MANU/MH/4017/2021

True Court CopyTM

IN THE HIGH COURT OF BOMBAY (AURANGABAD BENCH)

First Appeal No. 141 of 2007

Decided On: 06.12.2021

Appellants: United India Insurance Company Ltd.
Vs.
Respondent: Meera Gopal Nangare and Ors.

Hon'ble Judges/Coram:
R.G. Avachat

JUDGMENT

R.G. Avachat, J.

1. This is Insurance Company's appeal, taking exception to the judgment and award dated 15/9/2006, passed by Chairman, Motor Accident Claims Tribunal, Ahmednagar in Motor Accident Claim Petition No. 1084/1999 whereunder a sum of Rs. 2,00,000/- has been awarded as compensation on account of death in vehicular accident and directed to be paid jointly and severally by the appellant Insurance Company and the owner of the vehicle involved in the accident. The challenge is mainly on the ground of dishonour of cheque issued by the insured towards payment of premium of the insurance cover.

2. Heard. Learned counsel for the appellant - Insurance Company would submit that, the premium was paid by cheque. The cheque was dishonoured on its presentation for encashment. The appellant Insurance Company, therefore, cancelled the contract of insurance. It has, therefore, no liability to pay any compensation. He would further submit that, if the Court holds the appellant Insurance Company to be liable to pay the compensation to a third party, it be held to be entitled to recover the amount of compensation to be paid by it from the insured. In support of his submissions, learned counsel for the appellant relied on the judgment of the Apex Court in case of United India Insurance Company Limited Vs. Laxmamma and others, [MANU/SC/0314/2012 : (2012) 5 SCC 234].

3. Learned counsel for the respondent would support the impugned and award.

4. The policy of insurance covered the period from 13/2/1999 to 12/2/2000. The cheque towards the premium was issued on 12/2/1999. The accident took place on 14/5/999 i.e. during the period of insurance cover. The cheque was dishonoured on 17/2/1999. Intimation regarding the dishonour of cheque and cancellation of the policy of insurance was issued thereafter. It was a claim made by the legal representatives of the deceased, a third party. On the date the accident took place, the policy of insurance was in force.

5. In paragraph No. 26 of the judgment in case of Laxmamma (supra), it has been observed by the Apex Court:-

"26. In our view, the legal position is this: where the policy of insurance is issued by an authorised insurer on receipt of cheque towards the payment of premium and such a cheque is returned dishonoured, the liability of the authorised insurer to indemnify the third parties in respect of the liability which that policy covered subsists and it has to satisfy the award of compensation by reason of the provisions of Sections 147(5) and 149(1) of the MV Act unless the policy of insurance is cancelled by the authorised 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 authorised 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."

6. Since the policy of insurance was in force on the day the vehicle met with the accident, the appellant Insurance Company is bound to pay the amount of compensation granted under the impugned award. The fact is, however, that, post accident, the cheque issued towards payment of premium was dishonoured. The appellant Insurance Company, therefore, cancelled the policy of insurance and gave its intimation to the insured. Necessarily, the appellant Insurance Company would be entitled to recover the amount of compensation that it will be required to pay u........