High Court of KeralaSingle Judge2008-05-22Appeal allowed; insurer exonerated; claimant to...

The Oriental Insurance Co. Ltd. v. Mohammed Faizal K.P. (Minor) represented by guardian/father Kundan Pediyakkal Alavi, Kunnummal, Malappuram and others

Case / Petition Number:MFA.No. 251 of 2001 (B) / MFA.No.251/01

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: M.N. Krishnan
Judgment Date: 2008-05-22
Court Decision / Holding: The appeal is allowed. The Insurance Company is exonerated from liability and the claimant is directed to realise the amount from the owner. The modified award grants Rs.12,250 with 12% interest from the date of petition till realization, and costs of Rs.1,000 to be paid by respondents 2 and 3 (the driver and owner) jointly.
Final Disposition: Appeal allowed; insurer exonerated; claimant to recover from owner; modified award with interest and costs.

Parties to the Case

Appellants / Petitioners

The Oriental Insurance Co. Ltd.

Respondents

Mohammed Faizal K.P. (Minor) represented by guardian/father Kundan Pediyakkal Alavi, Kunnummal, Malappuram
K.P. Sivasankaran, S/O Marayanan, Karukapurayil House, Oorakam – Keezhu muri
T.K. Abdulla, S/O T.K. Ahammed Haji, Payamiya Manzil, Post Parappanangadi

Legal Representation & Advocates

Counsels for Petitioners

• Sri. George Cherian (Thiruvalla)

Counsels for Respondents

• Sri. M.K. Chandra Mohandas
• Sri. Peeyus A. Kottam

Case Synopsis & Summary

This Kerala High Court judgment arises from MFA No. 251 of 2001 (B), challenging an award of Rs.12,250 with 12% interest against the Oriental Insurance Company in MACT, Manjeri (OP(MV) No. 3370/94). The accident occurred on 12 February 1994. The MACT held the Insurance Company liable to pay the compensation, with a direction to recover the amount from the vehicle owner; the Insurance Company appealed. The insurer contends absence of a valid policy at the time of accident, arguing that the premium cheque was dishonoured (Exts. B1–B4), the policy was cancelled, and the insurer should not indemnify the owner. The trial court’s finding relied on New India Assurance Co. Ltd. v. Shamsed (2000) to hold that cheque dishonour does not disentitle a third party from compensation. However, the Supreme Court later decided Deddappa v. National Insurance Co. Ltd. (2008) holding that when a premium cheque is dishonoured and the policy is cancelled with proper intimation, the insurance contract is cancelled and the insurer is not liable; while the extraordinary jurisdiction under Article 142 could direct payment and recovery from the owner, a mere High Court order cannot. In light of Deddappa, the appeal is allowed, exonerating the insurer, and directing the claimant to recover the amount from the owner and driver, with a modified award reflecting the same and costs against the owner/driver.

Provisions of Law Cited

Article 142 of the Constitution of India

Submissions & Arguments

Contentions of Appellants / Petitioners

The appellant contends that there was no policy at the time of the accident and hence no liability to indemnify the owner. It relies on Exts. B1–B4 showing cheque dishonour and cancellation of the policy, arguing that the contract stood cancelled and the insurer was not liable; cites Deddappa v. National Insurance Co. Ltd. to support cancellation of the contract and non-liability, and omits being bound by an Article 142 directive in this context.

Contentions of Respondents

The respondents (claimant’s side) previously benefited from the MACT’s direction to pay and recover from the owner, following New India Assurance Co. Ltd. v. Shamsed. They contend that dishonour of the premium cheque does not automatically disentitle a third party from compensation, and rely on the earlier jurisprudence pending development of post-Deddappa law.

Cited Precedents (2)

Case Name	Citation	Treatment	Explanation
New India Assurance Co. Ltd. v. Shamsed	2000 (2) KLT 67	Overruled	Overruled by the Supreme Court in Deddappa v. National Insurance Co. Ltd., which held that where premium cheque is dishonoured and policy cancelled, the insurer is not liable.
Deddappa v. National Insurance Co. Ltd.	2008 (1) KLT 296 (SC)	Positive	SC decision relied upon to hold that premium cheque dishonour with policy cancellation terminates the contract; insurer not liable; supports the present judgment’s outcome.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT :** **THE HONOURABLE MR. JUSTICE M.N.KRISHNAN** **THURSDAY, THE 22ND MAY 2008 / 1ST JYAISHTA 1930** ## **MFA.No. 251 of 2001(B)** **---------------------OPMV.3370/1994 of MOTOR ACCIDENT CLAIMS TRIBUNAL, MANJERI** **....................** ## **APPELLANT: 3RD RESPONDENT:** **---------------------------------------------------** **THE ORIENTAL INSURANCE CO.LTD., MANJERI, REPRESENTED BY ITS ASSISTANT MANAGER, REGIONAL OFFICE, ERNAKULAM NORTH, KOCHI – 18.** **BY ADV. SRI.GEORGE CHERIAN (THIRUVALLA)** ## **RESPONDENTS: RESPONDENTS:** **--------------------------------------------------** **1. MOHAMMED FAIZAL K.P.(MINOR), REP. BY GUARDIAN/FATHER KUNDAN PEEDIYAKKAL ALAVI, KUNNUMMAL, MALAPPURAM.** **2. K.P.SIVASANKARAN, S/O.MARAYANAN, KARUKAPURAYIL HOUSE, OORAKAM – KEEZHUMURI.** **3. T.K.ABDULLA, S/O.T.K.AHAMMED HAJI, PAYAMIYA MANZIL, POST PARAPPANANGADI.** **R1 BY ADV.SRI.M.K.CHANDRA MOHANDAS R3 BY ADV. SRI.PEEYUS A.KOTTAM** **THIS MISC. FIRST APPEAL HAVING BEEN FINALLY HEARD ON 22/05/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **ORDER ON C.M.P.NO.2706/2001 IN M.F.A.NO.251/2001** ## **DISMISSED** **22/05/2008 SD/- M.N.KRISHNAN, JUDGE /TRUE COPY/** **P.A.TO JUDGE** ## **M.N.KRISHNAN, J.** ## **-------------------------M.F.A. No. 251 OF 2001** **--------------------Dated this the 22[nd ] day of May, 2008** ## **JUDGMENT** This appeal is preferred against the order of the Motor Accidents Claims Tribunal, Manjeri, in OP(MV) No.3370/94. The 1[st] respondent/petitioner sustained injury in a road accident. The court below awarded a total compensation of Rs.12,250/- with a direction to the Insurance company to pay the said amount. It is also seen that the appellant/Insurance company will be entitled to realise the amount from the owner of the vehicle. The appeal is preferred by the Insurance company. 2. The Insurance company would contend that there was no policy at the time of accident and therefore it is not liable to indemnify the owner. The accident had taken place on 12.2.94. The Insurance company had produced Exts.B1 to B4 to establish its nonliability. Ext.B1 is the cheque dated 10.11.93 issued by the owner towards the premium. Ext.B2 is the letter sent by the Insurance company to the owner intimating the dishonour of the cheque and cancellation of the insurance policy. It has been received by the MFA NO.251/01 2 owner on 17.12.93. Ext.B4 is the another letter to the same effect. The court below in the light of the decision reported in _**New India Assurance Co. Ltd. v. Shamsed**_ [2000 (2) KLT 67] held that the dishonour of the cheque will not disentitle the third party from claiming compensation and therefore directed the Insurance company to pay the amount and realise it from the owner. Now the liability of the Insurance company in such cases has been decided by the Apex court in the light of the decision reported in _**Deddappa v. National Insurance Co. Ltd.**_ [2008 (1) KLT 296 (SC)]. It has held in that case that when the cheque issued towards premium is dishonoured and the policy is cancelled and intimation is given to the insured then the contract of insurance is cancelled and therefore the Insurance company would not be liable to satisfy the claim. As far as owner is concerned, the dishonour of the cheque and the intimation of cancellation of the policy has been duly informed to the insured who had kept quiet. Therefore, the Insurance company is not bound to indemnify the owner. It is true that in the reported case invoking the extra ordinary jurisdiction under Article 142 of the Constitution of India, the Apex court directed the Insurance company to pay and realise the amount from the owner. But that cannot be done by this MFA NO.251/01 3 court. Therefore there is merit in the contention of the appellant. The award of the MACT fixing the liability on the Insurance company is to be vacated. 3. Therefore, the appeal is allowed and the Insurance company is exonerated from the liability and the claimant is entitled to realise the amount from the owner. Therefore the modified award is passed as follows: The claimant is awarded a compensation of Rs.12,250/with 12% interest from the date of petition till realisation with a cost of Rs.1,000/- from respondents 2 and 3 in the appeal i.e. the driver and owner jointly and severely. The appellant is exonerated from the liability. ## **M.N.KRISHNAN, JUDGE** vps MFA NO.251/01 4 MFA NO.251/01 5 MFA NO.251/01 6