BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED : 08/02/2006 CORAM: THE HONOURABLE MR.JUSTICE A.C.ARUMUGA PERUMAL ADITYAN C.M.A.Nos.932 of 2005 C.M.A.Nos.933 to 936 of 2005 and C.R.P.No.879 of 2005 National Insurance Co. Ltd., represented by its Branch Manager, Branch Office-I, No.6, West Masi Street, Madurai. ... Appellant Petitioner in all C.M.As and C.R.P/2nd respondent in M.C.O.P.Nos.885/99,981/99,2835/02,
886/99,489/99 and 490/99.
Vs
1.M.Ayyappan
2.C.Chandran
3.M/s.Tamil Nadu State Transport Corporation Ltd.,
through its Managing Director,
Unit No.III, Kumbakonam, Karaikudi. … Respondent in
C.M.A.No.932 of 2005
Claimants in M.C.O.P.No.885/99
1.M.Shakul Hameedu
2.C.Chandran
3.M/s.Tamil Nadu State Transport Corporation Ltd.,
through its Managing Director,
Unit No.III, Kumbakonam, Karaikudi. …Respondent in
C.M.A.No.933 of 2005
/ Claimants in M.C.O.P.No.981/99
1.Seeralan
2.Savariammal
3.S.Arockiam
4.Selvi
5.S.Packiaraj
6.C.Chandran
7.M/s.Tamil Nadu State Transport Corporation Ltd.,
through its Managing Director,
Unit No.III, Kumbakonam, Karaikudi. …Respondent in
C.M.A.No.934 of 2005
/ Claimants in M.C.O.P.No.2835/02
1.M.Mariammal
2.2.C.Chandran
3.M/s.Tamil Nadu State Transport Corporation Ltd.,
through its Managing Director,
Unit No.III, Kumbakonam, Karaikudi. …Respondent in
C.M.A.No.935 of 2005
/ Claimants in M.C.O.P.No.886/99
1.T.Selvarajan
2.C.Chandran
3.M/s.Tamil Nadu State Transport Corporation Ltd.,
through its Managing Director,
Unit No.III, Kumbakonam, Karaikudi. …Respondent in
C.M.A.No.936 of 2005
/ Claimants in M.C.O.P.No.489/99
1.T.Selvarajan
2.C.Chandran
3.M/s.Tamil Nadu State Transport Corporation Ltd.,
through its Managing Director,
Unit No.III, Kumbakonam, Karaikudi. …Respondent in
C.R.P.No.879 of 2005
/ Claimants in M.C.O.P.No.490/99
Prayer: Appeals filed under Section 173 of Motor Vehicles Act, against the
judgment and decree dated 02.11.2004 and made in M.C.O.P.Nos.885 of 1999, 981 of
1999, 2835 of 2002, 886 of 1999, 489 of 1999 and the Revision Petition filed
under Article 227 of the Constitution of India, against the order dated
02.11.2005 made in M.C.O.P.No.490 of 1999, on the file of the Motor Accidents
Claims Tribunal – Additional District & Sessions Juge-cum-Fast Track Court
No.III, Madurai.
!For Appellant .. Mr.S.Srinivasa Raghavan ^For Respondents .. Mr.C.Godwin :COMMON JUDGMENT
C.M.A.Nos.932 of 2005, 933 of 2005, 934 of 2005, 935 of 2005, 936 of 2005
and C.R.P.No.879 of 2005 have arisen out of the award passed in M.C.O.P.Nos.885
of 1999, 981 of 1999, 2835 of 2002, 886 of 1999, 489 of 1999 and 490 of 1999, on
the file of the Motor Accidents Claims Tribunal – Additional District & Sessions
Juge-cum-Fast Track Court No.III, Madurai, dated 02.11.2004.
2. In all the above said C.M.As, the National Insurance Company Limited /
the second respondent is the appellant and in C.R.P.No.879 of 2005, the National
Insurance Company is the Revision petitioner.
The short facts of the prosecution case are as follows:
3. The claimants in M.C.O.P.Nos.885 of 1999, 886 of 1999, 490 of 1999 and
981 of 1999, were travelling in the bus bearing Registration No.TN-63-N-0400,
belonging to the third respondent, from Paramakudi to Madurai on 19.12.1998.
The bus was plying on the Madurai-Rameswaram National Highways Road and when it
reached Vellakurichi vilakku, at about 07.15 p.m., it involved in an head on
collusion with the lorry bearing Registration No.TN-59-E-3499, belonging to the
first respondent. The accident had occurred only due to the rash and negligent
driving of the drivers of both the vehicles, namely, the bus and the lorry. A
criminal case was registered by Thiruppasethi Police in Crime No.246 of 1998.
The claimants in the above M.C.O.Ps, were travellers in the ill-fated bus,
sustained grievous injuries. The drivers of the first and third respondents
were in the course of their duty at the time of accident and therefore, the
owners and insurers were also vicariously liable to pay compensation.
M.C.O.P.No.489 of 1999 and 2835 of 2002 are filed by the claimants, claiming
compensation for the death of one, Metylda, in the above said accident. The
parents, brother and sisters of the deceased Metylda have filed M.C.O.P.No.2835
of 2002, claiming compensation and the husband of the deceased Metylda was shown
as 4th respondent in M.C.O.P.No.2835 of 2002. The husband of the deceased
Metylda has also filed another M.C.O.P.No.489 of 1999, claiming compensation for
the death of his wife Metylda in the accident. The other claimants in the
remaining M.C.O.Ps, were the passengers of the bus on the date of accident, who
had sustained grievous injuries in the accident, claiming compensation. The
first respondent in his counter would contend that the occurrence had taken
place due to the rash and negligent driving of the driver of the bus and not by
the driver of the lorry. The first respondent in his additional counter has
contended that he had insured his lorry, bearing Registration No.TN-59_E-3499,
with the second respondent and the premium amount was also paid by the first
respondent to the second respondent by way of cheque. The second respondent in
his counter has contended that the lorry belonging to the first respondent was
not insured with the second respondent on the date of the accident. There was
no insurance coverage and insurable interest and therefore the second respondent
cannot be made liable to pay the compensation to the claimants and that the
first respondent’s lorry was insured with the second respondent only for the
period between 29.12.1998 and 28.12.1999. Therefore, the second respondent
cannot be held responsible to pay the compensation, since, the accident had
occurred on 19.12.1998, on which date the policy was not in force. The accident
had occurred only due to the rash and negligent driving of the driver of the bus
and not by the driver of the lorry. The second respondent in his additional
counter, has contended that the lorry belonging to the first respondent was
insured with the second respondent from 29.12.1998 till 28.12.1999 and that the
second respondent came to know that the first respondent, with the collusion of
the petitioners, did not disclose the previous policy and the payment of premium
by way of cheque and that the cheque issued by the first respondent was
dishonoured and the policy was cancelled as per rules. Suppressing the
cancellation of the previous policy, the first respondent was managed to get a
fresh policy from 29.12.1998 till 28.12.1999. The previous policy was not
existed since the cheque issued for the premium amount was dishonoured and
therefore, the second respondent can never be held responsible to pay
compensation. However, in view of the prevailing law, the insurance company may
be directed to pay compensation and then to recover the same from the first
respondent. The third respondent has filed a counter contending that the
accident had occurred only due to the rash and negligent driving of the driver
of the bus.
4. Before the learned Tribunal, P.W.1 to P.W.9 were examined and Exs.P.1
to P.30 were marked on the side of the claimants. On the side of the
respondents, R.W.1 to R.W.3 were examined and Exs.R.1 to R.9 were marked.
5. After going through the oral and documentary evidence available before
the learned Tribunal, the learned Tribunal has allowed all the M.C.O.Ps,
awarding various amount of compensation, taking into consideration the gravity
of the injuries sustained by the claimants in the accident, in the injured cases
and the plight of the legal representatives of the deceased in the case of
death.
6. The learned Tribunal has come to a conclusion that the accident had
occurred only due to the rash and negligent driving of the driver of the lorry,
bearing Registration No.TN-59-E-3499 and the learned Tribunal has further
directed the second respondent / National Insurance Company, to pay the award
amount in all the above said M.C.O.Ps, to the respective claimants and then, to
recover the same from the first respondent, following the dictum in 2001 ACJ 843
of the Honourable Supreme Court of India.
7. Aggrieved by the above directions of the learned Tribunal, directing
the National Insurance Company / the second respondent to pay the compensation
to all the claimants, the National Insurance Company / the second respondent had
preferred the appeal in C.M.A.Nos.932 to 936 of 2005 and the revision in
C.R.P.No.879 of 2005.
8. Now, the substantial questions of law that arose for consideration in
this appeals and revision, are
(1) Whether the National Insurance Company is liable to pay compensation,
when there was no insurance policy, in respect of the lorry bearing Registration
No.TN-59-E-3499, was in force on the date of the accident?
(2) Whether the award passed in M.C.O.P.Nos.885 of 1999, 981 of 1999, 2835
of 2002, 886 of 1999, 489 of 1999 and 490 of 1999 are liable to be set aside for
the reasons stated in the Memorandum of appeal in C.M.A.Nos.932 to 936 of 2005
and also in C.R.P.No.879 of 2005?
Point No:1
9. The only contention of the appellant / National Insurance Company is
that on the date of the accident, i.e, on 19.12.1998, there was no policy in
force, in respect of the lorry bearing Registration No.TN-59-E-3499. The
learned Counsel would further contend that the period for which the policy was
in force was from 29.12.1998 to 28.12.1999 and for the previous policy which
starts from 15.12.1998 to 14.12.1999. The first respondent had paid the premium
by way of cheque, which was bounced and hence, there was actually no policy was
in force to indemnify the National Insurance Company to the owner of the lorry
namely, the first respondent. Ex.R.5 is the insurance policy which shows that
the policy is in force from 15.12.1998 till 14.12.1999. The accident had
occurred on 19.12.1999. R.W.3, is the Deputy Regional Manager of the second
respondent / the appellant, who would depose that the first respondent viz., the
owner of the lorry bearing Registration No.TN-59-E-3499, had sent a cheque for
Rs.7,351/- towards premium for the insurance of the above said lorry. Ex.R.3,
is the certified copy of the cheque dated 15.12.1998 for Rs.7,351/- issued by
the first respondent, in favour of the second respondent. It is seen from
Ex.R.6 that the above said cheque was dishonoured by the bank on the ground that
there was no sufficient fund in the name of the drawer of the cheque, the first
respondent. Ex.R.7 is said to be the intimation regarding dishonor of the
cheque by the second respondent to the first respondent, the owner of the lorry.
The intimation is dated 22.12.1998, i.e, after the date of the accident. It is
seen from Ex.R.6 that the cheque was dishonored on 18.12.1998 itself. P.W.3
would admit in the cross-examination that the first respondent had paid the
premium on 28.12.1998 itself. So, the learned Counsel for the appellant would
contend that the Insurance Company is not liable to pay the compensation,
because there was no insurance policy for the lorry bearing Registration No.TN-
59-E-3499 on the date of the accident. The learned Counsel appearing for the
respondent / claimant relying on the decision in Oriental Insurance Company
Limited Vs. Inderjit Kaur and others reported in 1998 (1) LW 11 and contended
that even if the cheque drawn for payment of premium for insurance policy, was
bounced, the Insurance Company is not absolved of its obligation to third
parties under the policy, merely on the ground that the Insurance Company has
not received the premium.
10. The learned Counsel for the respondent would contend that as per
Section 64 V B of the Insurance Act, unless and until the premium is paid, the
Insurance Company is not bound to issue the policy, but, in this case, even
before the premium was paid under Ex.R.3, cheque was realised, the Insurance
Company has issued Ex.R.5, insurance policy, covering the period from 15.12.1998
to 14.12.1998, whereas the accident had occurred only on 19.12.1998, on that
date, Ex.R.5, insurance policy, was in force.
11. The facts of the above said dictum in Oriental Insurance Company
Limited Vs. Inderjit Kaur and others reported in 1998 (1) LW 11, is that a bus
met with an accident and its insurance policy was issued by the appellant
therein on 30th November 1989. The premium for the policy was paid by cheque.
The cheque was dishonoured. A letter stating that it had been dishonoured was
sent by the appellant to the insured on 23rd January, 1990. The letter claimed
that, as the cheque had not been encashed, the premium on the policy had not
been received and that, therefore, the appellant was not at risk. The premium
was paid in cash on 2nd May, 1990. In the mean time, on 19th April, 1990, the
accident took place: the bus collided with a truck, whose driver died. The
truck driver’s widow and minor sons filed the claim petition. The appellant
denied the claim asserting that under the terms of Section 64-V B of the
Insurance Act, 1938, no risk was assumed by an insurer unless the premium
thereon had been received in advance. The Motor Accident Claims Tribunal
rejected the appellant’s contention and awarded the claimants, a compensation of
Rs.96,000/- with interest at the rate of 12 per cent per annum from the date of
the petition, to be paid by the insured and the appellant jointly and severally.
The appeal filed by the appellant before the High Court of Punjab and Haryana
was summarily dismissed and hence, the second appeal was preferred before the
Apex Court, wherein it has been decided as follows:
“We have, therefore, this position. Despite the bar created by Section
64-VB of the Insurance Act, the appellant, an authorised insurer, issued a
policy of insurance to cover the bus without receiving the premium therefor. By
reason of the provisions of Section 147(5)and 149(1) of the Motor Vehicles Act,
the appellant 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 (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 a 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.
We may note in this connection the following passage in the case of
Montreal Street Railway Company Vs. Normandin, A.I.R.1917 Privy Council 142:
“When the provisions of a statute relate to the performance of a public
duty and the case is such that to hold null and void acts done in neglect of
this duty would work serious general inconvenience or injustice to persons who
have no control over those entrusted with the duty and at the same time would
not promote the main object of the Legislature, it has been the practice to hold
such provisions to be directory only, the neglect of the them, though
punishable, not affecting the validity of the acts done.”
It must also be noted that it was the appellant itself who was responsible
for its predicament. It had issued the policy of insurance upon receipt only of
a cheque towards the premium in contravention of the provisions of Section 64-VB
of the Insurance Act. The public interest that a policy of insurance serves
must, clearly, prevail over the interest of the appellant.
We are of the view, in the circumstances, that the observations in the
case of United India Insurance Co., Limited Vs. Ayeb Mohammed do not lay down
good law.”
12. In this case, the learned Counsel for the appellant would contend that
the policy has been subsequently, cancelled by the Insurance Company under
Ex.R.8 and the same has been acknowledged by the first respondent under Ex.R.9.
It is pertinent to note that the intimation of cancellation of the policy was
issued only on 23.05.2000, i.e., about one and half years subsequent to the date
of the accident.
13. The learned Counsel for the respondent would contend that even if the
cancellation of the policy was intimated by the Insurance Company to the owner
of the lorry involved in the accident, that will not absolve the Insurance
Company from indemnifying their responsibility to the third party victims. To
this proposition of law, the learned Counsel for the respondent relied on the
decision in Oriental Insurance Company Limited Vs. Prakash Chunilal Mirgany and
others reported in 2006 ACJ 15, wherein it has been held as follows:
“The factual distinction in the present case is that the accident took
place on 25.11.2981 after the insurance company had purported to endorse a
cancellation of the insurance policy on 19.11.1991 on the ground of the
dishonour of the cheque. This to my mind would not make any difference to the
position as it obtained at least under the Act of 1939 enunciated that where a
policy of insurance is cancelled, the insurer shall within seven days notify
such cancellation or suspension to the registering authority in whose records
the registration of the vehicle covered by the policy of insurance is recorded.
The object of this provision is obvious. Section 94 of the Act contained a
specific prohibition on the use of a motor vehicle unless there is in force a
policy of insurance complying with the provisions of the Chapter. The
provisions of Section 96(1) which correspond to the provisions of Section 149(1)
of the Motor Vehicles Act, 1988, have already been noted. Sub-section (2) of
Section 96 of the Act of 1939 enabled the insurer to defend the action against
him on certain specified grounds. Clause (a) thereof was that the policy was
cancelled by mutual consent or by virtue of any provision contained therein
before the accident giving rise to any liability or that either before or not
later than 14 days after the happening of the accident the insurer has commenced
proceedings for cancellation of the certificate after compliance with the
provisions of Section 105. The requirement that the insurer must notify the
registering authority under Section 105 was, therefore, tied up with the defence
which was available to the insurer under Section 96(2)(a) that he had either
before or within 14 days of the accident, commenced proceedings for the
cancellation of the contract of insurance after notice as contemplated in
Section 105. In the present case, the admitted position is that neither was any
notice given to the registering authority under Section 105 nor were any
proceedings for cancellation after such notice adopted. That being the
position, the liability of the insurer cannot stand excluded. In the
circumstances and particularly having regard to the law laid down by the Apex
Court, I am of the view that the first appeal has to be rejected, since the only
ground which has been raised on behalf of the insurer in these proceedings has
not been found to be tenable.”
14. The facts of the above case squarely applies to the present facts of
the case. Here also, the Insurance Company has not informed the Transport
Authorities as contemplated under Section 149(1) of the Motor Vehicles Act, or
the owner of the vehicle, namely, the first respondent.
15. The learned Counsel for the respondent also relied on the decision in
New India Assurance Co. Ltd, Vs. Rula and others reported in 2000 ACJ 630 and
contended that the dishonour of cheque drawn towards premium will not absolve
the Insurance Company from its liability to third parties. This dictum was
pronounced following the dictum in Oriental Insurance Co. Ltd., Vs. Inderjit
Kaur reported in 1998 ACJ 123 (SC). The relevant observation of the above
dictum runs as follows:
“Thus, any contract of insurance under Chapter 11 of the Motor Vehicles
Act, 1988 contemplates a third party who is not a signatory or a party to the
contract of insurance but is, nevertheless, protected by such contract. As
pointed out by this court in New Asiatic Insurance Co. Ltd., Vs. Pessumal
Dhanamal Aswani, 1958-65 ACJ 559 (SC), the rights of the third party to get
indemnified can be exercised only against the insurer of the vehicle. It is
thus clear that the third party is not concerned and does not come to the
picture at all in the matter of payment of premium. Whether the premium has
been paid or not is not the concern of the third party who is concerned with the
fact that there was a policy issued in respect of the vehicle involved in the
accident and it is on the basis of this policy that the claim can be maintained
by the third party against the insurer.
It was in the background of the above statutory provisions that the
provisions of Section 64-VB, upon which reliance has been placed by learned
Counsel for the appellant, were considered by this Court in Oriental Insurance
Co. Ltd., Vs. Inderjit Kaur, 1998 ACJ 123 (SC), in which it was laid down as
under:
“We have, therefore, this position. Despite the bar created by Section
64-VB of the Insurance Act, the appellant, an authorised insurer, issued a
policy of insurance to cover the bus without receiving the premium therefor. By
reason of the provisions of Section 147(5)and 149(1) of the Motor Vehicles Act,
the appellant 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 (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.”
This decision, which is a three-Judge Bench decision, squarely covers the
present case also. The subsequent cancellation of the insurance policy in the
instant case on the ground that the cheque through which premium was paid was
dishonoured, would not affect the rights of the third party which had accrued on
the issuance of the policy on the date on which the accident took place. If on
the date of accident, there was a policy of insurance in respect of the vehicle
in question, the third party would have a claim against the insurance company
and the owner of the vehicle would have to be indemnified in respect of the
claim of that party. Subsequent cancellation of insurance policy on the ground
of non-payment of premium would not affect the rights already accrued in favour
of the third party.”
16. The dictum relied on by the learned Counsel appearing for the
appellant in United India Insurance Company Limited Vs. Chinnakannan and another
reported in 1994 (2) TNMAC 146 will not be applicable to the present facts of
the case. The facts of the above case are that on 06.05.2002, the claimants
travelled in a goods vehicle along with the goods, namely, 25 Kgs., of rice and
5 Kgs., of Dhal and adoration articles to celebrate the family deity festival
from Anumantheertham towards Uthangarai in a Tempo bearing Registration No.TN-
55-8759 belonging to the first respondent. The second respondent in that case,
is the owner of the vehicle and the appellant was the insurer of the above said
vehicle. Following the dictum in New India Assurance Company Limited, Vs. Asha
Rani and others reported in 2003 ACJ 1, the learned Tribunal held that the
Insurance Company is liable to pay the compensation and it has been held in the
said case as follows:
“The Tribunal simply relied on the judgment of the Apex Court in Asha
Rani’s Case to make the Insurance Company liable to pay compensation merely
because the claimants travelled in the tempo with some goods. The said judgment
was on the basis of the amendment made in Section 147(1)(b) of the Act according
to which, the Insurance Company should indemnify the insured even under “Act
only Policy” if any person including the owner of the goods or his authorised
representative carried in the vehicle sustained injury. It cannot be said that
carrying of the passengers in a goods vehicle is totally prohibited. But if the
predominant intention of the claimants to hire the goods vehicle is not to carry
the goods but to travel in large number with negligent quantity of goods, the
“Act only Policy” does not cover the risk and the Insurance Company is not bound
to indemnify the insured against any liability to pay compensation. The
conclusion is arrived at only on the basis that the goods vehicle was to carry
the goods but not to take the claimants in large number. The risk under “Act
only Policy” covers only if the vehicle is hired for carrying the goods and the
person/persons travelled along with his/their goods died or sustained injury.”
17. The above said dictum will not be applicable to the present facts of
the case. Because, here the point to be decided is whether the dishonour of the
cheque issued for the payment of insurance premium will absolve the liability of
the Insurance Company. As per, the dictum in 1998 (1) LW 11, the liability of
the Insurance Company will not be absolved of its obligation to third parties
under the policy, merely because, the cheque for the payment of premium of
insurance policy, had bounced.
18. Hence, I hold on the point No.1 that the appellant / National
Insurance Company in all the above said appeals and revision, is liable to pay
the compensation to the claimants, even though the cheque for the payment of
premium for insurance policy, was dishonoured, as held in 1998 (1) LW 11 (SC).
Point No.1 is answered accordingly.
Point No:2
19. In view of my findings in the earlier paragraph, I hold on the point
No.2 that the award passed in M.C.O.P.Nos.885 of 1999, 981 of 1999, 2835 of
2002, 886 of 1999, 489 of 1999 and 490 of 1999 in C.M.A.Nos.932 to 936 of 2005
and C.R.P.No.879 of 2005, on the file of the Motor Accidents Claims Tribunal –
Additional District & Sessions Juge-cum-Fast Track Court No.III, Madurai, are
not liable to be set aside for the reasons stated in the Memorandum of appeal
and the Revision Petition. Point No.2 is answered accordingly.
20. In the result, C.M.A.Nos.932 to 936 of 2005 and C.R.P.No.879 of 2005
are dismissed and consequently, the award passed in M.C.O.P.Nos.885 of 1999, 981
of 1999, 2835 of 2002, 886 of 1999, 489 of 1999 and 490 of 1999, are hereby
confirmed. Time for deposit is one month.
21. The learned Counsel for the appellant represented that he may be given
a liberty to file E.P against the owner of the vehicle for realising the award
amount after paying the same to the claimants. The request of the learned
Counsel appearing for the appellant is
A.C.ARUMUGA PERUMAL ADITYAN.J
rsb
acceded and the appellant is permitted to file E.P against the owner of the
vehicle / lorry for realisation of the award amount after paying the same to the
claimants / third parties in all the M.C.O.Ps. No costs.
rsb
To
The Motor Accidents Claims Tribunal –
Additional District & Sessions Juge-cum-
Fast Track Court No.III,
Madurai.