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National Insurance Co. Ltd., Now Represented by its Regional Manager & Another v/s Srinivasa & Another

    Miscellaneous First Appeal No. 6870 of 2005 C/W M.F.A. Cross Objection No. 80 of 2006

    Decided On, 25 May 2011

    At, High Court of Karnataka

    By, THE HONOURABLE MR. JUSTICE SUBHASH D. ADI

    For the Petitioners: A.N. Krishnaswamy, Advocate. For the Respondents: R1 - Smt. P.V. Kalpana, Advocate, Notice to R2 held sufficient.



Judgment Text

(Prayer: M.F.A. No. 6870 of 2005 is filed under Section 173(1) of MV Act against judgment and award dated 02.05.2005 passed in MVC No. 302 of 2002 on the file of the Prl. Civil Judge (Sr.Dn.) & C.J.M. & MACT, Kolar, awarding compensation of Rs. 2,05,000/- with interest at 6% P.A. from the date of petition to the dates of payment in full and directing the appellant herein to deposit the same.)

(Prayer: M.F.A.CR.OB. No. 80 of 2006 is filed under Order 41 R22 of CPC, against the judgment and award dated 02.05.2005 passed in MVC No. 302 of 2002 on the file of the Prl. Civil Judge (Sr.Dn.) & MACT, Kolar, partly allowing the claim petition for compensation and seeking enhancement of compensation.)

1. M.F.A. No. 6870 of 2005 is directed against the judgment and award in M.V.C. No. 302 of 2002 dated 2.5.2005 on the file of M.A.C.T., Kolar.

2. Appeal is by the insurer, questioning the liability whereas, Cross Objection is by the claimant seeking enhancement of compensation.

3. Claimant has also produced an additional document by way of additional evidence.

4. Claimant sought for compensation for that injury suffered in a road accident that occurred on 7.11.1996. It is alleged that, while claimant was proceeding on TVS motor bike bearing No. KA-07/E-6359, a lorry bearing No.AP-03/T-3231 came in a rash and negligent manner and dashed against the said motor cycle, as a result of which, claimant fell down and sustained grievous injuries and was hospitalized. In this regard, claimant sought for compensation towards injuries and disability suffered on account of the injuries.

5. Claim petition was initially contested by the insurer by filing objections, denying the liability and also the quantum of compensation. Subsequently, the objection statement was amended and specific plea was raised that the policy issued in favour of the owner of the vehicle has been cancelled by issuing notice dated 4.7.1996, which was served on the owner on 10.7.1996 and similar notice was also issued to the RTO. It is the case of the insurer that the cheque issued by the owner was dishonoured on 19.6.1996, as such, the policy was cancelled by issuing notice and in view of the cancellation of the policy, there is no contract between the owner and the insurer to indemnify the liability of the owner.

6. Before the Tribunal, claimant got himself examined as PW-1 and examined Doctor as PW-2 and produced Exs.P1 to P17. On behalf of the respondent, owner was examined as RW-1, RW-2 is the driver and RW-3 is the officer of the Insurance Company. In the evidence of RW-3, Exs. R1 to R7 were marked.

7. The Tribunal on appreciation of the evidence though determined the compensation at Rs. 2,05,000/- with interest, however, it held that, the cheque issued towards the premium of the insurance policy was dishonoured and the owner had not protected his interest, having so held, it is also held that the claimant being a third party to the contract between the insured and the insurer, he is entitled for compensation and the insurer is liable to pay the said amount and recover from the owner. It is against the direction of pay and recover, the insurer is in appeal. The cross-objection is by the claimant for enhancement of compensation.

8. Sri. A.N. Krishnaswamy, learned Counsel appearing for the appellant – insurer submitted that, apart from raising specific plea of cancellation of the insurance policy in favour of the owner of the vehicle, in the evidence of RW-3, the insurer has produced Ex. R2 – an acknowledgment for having served the notice on the RTO as well as the owner of the vehicle. Ex. R3 is the cancellation letter sent by RPAD, Ex. R4 – copy of the insurance policy, Ex. R5 is the copy of cancellation. Ex.R6 is the statement of the bank. He also relied on these documents and submitted that, even before the accident, in view of the dishonor of the cheque issued by the owner of the vehicle towards premium of the policy, the Insurance Company issued a notice, cancelling the policy. Said notice was served on 10.7.1996. Similar notice was also sent to RTO for intimation and it was also served on the RTO. In view of the cancellation of the policy there being no privity of contract between the insured and the insurer, the question of insurer praying the compensation to the claimant does not arise. It arises only if there is existing contract between the insured and the insurer and submitted that, the Tribunal erred in holding that, the insurer can pay and recover from the owner of the vehicle.

9. On the other hand, Smt. Kalpana, learned Counsel appearing for the claimant submitted that, Exs. R2, R3, and R5 are only the Xerox copies, no original documents are produced by the insurer and as such, they are not admissible in evidence. Hence there is no proof of cancellation of the policy, it is also submitted that, even if the policy is cancelled, the insurer is liable to pay the compensation to the third party and recover the same from the owner and the tribunal on proper appreciation of the evidence has rightly issued the direction. She also submitted that, the compensation awarded by the Tribunal is on the lower side and requires enhancement.

10. Facts, which are not in dispute, are:

That the appellant – Insurance Company amended the objection statement and raised a specific plea interalia stating that, accident occurred on 7.11.1996. The policy was issued for a period from 19.6.1996 to 18.6.1997. However, the cheque issued by the owner was dishonoured on 19.6.1996. As against the same, by notice dated 4.7.1996, the policy was cancelled by the Insurance Company and the notice sent to the owner as well as to the RTO have been duly served with acknowledgment. These documents clearly prove that there was no policy existing as on the date of accident and as such, if there is no contract and no policy between the owner and the Insurance Company, the liability of Insurance Company does not arise nor the Insurance Company be made liable to pay the compensation and recover the same from the owner. Such a direction could not have been issued.

11. Learned Counsel for the claimant had relied on the judgment of this Court reported in ILR 2006 KAR 2017 in the matter of M/S. UNITED INDIA INSURANCE CO. LTD. –vs- DEVAIAH AND OTHERS wherein this court has observed that, in case of cancellation, it must be cancelled with a notice sent by registered post acknowledgment due, in this case, the notice was sent by registered post and it has been served on the owner as well as RTO. The documents are also marked in the evidence.

12. As far as the contention of the learned Counsel for the claimant that the Xerox copies are produced, it is not in dispute that, those documents have been marked in the evidence of RW-3. It is also not in dispute that those documents have not been challenged in the cross-examination nor disputed. Even the Tribunal has also held that the insurer has cancelled the policy, but only on the ground that the claimant is the third party, insurer is directed to pay and recover. In my opinion, once there is a cancellation of the policy, there remains no contract, the insurer was not necessary party before the Tribunal, as there is no contract between the owner and the insurer, the Tribunal having held that the cheque issued by the owner towards premium of the policy having dishonoured, the owner has not protected any interest and also having held that there is a cancellation, there was no justification for the Tribunal to issue a direction to the insurer to pay and recover. Just because the insurer is made party to the proceedings, no direction could automatically be issued for pay and recover. The fact that the policy has been cancelled much prior to the accident, in my opinion, the direction could not have been issued against the insurer to pay the compensation and recover the same from the owner. To this extent, appeal of the insurer is required to be allowed.

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/> 13. As far as cross objection is concerned, the claimant has sought for enhancement of compensation. The Tribunal while considering the quantum of compensation has relied on the evidence of the Doctor – PW-2 and has also taken into consideration the evidence led by the claimant and has reasonably awarded the compensation. In my opinion, the compensation awarded by the Tribunal is just and reasonable and does not call for interference. Accordingly, M.F.A. No. 6870 of 2005 is allowed in part. M.F.A.Cr.Ob. No. 80 of 2006 fails and same is dismissed. The amount in deposit be refunded to the appellant – Insurance Company. Misc. Cvl. 9021 of 2010 filed for production of additional documents is also considered and I find no good ground to take the additional evidence. Further, the cross-objection itself is dismissed, Misc.Cvl. 9021 of 2010 is also dismissed.
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