Raipur, Chhattisgarh v. 1 - Horilal Yadav S/o Late Mehttar Yadav Aged About 47 Years R/o Village
Case Details
1 Digitally signed by RAGHVENDRA JAT 2025:CGHC:28724 NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR MAC No. 768 of 2018 1 - Future Generali India Insurance Company Ltd. Through Branch Manager, Address G.E.Road, Shop No.01, 2nd Floor, B-Block, Maruti Business Park, In-Front Of Dhuppad Petrol Pump, Raipur, District Raipur, Chhattisgarh (Insurer Of Vehicle No. C.G.-04-Zq-8100), District : Raipur, Chhattisgarh. ... Appellant(s) versus 1 - Horilal Yadav S/o Late Mehttar Yadav Aged About 47 Years R/o Village Khallari, Post Kalangpur, Thana And Tahsil Gunderdehi, District Balod, Chhattisgarh, District : Balod, Chhattisgarh. 2 - Smt. Surjabai W/o Horilal Yadav Aged About 42 Years R/o Village Khallari, Post Kalangpur, Thana And Tahsil Gunderdehi, District Balod, Chhattisgarh, District : Balod, Chhattisgarh. 2 3 - Nemashwar Yadav S/o Horilal Yadav Aged About 18 Years R/o Village Khallari, Post Kalangpur, Thana And Tahsil Gunderdehi, District Balod, Chhattisgarh, District : Balod, Chhattisgarh. 4 - Dipeshwar Yadav S/o Horilal Yadav Aged About 15 Years Minor Through Father Respondent No. 1 Mr. Horilal Yadav, R/o Village Khallari, Post Kalangpur, Thana And Tahsil Gunderdehi, District Balod, Chhattisgarh (Claimants), District : Balod, Chhattisgarh. 5 - Bhagwat Kumar Sahu S/o Bhuvanram Sahu Aged About 22 Years R/o Village Bhojepara, Mohgaon, Post Mohgaon, Thana Saja, District Bemetara, Chhattisgarh, At Present Address Vishal Nagar, Balaji Homes, Thana Telibandha, Tahsil And District Raipur, Chhattisgarh (Driver Of Vehicle No. Cg-04-Zq-8100), District : Raipur, Chhattisgarh. 6 - Lalsingh Parmar S/o Vishnu Allies Sakhansingh R/o Mig D-10, Sec. 1, Devendra Nagar, Tahsil And District Raipur, Chhattisgarh (Owner Of Vehicle No. Cg-04-Zq-8100), District : Raipur, Chhattisgarh ... Respondent(s) For Appellant(s)
Legal Reasoning
: Ms. Harneet Kaur, Advocate on behalf of Mr. Sourabh Sharma, Advocate. For Respondent(s) No. 1 to 4 : Ms. Vartika Shrivastava, Advocate on behalf of Mr. P.R. Patankar, For Respondents No. 5 & 6 : None. Advocate. 3 Hon’ble Mr. Justice Amitendra Kishore Prasad 27/06/2025 Order on Board 1. By way of this appeal, the appellant has prayed for following prayer:- “It is most humbly prayed that the Hon'ble Court be kind enough to set aside the impugned award (Annexure A-1) and exonerate the appellant from paying compensation and also reduce the award amount suitably or alternatively to remand the matter for proper inquiry to the learned tribunal.” 2. Facts of the case, is that, respondents No. 1 to 4, are the legal representatives of the deceased, namely, Hemshankar alias Laila Yadav specifically, his father, mother, and two brothers have filed a claim application before the Motor Accident Claims Tribunal under Section 166 of the Motor Vehicles Act, seeking compensation of Rs. 38,58,000/- for his death in a road accident which was occurred on 22.07.2016 near the Bus Stand, Village- Khallari, when the offending vehicle bearing registration No. CG- 04-ZQ-8100, driven rashly and negligently by respondent No. 5, hit the deceased, leading to fatal injuries. The vehicle was allegedly owned by respondent No. 6 and insured with the appellant, though the appellant denied the insurance claim, asserting that the policy had been cancelled due to cheque 4 dishonour, and proper intimation was sent to both the owner and the RTO. A police case bearing crime No. 206/2016 was registered at PS Gunderdehi, and it was claimed that the deceased was aged 21 years old and was a Daily Wage Labourer earning Rs. 6,000/- per month and all the claimants financially dependent upon him. The appellant denied all material allegations including liability, employment, income, and validity of the insurance, the Tribunal framed issues and decided in favor of the claimants, allegedly without properly appreciating objections raised in the written statement, failing to conduct due inquiry under Sections 168/169 of the Act and relevant Rules, and ignoring evidence including bank testimony proving non-receipt of premium due to cheque bounce. An application under Section 170 of the Act was filed by the appellant and Rs. 25,000/- was deposited as statutory requirement under Section 173 of the Act. 3. The learned Claims Tribunal, by its impugned award dated 30.11.2017, partly allowed the claim petition, holding that the accident was occurred on 22.07.2016 at about 9:45 p.m. was caused due to the negligent act of respondent No. 5, resulting in grievous injuries to the deceased, ultimately leading to his death. It was further held that there was no breach of the terms and conditions of the insurance policy, and accordingly, the claimants are entitled to receive a compensation of Rs. 7,73,000/- along 5 with interest at the rate of 10% per annum from the date of filing of the claim petition, i.e., 23.12.2016, till actual payment. 4. Learned counsel for the appellant submits that the cheque issued for premium for insurance of the vehicle was dishonored and the intimation about the same has been given to the owner of the vehicle but it has also been argued that the said intimation was given after the accident. She further submits that the offending vehicle was not insured with the appellant company at the time of the accident, as the cheque issued by respondent No. 6 towards payment of the insurance premium was dishonoured. She further submits that there was no valid contract of insurance in force, and the respondent failed to comply with the mandatory provisions of Section 64VB of the Insurance Act. It was further submitted that due to intimation regarding dishonour of the cheque and cancellation of the insurance policy was duly communicated to respondent No. 6 as well as the concerned RTO through registered post with acknowledgment. In support of their stand, the appellant company examined its official and the concerned bank officer, who categorically stated that the premium amount was neither credited to the insurer’s account nor debited from the drawer's account, thereby establishing that no consideration was received for the alleged insurance. It was also contended that the compensation amount awarded, along 6 with the rate of interest, is on the higher side which deserves to be reduced. 5. On the other hand, learned counsel for respondents No. 1 to 4 submits that they have already received Rs. 5,00,000/- out of total amount awarded by the tribunal. 6. None for respondents No. 5 & 6 i.e. the driver and owner of the offending vehicle, despite service of notice. 7. I have heard learned counsel for the parties and perused the material available on record. 8. The said issue had come up for consideration before the Hon’ble Supreme Court in the matter of United India Insurance Co. Ltd.v. Laxmamma and others reported in 2012 AIR SCW 2657 and while dismissing the appeal of the Insurance Company, the Hon’ble Supreme Court in its judgment has held in paragraphs-8 to 15, as under:- “8. The Motor Vehicles Act, 1988 (for short, 'the M.V. Act') in Chapter XI deals with insurance of motor vehicles against third party risks. Section 145 in that Chapter provides for definitions: (a) authorised insurer, (b) certificate of insurance, (c) liability, (d) policy of insurance, (e) property, (f) reciprocating country and (g) third party. 9.Section 146 mandates insurance of a motor vehicle against third party risk. Inter alia, it provides that no person shall use the motor vehicle in a public place unless a policy of 7 insurance has been taken with regard to such vehicle complying with requirements as set out in Chapter XI. The owner of vehicle, thus, is statutorily mandated to obtain insurance for the motor vehicle to cover the third party risk except in exempted and exception categories as set out in Section 146 itself. 10. Section 147 makes provision for requirements of policies and limits of liability. Sub-section (5) thereof is relevant for the present purposes which reads as follows: "S. 147. Requirements of policies and limits of liability.- (1)) to (4) XXX XXX XXX XXX XXX (5) Notwithstanding anything contained in any law for the time being in force, an insurer issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons." 11. Section 149 deals with the duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks. Sub-section (1) which is relevant for the present purposes reads as under: "S.149.- Duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks.-(1) If, after a certificate of insurance 8 has been issued under sub-section (3) of section 147 in favour of the person by whom a policy has been effected, judgment or award in respect of any such liability as is required to be covered by a policy under clause (b) of sub-section (1) of section 147 (being a liability covered by the terms of the policy) or under the provisions of section 163A is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments." 12. The above provisions came up for consideration in the case of Inderjit Kaur (AIR 1998 SC 588 : 1998 AIR SCW 183). That was a case where a bus met with an accident. The policy of insurance was issued by the Oriental Insurance Company Limited on November 30, 1989. The premium for the policy was paid by cheque but the cheque was dishonoured. The insurance company sent a letter to the insured on January 23, 1990 that the cheque towards premium had been dishonoured and, therefore, the insurance 9 company was not at risk. The premium was paid in cash on May 2, 1990 but in the meantime on April 19, 1990 the accident took place, the bus collided with the truck and the truck driver died. The truck driver's wife and minor sons filed claim petition. A three-Judge Bench of this Court noticed the above provisions and then held in paragraphs 9, 10 and 12 (pages 375 and 376) (of SCC): (Paras 7, 8 and 10 of AIR, AIR SCW) as under: "9. We have, therefore, this position. Despite the bar created by Section 64-VB of the Insurance Act, the appellant, an authorised insurer, issued a policy of insurance to cover the bus without receiving the premium therefor. By reason of the provisions of Sections 147(5) and 149(1) of the Motor Vehicles Act, the appellant became liable to indemnify third parties in respect of the liability which that policy covered and to satisfy awards of compensation in respect thereof notwithstanding its entitlement (upon which we do not express any opinion) to avoid or cancel the policy for the reason that the cheque issued in payment of the premium thereon had not been honoured. 10. The policy of insurance that the appellant issued was a representation upon which the authorities and third parties were entitled to act. The appellant was not absolved of its obligations to third parties under the policy because it did not 10 receive the premium. Its remedies in this behalf lay against the insured. 12. It must also be noted that it was the appellant itself who was responsible for its predicament. It had issued the policy of insurance upon receipt only of a cheque towards the premium in contravention of the provisions of Section 64-VB of the Insurance Act. The public interest that a policy of insurance serves must, clearly, prevail over the interest of the appellant." 13. In Inderjit Kaur, the Court invoked the doctrine of public interest and held that the insurance company was liable to indemnify third parties in respect of the liability which the policy covered despite the bar created by Section 64-VB of the Insurance Act. The Court did leave open the question of insurer's entitlement to avoid or cancel the policy as against insured when the cheque issued for payment of the premium was dishonoured. 14. In New India Assurance Co. Ltd. v. Rula and others, the Court was concerned with a question very similar to the question posed before us. That was a case where the insurance policy was issued by the New India Assurance Co. Ltd. in terms of the requirements of the M.V. Act but the cheque by which the owner had paid the premium bounced and the policy was cancelled by the insurance company but before the cancellation of the policy, 11 accident had taken place. A two-Judge Bench of this Court considered the statutory provisions contained in the M.V. Act and the judgment in Inderjit Kaur. In paragraph 13 (at page 200): (of SCC): (Para 11 of AIR, AIR SCW). the Court held as under: "13. This decision, which is a three-Judge Bench decision, squarely covers the present case also. The subsequent cancellation of the insurance policy in the instant case on the ground that the cheque through which premium was paid was dishonoured, would not affect the rights of the third party which had accrued on the issuance of the policy on the date on which the accident took place. If, on the date of accident, there was a policy of insurance in respect of the vehicle in question, the third party would have a claim against the Insurance Company and the owner of the vehicle would have to be indemnified in respect of the claim of that party. Subsequent cancellation of the insurance policy on the ground of non-payment of premium would not affect the rights already accrued in favour of the third party" (Emphasis supplied) 15. In Seema Malhotra (AIR 2001 SC 1197: 2001 AIR SCW 902), the Court was concerned with the question whether the insurer is liable to honour the contract of insurance where the insured gave a cheque to the insurer towards the premium amount 12 but the cheque was dishonoured by the drawee bank due to insufficiency of funds in the account of the drawer. In the case of Seema Malhotra, the above question arose from the following facts: the owner of a Maruti car entered into an insurance contract with National Insurance Company Limited on December 21, 1993; on the same day the owner gave a cheque of Rs. 4,492/-towards the first installment of the premium; the insurance company issued a cover note as contemplated in Section 149 of the M.V. Act; the car met with an accident on December 31, 1993 in which the owner died and the car was completely damaged; on January 10, 1994 the bank on which the cheque was drawn by the insured sent an intimation to the insurance company that the cheque was dishonoured as there were no funds in the account of the drawer and on January 20, 1994 the business concern of the owner was informed that the cheque having been dishonoured by the bank, the insurance policy is cancelled with immediate effect and the company is not at risk. The widow and children of the owner filed a claim for the loss of the vehicle with the insurance company. When the claim was repudiated, they moved the State Consumer Protection Commission (for short, 'Commission'). The Commission rejected the claim of the claimants and held that insurer was justified in repudiating the contract as soon as cheque got bounced. The claimants moved the Jammu and Kashmir High Court. The High Court reversed the order of the Commission and held that the insurance company 13 chose to cancel the insurance policy from the date of issuance of communication and not from the date the cheque was issued which got bounced. The matter reached this Court from the above judgment of the High Court. The Court referred to Section 64-VB of the Insurance Act, Sections 25, 51,52,54 and 65 of the Indian Contract Act and the decisions of this Court in Inderjit Kaur and Rula and held (at pages 156 and 157): (of SCC): (at p. 1200 of AIR) as under: "17. In a contract of insurance when the insured gives a cheque towards payment of premium or part of the premium, such a contract consists of reciprocal promise. The drawer of the cheque promises the insurer that the cheque, on presentation, would yield the amount in cash. It cannot be forgotten that a cheque is a bill of exchange drawn on a specified banker. A bill of exchange is an instrument in writing containing an unconditional order directing a certain person to pay a certain sum of money to a certain person. It involves a promise that such money would be paid. 18. Thus, when the insured fails to pay the premium promised, or when the cheque issued by him towards the premium is returned dishonoured by the bank concerned the insurer need not perform his part of the promise. The corollary is that the insured cannot claim performance from the insurer in such a situation. 19. Under Section 25 of the Contract Act an agreement made without consideration is void. 14 Section 65 of the Contract Act says that when a contract becomes void any person who has received any advantage under such contract is bound to restore it to the person from whom he received it. So, even if the insurer has disbursed the amount covered by the policy to the insured before the cheque was returned dishonoured, the insurer is entitled to get the money back. 20. However, if the insured makes up the premium even after the cheque was dishonoured but before the date of accident it would be a different case as payment of consideration can be treated as paid in the order in which the nature of transaction required it. As such an event did not happen in this case, the Insurance Company is legally justified in refusing to pay the amount claimed by the respondents.” 9. From the aforementioned judgment, it is crystal clear that until and unless, cancellation of the insurance policy is informed to the owner of the vehicle, the vehicle will be held to be insured with the Insurance Company and the Insurance Company cannot escape from its liability to pay the amount of compensation and on the date when the insurance policy was cancelled, then only the Insurance company would be exonerated from its liability and it would be fastened upon the owner of the vehicle. 10. Considering the aforesaid law laid down by the Hon’ble Supreme Court in the aforesaid matter, it is quite vivid on the date of accident, the vehicle was duly insured. Insurance policy had 15 never been cancelled on the date of accident, as such, on the date of accident, the insurance policy was effective. In the considered opinion of this Court, the Insurance Company is liable to satisfy the amount of compensation. 11. Accordingly, the appeal filed by the Insurance Company being MAC No. 768/2018 fails and it is accordingly dismissed. Sd/- (Amitendra Kishore Prasad) Judge Raghu Jat