IN THE HIGH COURT OF JUDICATURE AT PATNA M.A. No.385 of 2002 NATIONAL INSURANCE COMPANY LTD., SAHADAT MARKET, KACHAHARI ROAD, DISTRICT BEGUSARAI .. APPELLANT Versus 1. REKHA DEVI, WIDOW OF LATE PANCHDEO SINGH, R/O VILLAGE NAGARGAMA, P.S. BALIA, DISTRICT BEGUSARAI 2. AMARENDRA KUMAR SINGH, S/O DINESH PRASAD SINGH, R/O VILLAGE BAJALPURA, P.S. TEGHRA, DISTRICT BEGUSARAI 3. RAM PRAVESH KUMAR, S/O GORHIK KUMAR, R/O DANIYALPUR, P.S. TEGHRA, DISTRICT BEGUSARAI .. RESPONDENTS **** /19/ 13 August 2010 Heard the learned counsel for the parties. 2. This Miscellaneous Appeal is directed against the order, dated 31st May, 2002, passed in Claim Case No. 16 of 2000/29 of 2001 by the Motor Vehicles Accident Claim Tribunal-cum-Additional District Judge, III, Begusarai, by which it has been held that the complainant is entitled for compensation to the tune of Rs.1,95,000/- as compensation and have directed the insurance company to pay the amount together with interest at the rate of nine per cent per annum from the date of application till February, 2002, and, thereafter, interest leviable would be 8.5 per cent till payment. 7. The appellant is the insurance company. The 2 insurance company has neither challenged the quantum nor has challenged the accident. The learned counsel for the appellant pointed out that though policy of the insurance issued and the same has been filed which has been marked as Exhibit 2 and the policy of insurance shows that the said vehicle had been insured by the National Insurance Company Limited and was operative from 20.12.1999 to 12.12.2003, but, the cheque issued for the premium amount by the insured Amrendra Kumar Singh, the owner of the vehicle, was dishonounred by the Bank and so the policy of the insurance issued was cancelled by the insurance company and even the owner was intimated by sending a letter, dated 16.03.2000, and, hence, contends that since the premium of the insurance was not paid and the cheque issued has bounced regarding the payment of premium and, hence, the insurance company cancelled the policy, therefore, there was no substantiating contract between the insurance company, the appellant, and the owner of the evidence, hence, the insurance company is not liable to pay and has placed reliance on decision reported in (2004)2 P.L.J.R., 166 (National Insurance Company Ltd., Vrs. Bahuri Devi & Ors.) as well as (2008)2 S.C.C., 595 (Deddappa & Ors. Vrs. Branch Manager, National 3 Insurance Company Ltd.). 8. However, none appeared on behalf of the owner of the vehicle even though notice issued and service of notice effected. 9. The claimant appeared and the learned counsel for the claimant contended that from the impugned order it is apparent that the insurance policy has been filed by the claimant which has been marked as Exhibit 2 and the insurance policy shows that the said vehicle bearing registration no. BR-09-9321 had been insured by the National Insurance Company Ltd., which was operative from 20.12.1999 to 19.12.2003 whereas the occurrence took place on 22.03.2000, but, there is nothing in the evidence to suggest that after the cheque was bounced the intimation was given to the owner and the owner ever received the said communication by the insurance and the learned lower Court has considered Exhibit “D”, the registration receipt, but, through this what had been sent to the addressee is not clear and so it is not clear that the information regarding the bouncing of the cheque was given to the owner, has been received by the owner, has not been established and, hence, contends that under the facts and circumstances that the insurance company can not shift it‟s liability to a third party 4 and is liable to third party on account of statutory compulsion due to initial agreement between the insured and insurer and has placed reliance on decisions reported in A.I.R. 2001 S.C., 1197 (National Insurance Company Ltd. Vrs. Seems Malhotra & Ors) as well as A.I.R. 1998 S.C., 588 (Oriental Insurance Company Vrs. Inderjit Kaur & Ors.). 10. Hence, the limited question for consideration whether the impugned order directing the insurance company to pay the amount to the claimant is sustainable or not. 11. The admitted fact is that insurance policy has been proved and marked as Exhibit 2 with regard to vehicle, in question, and was operative in between 20.12.1999 to 19.12.2003 whereas the accident took place on 22.03.2000 it has been asserted by the learned counsel for the insurance company that intimation regarding the bouncing of the cheque was sent on 06.03.2000, but, there is nothing to suggest whether the said intimation by post was received or communicated to the owner and the lower Court below taken into consideration these facts as the insurance company has proved Exhibit “A”, the cheque, Exhibit “B”, the cancellation of policy, Exhibit “C”, the endorsement of 5 dishonour of the cheque and which has been proved by Advocate‟s Clerk, O.P.W. No. 1, and this witness has failed to answer whether the notice regarding bouncing of cheque and cancellation of the policy has been given to the owner or not and even unable to say that he has award in which the case of the National Insurance Company Ltd. and even take into consideration that these important document have formally been prove and the authority has not come to depose in the case and the insurance company though proved Exhibit “D”, the copy of the registration certificate, but, what has been sent by the said registration certificate is not clear and so there is nothing to suggest that intimation of bouncing of the cheque was received to the owner and in such circumstance if there is no communication then it is hit by Section 4 of the Contract Act as no due cancellation. 12. However, the decision relied upon by the learned counsel for the appellant reported in (2004)2 P.L.J.R., 166 (supra), there in the facts and circumstances of the case that the policy issued by the insurance company was marked as Exhibit 2 for the period 31.05.1995 to 30.05.1996 and the cheque was proved under the signature of the Branch Manager with note stating „no fund‟ followed with a letter, dated 28.06.1995, from the appellant company 6 to respondent no. 3 cancelling the policy on the ground that the cheque has bounced and a copy of the said ledger has been maintained in routine course of business in the office of the appellant company also on record, hence, the decision reported in (2004)2 P.L.J.R., 166 (supra) is not applicable in the facts and circumstances of this case as the insurance company did not produce the material to show about the intimation regarding the cancellation of the policy or any material in the record of the insurance company having been proved regarding the intimation to the owner regarding the cancellation of policy. 13. In the decision reported in (2008)2 S.C.C., 595 (supra) also the fact of that case that the insurance company under the heading third party insurance for period 17.10.1997 to 16.10.1998 the premium was paid by cheque on 15.10.1997 which was dishonoured on 21.10.1997due to insufficient fund, the insurance company consequently cancelling insurance policy and informing vehicle owner and Road Transport Office about the accident taking place on 06.02.1988 and there it was held that the contract of insurance stood rescinded due to failure of the consideration and intimation to this effect had been given to all concerned and in paragraph 9 of this judgment, itself, there is specific 7 mention that the first respondent thereupon cancelling the policy of the insurance and the said information was communicated to respondent no. 2 and intimation there about was also given to Road Transport Corporation concerned, however, under the facts and circumstances of the case in hand there is nothing to show the fact regarding the cancellation of policy of the truck was ever communicated to the owner of the vehicle and there is no evidence to that effect and, hence, the two decisions is of no help to the appellant. Hence, unless the communication of bouncing of cheque and cancellation of policy communicated to the owner is proved the insurance company can not be thrown. 14. However, in decisions reported in A.I.R. 2001 S.C., 1197 (National Insurance Company Ltd. Vrs. Seems Malhotra & Ors) as well as A.I.R. 1998 S.C., 588 (Oriental Insurance Company Ltd. Vrs. Inderjit Kaur & Ors.) there is specific mention of three Judges Bench in which the premium was paid by cheque was later dishonoured. The insured was intimated about it by the insurance company two months‟ after the vehicle got involved in the accident and when a claim was made by the legal heir of the driver who died in the accident, the 8 insurance company resisted the claim on the strength of the contention that cheque has bounced and premium not paid. The three Judges Bench held that the appellant become liable to indemnify third party in respect of the liability which policy covers and to satisfy award of compensation in respect thereof notwithstanding it‟s entitlement to avoid or cancel the policy for the reasons that the cheque issued for payment of the premium thereon has not been honoured, hence, in that view of the matter, the insurer is bound to satisfy the claim to third party, hence, order of the Tribunal directing the insurance company to pay is sustainable in law. I do not find any illegality in the impugned order. However, it shall be open to the appellant to realize the amount from the owner in accordance with law. 15. With these observations and directions, this Miscellaneous Appeal is dismissed. Cp:2/S.A. ( Gopal Prasad, J. )