Just lately, The Rajasthan HC said that no prudent particular person would challenge two cheques and one demand draft for renewal of insurance coverage coverage, Insurance coverage Firm just isn’t liable to make fee of compensation.
The bench of Justice Anoop Kumar Dhand was coping with the enchantment difficult the award handed by the Motor Accidents Claims Tribunal, by which the declare petition filed by the claimants has been allowed and the respondent-Insurance coverage Firm has been directed to pay compensation of Rs. 1,88,000/- to the claimants.
On this case, on 28.05.1996, the deceased Ghisa Lal met with an accident brought on by the motive force of bus. After the aforesaid accident, the claimants submitted the declare petition earlier than the Tribunal in opposition to the motive force, proprietor and Insurance coverage Firm of the car.
Regardless of receipt of discover, the motive force in addition to the registered proprietor of the car didn’t seem earlier than the Tribunal, therefore ex-parte proceedings had been initiated in opposition to them vide order dated 07.11.1997.
The Insurance coverage Firm submitted that the car in query was not insured on the date of the accident i.e. 28.05.1996. It was pleaded within the reply that for renewal of the insurance coverage coverage, the premium was paid by the registered proprietor of the car to the Insurance coverage Firm vide cheque on 04.10.1995 and on the idea of the stated cheque, a canopy notice was issued.
Subsequently, the aforesaid cheque was dishonoured and therefore the insurance coverage coverage was cancelled by the Insurance coverage Firm on 08.12.1995 and an intimation on this regard was despatched to the registered proprietor of the car by registered put up.
It was additionally pleaded by the Insurance coverage Firm earlier than the Tribunal that for the reason that car was not insured on the date of the accident, therefore the Insurance coverage Firm just isn’t liable to pay any quantity of compensation to the claimants.
The difficulty for consideration earlier than the bench was:
Whether or not the Insurance coverage Firm is liable to cowl third-party danger, when the insured fails to pay the premium, or when the cheque issued by him in direction of the premium is returned/dishonoured by the financial institution?
The bench famous that insurance coverage is a contract whereby one undertakes to indemnify one other in opposition to loss, injury or legal responsibility arising from an unknown or contingent occasion and is relevant solely to the identical contingency or act to happen in future. The supply of Part 64 VB of the Insurance coverage Act, 1938 supplies that an Insurance coverage Firm won’t assume/settle for danger until an insurance coverage premium is obtained upfront or earlier than the date of assumption of danger.
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Excessive Court docket referred to the case of Deddappa and Ors. v. Department Supervisor, Nationwide Insurance coverage Firm Restricted, the place the Apex Court docket has held that “any legal responsibility arising below a contract of insurance coverage must be met if the contract is legitimate. If the contract of insurance coverage has been cancelled and all involved have been knowledgeable thereabout, the insurance coverage firm wouldn’t be liable to fulfill the declare.”
The bench additional referred to the case of United India Insurance coverage Firm Restricted v. Laxmamma and Ors., the place it was held “if the insurance coverage cowl notice is issued topic to fee of cheque quantity and if the cheque get dishonoured and the insurance coverage firm cancels the insurance coverage coverage below intimation to the proprietor of the car earlier than the accident, then the insurance coverage firm just isn’t liable to fulfill the award of compensation.”
Excessive Court docket famous that no prudent particular person or proprietor of any car would challenge two cheques and one demand draft for renewal of the insurance coverage coverage. Right here on this case, twice the cheques issued by the proprietor had been dishonoured and the Insurance coverage Firm didn’t obtain the premium quantity previous to the date of the accident. Thus, the findings recorded by the Tribunal on challenge No. 4 are quashed and put aside and it’s held that the Insurance coverage Firm just isn’t liable to make the fee of compensation to the claimants.
In view of the above, the bench allowed the enchantment filed by the Insurance coverage Firm.
Case Title:
Bench: Justice Anoop Kumar Dhand
Case No.: CMA-1956/2002
Counsel for the appellant: Mr. Ganesh Joshi
Counsel for the respondent: Mr. Lokesh Gaur
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