F.A.O. NO. 2308 OF 2000 , F.A.O. NO. 2309 OF 2000 and 1 F.A.O. NO. 4060 OF 2001 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH F.A.O. NO. 2308 OF 2000 Date of decision:21st September, 2010 United India Insurance Co. Ltd. through the Deputy Manger, Regional Officer, Ludhiana. .......Appellant Versus Smt. Gurmit Kaur and others ........Respondents F.A.O. NO. 2309 OF 2000 United India Insurance Co. Ltd. through the Deputy Manger, Regional Officer, Ludhiana. .........Appellant Versus Joginder Kaur and others ........Respondents F.A.O. NO. 4060 OF 2001 Joginder Kaur and others ....Appellants Versus Ajit Singh and others ......Respondents BEFORE: HON'BLE MR. JUSTICE K.KANNAN Present: Mr. Jagtar Kureel, Advocate, for the appellant. Ms. G.K.Mann, Advocate, for the claimants. 1. Whether Reporters of local papers may be allowed to see the judgment? Yes/No 2. To be referred to the Reporters or not?Yes/No 3. Whether the judgment should be reported in the Digest? Yes/No F.A.O. NO. 2308 OF 2000 , F.A.O. NO. 2309 OF 2000 and 2 F.A.O. NO. 4060 OF 2001 K.Kannan, J.(Oral) 1. FAO Nos. 2308 and 2309 of 2000 have been filed challenging the liability by the Insurer and FAO NO. 4060 of 2001 is filed by the representatives of the deceased, seeking for enhancement of compensation. 2. The liability was denied by the Insurance Company on a plea that on the relevant date of the accident on 6.2.1995, there had been no policy of Insurance at all. It was brought out in evidence that the cover note had been prepared at 3:00 p.m and when the insured was directed to supply vehicular particulars and pay the premium, he did not do so and therefore, the cover note was cancelled and not handed over. The original cover note which was prepared and cancelled was produced and marked as Ex: RW-8. The original receipt book was also filed before the Court that showed that receipt which was prepared on 7.02.1995, was cancelled on the same day for non payment of premium. The contention, therefore, was that even before the accident, the cover note had been cancelled and there had been no valid contract of policy to make insurer liable. The Tribunal relied on judgment of the Hon'ble Supreme Court itself in Oriental Insurance Company Ltd. vs. Inderjeet Kaur (1998) 1 SCC 37, to make the insurer liable for payment to the third party claimants, on reasoning that the non payment of premium alone cannot deny to a third party right of enforcement. Sections 146 and 147 of the Motor F.A.O. NO. 2308 OF 2000 , F.A.O. NO. 2309 OF 2000 and 3 F.A.O. NO. 4060 OF 2001 Vehicles Act, protect the interests of third party by mandating the owner of a motor vehicle to make compulsory insurance. Situations where there had been no cancellation of policy prior to the accident, have been treated differently from cases where the cancellation itself occurs subsequent to the accident. The Hon'ble Supreme Court in Deddappa and others versus The Branch Manager, National Insurance Co. Ltd. 2008(2) SCC 595, dealt with a cancellation of a policy even prior to the accident, where the Insurer was held not to be liable. In view of the New India Assurance Co. Ltd. versus Rula and others (2003) SCC 195, the cancellation had taken place subsequent to the accident and the cheque received towards premium bounced. The same situation also obtained in National Insurance Company Limited versus Abhay singhParatapsing Waghela and others (2008) 9 SCC 133 where the cancellation took place subsequent to the accident. Deddappa's case(supra) sets out a situation different from Rula's case(supra) and AbhaysinghParatapsing Waghela's case referred to above. Here in this case, it is not merely the issue of payment of premium which was not paid, even the cover note had not been made and it was not even handed over to the insurer. Learned counsel for the Insurer himself produced the original cover note. All that could be gathered, there was a contemplation by the injured to take the insurance and it never come into effect. The situation has obtained in Deddappa's case (supra) clearly is brought out in this case and therefore, there is no F.A.O. NO. 2308 OF 2000 , F.A.O. NO. 2309 OF 2000 and 4 F.A.O. NO. 4060 OF 2001 question of making insurer liable. 3. In this case after the award is passed, the claimants have recovered the amount already awarded and therefore, the insurer shall have a right of recovery only against the insured and not against the claimants. The appeals by the Insurer are allowed to the above extent. The amounts deposited by the insurer at the time of filing the appeal shall be allowed to be withdrawn by the insurer, if they have not already been recovered by the insurer. 4. In the appeal for enhancement of compensation, the claimants state that the deceased was a clerk in a sugar mill drawing a salary at Rs. 2,930/- per month. He had left behind a widow, three minor children and mother dependants. I would take the income to be Rs. 3,000/- and adopt a formula laid down in Sarla Verma Vs. Delhi Transport Corporation and another (2009) 6 SCC 121. I would take 1/5th as the deduction for personal expenses and Rs. 2,400/- as the monthly contribution and the annual dependence shall therefore, be taken as Rs. 28,800/-. The deceased was 40 years of age at the relevant time and I would take 15 as multiplier that will become payable at Rs. 4,32,000/-. I would provide for Rs. 5,000/- towards loss of consortium to the wife and provide another Rs. 5,000/- to each one of the minor children. I will provide another Rs. 5,000/- towards funeral expenses and loss of estate. In all the total amount payable will be Rs. 4,57,000/-. The amount awarded in excess over what has already been F.A.O. NO. 2308 OF 2000 , F.A.O. NO. 2309 OF 2000 and 5 F.A.O. NO. 4060 OF 2001 granted by the Tribunal will attract interest at 6% per annum from the date of the petition till the date of payment. This recovery shall be made only against the insured-owner of the truck and not against the insurer, consistant with the reasons that I have given in the preceding paragraphs, exonerating the liability of the insurer. The appeal by the claimants for enhancement is allowed to the above extent. [K.KANNAN] JUDGE 21st September, 2010 Shivani Kaushik