Case Note & Summary
These two civil miscellaneous appeals arose from an award dated 28.11.2025 passed by the Motor Accident Claims Tribunal, II Court of Small Causes, Chennai, in MCOP No.1992 of 2019. The accident occurred on 26.12.2018 at about 14.45 hours when the claimant, a computer operator earning Rs.10,000 per month, was riding his motorcycle on GST Road and a tipper lorry hit him from behind, causing grievous injuries. The lorry was owned by the first respondent and allegedly insured with Shriram General Insurance Co. Ltd. under policy number 421010/31/18/014699 valid from 30.03.2018 to 29.03.2019. The insurance company disputed liability, stating that the premium cheque dated 30.03.2018 was dishonoured for insufficient funds on 04.04.2018, and the policy was cancelled. The owner of the lorry did not appear and was set ex parte. The Tribunal held that the accident was caused by the negligent driving of the lorry driver and that the insurer failed to prove that cancellation was duly intimated to the owner and the RTO; hence the insurer remained liable. The Tribunal awarded Rs.32,52,530, including Rs.1,60,000 for 32% permanent disability at Rs.5,000 per percentage and Rs.30,04,930 for medical expenses. The insurer appealed seeking to set aside the award, while the claimant appealed seeking enhancement, arguing for multiplier method, 100% loss of earning power, and higher notional income of Rs.25,000 per month. Before the High Court, the insurer relied on Section 64VB of the Insurance Act, 1938, contending the policy was void ab initio, and argued that medical expenses were excessive. The claimant relied on United India Insurance Co. Ltd. v. Laxmamma and others, contending that the insurer failed to prove policy coverage and due intimation. The High Court, after perusing records, noted that the insurance company had not filed any acknowledgement proof to show that the cancellation of policy was duly intimated to the owner and the RTO, and that the Tribunal had found the intimation documents self-serving. The excerpt of the judgment ended while the court was analyzing this aspect; therefore, the final operative directions were not available in the provided text. The court's reasoning centered on the insurer's burden to prove due cancellation intimation and the third-party claimant's rights.
Headnote
A) Motor Vehicle Insurance - Liability of Insurer - Dishonour of premium cheque and cancellation of policy - Insurance Act, 1938, Section 64VB; Motor Vehicles Act, 1988, Section 173 - The insurance company contended that the policy became void ab initio when the premium cheque was dishonoured and that it had intimated cancellation to the owner and RTO. The Tribunal held that the insurer failed to prove due intimation because the cancellation notice and intimation were self-serving, original postal receipt and acknowledgement were not filed, and the claimant as a third party was entitled to recover. The High Court noted that the insurance company had not filed any acknowledgement proof to show due intimation of cancellation. Held that the insurer's liability depended on strict proof of cancellation intimation (Paras 3, 5, 6, 11, 12). B) Motor Accident Compensation - Assessment of Permanent Disability - Multiplier method and loss of earning power - Motor Vehicles Act, 1988 - The claimant sought enhancement, arguing that the Tribunal should have applied the multiplier method and treated functional disability as 100% loss of earning power, with monthly income taken as Rs.25,000. The Tribunal had awarded Rs.5,000 per percentage of 32% permanent disability, fixed notional income at Rs.10,000 per month, and awarded Rs.30,04,930 as medical expenses. The High Court considered the submissions but the provided excerpt ended before a final decision on quantum. Held that compensation assessment required examination of disability certificate and actual loss of earning capacity (Paras 6, 9).
Issue of Consideration
Whether insurance policy became void ab initio upon dishonour of premium cheque under Section 64VB of Insurance Act, 1938, and whether insurer duly intimated cancellation to owner and RTO; whether insurer is liable to pay compensation to third-party claimant; whether quantum of compensation awarded by Tribunal for permanent disability and other heads is just, requiring enhancement or application of multiplier method
Final Decision
Not mentioned (provided judgment text ends before final order)
Law Points
- Insurer must prove due intimation of policy cancellation to owner and RTO to avoid liability
- policy issued against cheque later dishonoured is void ab initio under Section 64VB Insurance Act
- 1938 only if cancellation duly communicated
- third-party claimant not party to insurance contract
- compensation for permanent disability may require multiplier method under Motor Vehicles Act
- 1988
