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IN THE HIGH COURT AT CALCUTTA

Civil Appellate Jurisdiction

Appellate Side

Present:

The Hon’ble Justice Biswaroop Chowdhury

F.M.A. 2216 of 2016

With

CAN/2/2015 (Old No. CAN/4322/2015)

Smt. Santi Roy & Ors.

VERSUS

National Insurance Company & Ors.

With

F.M.A.T. 931 of 2014

With

CAN/1/2015 (Old No. CAN/8452/2014)

CAN/2/2014 (Old No. CAN/8453/2014)

CAN/3/2015 (Old No. CAN/4314/2015)

CAN/4/2017 (Old No. CAN/5456/2017)

Bajaj Allianz General Insurance Co. Ltd.

VERSUS

Smt. Santi Roy & Ors.

For the appellants/claimants in FMA

2216 of 2016:

For the respondent no.1 in FMA 2216

of 2016:

For the respondent no.2 in FMA 2216

of 2016:

Mr. Krishanu Banik, Adv.

Mr. Tathagata Banik, Adv.

Mr. P. K. Pahari, Adv.

Mr. Rajesh Singh, Adv.

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For the appellant in FMAT 931/2014:

Mr. Rajesh Sing, Adv.

For the respondent nos. 2, 3 & 4 in

FMAT 931 of 2014:

Mr. Krishanu Banik, Adv.

Mr. Tathagata Banik, Adv.

For the respondent no.7 in FMAT 931

of 2014:

Mr. P.K. Pahari, Adv.

Last Heard on: July 29, 2026

Judgment on: August 11, 2026

Biswaroop Chowdhury, J:

The instant appeals were heard analogously for their

interconnectiveness. The said appeals were preferred by the appellants against

Judgment and Award dated 11/04/2014 passed by Learned Additional District

Judge 3

rd

Court Balurghat Dakshin Dinajpur in MACC-24/2009.

The case of the claimants before Learned Trial Judge may be summed up

thus: On 15/09/2008 at about 5.30 hours the victim Shyamal Kumar Roy

along with her wife Anjali Roy were proceeding by a motor cycle bearing No.

WB-01-T-3033 from Salt Lake Police Abasan Flat 1/5 Sector 11/Kolkata-106

towards Khanna Hat. When they reached in front of 186 Aurobindo Sarani at

that time the accused driver of truck no. WB-15A-5233 (Truck) was proceeding

along Aurobindo Sarani from West to East and at same time one truck bearing

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no. WB-31-2876 (Truck) was proceeding along Raja Dinendra street from north

to South with a common intention to overtake being driven in rash and

negligent manner at the crossing of RD street and Aurabindo Sarani and

followed the colliding lorry no. WB-15A-5233 knocked down the motor cycle

WB-01T-3033 in front of 186 Arabindo Sarani as a result both the rider of the

motor cycle namely Shymal Kumar Roy and pillion rider his wife sustained

severe injuries and they were taken to R.G. Kar Hospital where both of them

declared brought dead.

Due to rash and negligent driving by both the drivers of the offending

truck the accident took place and both the drivers were wholly responsible for

this accident.

Pursuant to the filing of the case notice was issued upon the opposite

parties. Opposite parties vehicle owners did not contest the case. However the

opposite party, National Insurance Company Limited, and Bajaj Allianz General

Insurance Company Limited contested the case by filing written statements:

ISSUES were framed and evidence was adduced . Learned Trial Judge upon

considering the evidence adduced and hearing the Learned Advocates was

pleased to dispose the claim case by observing and directing as follows:-

‘Hence it is ORDERED that the instant MAC Case No. 24 of 2009 be and

the same is allowed on contest against the Opposite Parties National Insurance

Company Limited and Bajaj Allianz General Insurance Company Ltd. and ex-

parte against OP owners.

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The claimants/petitioners do hereby get an award of Rs. 11,16,676/ -

only against the opposite parties, National Insurance Company and Baja j

Allianz Insurance Company Limited under Section 166 of MV Act.

Accordingly both the Insurance Companies are hereby directed to pay

the equal share of compensation amount to the claimants in equal shares by

way of A/C payee cheques to this tribunal within two months hereof, failing

which the entire amount of compensation shall carry simple interest @9% p.a.

from the date of order till its realization in full.’

The claimants being aggrieved by the quantum of compensation awarded

by the Learned Trial Court has come up with the Appeal FMA-2216/2016. On

the other hand Bajaj Allianz General Insurance Co. Ltd. challenging the

Judgment and Award passed by Learned Trial Judge preferred Appeal being

FMAT-931 of 2014.

The ground of challenge by the claimants in FMA-2216/2016 is that

Learned Trial Judge erred in considering the monthly salary of the victim

Shyamal Roy as Rs. 10694 and not as Rs. 10,714/-. Secondly the Learned Trial

Judge erred in not awarding future prospect at 30% and thirdly the Learned

Trial Judge erred in awarding General damages Rs. 4500/ - instant of Rs.

84,000/-.

The ground of challenge by Bajaj Allianz General Insurance Company

Limited is that the Learned Trial Judge erred in not granting liberty to the

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Insurance Company to recover the compensation from the vehicle owner WB-

31/2876 although cheque issued by the vehicle owner was dishonoured.

Heard Learned Advocates for the parties. Perused the evidence adduced

and materials on record.

Upon hearing the learned Advocates and upon perusin g the evidence

adduced this Court is of the view that monthly income of the victim upon

deduction of profession tax as reflected in Pay Slip comes to Rs. 10,714 and by

adding future prospect of 30% and adding general damages of Rs. 70,000/- the

total compensation should be enhanced.

In the event monthly income after deduction of profession tax comes to

Rs. 10,714/- the annual income comes to Rs. 1,28,568/-. Future prospect 30%

being added Net annual income comes to Rs. 1,67,138.40/- 1/3

rd

deduction on

account of personal expenses annual dependency loss comes to Rs.

1,11,425.60/-. By applying the multiplier of 13, total dependency loss comes to

Rs. 14,48,532.80/-. Further general damages of Rs. 70,000/- should be added.

Thus total compensation comes to Rs. 15,18,532.80/- by arithmetical

calculation. However this Court is of the view that compensation of Rs.

15,00,000/- is just and reasonable. Thus the claimants are entitled to Rs.

7,50,000/- each from National Insurance Company Ltd. and Bajaj Allianz

Insurance Company Ltd. along with interest @6% p.a. from date of filing claim

case till today.

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Now with regard to right of recovery by Bajaj Allianz General Insurance

Co. Ltd on the ground of dishonour of premium cheques it is necessary to

consider some judicial decisions. In the case of Sova Dey and Ors. VS National

Insurance Company Ltd. and Anr. (FMA 1442 of 2014) reported in 2026 (3)

TAC-269 (Cal.) it was observed as follows:-

‘In the case of Oriental Insurance Co. Ltd. VS Inderjit Kaur (supra) where

the notice of dishonour of cheque was issued prior to accident, and

subsequently premium was paid the Hon’ble Supreme Court upon discussing

the provisions contained in Chapter 11 of the Motor Vehicles Act 1988 was

pleased to observe as follows:

„Chapter 11 of the Motor Vehicles Act, 1988, provides for the insurance of

motor vehicles against third party risks. Section 146 thereunder states that no

person shall use or cause or allow any other person to use a motor vehicle in a

public place unless there is in force in relation to the use of the vehicle a policy of

insurance that complies with the requirements of the Chapter. Section 147 sets

out the requirements of policies and the limits of liability. A policy of insurance,

by reason of this provision, must be a policy which is issued by a person who is

an authorised insurer. Sub-section 5 reads thus:

“(5) Notwithstanding anything contained in any law for the time being in

force, an insurer issuing a policy of insurance under this section shall be liable to

indemnify the person or classes of persons specified in the policy in respect of

any liability which the policy purports to cover in the case of that person or those

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classes of persons.” Section 149 refers to the duty of insurers to satisfy

judgments and awards against persons insured in respect of third party risks.

Subsection (1) thereof reads thus:

“(1) if, after a certificate of insurance has been issued under sub-section (3)

of section 147 in favour of the person by whom a policy has been effected,

judgment or award in respect of any such liability as is required to be covered by

a policy under clause (b) of sub-section (1) of section 147 (being a liability covered

by the terms of the policy) (or under the provisions of section 163A) is obtained

against any person insured by the policy, then, notwithstanding that the insurer

may be entitled to avoid or cancel or may have avoided or cancelled the policy,

the insurer shall, subject to the provisions of this section, pay to the person

entitled to the benefit of the decree any sum not exceeding the sum assured

payable thereunder as if he were the judgment debtor, in respect of the liability,

together with any amount payable in respect of costs and any sum payable in

respect of interest on that sum by virtue of any enactment relating to interest on

judgment. “We have, therefore, this position. Despite the bar created by Section

64-VB of the Insurance Act, the appellant, an authorised insurer, issued a policy

of insurance to cover the bus with out receiving the premium therefor. By reason

of the provisions of Section 147(5) and 149(1) of the Motor Vehicles Act, the

appellant became liable to identify third parties in respect of the liability which

that policy covered and to satisfy awards of compensation in respect thereof

notwithstanding its entitlement (upon which we do not express any opinion) to

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avoid or cancel the policy for the reason that the cheque issued in payment of the

premium thereon had not been honoured.

The policy of insurance that the appellant issued was a representation

upon which the authorities and third parties were entitled to act. The appellant

was not absolved of its obligations to third parties under the policy because it did

not receive the premium. Its remedies in this behalf lay against the insured.

We may note in this connection the following message in the case of

Montreal Street Railway Company VS. Normandin, A.I.R. 1917 Privy Council

142;

“When the provisions of a statute relate to the performance of a public duty

and the case is such that to hold null and void acts done in neglect of this duty

would work serious general inconvenience or injustice to persons who have no

control over those entrusted with the duty and at the same time would not

promote the main object of the Legislature, it has been the practice to hold such

provisions to be directory only, the neglect of them, though punishable, not

affecting the validity of the acts done.‟ It must also be noted that is was the

appellant itself who was responsible for its predicament. It had issued the policy

of insurance upon receipt only of a cheque towards the premium in contravention

of the provisions of Section 64-VB of the Insurance Act. The public interest that a

policy of insurance serves must, clearly, prevail over the interest of the

appellant.‟

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In the case of United India Insurance Co. Ltd VS Laxmamma and ors.

(supra) where the information of dishonour of cheque was given after the

accident by the Insurer to the insured the Hon‟ble Supreme Court observed as

follows:

‘19. In our view, the legal position is this: where the policy of insurance is

issued by an authorized insurer on receipt of cheque towards payment of

premium and such cheque is returned dishonoured, the liability of authorized

insurer to indemnify third parties in respect of the liability which that policy

covered subsists and it has to satisfy award of compensation by reason of the

provisions of Sections 147(5) and 149(1) of the M.V. Act unless the policy of

insurance is cancelled by the authorized 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 authorized insurer to cover a vehicle on

receipt of the cheque paid towards premium and the cheque gets dishonored 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.

20. Having regard to the above legal position, insofar as facts of the

present case are concerned, the owner of the bus obtained policy of insurance

from the insurer for the period April 16, 2004 to April 15, 2005 for which

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premium was paid through cheque on April 14, 2004. The accident occurred on

May 11, 2004. It was only thereafter that the insurer cancelled the insurance

policy by communication dated May 13, 2004 on the ground of dish onour of

cheque which was received by the owner of the vehicle on May 21, 2004. The

cancellation of policy having been done by the insurer after the accident, the

insurer became liable to satisfy award of compensation passed in favour of the

claimants.‟

In the case of National Insurance Co. Ltd. VS Balkar Ram and Ors. (supra)

the Hon‟ble Supreme Court upon considering the decision of United India

Insurance Co. Ltd. VS Laxmamma and Ors. (supra) observed as follows:

„The Appellant/Insurance Company assailed the award passed by the

Tribunal essentially on the ground that the cover note for the Policy of insurance

was issued on 07-04-2000 for which a cheque was submitted by the owner.

However the cheque was dishonoured by the bank on 17-04-2000 subsequently

the vehicle which was insured with the appellant-insurance company met with

an accident on 19-04-2000. The appellant-insurance Company, therefore

contended that as the policy of insurance could not be held to be a valid

document in view of the fact that the cheque towards the policy had been

dishonoured even before the accident had taken place the insurance company

was not liable to indemnify the claimants by paying the amount which fell into

its share as per the Tribunal‟s award and it is the owner which is liable to pay

the entire amount of compensation to the respondents/claimants.

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However we compliment M.S. Kiran Suri, Learned Counsel for the

appellant for cutting short the controversy by fairly pointing out the ratio of the

judgment (2012) 5 SCC-234 titled United India Insurance Co. Ltd. VS Laxmanna

and ors. wherein it has been held that the insurance company is liable to satisfy

the award if the intimation regarding the dishonour of the cheque and

cancellation of policy is communicated to the policy-holder after the date of the

accident. Thus the defence of the insurance company that the policy of insurance

was not valid since the cheque had been dishonoured prior to the accident on 17-

04-2000 the intimation to the policy – holder had been given by the insurance

company on 26-04-2000 in view of which the insurance Company cannot be

allowed to contend that the Policy-holder was not holding a valid policy of

insurance in regard to the vehicle which met with an accident. Admittedly the

policy-holder had already issued another cheque substituting the cheque which

had earlier been dishonoured.

In that view of the matter and following the ratio of the judgment referred

to hereinabove this appeal has no substance and accordingly it is dismissed. No

order as to costs.

In the case of National Insurance Co. Ltd. VS Abhaysingh Pratap Sing

Waghela (supra) where the insurance policy was cancelled only after accident

took place the Hon‟ble Supreme Court observed as follows:

16. “Indisputably, the first respondent is a third party in relation to the

contract of insurance which had been entered into by and between the appellant

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and the owner of the vehicle in question. We have noticed hereinbefore that a

document was produced before the Tribunal. Even according to the appellant,

although it was only a Motor Input Advice cum Receipt, it contained the Cover

Note No. 279106. We, therefore, have to suppose that a Cover Note had, in fact,

been issued. If a Cover Note had been issued which in terms of clause (b) of sub-

Section 1 of Section 145 of the Act would come within the purview of definition of

certificate of insurance; it also would come within the purview of the definition of

a insurance policy. If a Cover Note is issued, it remains valid till it is cancelled.

Indisputably, the insurance policy was cancelled only after the accident took

place. A finding of fact, owner of the vehicle, the cover note was not cancelled.

17. It is in the aforementioned situation, we are of the opinion, that the

judgment of the High Court cannot be faulted. No doubt, a contract of insurance

is to be governed by the terms thereof, but a distinction must be borne in mind

between a contract of insurance which has been entered into for the purpose of

giving effect to the object and purport of the statute and one which provides for

reimbursement of the liability of the owner of the vehicle strictly in terms thereof.

In that limited sense, a contract of insurance entered into for the purpose of

covering a third party risk would not be purely contractual. We may place on

record that an ordinary contract of insurance does not have a statutory flavour.

The Act merely imposes an obligation on the part of the insurance company to

reimburse the claimant both in terms of the Act as also the Contract. So far as

the liability of the insurance company which comes within the purview of Section

146 and 147 is concerned, the same subserves a constitutional goal, namely,

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social justice. A contract of insurance covering the third party risk must,

therefore, be viewed differently vis – vis a contract of insurance qua contract.

18. In National Insurance Co. Ltd. V. Laxmi Narain Dhut [(2007) 3 SCC

700], this Court opined:

“23. As noted above, there is no contractual relation between the third

party and the insurer. Because of the statutory intervention in terms of Section

149, the same becomes operative in essence and Section 149 provides complete

insulation.

24. In the background of the statutory provisions, one thing is crystal clear

i.e. the statute is beneficial one qua the third party. But that benefit cannot be

extended to the owner of the offending vehicle. The logic of fake license has to be

considered differently in respect of third party and in respect of own damage

claims.”

The same view was reiterated in Oriental Insurance Co. Ltd. v. Meena Variyal &

Ors. [(2007) 5 SCC 428] stating:

“14. The object of the insistence on insurance under Chapter XI of the Act

thus seems to be to compulsorily cover the liability relating to their person or

properties of third parties and in respect of employees of the insured employer,

the liability that may conductor and the one carried in a goods vehicle carrying

goods.”

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This Court in Oriental Insurance Co. Ltd. v. Sudhakaran K.V. and Ors. [2008(8)

SCALE 402] held:

“14. The provisions of the Act and, in particular, Section 147 of the Act

were enacted for the purpose of enforcing the principles of social justice. It,

however, must be kept confined to a third party risk. A contract of insurance

which is not statutory in nature should be construed like any other contract.”

This Court in Oriental Insurance Co. Ltd. v. Inderjeet Kaur [(1998) 1 SCC

71] held that once a certificate of insurance is issued, the insurance company

would not be absolved of its obligations to third parties Yet again in Deddappa &

Ors. V. Branch Manager, National Insurance Co. Ltd. [2008) 2 SCC 595], having

regard to the provisions contained in Section 54(v) of the Insurance Act, 1938, in

the fact situation obtaining therein, it was opined:

“A contract is based on reciprocal promise. Reciprocal promises by the

parties are condition precedents for a valid contract. A contract furthermore must

be for consideration.”

In the case of New India Assurance Co. Ltd. VS Rula and Ors (supra) the

Hon‟ble Supreme Court upon considering the decision of Oriental Insurance Co.

Ltd. VS Inderjeet Kaur and Ors. (1998) 1 SCC. P-371 was pleased to observe as

follows:

„It was in the background of the above statutory provisions that the

provisions of Section 64-VB upon which reliance has been placed by Learned

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Counsel for the appellant were considered by this Court in Oriental Insurance Co.

Ltd. VS Inderjeet Kaur and Ors. (1998) 1 SCC 371 in which it was laid down as

under:

“We have therefore this position. Despite the bar created by Section 64-VB

of the Insurance Act, the appellant, an authorized insurer issued a policy of

insurance to cover the bus without receiving the premium therefore. By reason of

the provisions of Section 147(5) and 149(1) of the Motor Vehicles Act, the

appellant became liable to indemnify third parties in respect of the liability which

that policy covered and to satisfy awards of compensation in respect thereof

notwithstanding its entitlement (upon which we do not express any opinion) to

avoid or cancel the policy for the reason that the cheque issued in payment of the

premium thereon had not been honoured.”

This decision which is a 3-Judge Bench decision squarely covers the

present case also. The subsequent Cancellation of the Insurance Policy in the

instant case on the ground that the cheque through which premium was paid

was dishonoured would not affect the rights of the third party which had

accrued on the issuance of the Policy on the date on which the accident took

place. If on the date of accident there was a policy of Insurance in respect of the

vehicle in question, the third party would have a claim against the Insurance

Company and the owner of the vehicle would have to be indemnified in respect of

the claim of that party. Subsequent cancellation of Insurance Policy on the

ground of non-payment of premium would not affect the rights accrued in favour

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of the third party. The above decision of this Court was relied upon by the High

Court in negativing the contention raised by the appellant. The High Court in the

circumstances was fully justified in dismissing the appeals. We find no infirmity

in the judgment of the High Court. Consequently the appeals are dismissed.

There will be no order as to costs.‟

Upon considering the Judicial decisions it is clear that once the Insurance

Policy is issued and the cancellation of same is not communicated and received

by the Insured the third party liability continues to exist.

In case where the intimation of dishonour of cheque and cancellation of

Policy is given prior to accident as was the case of Oriental Insurance Co. Ltd. VS

Inderjit Kaur and Ors (supra) the Insurance Company has to satisfy the award

and may recover the same from the insured.‟

Hence both Appeals FMA -2216 of 2016 and FMA T-931/2014 stands

disposed. the Judgment and Award dated 11/04/2014 stands modified to the

extent that the claimants/Respondents Santi Roy , Ashish Kumar Roy and

Saswati Roy are entitled to from. National Insurance Company Limited and

Bajaj Allianz Insurance Company Ltd. Rs. 7,50,000/- each along with interest

@6% per annum from date of filing of claim case till today.

National Insurance Company Ltd. and Bajaj Allianz General Insurance

Company shall deposit the compensation amount along with interest before

Registrar General High Court Calcutta. Such deposit shall be made within 8

weeks from the date of communication of this Order. In the eve nt

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compensation awarded by the Learned Trial Court is paid or deposited balance

amount be deposited. The claimants will be entitled to withdraw the

compensation upon compliance of necessary formalities.

With regard to the issue of recovery from the vehicle owner it appears

that there is observation by Learned Trial Judge that fact of dishonour of

cheque is not proved. However as detail reasons are not given on that issue the

said findings cannot be sustained.

Bajaj Allianz General Insurance Co. Ltd. is permitted to conduct enquiry

in this regard by giving the vehicle owner an opportunity of being heard and

proceed in accordance with law. It is hereby made clear that in the event

recovery proceedings are instituted the parties will be entitled to raise relevant

points of law.

Urgent photostat certified copy of this order, if applied for, should be

made available to the parties upon compliance with the requisite formalities.

(Biswaroop Chowdhury, J.)