The High Court
Case Details
IN THE HIGH COURT OF ORISSA AT CUTTACK MACA Nos.458, 459 & 460 of 2007 (From the common judgment dated 28th February, 2007 of learned 2nd MACT, Cuttack passed in Misc. Case Nos.44, 45 & 60 of 1989) The United India Insurance Co. Ltd., represented by its Regional manager, Regional Cell, IPICOL House, Bhubaneswar …. Appellant in all the three appeals -versus- Sabitri Bewa and Others Baisakhi Bewa and Others Rasika Munda and Another (in MACA No.458 of 2007) (in MACA No.459 of 2007) (in MACA No.460 of 2007) …. Respondents Advocate(s) appeared in this case:- For Appellant : Mr. S.K. Mohanty, Advocate For Respondents
Legal Reasoning
“26. In our view, the legal position is this: where the policy of insurance is issued by an authorised insurer on receipt of cheque towards the payment of premium and such a cheque is returned dishonoured, the liability of the authorised insurer to indemnify the third parties in respect of the liability which that policy covered subsists and it has to satisfy the award of compensation by reason of the provisions of Sections 147(5) and 149(1) of the MV Act unless the policy of insurance is cancelled by the authorised insurer and intimation of such cancellation has reached the insured before the accident. In other words, where the policy of insurance is issued by an authorised insurer to cover a vehicle on receipt of the cheque paid towards premium and the cheque gets dishonoured and before the accident of the vehicle occurs, such insurance company cancels the policy of insurance and sends intimation thereof to the owner, the insurance company’s liability to indemnify the third parties which that policy covered ceases and the MACA Nos.458, 459 & 460 of 2007 Page 7 of 9 insurance company is not liable to satisfy awards of compensation in respect thereof.” 14. Further, this Court in the case of Rashmita Mohanty and 4 others vrs. Santosh Kumar Padhi and another, 2016(I) OLR-989, have observed that, in absence of an intimation to the concerned Registering Authority regarding cancellation of the insurance policy issued in respect of the offending vehicle, as required under Section 147(4) of the M.V. Act, 1988, the insurer is liable to pay the awarded compensation amount to the claimants, with the right to recover the same from the owner of the vehicle. 15. In the case at hand, as stated above, the insurance company has failed to establish on record regarding sending of due intimation to the registering authority regarding cancellation of policy. So for non- compliance of the provisions of Section 105 of the MV Act, 1939, the conclusion, in such circumstances, would be that the insurance company cannot be absolved of its obligations to 3rd parties for alleged cancellation of policy for not receiving the premium. Therefore, the findings in the impugned award and the direction to the insurance company to pay the compensation amount are confirmed. MACA Nos.458, 459 & 460 of 2007 Page 8 of 9 16. In the result, the appeals are dismissed and the Appellant – insurer is directed to pay entire compensation amount to the respective claimants as directed by learned Tribunal within a period of three months from today by depositing the same before the tribunal, which shall be disbursed in favour of respective claimants on same terms and proportion as contained in the impugned award. 17. The statutory deposits made by the insurer - Appellant before this court in all the three appeals along with accrued interest thereon be refunded to the Appellant on proper application and on production of proof of deposit of the awarded amount before the tribunal. M.K. Panda, Sr. Steno (B.P. Routray) Judge MACA Nos.458, 459 & 460 of 2007 Page 9 of 9
Arguments
: Mr. B. Mohanty, counsel for Respondents 1-5 in MACA No.458/2007 For Respondents 1 & 3 to 7 in MACA No.459 of 2007 & For Respondent No.1 in MACA No.460 of 2007. CORAM: JUSTICE B.P. ROUTRAY B.P. Routray, J. JUDGMENT 20th March, 2023 1. All the three appeals are directed against the common impugned judgment dated 28th February, 2007 of learned 2nd MACT, Cuttack passed in Misc. Case No.44, 45 and 60 of 1989. MACA Nos.458, 459 & 460 of 2007 Page 1 of 9 2. The common issue involved in all the three appeals is regarding liability of the Appellant – Insurance Company to indemnify the compensation amount. While no dispute is raised with regard to involvement of the offending vehicle, i.e. truck bearing registration number OAC 2015 in the accident and death as well as injury in respect of the claimants, the entire contention is concentrated on the validity of insurance policy. It is submitted on behalf of the Appellant that the policy issued in respect of the offending vehicle was cancelled much prior to the accident and due intimation thereof was sent to the RTO as well as owner of the vehicle. Therefore, the insurance company is exempted from the liability. 3. Conversely, it is submitted on behalf of the claimant – Respondents that no such intimation about cancellation of policy was sent either to the RTO or to owner prior to the accident and secondly, the insurance policy once issued cannot be cancelled as contended by the Appellant. 4. The accident took place on 17th December, 1988 causing death of two persons and injury to others. The alleged insurance policy bearing No.034001/24/1/03487 issued on 24th December, 1987 was MACA Nos.458, 459 & 460 of 2007 Page 2 of 9 effective from 31st December 1987 to 20th December 1988. According to the insurance company, issuance of certificate of policy was cancelled with effect from the date of its inception due to dishonor of the Cheque given by the owner towards premium. The fact of cancellation, as per the insurer, was duly intimated to the RTO and the owner on 17th February, 1988. 5. In order to prove their contention, the insurance company examined 4 witnesses and adduced several documents marked under Ext. A to G. Further, three other documents were also filed by the insurance company and though the same were not marked as exhibits but were marked as ‘X’, ‘M’ and ‘N’ for identification by the tribunal being Photostat copies. Amongst four witnesses examined by the insurance company, O.P.W.3 is the owner of the offending vehicle and rest are the officials of insurance company. 6. The tribunal on analysis of the evidences brought on record has come to the finding that the contention of the insurance company regarding due intimation of cancellation of policy has not been proved on record and as such, saddled the liability on the insurance company. MACA Nos.458, 459 & 460 of 2007 Page 3 of 9 The tribunal has further directed the insurer to pay compensation of Rs.1,13,000/- and Rs.1,20,200 in death cases (Misc. Case No.44 of 1989 and Misc. Case No.45 of 1989) and Rs.18,000/- in the injury case (Misc. Case No.60 of 1989) along with interest @ 6% per annum from 12th January, 1989. 7. Admittedly, the certificate of insurance policy under Ext.A was issued on 24th December, 1987 along with money receipt dated 24th December, 1987. In order to appreciate the contention of the Appellant with regard to cancellation of the policy, Ext. D, E and F are important documents. Ext.D is the cancellation bill, Ext.E is the letter addressed to the RTO, Cuttack regarding cancellation and Ext.F is the extract of insurance certificate register. The document marked as ‘M’ is the Photostat copy of postal receipt addressed to the RTO, Cuttack and mark ‘N’ is the Photostat copy of postal receipt in the address of the owner (T.C. Samal). 8. It is apt to mention here that Ext.A is the insurance policy issued as per the provisions of the Motor Vehicles Act, 1939. 9. As per the evidences of O.P.Ws.1, 2 & 4, the premium for issuance of policy was paid by the owner in Cheque No.166202 dated MACA Nos.458, 459 & 460 of 2007 Page 4 of 9 24th December, 1987 and the same was dishonoured for insufficient fund. The dishonour of Cheque is not disputed by the owner. O.P.W.3, the owner, has stated in his evidence that he received the intimation regarding cancellation of the policy on 12th January, 1989 only when he gave necessary information to the company regarding the accident. But as per O.P.Ws.1, 2 & 4, the officials of the company, the fact of cancellation of the policy was intimated to the RTO as well as the owner on 17th February, 1988, i.e. much prior to the date of accident. So it becomes important here to look into the register of the insurance company produced under Ext. E and F as well as the postal receipts identified under Mark ‘M’ and ‘N’. From perusal of the same, it is first noticed that the intimation has been sent to RTO, Cuttack. But the fact remains that the RTO, Chandikhol is the registering authority of the offending vehicle. No explanation has been offered by the officials of the company in this regard that why the intimation was sent to the RTO, Cuttack when the registering authority of the vehicle is the RTO, Chandikhol. 10. Secondly, it is seen from the register as well as the postal receipt that the address of the owner is mentioned as “Trailokya Charan Samal, Chandikhol”. As per the Proposal Form, the address of the MACA Nos.458, 459 & 460 of 2007 Page 5 of 9 owner is “Trailokya Charan Samal, At/PO:- Aruha, Via:- Haridaspur, Cuttack”. Undoubtedly, Chandikhol is a place that covers Aruha. But Chandikhol is a bigger place that includes many post offices and it is difficult to find a particular address at Chandikhol unless the same is specific. What I mean to indicate here that the address mentioned in the postal receipt as well as in the register is lacking details and therefore, the service on the addressee cannot be definitely confirmed. So, it is concluded that the insurance company has failed to substantiate its case regarding service of notice of cancellation of policy either on the owner or on the registering authority. 11. Section 105 of the MV Act, 1939 mandates service of notice of cancellation to the registering authority within 7 days of such cancellation. Further section 95(2)(a) prescribes that the insurer can take such defence of cancellation of policy with compliance to the provisions under Section 105. A cumulative reading of Sections 96, 103 and 105 suggests that the insurer can take the defence of its non- liability, within 14 days after the accident or any time before the accident if a proceeding has been commenced for cancellation of the certificate of insurance policy, with compliance of the provisions under Section 105. MACA Nos.458, 459 & 460 of 2007 Page 6 of 9 12. The Hon’ble Supreme Corut in the case of Oriental Insurance Company Ltd. v. Indrajit Kaur, (1998) 1 SCC 371 have held that, “the policy of insurance that the Appellant issued was a representation upon which the authorities and 3rd parties were entitled to act. The Appellant was not absolved of its obligations to 3rd parties under the policy because it did not receive the premium. Its remedies in this behalf lie against the insured.” 13. The Supreme Court in the case of United India Insurance Co. Ltd. vrs. Laxmamma, (2012) 5 SCC 234 have held as follows: