Case Note & Summary
The case involves an appeal by The Oriental Insurance Co. Ltd. against the judgment and award of the Motor Accident Claims Tribunal, Nagpur, in Claim Petition No.839/2002. The Tribunal had held the appellant Insurance Company and respondent no.2 (owner of the truck) jointly and severally liable to pay Rs.39,500/- with interest at 7.5% per annum to respondent no.1 (injured claimant), with a direction to the insurer to pay and recover from the owner. The accident involved Truck bearing Registration No. MTV 2833, and respondent no.1 suffered injuries resulting in 10% permanent disability. The appellant Insurance Company did not dispute the accident or the injuries but contended that the insurance policy issued in favour of respondent no.2 was cancelled prior to the accident because the cheque (No.003534) issued by respondent no.2 was dishonoured, and this fact was intimated to the appellant on 26/6/2002. The appellant argued that the Tribunal failed to appreciate this cancellation. The Court, however, upheld the Tribunal's decision, noting that the policy was in force at the time of the accident and the cancellation was not communicated to the third party. The Court held that the insurer is liable to pay the third party and can recover the amount from the owner. The appeal was dismissed with no order as to costs.
Headnote
A) Motor Accident Claims - Insurance Policy Cancellation - Cheque Dishonour - Third Party Liability - The insurer is liable to pay compensation to a third party even if the policy was cancelled due to dishonour of cheque, as the policy was in force at the time of the accident and the cancellation was not communicated to the third party. The insurer can recover the amount from the owner. (Paras 2-4)
B) Motor Accident Claims - Pay and Recover - Insurer's Right - The Tribunal's direction to the insurer to pay the award and then recover from the owner is valid, as the insurer's liability to a third party is statutory and cannot be avoided due to the insured's default. (Paras 2-4)
Issue of Consideration
Whether the insurance company is liable to pay compensation to a third party when the insurance policy was cancelled due to dishonour of cheque prior to the accident, and whether the Tribunal's direction to pay and recover is correct.
Final Decision
The appeal is dismissed. The judgment and award of the Motor Accident Claims Tribunal, Nagpur, dated 15/1/2017 in Claim Petition No.839/2002 is upheld. No order as to costs.
Law Points
- Motor Accident Claims
- Insurance Policy Cancellation
- Cheque Dishonour
- Third Party Liability
- Pay and Recover
Case Details
2017 LawText (BOM) (11) 187
First Appeal No.221 of 2009
Shri L. Limaye for appellant
The Oriental Insurance Co. Ltd.
Shri Sukhadeo s/o Khogalji Gurve and Shri Inayatbhai Sheikh s/o G. Razzak Sheikh
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Nature of Litigation
Appeal against judgment and award of Motor Accident Claims Tribunal in a claim petition for compensation for injuries sustained in a motor accident.
Remedy Sought
The appellant Insurance Company sought quashing and setting aside of the Tribunal's award holding it jointly and severally liable to pay compensation.
Filing Reason
The appellant contended that the insurance policy was cancelled due to dishonour of cheque prior to the accident, and thus the insurer should not be liable.
Previous Decisions
The Motor Accident Claims Tribunal, Nagpur, in Claim Petition No.839/2002, held the appellant Insurance Company and respondent no.2 jointly and severally liable to pay Rs.39,500/- with interest at 7.5% per annum from 25/11/2002, with a direction to the insurer to pay and recover from the owner.
Issues
Whether the insurance company is liable to pay compensation to a third party when the policy was cancelled due to dishonour of cheque prior to the accident.
Whether the Tribunal's direction to pay and recover is correct.
Submissions/Arguments
The appellant Insurance Company argued that the policy was cancelled prior to the accident as the cheque issued by the owner was dishonoured, and this fact was intimated to the appellant on 26/6/2002. The Tribunal failed to appreciate this cancellation.
The respondents did not appear despite service of notice.
Ratio Decidendi
The insurer's liability to a third party is statutory and cannot be avoided due to the insured's default in payment of premium. Even if the policy is cancelled due to dishonour of cheque, the insurer must pay the third party and can recover the amount from the owner.
Judgment Excerpts
This appeal takes exception to judgment and award dated 15/1/2017 passed by learned Member, Motor Accident Claims Tribunal, Nagpur in Motor Accident Claim Petition No.839/2002 holding appellant Insurance Company and respondent no.2/owner of truck jointly and severally liable to pay amount of Rs.39,500/- to respondent no.1 with interest at the rate of 7.5% per annum from the date of petition, i.e. 25/11/2002 till realisation with further direction to appellant Company to satisfy the award and then recover it from the owner of the truck by initiating recovery proceedings.
It is, however, contended that the impugned judgment and award needs to be quashed and set aside as the learned Tribunal has failed to appreciate the fact that policy, which was issued in favour of respondent no.2/owner of truck was cancelled much prior to date of accident as Cheque No.003534 issued by respondent no.2 to appellant was dishonoured by its Banker and this fact was intimated to appellant on 26/6/2002.
Procedural History
The Motor Accident Claims Tribunal, Nagpur, passed judgment and award on 15/1/2017 in Claim Petition No.839/2002. The Oriental Insurance Co. Ltd. filed First Appeal No.221 of 2009 before the Bombay High Court, Nagpur Bench, challenging the award. The appeal was heard on 17/11/2017 and dismissed.
Acts & Sections
- Motor Vehicles Act, 1988:
