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Judgment
This Miscellaneous first appeal is filed by the insurer against the judgment and award dated 28-6-2006 passed in MVC No. 3480/2004 on the file of the VII Addl., Judge, Member, MACT-3, Court of Small Causes, Metropolitan Area, Bangalore (SCCH. 3), (hereinafter referred to as ''the tribunal'' for short) and sought for setting aside the same by allowing this Appeal, urging various grounds. The learned counsel for the insurance company placing reliance upon a decision of the Supreme Court in the case of Deddappa and Others Vs. The Branch Manager, National Insurance Co. Ltd., contends that having regard to the undisputed fact that the cheque issued by the insured towards premium charge for insuring the vehicle which later involved in the accident was not encashed and it was dishonoured on account of insufficient funds vide endorsement issued by the Banker dated 24-4-2004. Therefore the policy issued was cancelled vide annexure-R-6 dated 21-5-2005. The cancellation of the policy issued to the offending vehicle was communicated to the RTO and also to the insured. In the circumstances, the learned counsel for the appellant submits that the insurance company is not liable to pay the compensation awarded in favour of the claimant as no consideration passed on to it therefore there is no contract between the insured and the insurer in issuing the policy in respect of the offending vehicle. In support of his submission., he has placed reliance upon a decision of the Supreme Court in the case of New India Assurance Co. Ltd. Vs. Rula and Others, and also upon another decision of the Supreme Court in the case of National Insurance Co. Ltd. Vs. Seema Malhotra and Others, According to him, even assuming that the policy was cancelled under Sec. 64VB of the Insurance Act. With reference to Sec. 147(5) and 149(1) of the Motor Vehicles Act, 1988, (here in after called as Motor Vehicle Act) the learned counsel for the respondent/claimants submits that the liability of the insurance company is only to the limited extent to pay compensation awarded to the claimants as observed at paragraph 26 of Daddappa''s case. Therefore he submits that insurance company may be directed to pay the compensation to the claimants. He also places reliance upon Swaran Singh''s case and Nanjappa''s case.
The learned counsel appearing on behalf of the insured submits placing reliance upon a decision of the Supreme Court in the case of Oriental Insurance Co. Ltd. Vs. Inderjit Kaur and Others, wherein it is held that the insurance company was not absolved of its obligation to third parties under the policy because it did not receive the premium for having issued the policy in respect of the offending vehicle. Its remedies in this behalf lay against the insured. It was the insurance company itself who was responsible for its predicament. It has issued the policy of insurance upon receipt only of cheque towards the premium, which is in contravention of the provisions of Sec. 64-VB of the Insurance Act and therefore it has to pay the compensation awarded to the claimants.
With reference to the above said rival legal contentions urged on behalf of the parties, we have examined the correctness of the finding recorded in the impugned judgment. In our view, the tribunal has rightly fastened the liability both on the insured and insurer, particularly having regard to the cancellation of the policy. As per the provisions of Sec. 147(5) and 149(1) of the Motor Vehicle Act as interpreted by the Supreme Court in the case of Inderjit Kaur''s case referred to supra, the liability of insurance company towards the third party risk is very much recognized and the same principle is also reiterated in the case of Daddappa''s case and Nanjappa''s case referred supra.
It is further contended by the learned counsel for the insured that the policy issued in respect of the offending vehicle was cancelled subsequent to the date of accident and without any notice to him and hence it is in violation of the principles of natural justice, therefore he submits that the liability fastened on the insured by the Tribunal in the impugned judgment is liable to be set aside. This contention of him cannot be accepted, for the reason that the contract was void as no consideration was passed on to the insurer as on the date of issuance of the pOlicy. Cancellation of the policy for the said reason is perfectly legal, however the same has been done subsequent to the accident, therefore the tribunal is right in fastening the liability upon both the insured and the insurer in the impugned judgment,. In this regard it is worthwhile to refer to paragraphs 10, 11 and 12 of the Indrajit Kaur''s case which reads as follows:
We may note in this connection the following passage in the case of Montreal Street Railway Company V. Normandin, AIR. 1917 PC 142:
When the provisions of a statute relate to the performance of a public duty and the case is such that to hold null and void acts done in neglect of this duty would work serious general inconvenience or injustice to persons who have no control over those entrusted with the duty and at the same time would not promote the main object of the legislature, it has been the practice to hold such provisions to be directory only, the neglect of them, though punishable, not affecting the validity of the acts done.
11 It must also be noted that it was the appellant itself who was responsible for its predicament. It had issued the policy of insurance upon receipt only of a cheque towards the premium in contravention of the provisions of section 64-VB of the Insurance Act. The public interest that a policy of insurance serves must, clearly, prevail over the interest of the appellant.
We are of view, in the circumstances, that the observations in the case of United India Insurance Company Ltd. Vs. Ayeb Mohammed and Others, do not lay down good law.
The further submission of the learned counsel for the insured is that the liability may be apportioned equally also cannot be accepted for the reason that as on the date of the accident the policy was subsisting but the same has been cancelled and this fact is within the knowledge of the insured and subsequently he has taken a fresh policy in respect of the offending vehicle. The appeal is therefore dismissed with the observation that the insurance company has to pay the compensation to the respondent claimants as held by the Apex Court in the case of Oriental Insurance Co. Ltd. Vs. Inderjit Kaur and Others, referred supra.