1. Heard Sri R.C. Sharma, learned counsel for the appellant and perused the record.
2. This appeal, at the behest of the Insurance Company namely the National Insurance Company Limited, has been preferred against the judgment and award dated 22.5.2004 passed by Additional District Judge (N.D.P.S.)./ Motor Accident Claims Tribunal, Faizabad (hereinafter referred to as 'Tribunal') whereby the Tribunal allowed the claim petition of the claimant in part and awarded a sum of Rs.20,000/- as compensation with interest at the rate of 9%.
3. The factual data is not necessary as according to the Insurance Company there is breach of policy condition under Section 147 of the Motor Vehicles Act, 1988 (hereinafter referred to as 'Act, 1988) which reads as follows:
"147 Requirements of policies and limits of liability. --
(1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which--
(a) is issued by a person who is an authorised insurer; and
(b) insures the person or classes of persons specified in the policy to the extent specified in sub-section (2)--
(i) against any liability which may be incurred by him in respect of the death of or bodily injury to any person, including owner of the goods or his authorised representative carried in the vehicle] or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place;
(ii) against the death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of the vehicle in a public place:
Provided that a policy shall not be required --
(i) to cover liability in respect of the death, arising out of and in the course of his employment, of the employee of a person insured by the policy or in respect of bodily injury sustained by such an employee arising out of and in the course of his employment other than a liability arising under the Workmen's Compensation Act, 1923 (8 of 1923) in respect of the death of, or bodily injury to, any such employee --
(a) engaged in driving the vehicle, or
(b) if it is a public service vehicle engaged as conductor of the vehicle or in examining tickets on the vehicle, or
(c) if it is a goods carriage, being carried in the vehicle, or
(ii) to cover any contractual liability.
Explanation. --For the removal of doubts, it is hereby declared that the death of or bodily injury to any person or damage to any property of a third party shall be deemed to have been caused by or to have arisen out of, the use of a vehicle in a public place notwithstanding that the person who is dead or injured or the property which is damaged was not in a public place at the time of the accident, if the act or omission which led to the accident occurred in a public place.
(2) Subject to the proviso to sub-section (1), a policy of insurance referred to in sub-section (1), shall cover any liability incurred in respect of any accident, up to the following limits, namely:--
(a) save as provided in clause (b), the amount of liability incurred;
(b) in respect of damage to any property of a third party, a limit of rupees six thousand:
Provided that any policy of insurance issued with any limited liability and in force, immediately before the commencement of this Act, shall continue to be effective for a period of four months after such commencement or till the date of expiry of such policy whichever is earlier.
(3) A policy shall be of no effect for the purposes of this Chapter unless and until there is issued by the insurer in favour of the person by whom the policy is effected a certificate of insurance in the prescribed form and containing the prescribed particulars of any condition subject to which the policy is issued and of any other prescribed matters; and different forms, particulars and matters may be prescribed in different cases.
(4) Where a cover note issued by the insurer under the provisions of this Chapter or the rules made thereunder is not followed by a policy of insurance within the prescribed time, the insurer shall, within seven days of the expiry of the period of the validity of the cover note, notify the fact to the registering authority in whose records the vehicle to which the cover note relates has been registered or to such other authority as the State Government may prescribe.
(5) Notwithstanding anything contained in any law for the time being in force, an insurer issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons"
4. It is true and I am in agreement with the submission made by Sri R.C. Sharma that it was the duty of the owner/insured to either pay the premium in cash, once the cheque was dishonoured or to issue a fresh cheque on receiving intimation of return of the cheque and on his failure to do so, there was no insurance of the Bus in question and, therefore, the appellant cannot be held liable to pay compensation or to indemnify the owner once the owner was intimated by Insurance Company about dishonour of cheque.
5. I also agree with the submission that even if it is held that the insurer was liable to pay to the third parities by virtue of Section 149 (1) of the Act, 1988, it was incumbent on the Tribunal to provide right of recovery under Section 149 (4) of the Act, 1998 which has not been done.
6. Once it has been held by the Tribunal that the policy was not enforceable as the contract has been receded by the Insurance Company immediately on the date they came to know that the cheque issued by the owner was dishonoured. It is not the case of the owner before the Tribunal that he had tendered the amount in lieu of the contract by way of cash transaction or that he was not aware about the return of the cheque. Once it has been proved by the Insurance Company by leading evidence and once, the Tribunal in paragraph 16 held that prior to the date of accident the Insurance Company had intimated about the return of the cheque, relying on the decisions in New India Assurance Company Limited Vs. Rula, 2002 TAC 1 SC and Oriental Insurance Company Limited Vs. Upendra Babu Dubey, 2002 ALR 770 and mulcting the liability on the Insurance Company, is perverse.
7. In Rula (Supra) it has not been held that even if the Insurance Company intimates to the insured about the return of the cheque and the policy not being in vogue, the insured can be made liable. The finding of fact that the Insurance Company had not given any intimation is running contrary to the finding of fact in paragraph 16.
8. In that view of the matter, this appeal is allowed.
9. What would be the resultant effect of allowing this appeal?
10. The Insurance Company has already deposited the amount of Rs.10,000/- and 50% of the awarded amount has been permitted to be withdrawn. The claimant will be at liberty to realise other amount from the owner and the amount deposited here by the Insurance Company will be recoverable by way of execution proceedings against the owner. The decree shall stand modified to the aforesaid extent.
Order Date :- 29.8.2018 DKS