is clear that there is responsibility on the side of the appellant either to examine the postman, who served the notice to the insured and mark the postal acknowledgment card through him. Therefore, it is presumed that there is no proper communication of dishonour of the cheque to the owner of the vehicle. When there is no communication, the appellant M.A.C.A.No.619/2017 & con.case 10 cannot be exonerated from the liability as stated by the Apex court in the aforesaid decision. The insurance company is liable to pay the compensation to the injured and reimburse the amount from the owner of the vehicle. 9. The learned counsel for the appellant relied the decision in _**National Insurance Company Ltd.**_ v. _**Parvathneni and another**_ [2009 (8) SCC 785] and contended that, even though the insurance company is not liable under the law, liberty may be given to the company to recover the amount from the owner of the vehicle. Apex Court in _**Manuara Khatun and others**_ v. _**Rajesh Kumar singh and others**_ [(2017) 4 SCC 796] held that _“appellant claimants were entitled for an order against the insurer to pay the awarded sum to claimants and then to recover the said amount from the insured in the same proceedings as per the law .......”._ 10. In the circumstances, the direction in O.P.(MV) Nos.166/2014 and 167/2014 is modified as follows: The appellant is directed to satisfy the award amount M.A.C.A.No.619/2017 & con.case 11 within thirty days from the date of receipt of a copy of this judgment and reimburse the same from the owner of the vehicle failing which it will carry 12 % interest. The appeals are disposed of as above. **P.D.RAJAN, JUDGE** acd