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HIGH COURT OF DELHI
JUDGMENT
USHA AGGARWAL ..... Appellant Represented by: Mr. Navneet Goyal, Adv.
For R-3.
1. The present appeal has been preferred against the impugned award dated 29.05.2010, whereby while granting compensation of Rs. 21,90,000/with interest @ 7 % from the date of filing of the petition till realization., the Ld. Tribunal has exonerated respondent No.3/Insurance Company and directed the respondents No. 1 and 2, i.e., driver and owner of the offending vehicle to pay the compensation.
2. Counsel appearing on behalf of the appellant submitted that the accident took place on 27.04.2001; the cheque for ‘cover note’ was issued by the respondent No.2 Raju Gupta on 15.03.2001. Accordingly, the 2013:DHC:6092 respondent No.3 issued cover note in favour of the respondent No.2. Thereafter, on the cheque being dishonoured, the respondent NO. 3/Insurance Company sent notice dated 28.03.2001 by cancelling the said cover note.
3. Ld. Counsel further submitted that even the cover note/policy was cancelled, despite, first liability is on the Insurance Company and thereafter the same amount can be recovered from the insured.
4. Vide the instant appeal, the appellant is seeking direction against the respondent No. 3 to pay the compensation amount and thereafter recover the same from the respondent no.2/insured.
5. To strengthen his arguments learned counsel has relied upon the case of Oriental Insurance Co. Ltd. Vs. Sivankutty and others 2006 ACJ 106 decided by Full Bench of the Kerala High Court wherein the Court has held as under:
6. He also relied upon the case of Oriental Insurance Co. Ltd. Vs. Inderjit Kaur and others 1998 ACJ 123 wherein the Apex Court has held as under:-
7. Learned counsel submitted that keeping in view the facts of the present case and the settled law as discussed above, the present appeal may be allowed and the respondent No.3/Insurance Company may be directed to pay the amount to the appellants.
8. On the other hand, learned counsel appearing on behalf of respondent No.3/Insurance Company submitted that the respondent No.2 Raju Gupta, i.e., owner of the offending vehicle, issued a cheque which was dishonoured and accordingly he was informed by the Insurance Company by the notice dated 28.03.2013 well before the accident. The cheque issued by the respondent No.2 has been proved as Ex.R3W1/A dated 15.03.2001 which was returned unpaid vide Ex. R3W1/B and C. The Insurance Company, thereafter, issued a notice to the owner Raju Gupta on 28.03.2001, copy of the same has been proved as Ex. R 3W1/D.
9. Ld. Counsel further submitted that the accident took place on 27.04.2001 which is a date subsequent to the notice issued by Insurance Company to the owner informing about dishonour of the cheque. By the aforesaid notice, it was further informed to the insured that his cheque issued against the cover note was returned unpaid and in view of the same, cover note stands cancelled.
10. She further submitted that in the written statement filed by the respondents No. 1 and 2, it is nowhere stated that the vehicle was insured on the date of the accident. Moreover, R3W[1] Rajesh Kumar, witness of the Insurance Company has not been cross-examined by the counsel for respondents No. 1 and 2 despite opportunity being offered for the same.
11. She submitted that keeping in view the facts and circumstances of the case, the Ld. Tribunal has rightly exonerated the Insurance Company from any liability and the respondent No. 2, i.e., the owner of the offending vehicle, was directed to pay the award amount.
12. To strengthen her arguments, Ld. Counsel relies upon the case of United India Insurance Company Limited Vs. Laxmamma and others (2012) 5 SCC 234 wherein the Apex Court has held as under:- “26. In our view, the legal position is this: where the policy of insurance is issued by an authorized insurer on receipt of cheque towards payment of premium and such cheque is returned dishonoured, the liability of authorized insurer to indemnify third parties in respect of the liability which that policy covered subsists and it has to satisfy award of compensation by reason of the provisions of Sections 147(5) and 149(1) of the M.V. Act unless the policy of insurance is cancelled by the authorized 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 authorized 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 insurance company is not liable to satisfy awards of compensation in respect thereof.”
13. Ld. Counsel further submitted that on the date of accident the insurance policy was not in existence. Cancellation of the same was conveyed to the respondent No. 2 well before the accident. Therefore, there is no merit in the instant appeal; accordingly, same may be dismissed.
14. I have heard counsel for the parties.
15. Admittedly, the cheque was issued by the respondent No.2 Raju Gupta, i.e., the owner of the offending vehicle on 15.03.2001 for issuance of cover note. Accordingly, the respondent No. 3 issued cover note in favour of the respondent No. 2. Thereafter, on the cheque being dishonoured, the respondent No. 3 Insurance Company sent notice dated 28.03.2013 by cancelling the said cover note.
16. The question before this Court for consideration is whether the cover note once issued and thereafter on the cheque being dishonoured, the said cover note continued in force as the third party risk is concerned.
17. The similar issue came before the High Court of Kerela in the case of Sivankutty and others (Supra) wherein the Court held that the liability of the Insurance Company in damages for third party risks continues for the entire period covered by the policy in spite of the cheque issued towards payment of premium was dishonoured and consequently policy was cancelled by the Insurance Company. The remedy of the Insurance Company lies against the "insured" to have the amount paid by them by way of compensation for third party risks to be got reimbursed.
18. Moreover, in the case of Inderjit Kaur and others (Supra) the Apex Court held that despite the bar created by Section 64VB of the Insurance Act, the appellant, an authorized insurer, issued a policy of insurance to cover the bus without receiving the premium. By reason of the provisions of Section 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 to avoid or cancel the policy for the reason that the cheque issued in payment of the premium thereon had not been honoured.
19. In view of the above, the respondent No. 3 Insurance Company cannot be absolved of its obligation to third parties under the policy because it did not receive the premium. It has remedies in this behalf lay against the insured. It was the Insurance Company itself who was responsible for its predicament. It had issued the policy of insurance upon receipt of a cheque towards the premium in contravention of the provisions of Section 64 VB of the Insurance Act. A policy of insurance being a public interest concept prevails over the interests of the Insurance Company.
20. The Ld. Tribunal has wrongly exonerated Respondent No.3 Insurance Company from the liability and directed respondents no. 1 and 2 to pay the compensation. Ld. Tribunal has not considered the settled law regarding the statutory liability of the insurance company which is also envisaged as per the provisions of Motor Vehicles Act, 1988.
21. In view of the above discussion and the settled law, the Insurance Company is directed to pay the compensation amount before the ld. Tribunal within five weeks from the date of receipt of this judgment, in terms of the award dated 29.05.2010 with recovery rights against the respondent no.2, i.e., the owner of the offending vehicle. Failing which, the appellant shall be entitled for 12% interest on delayed payment.
22. Accordingly, the appeal is allowed.
SURESH KAIT, J NOVEMBER 27, 2013 RS/jg