Case Note & Summary
The case arises from a motor accident claim where the appellant, National Insurance Company Ltd., challenged the award of the Motor Accident Claims Tribunal, Darwah, which granted compensation to the legal heirs of Rameshlal Jaiswal, who died in a road accident. The accident occurred on 31/10/2005 when Rameshlal was riding his motorcycle and was hit by a taxi driven rashly and negligently. He sustained grievous injuries and later died. The claimants sought compensation of Rs.1,50,000 from the taxi owner and the insurance company. The insurance company resisted, arguing that the accident was caused by the deceased's own negligence and that the taxi's insurance policy was not valid because the cheque for premium had been dishonoured. The Tribunal, however, found the taxi driver negligent and awarded compensation. On appeal, the High Court examined the issue of whether the insurance company is liable despite the dishonoured cheque. The court noted that the policy was issued and was in force at the time of the accident. The cancellation of the policy due to cheque dishonour was not communicated to the third party. Relying on the principle that the insurance company is liable to third parties under Section 149 of the Motor Vehicles Act, 1988, the court held that the insurer must pay the compensation and then recover the amount from the insured. The appeal was dismissed, and the award was upheld.
Headnote
A) Motor Accident Claims - Third Party Liability - Dishonoured Cheque - Insurance Policy - Section 147, 149 Motor Vehicles Act, 1988 - The issue was whether the insurance company is liable to pay compensation to a third party when the cheque issued for premium was dishonoured and the policy was cancelled prior to the accident. The court held that the insurance company is liable to pay compensation to the third party and then recover the amount from the insured, as the policy was in force at the time of the accident and the cancellation was not communicated to the third party. (Paras 1-10)
Issue of Consideration
Whether the insurance company is liable to pay compensation to a third party when the cheque issued for premium was dishonoured and the policy was cancelled before the accident.
Final Decision
The appeal is dismissed. The judgment and award of the Motor Accident Claims Tribunal, Darwah, dated 27/07/2011 in Claim Petition No. 336/2006 is upheld. The insurance company is directed to pay the compensation amount to the claimants and is entitled to recover the same from the insured.
Law Points
- Motor Accident Claims
- Dishonoured Cheque
- Third Party Liability
- Insurance Policy
- Section 147 Motor Vehicles Act
- 1988
- Section 149 Motor Vehicles Act
