ORIENTAL INSURANCE CO LTD Vs. PRAKASH CHUNILAL MIRGANY

JUDGEMENT

(1.) THE question which arises before the Court in this First Appeal lies within a narrow compass. The Second to Fourth Respondents are the claimants before the Motor Accident Claims Tribunal whose claim has been allowed in the amount of Rs. 1 lac together with interest at the rate of 12% per annum. The accident in question took place on 25th November, 1981 at about 9. 30 pm when the deceased was pulling a handcart from the West to East direction on mesant Road, Sewri, Mumbai. The offending vehicle which was being driven by the First Respondent came from behind and overran, the handcart along with the deceased. The deceased was admitted to hospital at 9. 35 pm and had received a number of injuries including a head injury, injuries in the chest and a bronchial tear. He expired on 16th December, 1981 at 4. 50 pm. The motor vehicle in question bore registration NO. MTT 3227.

(2.) THE defence of the insurance company which is the Appellant before the Court is that there was no valid contract of insurance. The facts on the basis of which this defence has been set up are admitted and are thus : the policy of insurance was issued on 14th October, 1981 valid for the period from 16th October, 1981 rill 15th October, 1982. A payment of Rs. 2,055/- on account of the premium was sought to be made to the insurance company in me form of a cheque bearing no. 10075 dated 16th October, 1981 drawn on me Vaibhav Cooperative Bank Ltd. , Mulund Branch, Mumbai. The cheque was dishonoured and an endorsement was made by the insurance company on 19th November, 1981 that the policy stood cancelled. The accident took place on 25th November, 1981. The defence, therefore, was that the accident had taken place after the insurance company had purported to cancel the policy on 19th November, 1981 on account of the dishonour of the cheque for premium and that consequently, the insurance company was not liable. The tribunal answered this question against the insurance company, which is, therefore, in appeal.

(3.) SINCE me accident in the present case took lace before the provisions of the Motor Vehicles Act, 1988 were enforced, the Court would have to have regard to the relevant provisions of the earlier act of 1939. Section 94 (1) of the 1939 Act provided that no person shall use except as a passenger or cause or allow any other person, to use a motor vehicle in a public place unless there is in force in relation to the use of the vehicle by that person or that other person, as the case may be, a policy of insurance complying with the requirements of Chapter 8. The corresponding provision in the act of 1988 is Section 146. Section 96 (1) of the Act of 1939 which against person insured in respect of third party risks - (1)If, after a certificate of insurance has been issued under sub-section (3) of section 147 in favour of the person by whom a policy has been effected, judgment or award in respect of any such liability as is required to be covered by a policy under clause (b) of sub-section (1) of section 147 (being a liability covered by the terms of the policy)[or under the provisions of section 163a] is obtained against any person insured by the policy, men, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor, in respect of the clause (a) of sub section 2 was in the following terms :