# The National Insurance Company Ltd v. Reetu Devi & Ors

- **Citation:** (2025) 5 ILRA 1756
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2025-05-08
- **Case number:** First Appeal From Order No. 37 of 2022
- **Bench:** Abdul Moin
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/the-national-insurance-company-ltd-v-reetu-devi-ors-54625
- **Pages:** 4

## Headnote

Civil Law- The Motor Vehicles Act,
1988-Section 147--- The accident is said
to have occurred on 08.01.2016 and the
policy which had been issued on 28.11.2014
was cancelled
on 09.01.2015 and the
intimation to the insured was sent on
11.02.2015 i.e. the policy having been
cancelled and the holder having been
informed are all events which took place
prior to the accident consequently there
cannot be any occasion for an insurance
policy to have subsisted on the date of
accident i.e. 08.01.2016 and as such, the
insurance Co. cannot be held liable to pay
the amount at the first instance and to
recover from the owne.

Matter remitted. (E-15)

List of the cases referred-:

## Text

1756 INDIAN LAW REPORTS ALLAHABAD SERIES
----------
(2025) 5 ILRA 1756
APPELLATE JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 08.05.2025

BEFORE

THE HON'BLE ABDUL MOIN, J.

First Appeal From Order No. 37 of 2022
Along with
Other Connected Cases

The National Insurance Company Ltd.
 ...Appellant
Versus
Reetu Devi & Ors. ...Respondents

Counsel for the Appellant:
Satyajit Banerji

Counsel for the Respondents:
Satendra Nath Rai

Civil Law- The Motor Vehicles Act,
1988-Section 147--- The accident is said
to have occurred on 08.01.2016 and the
policy which had been issued on 28.11.2014
was cancelled
on 09.01.2015 and the
intimation to the insured was sent on
11.02.2015 i.e. the policy having been
cancelled and the holder having been
informed are all events which took place
prior to the accident consequently there
cannot be any occasion for an insurance
policy to have subsisted on the date of
accident i.e. 08.01.2016 and as such, the
insurance Co. cannot be held liable to pay
the amount at the first instance and to
recover from the owne.

Matter remitted. (E-15)

List of the cases referred-:

1. United India Insurance Co.Ltd. Vs Laxmamma
& ors.- AIR 2012 SC 2817

2. National Insurance Co. Ltd. Vs Jitendra
Kumar - 2009 (2) T.A.C. 407 Allahabad
3. Oriental Insurance Co. Vs Mohd. Wasim &
ors.- 2009 A.I.C.C. 949

(Delivered by Hon'ble Abdul Moin, J.)

1. F.A.F.O. Nos.37 and 39 of 2022
have been filed against the impugned
award dated 21.10.2021 passed by the
learned Motor Accident Claims Tribunal,
Lakhimpur Kheri.

2. Since all the aforesaid appeals
involve common question of law and facts
as such they are being decided by a
common
order.
However,
the
facts
ofF.A.F.O. No.37 of 2022 are being
taken into consideration for deciding the
appeals.

3. Heard Satyajit Banerji, learned
counsel for the appellant and Sri Satendra
Nath
Rai,
learned
counsel
for
the
respondents no.1 to 5.

4. Despite respondents no.6 and 7
having been served nobody has put in
appearance on their behalf. Accordingly,
the Court proceeds to hear and decide the
matter.

5. Under challenge is the judgment
and award dated 21.10.2021 passed by the
learned Tribunal in Motor Accident Claim
Petition No.54 of 2016 in re: Reetu Devi
and others vs. Bus Owner Kamaljeet Singh
and others, whereby the learned Tribunal
has awarded a sum of Rs.12,85,000/-
against the appellant Insurance Company.

6. F.A.F.O. Nos.125 and 126 of 2022
have been filed by the claimants praying
for enhancement of the amount as awarded
by the learned Tribunal in the said appeal.
Despite service on the respondents nobody
has put in appearance although Sri Satyajit
5 All. The National Insurance Company Ltd. Vs. Reetu Devi & Ors.
1757
Banerji, learned counsel, has put in
appearance on behalf of the Insurance
Company in the connected appeals also.

7. Bereft of unnecessary details, the
fact set forth by the learned counsel for the
appellant is that an accident is said to have
occurred on 08.01.2016 which resulted in
death of Sri Vijay Prakash Shukla and one
Ram Surat. The accident had occurred
when both of them were going on a
motorcycle and were hit by a bus having
registration no.UP 31 T 3800 which bus
was being driven rashly and negligently.

8. The learned Tribunal had framed
various issues of which issue no.3 was as to
whether on the date of accident the said bus
was insured with an insurance company.

9. The learned Tribunal examined the
facts which were that a cheque had been
issued by the owner of the vehicle to the
insurance company for issuance of an
insurance policy on 20.11.2014. The policy
had been issued on 28.11.2014. The
validity of the policy was from 27.01.2015
to 26.01.2016. Incidentally the cheque that
had been given by the owner of bus was
dishonoured as emerged in the system of
the insurance company on 07.01.2015. The
policy was cancelled on 09.01.2015. Notice
with regard to cancellation of the policy
was issued to the holder of the policy on
11.02.2015.

10. The learned Tribunal thereafter
was of the view that in terms of Section
147 of the Motor Vehicles Act, 1988, the
information was to be sent within a period
of seven days by the insurance company
pertaining to cancellation of the policy and
the same not having been done therefore it
should be deemed that on the date of
accident the vehicle was insured. The
insurance company was held liable for
paying the awarded amount and to recover
from the owner.

11. The argument of Sri Banerji is
that once the insurance policy itself did not
come into effect consequently there cannot
be any occasion for the insurance company
to first pay the amount to the claimants and
thereafter recover the same from the owner.

12. In this regard, learned counsel for
the appellant has placed reliance on the
judgment of Hon'ble Supreme Court in the
case of United India Insurance Co.Ltd.
vs. Laxmamma and others - AIR 2012
SC 2817 to argue that the Hon'ble Supreme
Court
while
considering
similar
circumstances has held that where a cheque
has been dishonoured and before the
accident of the vehicle occurs and in case
the insurance company cancels the policy
of the insurance and sends intimation
thereof to the owner then the insurance
company's liability to indemnify the third
party would cease.

13. The argument is that learned
Tribunal has failed to consider the
judgment of Hon'ble Supreme Court in the
case of Laxmamma (supra) rather has
placed reliance on the judgment of Delhi
High Court passed in the case of Oriental
Insurance Company vs. Mohd. Wasim
and others - 2009 A.I.C.C. 949 as well as
the judgment of this Court in the case of
National Insurance Company Ltd. vs.
Jitendra Kumar - 2009 (2) T.A.C. 407
Allahabad, to hold otherwise.

14. It is thus contended that
considering the judgment of Hon'ble
Supreme Court in the case of Laxmamma
(supra), it is apparent that the award
passed by the learned Tribunal so far as it
1758 INDIAN LAW REPORTS ALLAHABAD SERIES
directs the insurance company to make the
payment and thereafter recover from the
owner is liable to the set-aside and there
would not be any liability of the insurance
company to pay any amount.

15. On the other hand, Sri Rai,
learned
counsel
for
the
respondents/claimants, does not dispute the
aforesaid proposition of law of Hon'ble
Supreme Court in the case of Laxmamma
(supra). However, he states that as the
claimants
have
also
prayed
for
enhancement consequently this Court may
consider the enhancement of the awarded
amount.

16. Having heard learned counsels for
the parties and having perused the records,
it emerges that an accident is said to have
occurred on 08.01.2016 which resulted in
the death of Sri Vijay Prakash Shukla and
Sri Ram Surat who were hit by a bus. Upon
filing of the claim application, learned
Tribunal framed issue no.3 which was as to
whether on the date of accident the bus was
insured.

17. In this regard, the insurance
company indicated that a cheque had been
given by the owner for issuance of the
insurance policy on 20.11.2014. The policy
had been issued on 28.11.2014. The
validity of the policy was from 27.01.2015
to 26.01.2016. Incidentally, the cheque,
which was issued by the owner for issuance
of the policy, was dishonoured which was
indicated in the system of the insurance
company on 07.01.2015. Immediately the
policy was cancelled on 09.01.2015 and an
information in this regard was sent to the
holder of the insurance policy/insured on
11.02.2015.

18.
 As
the
accident
occurred
subsequent to the cancellation of policy and
an information being sent to the insured
consequently there would not be any
liability of the insurance company as has
been urged by the learned counsel for the
appellant.

19. In this regard, it would be suffice
to refer the judgment of Hon'ble Supreme
Court in the case of Laxmamma (supra)
wherein the Hon'ble Supreme Court has
held as under:-

"In our view, the legal position is
this: where the policy of insurance is issued
by an authorised insurer on receipt of
cheque towards the payment of premium
and such a cheque is returned dishonoured,
the liability of the authorised insurer to
indemnify the third parties in respect of the
liability which that policy covered subsists
and it has to satisfy the award of
compensation by reason of the provisions
of Sections 147(5) and 149(1) of the MV
Act unless the policy of insurance is
cancelled by the authorised insurer and
intimation of such cancellation has reached
the insured before the accident. In other
words, where the policy of insurance is
issued by an authorised insurer to cover a
vehicle on receipt of the cheque paid
towards premium and the cheque gets
dishonoured and before the accident of
the
vehicle
occurs,
such
insurance
company cancels the policy of insurance
and sends intimation thereof to the owner,
the insurance company's liability to
indemnify the third parties which that
policy covered ceases and the insurance
company is not liable to satisfy awards of
compensation in respect thereof."

 (emphasis by Court)
5 All. Premwati & Ors. Vs. Mihilal Sharma & Ors.
1759

20. From perusal of the judgment of
Hon'ble Supreme Court in the case of
Laxmamma (supra) it emerges that the
Hon'ble Supreme Court has held that where
the policy of insurance is issued by an
authorised insurer to cover a vehicle on
receipt of a cheque paid towards the premium
and the cheque gets dishonoured and before
the accident of the vehicle occurs, such
insurance company cancels the policy of
insurance and sends intimation thereof to the
owner, the insurance company's liability to
indemnify the third parties which that policy
covered ceases and the insurance company is
not
liable
to
satisfy
the
awards
of
compensation in respect thereof.

21. From perusal of the judgment of
Hon'ble Supreme Court in the case of
Laxmamma (supra) it clearly emerges that
in the instant case also the accident is said to
have occurred on 08.01.2016 and the policy
which had been issued on 28.11.2014 was
cancelled on 09.01.2015 and the intimation to
the insured was sent on 11.02.2015 i.e. the
policy having been cancelled and the holder
having been informed are all events which
took place prior to the accident consequently
there cannot be any occasion for an insurance
policy to have subsisted on the date of
accident i.e. 08.01.2016 and as such, the
insurance company cannot be held liable to
pay the amount at the first instance and to
recover from the owner.

22. However, this aspect of the matter
has not been considered by the learned
Tribunal while passing the impugned award
dated 21.10.2021.

23. Keeping in view the aforesaid
discussion, the appeal is allowed. The award
impugned dated 21.10.2021 as passed by the
learned Tribunal in M.A.C.P. No.54 of 2016
in re: Reetu Devi and others vs. Bus Owner
Kamaljeet Singh and others, is set-aside. The
matter is remitted to the learned Tribunal to
decide the matter afresh keeping in view the
observations made above.

24. Learned Tribunal shall endeavour to
decide the claim application within a period
of three months from the date a certified copy
of this order is placed on record without
granting unnecessary adjournments.

25. Needless to mention that due
opportunity of hearing shall be accorded to
all the parties before the learned Tribunal.

26. So far as the appeals filed by the
claimants praying for enhancement i.e.
F.A.F.O. Nos.125 and 126 of 2022 are
concerned, the same also stand disposed of
leaving it open to the claimants to raise any
argument
or
pleading
pertaining
to
enhancement of compensation which would
be considered in accordance with law by the
learned Tribunal.

27. The statutory deposit before this
Court as well as the amount deposited before
the learned Tribunal shall be refunded to the
insurance company within four weeks.

28. Let the trial court record be returned
as per procedure.
----------
(2025) 5 ILRA 1759
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 08.05.2025

BEFORE

THE HON'BLE KSHITIJ SHAILENDRA, J.

Civil Misc. Review Application No. 27 of 2025

Premwati & Ors. ...Applicants
Versus
Mihilal Sharma & Ors. ...Respondents