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CASE NO.: Appeal (civil)  5285 of 2006

PETITIONER: The New India Assurance Co. Ltd.

RESPONDENT: Smt. Afroz Bi & Ors.

DATE OF JUDGMENT: 30/11/2006

BENCH: ARIJIT PASAYAT & S.H. KAPADIA

JUDGMENT: J U D G M E N T (Arising Out of S.L.P. (C) Nos.14587-88 of 2005)

ARIJIT PASAYAT, J.

Leave granted.

Challenge in these appeals is to the orders passed by the  Division Bench of the Madhya Pradesh High Court, Indore  Bench in Miscellaneous Appeal No. 473 of 1997 which was  disposed of on 14.7.2004 and MCC No. 597 of 2004 filed for  reviewing the said order which was rejected by order dated  2.2.2005.   

Background facts in a nutshell are as follows:

One Nisar Khan (hereinafter referred to as the ’deceased’)  met with an accident on 17.8.1992.  The offending vehicle (No.  MP-09-D-3815) was the subject matter of insurance with  National Insurance Company Ltd. Policy of insurance issued  by it covered the period from 5.10.1991 to 4.10.1992.   Appellant issued insurance cover in respect of the vehicle  covering the period from 7.11.1992 to 6.11.1993.  A petition  claiming compensation was filed before the IVth Additional  Member, Motor Accidents Claims Tribunal, Dewas (in short  the ’MACT’).  The claim was lodged by the widow, three minor  children and the mother of the deceased.  In the claim petition  the owner of the vehicle, the driver of the vehicle and the  appellant Insurance Company were arrayed as the  respondents.  The MACT taking into account the evidence on  record held that the owner of the vehicle and the driver were  liable to pay the compensation fixed at Rs.1,20,000/- with  interest. So far as the present dispute is concerned the  quantum of award and the interest is really not relevant.  The  MACT took note of the fact that the offending vehicle was not  the subject matter of insurance with the appellant-insurance  company because the cheque which was issued to cover the  premium had been dishonored and the policy had become  inoperative. Copy of the insurance policy was annexed as  Annexure P-1.  It was therefore held that present appellant  has no liability with regard to the accident as on the fateful  day the vehicle was not the subject matter of insurance with  it.  The claimant preferred an appeal questioning the  conclusions regarding absence of liability of the present

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appellant. The High Court held that the quantum awarded  was reasonable.  It was, however, held that bouncing of  cheque issued on a later date cannot take away liability of the  insurer qua a third party.  Accordingly the High Court allowed  the appeal in part and held that the appellant-Insurance  company was also liable along with owner and the driver in  respect of the award.

A review application was filed.  It was brought to the  notice of the High Court that even if it is accepted for the sake  of argument that bouncing of the cheque is not of any  relevance, the liability cannot be fastened on the appellant as  the cheque issued related to a subsequent period and the  insurance cover as noted above was relatable to the period  from 7.11.1992 to 6.11.1993 i.e. after the date of accident i.e.  17.8.1992.  It is pointed out that during the said period, as  the records show, the vehicle was the subject matter of  insurance with National Insurance Company Ltd. which was  not even arrayed as a party in the claim petition.   

There is no appearance on behalf of the respondents in  spite of service of notice.

In support of the appeals, learned counsel for the  appellant submitted that the question involved is not the effect  of bouncing of cheque and the real question is the period for  which the insurance cover was issued.   

It appears that the High Court has not taken note of the  basic issue involved so far as the present appellant is  concerned.  Its specific stand was that even the cheque which  was issued and subsequently dishonored related to the period  from 7.11.1992 to 6.11.1993. The period obviously was  subsequent to the date of accident.  The copy of the cover note  is annexed as Annexure P-2 to the Memorandum of Appeal  before this Court and it clearly shows that the period covered  was 7.11.1992 to 6.11.1993.  This aspect was also highlighted  in the review petition before the High Court.  That being so,  the High Court was required to examine the liability, if any, of  the appellant-Insurance Company. In that factual background  the question whether bouncing of the cheque subsequently  affected the liability of the insurer was really not relevant for  the purpose of the present case. Additionally, National  Insurance Company Ltd. which is stated to be the insurer for  the relevant period, during which the accident took place, was  not pleaded as party before the MACT.   

In the aforesaid background, the case is remitted to the  High Court for fresh hearing and adjudication. If so felt  desirable, the High Court may permit the claimants to implead  the National Insurance Company Ltd. as respondent so that  its stand can be taken note of.  

The appeals are allowed to the aforesaid extent but in the  circumstances without any order as to costs.