Allahabad High Court Judgement

Allahabad High Court Judgement

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JUDGEMENT HEADLINE : Cheque Dishonoured, Information Sent Though Not Served, Insurance Company Not Liable.
JUDGEMENT TITLE : National Insurance Co. Ltd. Vs. Smt. Raj Kumari Singh & Others On 27/04/2012 By Allahabad High Court
CORAM : Hon'ble Yatindra Singh,J. And Hon'ble Mohd. Tahir,J.



Court No. - 9

Case :- FIRST APPEAL FROM ORDER No. - 641 Of 1998

Petitioner :- National Insurance Co. Ltd.
Respondent :- Smt. Raj Kumari Singh & Others
Petitioner Counsel :- K.S. Amist
Respondent Counsel :- Pramod Kumar Gupta,BB Paul And Sri AP Paul

Hon'ble Yatindra Singh,J.
Hon'ble Mohd. Tahir,J.

1. The Main Question Involved In This Appeal, Is Whether In The Circumstances Of The Case―when Cheque Was Dishonored And Information Was Sent Though Not Served―the Insurance Company Is Liable To Indemnify The Owner.

2. Late Sri Lalit Kumar Singh (the Deceased) Alongwith Sri Ishwar Singh And Shabbir Were Going On A Motor Cycle On 20.11.1990 From Meerut To Bagpat. At About 13.30 Hours, Truck No. RNB-6447 (the Truck) Hit The Motor Cycle From Behind. In This Accident The Deceased And Sri Ishwar Singh Received Fatal Injuries; Sri Shabbir Received Some Injuries.

3. The Widow And Children Of The Deceased (the Claimants) Filed A Claim Petition No.14/1991.

4. The Owners Of The Truck Promptly Filed Their Written Statement. They Denied The Accident But In The Alternative Pleaded That There Was No Negligence On Part Of Their Driver.

5. The National Insurance Company Ltd. (the Company) Filed Their Written Statement Alleging That:
The Truck Was Insured From 24.11.90 To 23.11.91;
It Was Not Insured On 20.11.90 Namely, The Date Of The Accident;
The Company Is Not Liable To Pay Compensation; And
In Any Case The Driver Of The Truck Was Not Negligent.

6. The Claimants Examined The Following Witnesses:
(i) Smt. Raj Kumari (PW-1) The Widow Of The Deceased;
(ii) Sri Manoj Kumar Singh (PW-2); An Eye Witness;
(iii) Sri A.K.Shukla (PW-3); The Senior Clerk, Fisheries Department, Meerut Division Meerut.

7. Amongst Others, The Claimants Filed The Following Documents:
Certified Copy Of FIR Dt.20.11.90 P.S. Baghpat Case Cr. No326/90 (paper No.22Ga);
Certified Copy Of Spot Inspection By IO In Case Cr. No.326/90, PS Baghpat (paper No.23Ga);
Certified Copy Of Charge Sheet U/s 379/337/338/427/304-A IPC, P.S. Baghpat In Case Cr. No.326/90 (paper No.24Ga);
Certified Copy Of Inspection (technical) Of Vehicle No. RNB 6447 Dt. 23.11.90 (paper No.25Ga);
Certified Copy Of Post Mortem Report Of Deceased Lalit Kishore Singh (paper No.26Ga);
Attested True Copy Of HS Examination Certificate Of Lalit Kishore Singh (paper No.27Ga);
Attested True Copy Of Intermediate Exam. Certificate Of Lalit Kishore Singh (paper No.28Ga);
Attested True Copy Of Bsc. Eams. Degree Of Lalit Kishore Singh 1977 (paper No.29Ga)
Attested True Copy Of Provi. Degree Of Msc Of Lalit Kishore Singh 1979 (paper No.30Ga);
Pay Certificate Of Lalit Kishore Singh Dt. 27.11.91 (paper No.31Ga).

8. The Owners Examined Sri Satya Prakash (DW-1) And Filed Cover Note No.685043 Dated 22.10.1990.

9. The Company Did Not Examine Any Witness But Amongst Others Filed The Following Documents;
True Copy Of The Original Policy No.354002/6302299/90 27.12.90 (paper No. 35Ga);
Certified Photo Copy Of Cover Note No.0622604 Dated 26.11.90(paper No.63Ga);
Certified Photo Copy Of Regd. AD. Letter Dated 24.11.90 (paper No.64Ga );
True Photo Copy Of Copy Of Envelope (paper No. 65Ga);
Certified Photocopy Of Cheque (paper No.66Ga);
Certified Photocopy Of Return Memo (paper No. 67 Ga);
Certified Photocopy Of Cheque Collection Payment Return Address (paper No. 68Ga);
Certified Photocopy Of Dishonored Cheque Register No.90 (paper No. 69Ga);
Certified Photocopy Of Cover Note No.0685043 Dated 22.10.1990 (paper No. 70Ga);
Certified Photocopy Of Proposal Form (paper No. 71Ga) .

10. Some Of The Aforesaid Documents Are Photo Copies But Are Certified To Be True Copies By The Branch Manager Of The Company. They Were Neither Denied Nor Challenged Before The Tribunal Or Before Us; They Were Accepted. It Is On This Footing That The Case Was Argued Before Tribunal As Well As Before Us.

11. The Claim Petition Was Allowed By IXth Additional District Judge/Motor Accident Claims Tribunal, Meerut (the Tribunal) On 18.4.1998.

12. The Tribunal Awarded A Sum Of `5,84,000/- With 12% Interest From The Date Of Filing Of The Claim Petition. It Was Further Provided That In Case Payment Was Not Made Within 60 Days Then The Claimants Would Be Entitled To 15% Interest. Hence, The Present Appeal By The Company. The Owners Have Also Filed An Application Challenging The Finding Recorded By The Tribunal.

13. We Have Heard Sri KS Amist For The Company; Sri Pramod Kumar Gupta, Counsel For The Claimants; Sri AP Paul, Counsel For The Owners Of The Truck. The Following Points Arise For Determination In The Case:
(i) Whether The Accident Occurred Because Of Negligence Of The Driver Of The Truck;
(ii) Whether The Compensation Awarded Is Proper;
(iii) Whether The Company Is Liable To Indemnify The Owners;
(iv) Whether The Company Should Be Asked To Satisfy The Award And Recover The Amount From The Owners.
(v) What Should Be Rate Of Interest And From What Date It Should Be Awarded ?

14. The Claimants Have Examined Manoj Kumar Singh (PW-2) To Prove The Negligence Of The Driver Of The Truck. He Stated That:
He Was Present On The Spot At The Time Of The Accident And Had Witnessed The Accident;
The Accident Took Place Due To Negligence Of The Driver Of The Truck.

15. The Owners Of The Truck Have Examined Sri Satya Prakash (DW-2) Who Was Not Present On The Spot.

16. There Is Nothing In The Cross Examination Of Sri Mnoj Kumar Singh (PW-2) To Disbelieve His Statement That He Was Present On The Spot At The Time Of Accident And The Accident Took Place Due To Negligence Of The Driver Of The Truck.

17. The Counsel For Company And The Owners Of The Truck Submits That;
Three Persons Were Riding On The Motor Cycle;
The Tribunal Has Committed Illegality In Holding That The Total Negligence Was Of The Truck Driver;
The Negligence Of The The Motor Cycle Driver Was At Least To The Extent Of 25%.

18. Sri Manoj Kumar Singh (PW-2) Has Stated That;
At The Time Of The Accident, The Motor Cycle Was On The Left Side Of The Road And On The 'Kachcha Patri';
The Truck Was Being Driven Very Fast And No Horn Was Blown.
There Is Nothing To Contradict The Statement Of PW-2.

19. In View Of Above, It Cannot Be Said That There Was Any Negligence On The Part Of The Motor Cycle Driver Merely For The Reason That Three Persons Were Riding On The Motor Cycle. This Finding Of The Tribunal Is Upheld.

20. In Order To Prove The Income Of The Deceased, His Widow (PW-1) And Sri AK Shukla (PW-3) Have Been Examined. The Claimants Have Also Filed Pay Slip Of The Deceased.

21. The Deceased Was Working As A Senior Fisheries Inspector In The Fisheries Department. Sri AK Shukla (PW-3) Is A Senior Clerk In The Fisheries Department. He Has Given His Statement Regarding The Salary Of The Deceased.

22. The Tribunal On The Basis Of Pay Slip And Testimony Of Sri AK Shukla Has Held The Salary Of The Deceased To Be `2,521 Per Month. There Is No Illegality In The Same

23. The Tribunal In Consideration Of Future Promotion Prospects Has Doubled The Salary Of The Deceased To `5,042 And Has Calculated The Compensation. This Is Not Correct.

24. The Question As To How Compensation May Be Calculated Considering The Future Promotion Prospects Has Been Decided By The Supreme Court In Smt. Sarla Verma Vs. Delhi Transport Corporation, JT 2009 (6) SC (495) (The Sarla-Verma Case). It Has Held That In Case The Deceased Had A Permanent Job And Was Less Then 40 Years Then Compensation May Be Calculated After Adding 50% To The Actual Salary.

25. The Deceased Was A Permanent Employee; He Was Less Then 40 Years Of Age And As Such Considering Future Promotion, Compensation Should Be Calculated Taking His Salary To Be `3,781.5 Rather Than `5,042.

26. The Deceased Was Aged About 35 Years. In View Of The Sarla-Verma Case, The Multiplier For Calculating Compensation Should Be 16. One Third From The Salary Should Be Deducted For Personal Expenses Of The Deceased. Thus, The Claimants Are Entitled To `3781.5 X 2 X 12 X 16/3 Or `4,84,032. Apart From This, The The Claimants Are Entitled To `2500 For Loss Of The Estate And `2,000/- For Funeral Expenses. The Widow Is Further Entitled To `5,000/ For Loss Of Consortium; Thus, The Claimants Are Entitled `4,93,532 As Compensation.

27. The Owners Had Given A Cheque No.64502 Dated 20.10.1990 For `6334 To The Agent Of The Company For The Insurance Of The Truck. A Cover Note No.0685043 Dated 22.10.1990 Was Issued By The Company. A Receipt Was Also Issued On 24.11.1990.

28. The Cheque Was Dishonored By The Bank On 29.10.1990 As There Was Insufficient Amount In The Account. In This Regard, A Registered Letter Dated 6.11.1990 Was Sent To The Owners By The Company. This Is Clear From The Dishonored Cheque Registered (paper No.69 Ga) And Envelope (paper No.65 Ga. However, The Letter Was Not Served But Came Back Unserved With The Note That There Was No One Of That Name In The Village.

29. The Accident Took Place On 20.11.1990 Thereafter The Owners Deposited The Cash With The Company On 24.11.1990 And A New Policy No. 0622604 Wef 24.11.1990 To 23.11.1990 Was Issued

30. Sri Satya Prakash (DW-1) Was Examined On Behalf Of The Owners. He Admitted That:
On The Date When The Cheque Was Given, The Bank Account Did Not Have `6334 But Had Only `1700;
The Remaining Amount Was Deposited In The Bank On 3.11.1990;
The Cheque Was Dishonored By The Bank; And
A New Cover Note Was Issued On 24.11.1990 (after The Accident) And At That Time Money For Premium Was Given In Cash.

31. An Earlier Cover Note Was Issued On 22.10.1990 In Lieu Of Payment Of Premium By Cheque. However, The Cheque Was Dishonored: It Became Void. The Information Of Dishonor Of The Cheque Was Also Sent By A Registered Letter. Thereafter, A Fresh Cover Note Was Issued In Lieu Of Cash Payment On 24.11.1990 For The Period 24.11.1990 To 23.11.1991. Thus, There Was No Insurance On 20.11.1990, The Date Of The Accident.

32. The Counsel For The Owners, Relying Upon A Division Bench Of Madras High Court In CMA 1930 Of 2006, Vaduguchetty Vs. S.P. Munusamy Decided On 16.3.2011 (the Vaduguchetty Case) And Submits That:
The Owners Never Received The Letter Of The Company For Cancelling Their Policy;
Unless Information Of Cancellation Is Received By Them, The Insurance Cannot Be Treated To Be Cancelled;
The Company Is Liable To Indemnify Them.

33. The Vaduguchetty Case Is Not Applicable And Is Distinguishable.

34. In The Vaduguchetty Case, The Vehicle Was Insured From 21.10.1990 To 20.10.1991. It Was On The Basis Of A Cheque That Was Dishonored. The Vehicle Met With An Accident On 24.11.1990 At 9:00 Hours And The Information Of Cancellation Of Policy Was Sent On The Same Date Namely 24.11.1990 But During Office Hours I.e. After The Accident. It Is For This Reason The Court Held That The Insurance Was Not Cancelled At The Time Of The Accident And The Insurance Company Was Held Liable To Indemnify. This Is Not The Case Here.

35. In This Case, The Cheque Was Dishonored On 29.10.1990 And The Letter Cancelling The Policy Was Sent On 6.11.1990. It Was Returned With The Endorsement Dated 14.11.1990 That There Was No One Of The Name In The Village. This Was Much Before The Accident.

36. The Fact That The Letter Dated 6.11.1990 Was Not Served Upon The Owners Is Not Material. It Is Not Disputed That The Letter Was Sent By Registered Post At The Address Provided By The Owners. The Company Had Done, What It Could Do. It Was Not Required To Do The Impossible. In Case, There Was Incomplete Address Then For That Reason, The Company Cannot Be Faulted.

37. The Counsel For The Owners Submits That:
The Letter Of Cancellation Shows That The Company Was Not Under The Risk Till Premium Was Paid;
As Soon As The Amount Was Paid, The Period Ought To Have Referred Back To 22.10.1990 To 21.10.1991:
The Insurance Was Merely Suspended And Not Cancelled.

38. Be As It May, The Amount Was Deposited On 24.11.1990 And A Fresh Cover Note Then Policy Was Insured For The Period 24.11.1990 To 23.11.1991. This Did Not Cover The Day Of The Accident, Namely 20.11.1990. The Company Is Not Liable To Indemnify The Owners.

39. This Appeal Was Admitted And An Interim Order Was Granted On 16.7.1998. By The Interim Order, The Operation Of The Award Was Stayed Provided The Company Deposited A Sum Of `3,00,000/- With The Tribunal Within A Period Of Two Months After Adjusting `25,000/- Deposited Before This Court. We Are Informed That This Amount Has Been Lifted By The Claimants.

40. The Claimants Are Widow And Three Children. Out Of The Three, Two Are Daughters. We Cannot Permit The Company To Recover This Amount From Them. It Is Appropriate That The Company Should Recover It From The Owners On Whose Behalf The Payment Is Deemed To Have Been Made.

41. Considering That―
The Claimants Are The Widow, Three Children And Out These Three, Two Are Daughters;
The Company Is Recovering From The Owners A Part Of Amount That Was Deposited By It―
It Would Proper To Ask The Company To Pay The Entire Amount And Recover It From The Owners Of The Truck.

42. The Tribunal Has Awarded Interest At The Rate Of 12% Per Annum From The Date Of Filing The Claim Petition. In Our Opinion, This Is On The Higher Side.

43. Considering That―
The Normal Rate Of Interest Under CPC Is 6% Per Annum;
The Widow Has Also Been Given Compassionate Appointment By The Department;
The Owners Had Filed Their Written Statement Promptly On 2.7.1990 And Nothing Has Been Pointed Out To Show That Any Delay Was Caused By Them And Ultimately Award Has To Be Satisfied By Them―
It Would Be Appropriate To Award The Interest At The Rate Of 6% Per Annum From The Date Of Order Of The Tribunal.

44. Our Conclusions Are As Follows;
(a) The Accident Occurred Due To Negligence Of The Driver Of The Truck;
(b) The Claimants Are Entitled To `493532/- As Compensation Alongwith 6% Per Annum From The Date Of The Award By The Tribunal;
(c) The National Insurance Company Ltd. Is Not Liable To Indemnify The Owners. However, It May Pay The Amount To The Claimants And Recover The Same From The Owners.

45. In View Of Our Conclusions, The Appeal Is Partly Allowed.

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