Case Note & Summary
The present appeal is filed by the National Insurance Co. Ltd. against the judgment of the Motor Accident Claims Tribunal, Wardha in Claim Petition No. 169 of 2008 dated 22nd November, 2012. The brief facts are that on 12th August, 2008, when the petitioner (respondent No.1 herein) was proceeding on his bicycle, the offending truck bearing Registration No. MTG9998 driven rashly and negligently gave dash to the bicycle. The petitioner sustained fracture to his right leg and was admitted in Kasturba Hospital from 12.08.2008 to 29.08.2008. He underwent operation and incurred medical expenses. A report was lodged and the truck driver was prosecuted. The truck was owned by respondent No.1 (Manohar Gilorkar) and insured by the appellant. The injured filed a claim petition for compensation. The appellant appeared and filed Written Statement at Exh.14, raising a specific defence that the owner of the vehicle had issued a cheque dated 14th July, 2008 for Rs.14,378/- towards insurance premium, which was dishonoured on 24th July, 2008 with endorsement 'funds insufficient'. The appellant informed the owner by letter dated 5th August, 2008 about the dishonour and that the policy was cancelled, and the appellant was not liable for any risk. The accident occurred on 12th August, 2008, after the cancellation. The Tribunal held the appellant liable to pay compensation. The legal issue is whether the insurance company is liable when the policy was cancelled due to cheque dishonour prior to the accident. The appellant argued that no contract of insurance existed as the cheque was dishonoured and the policy was cancelled before the accident. The respondent No.1 (injured) argued that the insurance company should pay. The Court analyzed that under Section 64VB of the Insurance Act, 1938, no risk can be assumed unless premium is paid. Since the cheque was dishonoured and the policy was cancelled before the accident, there was no contract of insurance. The Court held that the insurer is not liable and the owner of the vehicle is liable to pay the compensation. The appeal was allowed, setting aside the Tribunal's award against the insurer, and directing the owner to pay the compensation.
Headnote
A) Motor Accident Claims - Insurance Policy - Cancellation for Cheque Dishonour - Section 64VB of Insurance Act, 1938 - The insurer cancelled the policy after cheque dishonour and informed the owner before the accident. Held that no contract of insurance existed at the time of accident, and the insurer is not liable to pay compensation. The owner of the vehicle is liable to pay the compensation awarded. (Paras 1-10) B) Motor Accident Claims - Liability of Owner - Registered Owner - The owner of the vehicle is liable to pay compensation when the insurance policy is cancelled due to cheque dishonour and the insurer has no liability. (Paras 10-12)
Issue of Consideration
Whether the insurance company is liable to pay compensation when the insurance policy was cancelled due to dishonour of cheque prior to the accident.
Final Decision
Appeal allowed. The impugned judgment and award of the Motor Accident Claims Tribunal, Wardha dated 22nd November, 2012 in Claim Petition No. 169 of 2008 is set aside insofar as it holds the appellant/Insurance Company liable. The owner of the vehicle (respondent No.2 herein) is directed to pay the compensation awarded by the Tribunal. The appellant is entitled to refund of any amount deposited pursuant to the award.
Law Points
- Insurance policy cancellation due to cheque dishonour
- no contract of insurance
- insurer not liable
- intimation to owner
- registered owner liability
