PRASANNA B Vs. KABEER P K

JUDGEMENT

(1.) The petitioner (claimant) before the Tribunal is the appellant in the above appeal. The Tribunal had exonerated the insurer from the liability for payment of the compensation, based on the finding that the cheque issued for obtaining the policy was dishonoured subsequently. Exts.B3 and B4 documents were produced to prove that the dishonour of the cheque and cancellation of the policy was properly intimated to the owner of the vehicle and also to the Regional Transport Officer, Ernakulam, through 'certificate of posting', on 23.05.2008. Ext.B5 is the copy of the cancelled certificate of the policy. The accident in question occurred much after that, on 12.08.2008. The Tribunal found that the owner of the vehicle has taken another policy after 2-3 months from the date of dishonour of the cheque. Holding that the owner (insured) was well aware about cancellation of the policy, the Tribunal found that there was no valid policy issued by the 2 nd respondent at the time of the accident and therefore the 2 nd respondent insurance company had no liability to pay the compensation. The appellant/claimant is challenging the above said finding. Inter alia, she is challenging the quantum of compensation awarded on the ground of its inadequacy.

(2.) A preliminary objection was raised by the standing counsel appearing for the 2 nd respondent insurance company with respect to maintainability of the above appeal filed at the instance of the claimant, challenging her locus standi. It was contended that the appellant is not a 'person aggrieved', because there is already an award in favour of her passed against the 1st respondent.

(3.) Leave alone the above mentioned dispute, a larger question is involved in the present appeal regarding liability of the insurer against the claim of a third party, when the cheque issued for obtaining the policy was dishonoured. One of the earliest decisions of the hon'ble appex court on this point is, Oriental Insurance Co.Ltd. v. Inderjit Kaur & Ors., 1998 1 SCC 371. It is a case where the accident occurred after the insurer had sent a letter intimating about the dishonour of the cheque. Three judge's bench of the Hon'ble Supreme Court held that, under Sections 147(5) and 149(1) of the Motor Vehicles Act the insurer became liable to indemnify the third parties in respect of the liability which that policy had covered, to satisfy the award of compensation, notwithstanding the entitlement of the company to avoid or cancel the policy for the reason of dishonour of the cheque. It is held that, the company will not be absolved from its obligation to the third parties under the policy, merely because it did not received the premium. The finding is that, the remedies on that behalf lies only against the insured. The conclusion was that, the insurance company is liable to indemnify the third parties in respect of the liability which the policy covered, despite the bar created under Section 64-VB of the Insurance Act. However, the court had left open the question of entitlement of the insurer to avoid or cancel the policy as against the insured when the cheque was dishonoured.