ANITA BHARGAVA Vs. MANOJ KUMAR

JUDGEMENT

(1.) THE appellant is aggrieved that the award has been passed only against the owner and driver and exonerated the insurance company on the ground that at the relevant date when the accident took place, there had been no valid policy of insurance to cover the risk. It was brought out on record that a cover note had been issued on the basis of a cheque issued by the insured but before the issuance of policy when the cheque bounced, the insurance company served a notice of cancellation of policy. The owner and driver remained ex parte and the document of cancellation of policy and the bouncing of cheque were produced before the Tribunal. As it turned out, therefore, it was a case where there existed no contract of insurance.

(2.) LEARNED counsel appearing for the appellants seeks to contend that even in such a situation, the insurance company must be made liable and it must be provided with a right of recovery by invoking Section 149(4) proviso and Section 149(5). The counsel relies on two judgments of the Delhi High Court in National Insurance Company Limited Vs. Reshmi and others, 2012 3 AICJ 683and National Insurance Company Limited Vs. Smt. Chander Devi and others, 2007 4 ACC 363.

(3.) I would hold that any decision that holds insurer liable even when the policy of insurance had been cancelled does not state the correct position of law. Section 149(4) proviso and Section 149(5) can be invoked only in case where there existed a valid policy of insurance at the relevant time but there had been a breach of terms of the policy conditions of what is set forth under Section 149(4). The insurer who would otherwise be liable but who could plead for violation of terms of policy will be liable to make the payment at the first instance to the claimants and seek for right of recovery. Section 64(VB) of the Insurance Act lays down that there shall be no liability for the insurer unless the premium is paid. Consequently, if there is any policy of insurance which is not issued and only a cover note had been issued provisionally for realization of the amount which is brought through a cheque and it turns out later that the premium is not credited when the cheque bounced and the insurance company opted to cancel the policy, the effect of it is that there existed no contract of policy between the insured and the insurer to make the insurer liable under any ground. In such a situation, the question of pay and recover simply does not arise. The principle is wrongly understood and canvassed vehemently in spite of specific plea that there existed no contract of insurance at all. What the Supreme Court could do in its jurisdiction under Article 142 in a situation where the amount had already been paid by the insurer or when the claimant is directed to recover only against the insured and not against the insurer or when the Supreme Court chooses to direct the compensation to be paid by the insurer are not the powers which this Court is endowed with. The case has to be decided on the facts brought and by the application of law on the issue of liability on the insurer.