MANAGER, UNITED INDIA INSURANCE COMPANY LIMITED Vs. JAYALAKSHMI

JUDGEMENT

(1.) The short but interesting question that arises for consideration in this appeal is whether the appellant/insurance company is entitled to be exonerated from the liability to indemnify the insured/owner of the vehicle on the plea that as on the date of the accident the cover note issued in respect of the vehicle had been rendered ineffective and invalid since the cheque issued by the latter towards premium was dishonoured due to insufficiency of funds. The Tribunal, after considering the relevant materials available on record, negatived the above plea raised by the appellant and held that the appellant was liable to indemnify the insured. The said award passed by the Tribunal is under challenge in this appeal. Shorn of unnecessary details, the facts which are necessary for disposal of this appeal may be briefly noticed.

(2.) A tourist bus owned by respondent No. 5 herein knocked down a pedestrian causing fatal injuries to him at about 5 a.m. on October 20,1992. The legal representatives of the deceased victim claimed compensation from the owner, driver and insurer of the bus. The Motor Accidents Claims Tribunal, after considering the claim and the rival contentions of the insurance company, held that the claimants were entitled to get a sum of Rs. 5,31,984/- as compensation from the owner, driver and the insurer. The appellant/insurance company was directed to indemnify the owner, since it was found that as on the date of the accident there was a valid insurance policy in respect of the vehicle.

(3.) Sri. Mathews Jacob, learned Senior counsel who appears for the appellant submits that the cover note issued by the company was for the period from September 4,1992 to September 18,1992 only. The above cover note was issued on the basis of a proposal form submitted by the owner of the vehicle along with a cheque for Rs. 5123/- towards premium. The proposal form was returned to the owner, since certain defects were noted therein, and he was requested to resubmit the form after curing the defects. However, the appellant admittedly retained the cheque with it is on record that the cheque was presented for encashment on September 30,1992. According to the appellant, the cheque was dishonoured due to insufficiency of funds in the account of the owner (respondent No. 5) and an intimation in this regard was received from the bank on October 20, 1992, the date on which the accident took place.