Insurance Company liable despite policy cancellation, as cancellation was not properly communicated to insured party.

Chhattisgarh High Court Upholds Compensation Award in Motor Accident Case. Insurance Company Ordered to Pay Enhanced Compensation Despite Alleged Policy Cancellation

In a significant ruling, the Chhattisgarh High Court has upheld the liability of Chola Mandlam M. S. General Insurance Company Limited to pay compensation for a fatal motor vehicle accident, despite the company's claims of policy cancellation. The decision comes in response to an appeal filed by the insurance company against the award issued by the Additional Motor Accident Claims Tribunal, Khairagarh, which granted Rs. 7,60,000/- to the claimants.

The case arose from a tragic accident on February 7, 2014, when Dharamsingh Verma, along with his parents, Prahlad Verma and Heera Bai, was involved in a collision with a truck near Amlipara. The accident resulted in the immediate death of Prahlad Verma and Heera Bai, while Dharamsingh Verma sustained permanent disability. The claimants, children of the deceased, initially sought compensation of Rs. 61,50,000/-.

The insurance company contested its liability on grounds that the insurance policy was cancelled due to a dishonoured premium cheque. However, the court found that the cancellation was not properly communicated to the insured party, thus holding the insurer liable. The court enhanced the compensation to Rs. 11,64,000/-, considering future prospects and the loss suffered by the claimants due to the death of both parents.

Justice Amitendra Kishore Prasad, presiding over the case, emphasized that an insurance policy remains valid until properly cancelled with due notice to the insured. The court also highlighted the benevolent nature of the Motor Vehicles Act, allowing for compensation enhancement even without a cross-appeal from the claimants. 

The insurance company has been directed to pay the enhanced compensation with interest at 6% per annum from the date of the award until realization. The decision underscores the judiciary's commitment to ensuring just compensation for victims of road accidents.

Bottom Line:

Insurance Company held liable to pay compensation despite its claims of policy cancellation, as cancellation was not properly communicated to insured party.

Statutory provision(s): Motor Vehicles Act, 1988 Sections 166, 168

Branch Manager, Chola Mandlam M. S. General Insurance Company Limited v. Ku. Rajkumari Verma, (Chhattisgarh) : Law Finder Doc Id # 2796588