IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD TUESDAY, THE 10th DAY OF NOVEMBER TWO THOUSAND AND NINE PRESENT HON’BLE SRI JUSTICE G.V.SEETHAPATHY M.A.C.M.A.Nos.633 of 2005 & 3406 OF 2004 M.A.C.M.A.No.633 of 2005 Between:- United Insurance Company Limited., Rep. by its Divisional Manager, Malakpet, Hyderabad. …Appellant A n d Smt.R.Padma and others …Respondents A N D M.A.C.M.A.No.3406 OF 2004 Between:- Smt.R.Padma and others …Appellants A n d Md.Lala and another …Respondents HON’BLE SRI JUSTICE G.V.SEETHAPATHY M.A.C.M.A.Nos.663 of 2005 & 3406 OF 2004 COMMON JUDGMENT: These appeals arise out of the order dated 29- 03-2004 in O.P.No.1855 of 2000, on the file of the Motor Accidents Claims Tribunal-cum-V-Additional Chief Judge, City Civil Court, Hyderabad, wherein the claim was allowed-in-part, awarding compensation of Rs.2,25,500/- with interest at 9% per annum from the date of the petition. 2. Respondents 1 to 6 in MA.CMA.No.633 of 2005, who are appellants in MA.CMA.No.3406 of 2004, filed claim application seeking compensation of Rs.4 lakhs on account of the death of the deceased R.Durgesh, who died in a motor vehicle accident that occurred on 03-07-2000. The first claimant is the wife and claimants 2 to 4 are the children and claimants 5 and 6 are the parents of the deceased. According to them, the deceased was an auto driver and he was also doing business in firewood and that on 03-07-2000 at about 11.10 P.M., he was proceeding on a scooter bearing No.AP13C 7530 along with his friend from Agapally to Hyderabad and that near Ram Reddy Farm on Sagar Road, a lorry bearing No.ABT 1553 came in high speed in a rash and negligent manner and dashed against the scooter from behind, as a result of which the deceased fell down and sustained injuries and while undergoing treatment, died in the hospital. Ibrahimpatnam Police registered a case against the driver of the lorry. According to the claimants, the deceased was earning Rs.5,000/- per month. 3. The owner of the lorry remained ex parte before the tribunal. The insurer filed counter opposing the claim and denying their liability to pay the compensation, inter alia contending that by the date of the accident, the cover note issued in respect of the crime vehicle was cancelled as the cheque given by the insured towards the premium on 08-02-2000 was dishonoured for want of funds and on the intimation from the bank, the policy was cancelled on 25-02-2000 and, therefore, the insurer is not liable to pay the compensation, as the accident occurred subsequently on 03-07-2000. 4. During the course of enquiry, P.Ws.1 and 2 were examined and Exs.A-1 to A-5 were marked on behalf of the claimants. R.W.1 was examined and Exs.B- 1 to B-5 were marked on behalf of the insurer. 5. On a consideration of the evidence available on record, the tribunal held that the accident occurred due to the rash and negligent driving of the lorry by its driver. The tribunal also held that the claimants are entitled for a total compensation of Rs.2,25,500/- with interest at 9% per annum from the date of the petition. The tribunal further rejected the plea of the insurer that they are not liable to pay the compensation and fastened joint and several liability on the insurer also. Aggrieved by the award, the appellant-insurer filed MA.CMA.No.633 of 2005 and not satisfied with the award, the claimants filed MA.CMA.No.3406 of 2004, seeking enhancement of compensation. 6. As both the appeals arise out of the same judgment, they are heard together and are being disposed of by this common judgment. 7. Arguments of the learned counsel for both sides are heard in both the appeals. Perused the records. 8. The finding of the tribunal that the accident occurred due to the rash and negligent driving of the lorry by its driver is not seriously disputed. 9. The only question, which arises for consideration in the present appeal, is – whether the compensation awarded by the tribunal is just and reasonable and whether the insurer is also jointly and severally liable to pay the compensation. 10. It is not disputed that the deceased was aged about 38 years, as noted in Ex.A-3-inqeust report and Ex.A-4-post-mortem report. According to the claimants, the deceased was an auto driver and he was doing business in firewood. Ex.A-3 mentions the occupation of the deceased as ‘coolie’. Though the claimants pleaded that the deceased was earning Rs.5,000/- per month by driving the auto and also from the firewood business, the said plea has not been substantiated, as no evidence is adduced in that regard. In the absence of any such evidence, the tribunal has taken the income of the deceased at Rs.1,500/- per month i.e., at Rs.50/- per day, which is held to be reasonable, having regard to the fact that the deceased was only a coolie. After deducting one- third thereof towards personal expenses, the tribunal estimated the contribution of the deceased to the family at Rs.1,000/- i.e., Rs.12,000/- per annum and applying the multiplier ‘16’ suitable to the age of the deceased, as per the second schedule, the loss of dependency was estimated at Rs.1,92,000/-. By adding a sum of Rs.2,000/- towards personal expenses and Rs.1,500/- towards transport charges and Rs.15,000/- towards loss of consortium and Rs.15,000/- towards of loss of estate, the tribunal awarded a total compensation of Rs.2,25,500/-. As per the second schedule, a sum of Rs.5,000/- is payable towards loss of consortium and Rs.2,500/- towards loss of estate. When calculated accordingly, the total compensation payable to the claimants comes to Rs.2,03,000/-. But, however, having regard to the fact that the deceased has left behind three minor children, besides aged parents, and young widow, it is considered inappropriate to reduce the amount, especially when the difference between the amount awardable and the amount awarded is only marginal. Under those circumstances, it is held that there are no valid or justifiable grounds for enhancement of the compensation and the amount awarded by the tribunal in a sum of Rs.2,25,500/- is just and reasonable. 11. Coming to the liability of the insurer, the evidence of R.W.1 coupled with Exs.B-1 to B-5 would no doubt show that the cheque-Ex.B-1 issued by the insured on 08-02-2000 towards payment of the premium was dishonoured due to insufficient funds in the bank and the same was intimated by the bank under Ex.B-2 memo and confirmed the same by letter-Ex.B-3 and the letter-Ex.B-4 dated 25-02-2000 was addressed by the insurer to the insured stating that on account of dishonour of the cheque, the policy was cancelled with effect from the inception. Ex.B- 5 is stated to be the proceedings of the insurer, cancelling the policy. 12. The learned counsel for the insurer would, therefore, contend that as the accident occurred on 03-07- 2000 subsequent to the cancellation of the policy, the insurer is not liable to pay the compensation under Section 64-VB of the Insurance Act. 13. I n ORIENTAL INSURANCE CO., LTD., V. INDERJIT KAUR AND OTHERS[1], the Apex Court held as follows:- “We have, therefore, this position. Despite the bar created by S.64-VB of the Insurance Act, the appellant, an authorized insurer, issued a policy of insurance to cover the bus without receiving the premium therefore. By reason of the provisions of Ss 147(5) and 149(1) of the Motor Vehicles Act, the appellant became liable to indemnity 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. The policy of insurance that the appellant issued was 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 receive the premium. Its remedies in this behalf lay against the insured.” 14. In DEDDAPPA V. BRANCH MANAGER, NA DEDDAPPA TIONAL INSURANCE CO., LTD.,[2] the insurance policy was to remain valid for the period from 17-10-1997 to 16-10-1998 and the insured issued a cheque on 15-10- 1997 and when presented for encashment before Syndicate Bank, the bank by order dated 21-10-1997 issued a return memo disclosing disonhour of the cheque with remarks ‘funds insufficient’ and thereupon the insurer cancelled the policy of insurance and the said information was communicated to the insured and intimation of the same was also given to the RTO concerned. Subsequently, the accident occurred on 06-02-1998 much after communication of cancellation of policy. The Apex Court, after referring to the decision in INDERJIT KAUR AND ORS. V. NATIONAL INSURANCE CO., LTD., (1998) 1 SCC 371) and analyzing the case law on the subject, held as under: “We are not oblivious of the distinction between the statutory liability of the Insurance Company vis-à-vis a third party in the context of Sections 147 and 149 of the Act and its liabilities in other cases. But the same liabilities arising under a contract of insurance would have to be met if the contract is valid. If the contract of insurance has been cancelled and all concerned have been intimated thereabout, we are of the opinion, the insurance company would not be liable to satisfy the claim.” 15. In the present case, though the insurer has cancelled the policy under Ex.B-5 and sent a letter to that effect to the insured under Ex.B-4, there is, however, nothing on record to show that the said letter was duly served on the insured. Admittedly, no intimation of cancellation of the policy was given to the Regional Transport Authorities concerned. Even as per the decision of the Apex Court in Deddappa’s case (2 supra), if the contract of insurance is cancelled and all the concerned have been intimated thereabout, then only the insurance company would not be liable to satisfy the claim. Had the insured been notified of the factum of dishonour of the cheque issued by him, there is every possibility of his taking necessary steps to pay the premium by some other mode and see that the policy would be in vogue. But, there is nothing on record to show that the insured was duly notified of the factum of dishonour of the cheque, there being no evidence of service of the letter-Ex.B-4 on the insured or on the RTO concerned, as required under Section 147 of the Motor Vehicles Act. 16. I n M.NAGESWARA RAO V. NEW INDIA ASSURANCE CO. LTD.,[3] a Division Bench of this Court held that in view of the provisions contained in Sections 147(5) and 149(1) of the Motor Vehicles Act, the insurance company cannot be exempted from liability when the procedure contemplated by law is not followed by giving opportunity to the owner of the vehicle to make good the loss sustained by the drawee and when the insurance company failed to produce any evidence that the notices were served on the insured. Following the above decision of the Division Bench in M.Nageswara Rao’s case (3 supra), this Court in MANAGER, THE UNITED INDIA INSURANCE CO., LTD., HYDERABAD V. ABBISETTI VENKATRAO AND ORS[4] held under similar set of facts that the tribunal was justified in making the insurance company liable to indemnify the owner for the loss of the vehicle with a direction that the insurance company is at liberty to recover the amount from the owner of the vehicle according to law. In the above case also, the insurance company pleaded that they are not liable to indemnify because the policy was cancelled long prior to the accident as the cheque issued by the insured towards the premium got bounced and the amount was not paid even subsequently. In the above case also, it was found that no material was placed by the insurance company to prove that after bouncing of the cheque, the policy was cancelled and the intimation was received by the owner of the vehicle to that effect. 17. In UNITED INDIA CO., LTD., V. TUNIKI @ MUDAM LACHAVVA @ LAXMI AND ANOTHER[5], this Court, after referring to sub-section (4) of Section 147 of the Motor Vehicles, held as under: “From this, it is clear that in case a situation emerges for cancellation of cover note, the insurer must notify the cancellation thereof, to the Registering Authority i.e., the Regional Transport Officer, within seven days from the date of expiry of the same. It is from the date of such notification, that the liability of the insurer ceases to exist.” It was further held thus: “Whatever be the means employed, the obligation of the insurer, comes to an end, only when the factum of cancellation of the cover note had reached the Registering Authority. In the instant case, the only exercise undertaken by the appellant was that it sent a notice to the Registering Authority, through Certificate of Posting. It was neither pleaded not proved that the Registering Authority notified the factum of cancellation of the cover note before the accident had occurred. Consequently, it must be held that the cover note or the policy, as the case may be, issued by the appellant was in force as on the date of the accident.” 18. In the present case, there is nothing on record to show that any intimation was sent to the Registering Authority at all, let alone serving of the same on the said authority. There is also nothing on record to show that the letter-Ex.B-4 addressed to the insured was served on him. 19. Under those circumstances and in the light of the principles laid down in the above decisions of the Apex Court and this Court, it must be held that fastening of joint and several liability on the insurer for payment of the compensation, as awarded by the tribunal, does not call for any interference. It is, however, open to the insurer to recover the amount paid under the award, from the owner of the vehicle. 20. In the result, both the civil miscellaneous appeals are dismissed, subject to the direction stated above. There shall be no order as to costs. ____________________ G.V.SEETHAPATHY, J 10th November, 2009 Lrkm. [1] AIR 1998 SC 588 [2] AIR 2008 SC 767 [3] 2004 ACJ 1554, [4] 2008(1) ALD 84 [5] 2007(2) ALD 65