NEW INDIA ASSURANCE CO. LTD. Vs. AMRUTHAM RAJASREE

JUDGEMENT

(1.) We have heard Mr. Kota Subba Rao, learned counsel for the appellant/respondent No.2 and Mr. Chandra Sekhar Reddy Gopi Reddy, learned counsel for the claim petitioners.

(2.) This appeal has been filed by the respondent No.2/insurance company assailing the liability fastened in the decree and order dtd. 9/11/2015 in O.P.No.224 of 2009 on the file of the Chairman, Motor Accidents Claims Tribunal-cum-I Additional District Judge, Nalgonda.

(3.) The prime contest of the appellant/respondent No.2/insurer (hereinafter 'the insurer') is that as the cheque issued by the insured/respondent No.6 (hereinafter 'the insured') towards premium was dishonoured for want of sufficient funds and the same was intimated to the insured much prior to the accident, the policy stood cancelled, as such, fastening the liability to indemnify the owner is untenable. Further the cover note of the insurance policy is clearly specifying that the policy would be subject to realization of premium amount, thus the dishonour of the cheque automatically rescinds the insurance contract ab initio. Furthermore, as per the Sec. 64-VB of the Insurance Act, 1938 specifies that the insurer cannot be held liable under the policy unless the premium is received in advance. Therefore, the liability concluded by the tribunal against the insurer is unsustainable in law.