JUDGMENT
A.K. Mishra, J.
1. These appeals have been preferred by the claimants for enhancement of compensation and for saddling the liability on the insurer. They are aggrieved by an award dated 12.7.2000, passed by the Fourth Additional Motor Accidents Claims Tribunal, Morena in Claim Case Nos. 78 and 79 of 1999.
2. Briefly stated the facts are that on 17.6.1993 when Tejsingh was going from Joura to Morena on his motor cycle (CIR 2140), which was dashed by bus (MP 07-9750) driven by Ramsingh, owned by Shiv Kumar Sharma and insured with National Insurance Co. Ltd.
3. Report of the accident was lodged. Case was registered against the driver at Crime No. 122 of 1993. Tejsingh succumbed to the injuries. His age was 23 years. He was an agriculturist and contractor. It was claimed that he was earning a sum of Rs. 1,800 per month. Widow and sister of the deceased were dependent upon him. The compensation of Rs. 43,20,000 was claimed.
4. The owner of the bus, in the written statement, contended that the deceased himself drove the motor cycle in a rash and negligent manner. The owner and the insurer of motor cycle were also the necessary party. As the vehicle was insured, liability is that of the insurer.
5. The insurer, National Insurance Co. Ltd., filed a written statement contending that the deceased himself was negligent. The vehicle was not insured. A cheque was given by Vasudeo Prasad Sharma to Sudhir Kumar Dubey, Development Officer, Datia Branch on 3.8.1992 containing the premium of Rs. 12,020. Cover note No. 72541 was issued. However, as the cheque was not honoured by the bank, intimation was sent by registered post on 24.8.1992 to Shiv Kumar Sharma regarding dishonour of the cheque and cancellation of the cover note and the policy. Once the cancellation was intimated, there was no liability on the part of the insurer. The accident had taken place subsequent to cancellation of the policy, as such no responsibility vis-a-vis the third party.
6. Learned Claims Tribunal has held that the accident was the outcome of rash and negligent driving of Ramsingh, the driver of the bus. Owing to the injuries sustained in the accident, Tejsingh died. He was not negligent. The vehicle was not insured as on the date of the accident, as such the insurer has been exonerated from making payment of compensation. Total compensation of Rs. 1,68,000 has been awarded along with interest at the rate of 12 per cent per annum from the date of filing of the claim petition till realisation.
7. In M.A. No. 696 of 2000, same vehicle was involved in the accident. The date of accident is different. Accident took place on 4.1.1993 when Raghupati, who was the cleaner in the bus, went on the roof of the bus to unload the luggage, all of a sudden, bus was started by the driver Lokendra. Raghupati fell down, sustained injuries and died on the spot. Report of the accident was lodged. Age of Raghupati was 20 years. It was claimed that he was earning Rs. 1,800 per month. The widow, minor son and mother of the deceased were dependent upon him. Compensation of Rs. 17,38,000 was claimed.
8. The driver and owner, in their written statement, contended that there was no negligence on the part of the driver. False case was registered by the police as against the driver. Vehicle was insured with National Insurance Co. Ltd., as such liability, if any, was that of the insurer.
9. Insurer has taken the plea that it was not liable as the cheque which was given was dishonoured. Intimation of cancellation of cover note was issued.
10. Dissatisfied with the quantum of compensation, these appeals have been preferred for enhancement of compensation and for saddling the liability on the insurer.
11. The cross-objection has also been preferred by the owner. There was delay in filing the cross-objection. However, filing of the cross-objection is superfluous as the claimants have taken the ground agitated in the cross-objection in the appeals itself.
12. Mr. Vijay Sunderam, learned Counsel appearing on behalf of the claimants, has submitted that in M.A. No. 697 of 2000, learned Claims Tribunal has awarded inadequate compensation. Insurer ought to have been saddled with the liability to make the payment of compensation to third party. Intimation of cancellation was not served. Hence, the liability of the insurer subsists with respect to the third party to make the payment of compensation. The liability of the respondents be held to be joint and several to make the payment of compensation. He has further submitted that the deceased was earning a sum of Rs. 42,000 per annum is the finding recorded by the learned Tribunal, dependency was worked out at Rs. 24,000 per annum. Rs. 12,000 has been further deducted which was not proper, appropriate multiplier at the age of 23 years which was the age of the deceased, is 17, whereas multiplier of 13 was applied, as such inadequate compensation has been awarded. He has prayed for enhancement of compensation.
13. Mr. Vijay Sunderam, the learned Counsel appearing on behalf of claimants has further submitted that in M.A. No. 696 of 2000, the earnings of the deceased was Rs. 1,800 per month and income has been wrongly assessed at Rs. 1,200 per month. Multiplier of 13 has been applied at the age of 20 years, which is not proper. Thus, the compensation be suitably enhanced.
14. Mr. R.P. Gupta with Mr. Jitendra Sharma, learned Counsel appearing on behalf of the owner, have submitted that the vehicle was insured. Intimation of cancellation was not served at any point of time, as such in the absence of intimation being given of cancellation of policy and cancellation of cover note/policy and dishonour of the cheque, the insured was deprived of depositing the amount. Thus, there was no effective cancellation vis-a-vis liability of the insurer to third party. Intimation was also not given to the registering authority as contemplated under Section 147(4) of the Motor Vehicles Act. Intimation was given to the Registering Authority, Datia, whereas the intimation was required to be given to Registering Authority, Gwalior.
15. Mr. B.N. Malhotra, learned Counsel appearing on behalf of the insurer in both the appeals, has supported the award. He has submitted that the cancellation was made, registered notice was sent on the correct address given by the owner. Owner had taken the plea that amount was deposited in cash which plea has not been found to be proved by learned Claims Tribunal. Cheque which was given by Vasudeo on behalf of the insured was dishonoured and intimation of the same was given to the insured, i.e., the owner. He has deliberately not accepted the notice and got endorsement made of the postman that it was an incomplete address. On efforts being made, whereabouts could not be found. Thus, the endorsement makes it clear that it was a case of an evidence of service of notice. Thus, it should be taken that cancellation was to the knowledge of the owner. Hence, learned Claims Tribunal is right in concluding that the insurer is not liable to make payment of compensation as policy stood cancelled before the date of accident in both the cases.
16. First we come to the question of quantum of compensation:
M.A. No. 697 of 2000:
Tejsingh has died. He owned agriculture land in area more than 5 hectares and was also a contractor. Finding has been given that his income was Rs. 42,000 per annum from both these sources. As the income from agriculture remains Rs. 12,000, that amount was further reduced and after making deductions towards self expenditure, it appears that the deceased was having half share in the aforesaid agriculture land. As the deceased was having half share in agriculture land, it would be proper to assess his income at Rs. 30,000 per annum from both the sources, 1/3rd deduction has to be made towards self expenditure of the deceased which amount he would have spent on himself had he been alive. Thus, loss of annual dependency comes to Rs. 20,000. The age of the deceased was 23 years, multiplier of 13 has been applied, whereas multiplier of 17 is applicable as widow is one of the claimants, we apply multiplier of 17. Thus, the compensation on account of loss of dependency comes to Rs. 20,000 x 17 = Rs. 3,40,000. In addition, the claimants are entitled for a sum of Rs. 2,000 on account of funeral expenses, Rs. 2,500 for loss to the estate and Rs. 5,000 towards loss of expectancy of life. A further sum of Rs. 5,000 is awarded to the widow on account of loss of consortium. Thus, total compensation would come to Rs. 3,40,000 + Rs. 2,000 + Rs. 2,500 + Rs. 5,000 + Rs. 5,000 = Rs. 3,54,500 (rupees three lakh fifty-four thousand five hundred). The compensation enhanced by us to carry interest at the rate of 6 per cent per annum from the date of filing of the claim petition till realisation.
M.A. No. 696 of 2000:
Deceased Raghupati was a cleaner on the bus. Kamladevi, CW 1, has stated that the deceased used to receive Rs. 1,500 per month by way of salary and Rs. 10 per day allowance. The assessment of the income made by the learned Claims Tribunal at Rs. 1,200 per month is on the lower side. It would be proper to assess the income of the deceased at Rs. 1,800 per month inclusive of allowance. Making 1/3rd deduction which amount deceased would have spent on himself had he been alive, the loss of monthly dependency comes to Rs. 1,200, annual Rs. 14,400, multiplier at the age of 20 years which is applicable is 16, whereas multiplier of 13 has been applied which is on lower side; we apply the multiplier of 16 as widow, child and mother of deceased are the claimants. Thus, the compensation on account of loss of dependency comes to Rs. 14,400 x 16 = Rs. 2,30,400. In addition, the claimants are entitled for a sum of Rs. 2,000 on account of funeral expenses, Rs. 2,500 for loss to estate and Rs. 5,000 for loss of expectancy of life. A further sum of Rs. 5,000 is awarded to the widow on account of loss of consortium. Thus, total compensation comes to Rs. 2,30,400 + Rs. 2,000 + Rs. 2,500 + Rs. 5,000 + Rs. 5,000 = Rs. 2,44,500 (rupees two lakh forty-four thousand five hundred). The compensation enhanced by us shall carry interest at the rate of 6 per cent per annum from the date of filing of the claim petition till realisation.
17. Coming to question of liability of the insurer in both the appeals. Though the case was set up by the insured that amount was paid in cash to the insurer, thereafter the cover note was issued and in the cover note it was not mentioned that the payment was made by cheque which is usual where the payment is made by cheque. We find that case set up of payment by cash is rightly rejected. Cover note was issued on 3.8.1992 and it appears that the cheque given by Vasudeo Prasad Sharma was dishonoured, after receipt of the intimation of dishonour of the cheque, cover note was cancelled on 24.8.1992 by the insurer and intimation was sent to the insured Shiv Kumar Sharma by registered post. However, the said notice was not served on Shiv Kumar Sharma as on the registered envelope or notice, Exh. D8, it was mentioned by the postman that an incomplete address was given as Shiv Kumar Sharma, Amkho, Gwalior. It was not mentioned by the postman that the intimation was given to the insured to collect it from the post office or there was refusal to accept the notice. It was necessary to inform the dishonour of the cheque to the insured so that insured was able to take steps to deposit the amount with the insurer to cover the liability in case of dishonour of the cheque. It cannot be said to be a service of notice intimating the cancellation of the cover note. Though cancellation was made but it was not communicated. In the similar circumstances in M. Nageswara Rao v. New India Assurance Co. Ltd. , Division Bench of Andhra Pradesh High Court had held that it was necessary to prove that the notices were served on the insured so as to give him an opportunity to remit the premium amount for cheque that is dishonoured. The question has been considered thus:
(20) We are also of the firm view that even for an administrative action by a public sector undertaking the principle audi alterant partem has to be applied. In this case, though the insurance company produced Exh. B3 and Exh. B4, said to have been issued by them, it failed to prove that they served these notices on the insured. Hence, we express our inability to follow the judgment in National Insurance Co. Ltd. v. Seema Malhotra , for the reasons given supra. We are inclined to follow the other two judgments, namely, Oriental Insurance Co. Ltd. v. Inderjit Kaur and New India Assurance Co. Ltd. v. Rula , wherein their Lordships specifically dealt with the provisions of Chapter XI of the Motor Vehicles Act dealing with the insurance policies of the vehicles to be put to use in public places and the consequences that will emanate from such a policy. Even assuming for a moment that the principle laid down in Seema Malhotra’s case (supra), is to be accepted in the light of the observations of their Lordships in para 20 of the judgment, those observations are squarely applicable to the facts of the case as the insured was not given opportunity to remit the premium amount for cheque that is dishonoured.
18. In Oriental Insurance Co. Ltd. v. Inderjit Kaur , the Apex Court has laid down that once cover note/policy is issued, the insurer became liable to indemnify the third party liability. In the instant case, as cancellation was not informed to the insured, in our opinion vis-a-vis to third party insurer continues to be liable.
19. In New India Assurance Co. Ltd. v. Rula , the Apex Court has relied upon Inderjit Kaur’s case, and held that if on the date of accident there was a policy, cancellation subsequently due to dishonour of the cheque would not come to rescue of the insurer, it continues to be liable to make the payment to third party. In the instant case, as there was no effective communication of cancellation of policy, which was necessary, we find that it is open to the third party to recover the compensation even from the insurer, apart from driver and owner of the vehicle.
20. Resultantly, the appeals are partly allowed to the aforesaid extent. In M.A. No. 697 of 2000, compensation of Rs. 3,54,500 along with interest on enhanced amount at the rate of 6 per cent per annum from the date of filing of the claim petition till realisation and M.A. No. 696 of 2000 compensation of Rs. 2,44,500 along with interest on the enhanced amount at the rate of 6 per cent per annum from the date of filing of the claim petition till realisation, is awarded. Liability of the respondents is held to be joint and several to make the payment of compensation. No costs.