NEW INDIA ASSURANCE COMPANY LIMITED Vs. RULA

JUDGEMENT

(1.) Leave granted.

(2.) The appellant had insured Truck No. CIT-7928 on 8-11-1991 and issued an Insurance Policy in terms of the requirements of the Motor Vehicles Act, 1988. The Insurance Policy, which has been filed as Annexure P-1 to this petition, is headed as "MOTOR VEHICLES ACT, 1988 (GOODS CARRYING VEHICLE), SCHEDULE - POLICY 'A' (Act only) - Certificate No. 006424 Policy No. 3145070606875". The same day, at midnight, it met with an accident, in which three occupants, namely, Tetia @ Ramlal (Cleaner) and two labourers, Bada and Bhakla, died. Their dependants filed three Claim Cases, viz. No. 156/91, 157/91 and 158/91 before the Motor Accident Claims Tribunal, Barwani, M. P., which were contested by the appellant on the ground, inter alia, that the truck was not covered by any insurance policy, inasmuch as the truck-owner had obtained the Insurance Policy on the basis of a cheque dated 8-11-1991 towards payment of premium, but this cheque was dishonoured on 16-11-1991 with the result that the Insurance Policy itself was cancelled. The contention of the appellant was not accepted by the Tribunal, which decreed all the three claims by its award dated 25-1-1996, directing payment of Rs. 48,200/- as compensation in Case No. 156/91; Rs. 1,16,000/- in Case No. 157/91 and Rs. 67,600/- in Case No. 158/91. These awards were challenged by means of three appeals filed in the High Court which, by its judgment dated 28-9-1998, dismissed the appeals. Now, the present appeals.

(3.) We have heard learned counsel for the appellant whose principal contention has been that the Policy of Insurance represents a contract between the insurer and the insured, for consideration in the form of premium. It is contended that if premium is not paid, the contract would not be valid as there cannot be any contract without consideration. Reliance for this purpose has been placed by learned counsel for the appellant on various provisions of the Contract Act, 1872 and it is contended that since the cheque through which premium was sought to be paid to the appellant was dishonoured by the bank when it was presented for encashment, there was a failure of consideration and as such no contract of insurance came into existence as between the insurer and the insured. It is also contended that u/S. 64-VB of the Insurance Act, 1938, no risk would be assumed unless premium was received in advance. These contentions cannot be accepted.