NATIONAL INSURANCE COMPANY LIMITED Vs. SEEMA DEVI

JUDGEMENT

(1.) Though in this case notice had been issued to the respondents and they have not been served but since the matter is fully covered by the judgments of the Supreme Court, I do not deem it necessary to issue any further notice to the respondents. This appeal is directed against the award of the Motor Accident Claims Tribunal whereby the tribunal has awarded compensation for the death of Om Prakash who had died in a road accident caused by the rash and negligent driving of the offending vehicle by its driver. Appellant has challenged the award on two grounds, namely, (a) The cheque given by the insurer for insuring the vehicle had bounced and the insurance company had cancelled the policy of insurance and it could, therefore, not be held liable to pay compensation to the claimants; and (b) The driver of the offending vehicle at the relevant time did not have a valid driving licence in his favour and assuming the insurance company had issued the certificate of insurance, there being a clear breach of the conditions of insurance by the insured, the insurance company can avoid its liability to pay. In my view, none the points raised by learned counsel for the appellant can be agitated in as much as they are fully covered by the judgments of the Supreme Court. In Oriental Insurance Co. Ltd. Vs. Inderjit Kaur and others (1998) 1 SCC 371, the Supreme Court was concerned with a similar matter. In that case, the policy of insurance was issued after the premium for the policy was paid by cheque. The cheque on presentation to the Bank was dishonoured. On the cheque being dishonoured, the insurance company wrote to the insurer that as the premium on the policy had not been received, the company would not be at risk. In the meantime, the vehicle met with an accident and on a claim petition being filed, the tribunal directed the insurance company to pay compensation to the claimants. The matter was ultimately taken to the Supreme Court and on these facts the Supreme Court held that even if the insurance company was entitled to avoid the policy on not having received the premium nonetheless it would be liable for third party risk as public interest served by the insurance policy must prevail ever the insurer's interest. It is submitted by Mr.Mehra that explanation to sub-Section (2) of Section 64 VB of the Insurance Act was not brought to the notice of the Supreme Court and had it been brought to its notice perhaps a different view might have been taken by the Supreme Court. I do not agree with Mr.Mehra. Section 64 VB of the Insurance Act reads as under: - No risk to be assumed unless premium is received in advance - (1) No insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily payable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and until deposit of such amount as may be prescribed, is made in advance in the prescribed manner.

(2.) For the purposes of this section, in the case of risks for which premium can be ascertained in advance, the risk may be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the insurer.

(3.) Any refund of premium which may become due to an insured on account of the cancellation of a policy or alteration in its terms and conditions or otherwise shall be paid by the insurer directly to the insured by a crossed or order cheque or by postal money order and a proper receipt shall be obtained by the insurer from the insured, and such refund shall in no case be credited to the account of the agent.