The Chhattisgarh High Court reaffirmed that an insurer cannot escape liability for compensation solely by alleging non-receipt of premium or cancellation of the insurance policy, unless such cancellation is duly proved and properly communicated to the insured. This judgment follows settled Supreme Court principles, clarifies the obligations of insurers, and serves as binding authority for Motor Accidents Claims Tribunal cases in Chhattisgarh.
Summary
| Category | Data |
|---|---|
| Case Name | MAC/715/2017 of Branch Manager, Cholamandalam M. S. General Insurance Company Limited Vs Ku. Rajkumari Verma |
| CNR | CGHC010101842017 |
| Date of Registration | 09-05-2017 |
| Decision Date | 16-10-2025 |
| Disposal Nature | DISMISSED |
| Judgment Author | HON’BLE SHRI JUSTICE AMITENDRA KISHORE PRASAD |
| Court | High Court of Chhattisgarh at Bilaspur |
| Bench | Single Judge Bench (HON’BLE SHRI JUSTICE AMITENDRA KISHORE PRASAD) |
| Precedent Value | Binding authority for subordinate courts and Motor Accident Claims Tribunals within the jurisdiction of Chhattisgarh High Court |
| Overrules / Affirms | Affirms existing Supreme Court precedent (including Sarla Verma, Pranay Sethi, Magma General Insurance, Satinder Kaur) |
| Type of Law | Motor Vehicles Act — Motor Accident Compensation |
| Questions of Law |
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| Ratio Decidendi (3–8 sentences) |
The Court held that for the insurer to escape liability on the grounds of policy cancellation due to premium cheque dishonour, there must be clear evidence not only of the cancellation itself but also of proper and effective communication of such cancellation to the insured. Mere unilateral assertion or cancellation by the insurer, unaccompanied by proven and timely notice to the insured, does not absolve the insurer from liability to third parties under the Motor Vehicles Act. The Court further clarified that in keeping with the benevolent object of the Motor Vehicles Act, even in the absence of cross-objection by claimants, courts are empowered to enhance compensation when the awarded amount is found to be inadequate, as per Supreme Court precedent. The Court recalculated compensation applying the principles in Sarla Verma, Pranay Sethi, Magma Insurance, and Satinder Kaur, with appropriate additions for future prospects and conventional heads, including parental consortium. The appeal of the insurer was dismissed; the award was enhanced. |
| Judgments Relied Upon |
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| Logic / Jurisprudence / Authorities Relied Upon by the Court |
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| Facts as Summarised by the Court | The deceased (parents of claimants) died in a motor accident involving a truck. The insurance company denied liability on grounds of policy cancellation due to premium non-payment (dishonoured cheque). The Claims Tribunal partially allowed the claim, holding the insurer liable. On appeal, the High Court found the insurer failed to prove both the cancellation and its communication, confirmed the insurance was valid on the accident date, and enhanced compensation using Supreme Court criteria. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts and Motor Accident Claims Tribunals within the jurisdiction of the Chhattisgarh High Court |
| Persuasive For | Other High Courts and Motor Accident Claims Tribunals outside Chhattisgarh |
| Follows | Sarla Verma (Smt.) & Ors. v. Delhi Transport Corporation & Anr.; National Insurance Co. Ltd. v. Pranay Sethi & Ors.; Magma Gen. Ins. v. Nanu Ram; Satinder Kaur; Surekha Nakhate |
What’s New / What Lawyers Should Note
- Reaffirms that insurance companies must strictly prove both the actual cancellation of the policy and its due communication to the insured to avoid liability in motor accident claims.
- Clarifies that mere assertion of policy cancellation or production of internal documents is insufficient; effective notice to the insured is essential.
- Restates that courts can enhance compensation in motor accident claims even if claimants have not filed a cross-objection or cross-appeal, citing Supreme Court authority.
- Applies and illustrates the latest Supreme Court directions on enhancing compensation for conventional heads by 10% every three years to adjust for inflation.
- Emphasizes the right of minor claimants to parental consortium where both parents are lost in the same accident.
Summary of Legal Reasoning
- The Court reviewed all pleadings, evidence, and the award of the Claims Tribunal, focusing on whether the insurance company’s liability was extinguished owing to policy cancellation.
- It noted that the insurer alleged policy cancellation due to non-receipt of premium via dishonoured cheque, but failed to produce original/certified policy, call relevant witnesses, or provide credible documentary proof.
- Discrepancies in the documentary exhibits and a lack of explanation regarding the premium cheque were highlighted; the insurer’s proof was held inadequate.
- The registered owner at the accident date was confirmed as per RC; the insurance coverage was not disproved.
- The Court reiterated the principle that insurers cannot be absolved unless cancellation is not only completed but also duly communicated to the insured, relying on Supreme Court pronouncements.
- Jurisprudence regarding the power of courts to enhance compensation in absence of appeal/cross-objection from the claimant was reaffirmed (Surekha Nakhate, Pranay Sethi, etc.).
- The Court recalculated compensation strictly as per Supreme Court guidelines, adding future prospects and inflation adjustments, and awarding parental consortium to claimants.
- The insurer’s appeal was dismissed, enhanced compensation with interest was awarded, and procedural directions for payment and execution were given.
Arguments by the Parties
Petitioner (Appellant: Insurance Company):
- The Claims Tribunal wrongly fastened liability on the insurer despite lack of policy coverage.
- Alleged the deceased were negligent, and that accident involvement was not conclusively proved.
- Argued the insurance policy was cancelled due to premium cheque dishonour and requisite notice was given.
Respondent (Claimants):
- Tribunal erred in undervaluing annual income and in not granting future prospects or awarding compensation under conventional heads.
- Sought reassessment in line with Supreme Court’s Sarla Verma, Pranay Sethi, Magma Insurance principles.
Respondents (Driver & Owner of Vehicle):
- Supported the Tribunal’s finding that the insurance company was liable.
- Stated findings were supported by proper appreciation of evidence.
Factual Background
On 07.02.2014, a motorcycle carrying Dharamsingh Verma and his parents (Prahlad Verma and Heera Bai) was struck by a truck, leading to the death of the parents and permanent disability for Dharamsingh. The claimants, as children of the deceased, claimed compensation. The insurance company denied liability on grounds of policy cancellation due to a dishonoured premium cheque. The Tribunal awarded compensation against the insurer, which appealed. The High Court affirmed and enhanced the award.
Statutory Analysis
- The Motor Vehicles Act’s compensation regime was invoked, primarily sections concerning liability and requirements of “valid insurance.”
- The Court invoked Supreme Court interpretations regarding the insurer’s liability, particularly on when and how a policy cancellation absolves the insurer.
- Principles concerning computation of compensation (including future prospects, conventional heads, and parental consortium) as laid down in Sarla Verma, Pranay Sethi, Magma General Insurance, and Satinder Kaur were expressly applied.
- The principle that insurers remain liable to third parties unless valid cancellation is established and communicated was enforced.
Dissenting / Concurring Opinion Summary
No dissenting or concurring opinions are noted in the judgment.
Procedural Innovations
- The Court exercised power to enhance compensation sua sponte, despite absence of cross-appeal or cross-objection, resting on benevolent objectives of the Motor Vehicles Act and recent Supreme Court directives.
- No other procedural innovations are recorded.
Alert Indicators
- ✔ Precedent Followed