Summary
The High Court of Kerala has reversed the Motor Accidents Claims Tribunal’s judgment that absolved the insurer of liability in a motor accident claim. The Tribunal had upheld the insurer’s position that they canceled the cover note due to the owner’s dishonored cheque. The plaintiff lodged an appeal against the insurer’s exoneration, arguing that exoneration would cause displeasure among claimants, as it would prevent the victim from recovering compensation. The court determined that the insurer could not absolve itself of liability for notifying the policyholder of the cancellation. The responsibility of establishing that the insurer did not provide notice of cancellation lies with the insured, and the insurer was found liable following the approval of the appeal.
About the case
The High Court of Kerala has reversed the Motor Accidents Claims Tribunal’s judgment that absolved the insurer of liability in a motor accident claim, subsequent to a full bench decision. The Tribunal had upheld the insurer’s position that they canceled the cover note they issued due to the owner’s dishonored cheque. Invoking the insurer’s acquittal, the plaintiff lodged an appeal with the High Court. Claimants may contest insurer’s exoneration. The initial matter resolved by the single bench, presided over by Justice P B Suresh Kumar, concerned the maintainability of the appeal lodged by the claimant against the insurer’s exoneration.
The Court observed that exoneration of the insurer would cause displeasure among the claimants, given the challenge of recovering compensation from the vehicle owner. In the event that the insurer’s argument is upheld and the Tribunal erroneously absolves the insurer of liability while the owner, who is subsequently held liable, is unaware or otherwise impeded by circumstances from appealing the exoneration of the insurer, the victim may be denied the compensation to which they are entitled for the damage incurred as a result of the accident. The Court stated that such an interpretation of Section 173 would be contrary to the social welfare provisions outlined in Chapter XI of the Act. No burden was discharged by the insurer. The court determined, on the basis of the evidence, that the insurer could not absolve itself of the liability for notifying the policyholder of the cancellation.
Despite the production of a receipt that claimed to be confirmation of the notice of cancellation’s dispatch, the proprietor stated in his testimony that he had not obtained it. “In the beginning, it should be mentioned that the policy premium was only about Rs.1000/-, and there is normally no reason for an individual to dishonor a cheque for that amount, especially since it was for a vehicle insurance policy, in order to prevent the cheque from being honored. Therefore, it cannot be ruled out that the proprietor was unaware that the check issued to the insurer for the aforementioned purpose had bounced, the court noted. The responsibility of establishing that the insurer did not provide notice of cancellation of the insurance policy lies with the insured. The recent full bench ruling that placed the onus on the insurer to establish that the owner received the notification was adhered to. The insurer was unable to establish that the proprietor received the notification, the court ruled. The insurer was found liable following the approval of the appeal.
