1. The instant Miscellaneous Appeal has been preferred by the appellant / claimant under Section 173(1) of the Motor Vehicles Act, 1988 (hereinafter for short referred as, 'Act of 1988') challenging the impugned award dated 12/01/2012 passed by V Member, Motor Accident Claims Tribunal, Indore (M.P.) passed in Claim Case No.515/2009 to the extent that the learned Tribunal has exonerated the respondent No.3 / Insurance Company from the liability to pay the compensation to the claimant.
2. Short facts of the case are that respondent No.1 Suresh Kumawat, who was driving the offending Truck number MP-09-GE-2987 on 29/01/2009 at 11:30 pm rashly and negligently dashed the loading Rickshaw number MP-11-LA-0133 near Segwal Dhaba, Kundia, A. B. Road, Thikri, District Barwani. Resultantly, the appellant who was sitting in the loading Rickshaw sustained grievous injuries in his head, right leg and other parts of the body. FIR was lodged and after investigation police filed the charge sheet against respondent No.1. Appellant was taken to the Hospital, where he was treated and remained hospitalised for few days. During this period, surgery was carried out to treat the fracture sustained by the appellant in right thigh and hip. Appellant preferred claim petition under Section 166 of the Act of 1988 seeking claim of Rs. 10,00,000/- from the respondents.
3. The respondent No.3 / Insurance Company raised defence in the claim petition that cheque issued by insured for payment of premium was dishonoured and the policy was cancelled under intimation to the RTO, Indore and the insured. As per the Insurance Company, in absence of existence of any valid policy, the Insurance Company cannot be held liable to pay compensation to the claimant.
4. Learned Tribunal by award dated 12/01/2012 decided the issue of negligence and permanent disability in favour of the appellant / claimant and held that appellant is entitled to get compensation of an amount of Rs.1,47,460/- from the driver and owner of the offending vehicle, however, the Insurance Company was exonerated..
5. The instant appeal has been preferred by the appellant / claimant to the extent that Tribunal has committed an error in not passing an award for payment of compensation to the Claimant by the Insurance Company with liberty to recover the same from the vehicle owner i.e. Insured.
6. Respondents No.1 and 2 have not preferred any appeal and not challenged the award. The claimant is not seeking enhancement in the instant appeal. The only question involved in the instant appeal is that whether, the learned Tribunal has committed an error in not passing the award considering the doctrine of pay and recover.
7. Learned counsel appearing on behalf of the appellant / claimant submits that the Insurance Company has raised an issue of cancellation of policy and the policy was cancelled due to dishonour of cheque. The Insurance Company has not proved the service of the notice and therefore, the Tribunal was under an obligation to pass an award of pay and recover. He relied on the judgment delivered by the Division Bench of this Court in the case of Oriental Insurance Co. Ltd. Vs. Mahesh Prasad Rawat and Others reported in 2007 ACJ 1142 (MP-DB), wherein the Division Bench has held that once policy is issued and later on cancelled due to dishonour of the cheque, Insurance Company is under an obligation to intimate the same to the insured and until and unless the intimation is proved by the Insurance Company, the Insurance Company will not be absolved from the liability to pay the compensation to the third party and it is for insurer and insured to settle the inter se dispute between themselves.
8. Learned counsel further relied upon by the judgment delivered by the Supreme Court in the cases of Oriental Insurance Co. Ltd. Vs. Inderjit Kaur and Others reported in 1998 ACJ 123 (SC); New India Assurance Co. Ltd. Vs. Rula and Others reported in 2000 ACJ 630 (SC); and S. Latha and Another Vs. United India Insurance Co. Ltd. and Others reported in 2025 ACJ 1438 (SC), wherein the Apex Court has held that if the Tribunal has fastened the liability on Insurance Company to pay compensation and recover the same from the insured, the High Court should not interfere in the award passed by the Tribunal.
9. Learned counsel for the appellant prays for modification of the award by issuance of direction to the Insurance Company to pay the compensation to the appellant with a liberty to recover the same from the Driver and Owner of the offending vehicle.
10. No one is present on behalf of the respondents No.1 and 2 despite service.
11. Learned counsel appearing on behalf of the respondent No.3 / Insurance Company opposed the appeal on the ground that when the policy itself was cancelled due to non-receipt of the premium, the Insurance Company cannot be held liable to pay the compensation to the claimant. He submits that in the instant case, after dishonour of the cheque, the Insurance Company intimated cancellation of policy to RTO, Indore and issued a Letter of Intimation by registered post to the insured and in the absence of any rebuttal evidence there is presumption that intimation was duly served and received by the insured. He submits that learned Tribunal has not committed any error in exonerating the Insurance Company from the liability to pay compensation to the appellant / claimant. He relied upon the judgment delivered by the Apex Court in the case of National Insurance Company Limited Vs. Sunita Devi and Others reported in 2025 SCC OnLine SC 1647, wherein the Supreme Court has held that if the policy has been cancelled due to bouncing of the cheque issued towards premium amount and the intimation of the same has already been sent to the insured, the Insurance Company cannot be held liable to pay the compensation to the claimant with a liberty to recover it from the insurer. He prays for dismissal of the appeal.
12. The doctrine of pay and recover was explained by Supreme Court in celebrated judgment delivered in the matter of National Insurance Co. Ltd. Vs. Swaran Singh and Others reported in (2004) 3 SCC 297, wherein the Supreme Court in para 83 has held as under:
"83. Sub-section (5) of Section 149 which imposes a liability on the insurer must also be given its full effect. The insurance company may not be liable to satisfy the decree and, therefore, its liability may be zero but it does mean that it did not have initial liability at all. Thus, if the insurance company is made liable to pay any amount, it can recover the entire amount paid to the third-party on behalf of the assured. If this interpretation is not given to the beneficent provisions of the Act having regard to its purport and object, we fail to see a situation where beneficent provisions can be given effect to. Sub section (7) of Section 149 of the Act, to which pointed attention of the Court has been drawn by the learned counsel for the petitioner, which is in negative language may now be noticed. The said provision must be read with sub-section (1) thereof. The right to avoid liability in terms of sub-section (2) of Section 149 is restricted as has been discussed hereinbefore. It is one thing to say that the insurance companies are entitled to raise a defence but it is another thing to say that despite the fact that its defence has been accepted having regard to the facts and circumstances of the case, the Tribunal has power to direct them to satisfy the decree at the first instance and then direct recovery of the same from the owner. These two matters stand apart and require contextual reading."
Relying upon that judgment, the Supreme Court in para 24 of Amrit Paul Singh and Another Vs. Tata AIG General Insurance Company Limited and Others reported in (2018) 7 SCC 558 has observed as under:
"24. In the case at hand, it is clearly demonstrable from the materials brought on record that the vehicle at the time of the accident did not have a permit. The appellants had taken the stand that the vehicle was not involved in the accident. That apart, they had not stated whether the vehicle had temporary permit or any other kind of permit. The exceptions that have been carved out under Section 66 of the Act, needless to emphasise, are to be pleaded and proved. The exceptions cannot be taken aid of in the course of an argument to seek absolution from liability. Use of a vehicle in a public place without a permit is a fundamental statutory infraction. We are disposed to think so in view of the series of exceptions carved out in Section 66. The said situations cannot be equated with absence of licence or a fake licence or a licence for different kind of vehicle, or, for that matter, violation of a condition of carrying more number of passengers. Therefore, the principles laid down in Swaran Singh (supra) and Lakhmi Chand (supra) in that regard would not be applicable to the case at hand. That apart, the insurer had taken the plea that the vehicle in question had no permit. It does not require the wisdom of the "Tripitaka", that the existence of a permit of any nature is a matter of documentary evidence. Nothing has been brought on record by the insured to prove that he had a permit of the vehicle. In such a situation, the onus cannot be cast on the insurer. Therefore, the tribunal as well as the High Court had directed the insurer was required to pay the compensation amount to the claimants with interest with the stipulation that the insurer shall be entitled to recover the same from the owner and the driver. The said directions are in consonance with the principles stated in Swaran Singh (supra) and other cases pertaining to pay and recover principle."
The Supreme Court approved the application of doctrine of pay and recover in cases, where the Insurance Company claims the breach of policy conditions.
13. In the instant case, the Insurance Company raised the defence that cheque issued for payment of premium was dishonoured and the policy was cancelled by the Insurance Company. The intimation of the cancellation of the policy was duly sent to the RTO, Indore and insured by registered post and therefore, no order for pay and recover can be passed and the Tribunal has not committed any error in exonerating the Insurance Company.
14. The appellant submitted that the Insurance Company has not proved the service of the intimation letter on insured and in absence of proof of service, the cancellation of policy cannot be accepted so far as it relates to the third party. From perusal of the record, it appears that cheque dated 07/10/2008 was dishonoured on 13/10/2008 and immediately thereafter, letter dated 20/10/2008 was issued to the insured through registered post on 24/10/2008 intimating him that policy has been cancelled. Office copy of the letter has been exhibited as Ex.-D/3 and postal receipt as Ex.-D/4.
15. Section 27 of the General Clauses Act, 1897 provides that where any document is required to be served by post and the same is posted through a prepaid registered postal service at correct address, unless the contrary is proved, there shall be a presumption in favour of the sender that the letter would have been delivered in the ordinary course of post. The Insurance Company has produced the postal receipt. There is no evidence on record to prove contrary that letter was not delivered to the insured and in absence of any rebuttal evidence, there is a presumption that the same was duly served.
16. The dates are also material in the present case. The policy was cancelled on 20/10/2008 and the intimation was posted on 24/10/2008, whereas the accident occurred on 29/01/2009 i.e. after a period of three months and it cannot be accepted that despite dishonour of cheque of premium and cancellation of policy, the Insurance Company was continued to be liable to the third party.
17. The judgment relief upon by the appellant delivered in the matter of Mahesh Prasad Rawat (Supra) is not helpful to the appellant as in that case no document was produced to show that cancellation was ever notified and intimation was given to the insured. The other judgments relied on by counsel for the appellant are distinguishable on facts and are not helpful to the appellant. This is not a case wherein the accident occurred before dishonour of cheque or immediately after dishonour of cheque issued for payment of premium and the policy was cancelled after the accrual of the liability.
18. In view of the above conspectus, no case for interference is made out. The Tribunal has not committed any error in exonerating the Insurance Company from the liability to pay the compensation to the claimant. Similarly, Tribunal has not committed any error in not passing any award of pay and recover.
19. With the aforesaid, present appeal is dismissed. No order as to costs. Memo of costs be prepared.
