Case Note & Summary
The case arises from a motor accident claim filed by respondent Nos.1 to 5 (claimants) before the Motor Accident Claims Tribunal, Amravati, seeking compensation for the death of a four-year-old child who was hit by a truck on 07/04/2007. The truck was owned by respondent No.7 and driven by respondent No.6. The appellant, National Insurance Co. Ltd., denied liability on the ground that the premium cheque issued by the owner was dishonoured on 23/06/2006, rendering the cover note void. The Tribunal held the appellant jointly liable with the owner and driver to pay Rs.1,65,000/-. In appeal, the Insurance Company argued that since the cheque was dishonoured, the policy was void ab initio and it had no liability. The High Court examined the evidence, including the cover note issued for the period 22/06/2006 to 21/06/2007, and the fact that the accident occurred on 07/04/2007. The court noted that the Insurance Company had sent intimation of cancellation to the owner and the Regional Transport Authority only after the accident. Relying on settled law, the court held that the insurer is liable to pay compensation to third-party claimants and can recover the amount from the owner. The appeal was dismissed, and the Insurance Company was directed to pay the compensation with interest and recover it from the owner.
Headnote
A) Motor Vehicles Act - Insurance - Third-Party Liability - Section 149, Motor Vehicles Act, 1988 - Insurance company cannot avoid liability to third parties if cover note was issued and accident occurs during policy period, even if premium cheque was dishonoured, unless policy was cancelled before accident and intimation given to owner and RTO - Held that insurer must pay compensation to third-party claimants and may recover from owner (Paras 5-9).
Issue of Consideration
Whether the Insurance Company can avoid liability to pay compensation to third-party claimants when the premium cheque was dishonoured and the policy was cancelled, but the accident occurred during the policy period.
Final Decision
Appeal dismissed. Insurance Company directed to pay compensation of Rs.1,65,000/- with interest at 6% per annum from the date of claim petition till realization to respondent Nos.1 to 5. Insurance Company entitled to recover the amount from respondent No.7 (owner) in accordance with law.
Law Points
- Insurance company liability
- dishonoured cheque
- third-party risk
- Motor Vehicles Act
- 1988
- Section 149
- Section 173
- cover note void ab initio
- intimation to owner and RTO
