HIGH COURT OF CHHATTISGARH, BILASPUR SINGLE BENCH: HON'BLE SHRI R. L. JHANWAR, J. Misc. Appeal (Q No. 215/2008 APPELLANT Non-Clainiant Np.2 Raj Kumar Ashrani. Versus RESPONDENT Claiinants Smt. Indra Bai and others. ORDER Postfor pronouncement on ^^ August, 2010 JUDGE 2-fc /8/2010 HIGH COURT OF CHHAmSGARH : BILASPUR SINGLE BENCH: HON'BLE SHRI R.L.JHANWAR, J. Misc. Appeal (C) No. 215 of2008 APPELLANT Non-Claimant No.2 RESPONDENTS CLAIMANTS Raj Kumar Ashrani, S/o Gurumukh Das Sindhi, aged about 45 years, r/o village Charama, Police Station & tehsil Charama, District Kanker (CG) Owner of the vehicle VERSUS 1. Smt. Indra Bai, W/o Late Shri Ujar Singh Gond, aged about 35 years. 2. Gautam, S/o Late Shri Ujar Singh Gond, aged about 14years. 3. Narad Ram, S/o Late Shri Ujar Singh Gond, aged about 12 years. Respondents/claimants No.2 & 3 are minors; therefore, they are repsented through their natural guardian mother Smt. Indra Bai, W/o late Shri Ujar Singh Gond, aged about 35 years. Respondents/claimants No.1 to 3 are R/o village Mayana, Police Station Charama, Tehsil Charama, District Kanker (CG) Note:- Claimant Duhauram (Dhawruram) has already expired, therefore, he has not been impleaded as party/respondent in this appeal. 4. Sant Kumar, S/o Pardeshi Ram Rawat, aged about 32 years, R/o village Basanvahi, Police Station & Tahsil Charama, District Kanker (CG) Driverofthevehicle 5. The New India Insurance Company Limited, Mahatma Gandhi, Fort, Mumbai, Branch Office, Behind Purana Bus Stand, Dhamtari, Dist. Dhamtari (CG) APPEAL UNDER SECTION 173 OF THE MOTOR VEHICLES ACT. 1988 Appearance: Shri H.S.Patel, counsel forthe appellant. Shri Pankaj Agrawal, counsel for the respondent No.5. None forpther respondents. ORDER (Passedon ^(,.08.2010) ^'•y^. f^"w ~ \ .' ^^F^<* :3^; ^\ L^ This is owner's appeal directing against the impugned award dated 05.11.2009 passed by the Additional Motor Accidents Claims Tribunal, Balod, Dist. Durg (for short 'the Tribunal') in claim case No. 2/2006 whereby the Tribunal awarded a sum of Rs.1,97,800/- along with interest at 6% per annum in a death case and fastened the liability to pay compensation on the owner. 2. Brief facts of the case, in a nutshell, are that the deceased - Ujar Singh was working as Helper in Metador bearing No.M.P.26 B 4879 (for short 'the offending vehicle'). On 14.01.1994 when the deceased was travelling with paddy, the said offending vehicle was met with accident by its driver, who was driving the vehicle in an uncontrollable speed and rash and negligent manner, resulting in to.death of Ujar Singh. 3. It is not disputed that offending vehicle was belonged to the appellant and was insured with respondent No.5. 4. Claiming compensation of Rs.4,66,000/- for the death of Ujar Singh, the unfortunate claimants i.e. wife and children, pleaded that the deceased was earning Rs.1200/- as Helper; used to maintain his family and due to his untimely death, the claimants have become shelter-Iess and suffered irreparable loss and on the date of accident he was a young man. 5. Before the Tribunal since respondent No.4 did not file any written statement nor did contest the case, therefore, he was declared ex parte. The respondent No.2 by filing written statement denied the averments and specifically pleaded that on the date of accident, the offending vehicle was insured with the insurance company, therefore, he is not responsible for any payment. The respondent No.5 in its written statement has categorically denied and pleaded that it did not receive any information about the accident and on the date of accident, the offending vehicle was not insured with it and violated the terms and conditions of the insurance policy. 6. ^ The Tribunal on close scrutiny of the evidence adduced before it, held that the deceased - Ujar Singh has died on account of injuries sustained by him in the motor accident; on the date of accident, the offending vehicle was being driven by its driverin a rash and negligent / .;'^^<^^ ^.•^. ;; ^^ -^/'y. '••^^'y manner, therefore, the driver of offending vehicle was negligent and awarded compensation of Rs.1,97,800/-. The Tribunal by exonerating the insurance company has fastened the liability on the owner of the offending vehicle to pay compensation along with interest at 6% per annum. The said order is under challenge before this Court. 7. Learned counsel for the appellant / owner argued that he is the owner of the'offending vehicle, which was insured with respondent No.5 and for that he has paid premium by issuing cheque. Thereafter, a cover note Ex.D.1 was issued on 16.06.1993 and according to that the insurance policy was valid from 16.06.1993 till 15.06.1994. On 16.06.1993 itself, the insurance policy No.31451204-09148 Ex.D.2 was also issued. Learned counsel further submitted that the appellant did not receive any information regarding dishonour of cheque and cancellation of policy and since no information regarding dishonour of cheque and cancellation of policy was with him, therefore, the policy issued by the insurance company was valid and effective on the date of accident. On these premises, the appellant is not responsible to pay compensation to the third party / claimant. It was also argued that the learned Tribunal has erred in holding him to be responsible to pay compensation exonerating the insurance company from its liability to pay compensation. He placed reliance in the matter of National Insurance Company Ltd. vs. Rajendra Mourya & others, 2008 (2) C.G.L.J. 107, Ishwar Singh vs. Ashok Kumar and others, 2000(1) T.A.C. 585 (M.P.), Oriental Insurance Co. Ltd. Hyderabad vs.Pinjari Hussainamma and others, 2000 (3) T.A.C. 48 (AP), Agrawal Construction Co. vs. Veer Sati and others, 2000 (3) T.A.C. 344 and National Insurance Co. Ltd. vs. Abhaysing Pratapsing Waghela & Ors., 2008 AIR SCW 6178. Placing reliance on the above cited judgments, he further argued that the once policy was issued after receiving premium by cheque, therefore, the vehide was deemed to have been insured with the insurance company and a duty is cast on the insurance company to inform him regarding cancellation of poticy after dishonour of cheque. Therefore, he urged that the responsibility to pay compensation to third party be fastened on the insurance company. 8. On the other hand, learned counsel for respondent No.5 admitted that policy was issued after receiving premium by cheque from the owner on the same. He further submitted that subsequently, the cheque was ^/^'^. '\ 'f^..^;>:>-l ^ ^ .4' ^•i ft"*' •---....y dishonoured by the concerned Bank, due to that the insurance company cancelled the policy and informed the owner accordingly about the dishonour of cheque and cancellation of policy. Therefore, the insurance company is not responsible to pay compensation to the third party. He relied on a decision rendered in the matter of Deddappa and others vs. Branch Manager, National Insurance Co. Ltd., (2008) 2 SCC 595. 9. I have heard learned counsel for the parties at length, perused the order impugned including record oftfie Tribunal. 10. It is an admitted fact that policy No. 31451204-09148 Ex.D.2 was issued on 16.06.1993 for a period upto 15.06.1994 and premium was paid through cheque, which was also deposited in the Bank vide Ex.D.4. On this point, the insurance company has adduced evidence through Satyendra Kumar Ahuja N.A.W.1 who in his statement stated that the policy was issued against the premium which was given by the cheque. Subsequently, the cheque was dishonoured and according to him due to dishonour of cheque it was presumed that no premium was paid, and therefore, the policy which was issued was deemed to have been cancelled. He further deposed that dishonour of cheque was informed by the insurance company to the owner but in this behalf no document was produced before the Tribunal. He admitted that the letter issued by the concerned Bank regarding dishonour of cheque was not available in their record because this case is of old nature. This shows that letter regarding dishonour of cheque and cancellation of policy by the insurance company was not produced. Therefore, it cannot be said that the information about the cancellation of the policy by the insurance company and dishonour of cheque was sent to the owner. It is the duty of insurance company to produce such document because the value of documentary evidence is more important than the oral evidence. 11. It is evident from the record that the vehicle was insured with the insurance company and the cheque was issued on 16.06.1993 and cover note was also issued which is Ex. D.1. The policy Ex. D.2 was issued on the same date covering the risk of third party and was effective from 16.06.J993 till 15.06.1994 and the accident took place on 04.01.1994 shows that 6 months after the vehicle was insured with the insurer, the accident took place. Therefore, the respondent No.5 was bound to indemnify the insured. 1 am of the opinion that the learned Tribunal .'^^wO' ^ ^ '^' ^l ^ ^ ,......>' <T committed error in absolving insurance company from paying compensation amount on the ground thatinsurance policy had become ineffective due to dishonouring of cheque. Even otherwise, the dishonouring of cheque after issuance of insurance policy which includes the cover note does not affect the right of the third party in view of the provisions of Section 147 (5) and 149 (1) ofthe M.V.Act, 1988 which read below: "147. - Requirements of policies and limits of liability. (1) (2) (3) (4) (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." 149-—Dutyof insurers to satisfy judgments and awards against persons insured in respect of third party risks.—(1) If, after a certificate of insurance 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 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." From the perusal of above provisions of Sections 147(5) and 149(1) of the M.V.Act, it is clear that if insurance policy was issued on tender of cheque, which later on was dishonoured by bank, even then the insurer, notwithstanding the provisions of Section 64 VB of the Insurance Act, 1938 (henceforth 'the Act, 1938), the liability ofthe Insurance Company for paying jcompensation amount to the third party, continues and it is bound to make the payment of compensation amount. -^s^- k •t^^^' ^. -n..^^ .^. ^.^ ,^--/'.':-''' •^•:""~ 12. Section 64VB of the Act, 1938 reads as under: "64VB. No risk to be assumed unless premium is received in advance.—(1) No insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily pyable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and until deposit of such amount as may be prescribed, ismade in advance in the prescribed manner. (2) For the purposes ofthis section, in the case of risks for which premium can be ascertained in advance, the risk may be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the insurer. Explanation.-- Where the premium is tendered by posal money order or cheques sent by post, the risk may be assumed on the date on which the money order is booked or the cheque is posted, as the case may be. (3) Any refund of premium which may become due to an insured on account of the cancellation of a policy or alteration in its terms and conditions or otherwise shall be paid by the insurer directly to the insured by a crossed or order cheque or by postal money order and a proper receipt shall be obtained by the insurer from the insured, and such refund shall in no case be credited to the account of the agent. (4) Where an insurance agent collects a premium on a policy of insurance on behalf of an insurer, he shall deposit with, or dispatch by post to, the insurer, the premium so collected in full without deduction of his commission within twenty-four hours of the collection excluding bank and postal holidays. (5) The Central Government may, by rules, relax the requirements of sub-section (1) in respect of particular categories in insurance policies. (6) The Authority may, from time to time, specify, by the regulations made by it, the manner of receipt of premium by the insurer." Upon a minute perusal of the above provisions, it transpires that Section 64 VB of the Act, 1938 is in the shape of a legislative injunction upon an insurer not to assume any risk in respect of any jnsurance until the premium payable is received by it or is guaranteed to be paid by such person in such manner and within such time as may be prescribed is made in advance in prescribed manner. Where the insurer, despite the bar created by Section 64 VB of the Act, 1938, issued a policy of insurance to cover the offending vehicle without receiving the premium therefor, the insurer, by reasons of the provisions of Sections 147(5) and 149 of the M.V.Act, 1988 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 for payment of ,^ \ " €...••-'- l/ ^ ^. ^ <t •' premium had not been honoured. The words "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 sumby virtue of any enactment relating to interest on judgments" and "notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy" appearing in sub- section (1)of Section 149 of the Act, 1988 clearly indicate the mandate that once the certificate of insurance has been issued by the insurer under sub-section (3) of Section 147 of the Act, 1988 in favour of person by whom the policy has been effected despite compliance of sub-section (1) of Section 64 VB of the Act, 1938, then as regards the liability towards third parties is concerned, the insurance company shall be liable notwithstanding that it may be entitled to avoid or cancel or may have actually avoided or cancelled the policy of insurance. The policy of insurance that the insurer issued was a representation upon which the authorities and third parties were entitled to act and, therefore, the insurer was not absolved of its obligations towards third parties under the policy of insurance merely because it did not receive the premium. Its remedies in this behalf lay against the insured. 12. In Oriental Insurance Co. Lfcf. Vs. Inderjit Kaur and others, (1998) 1 SCC 371 in similar circumstances, it was held that it was the appellant itself, who was responsible for its predicament. It had issued the policy of insurance upon receipt pnly of a cheque towards the premium in contravention of the provisions of Section 64 VB of the Act, 1938. The public interest that a policy of insurance serves must, therefore, clearly prevail over the interest of the appellant. Therefore, in view of the provision contained in sub-section (1) of Section 149 of the Act, 1988 as regards the liability of the insurance company towards third parties is concerned, it is wholly immaterial whether the policy of insurance once issued by the insurance company was cancelled prior to or after the accident. 13. •- As observed above that after payment of premium through cheque, policy of insurance was issued, therefore, the respondent No.5 was liable to pay compensation. The learned Tribunal committed error in ./.."' '•^ 9\ '*' u .^•" s exonerating the respondent No.5/lnsurance Company from paying compensation to the claimant. 14. In the result, the appeal filed by the appellant / owner is allowed. The impugned award passed by the Tribunal is modified and it is directed that the respondent No.5 / insurance company shall pay Rs.1,97,800/- to the claimant with interest as awarded by the Tribunal, within three months from the date of receipt of copy of this order. No order as to costs. Sd/- R.L. Jhanwar Judge .4^