1 IN THE HIGH COURT AT CALCUTTA Civil Appellate Jurisdiction Appellate Side Present: The Hon’ble Justice Biswaroop Chowdhury F.M.A. 1082 of 2007 With IA NO: CAN 2 of 2018 (Old No: CAN 6548 of 2018) National Insurance Company Limited VERSUS Nabika Begum With F.M.A. 437 of 2008 With IA NO: CAN 1 of 2012 (Old No. CAN 7567 of 2012) CAN 2 of 2012 (Old No. CAN 7605 of 2012) CAN 3 of 2018 (Old No: CAN 6549 of 2018) Nabika Begum & Ors. VERSUS National Insurance Company Limited For the appellant in FMA 1082 of 2007 and respondent in FMA 437 of 2008.: For the respondent/claimant in FMA 1082 of 2007 and appellants/claimants in FMA 437 of 2008.: Mr. Rajesh Singh, Adv. Mr. Ali Imam Shah, Adv. Last Heard on: July 08, 2026 2 Judgment on: July 20, 2026 Biswaroop Chowdhury, J: FMA 437 of 2008 is treated in the days list by consent of the parties. The above two appeals were heard analogously due to their interconnectiveness. The above appeals arise out of Judgment and Award dated 21st July 2006 passed by Learned Additional District Judge 4th Court Burswan/District Purba Burdwan in MAC Case No. 103/2005/5 of 2004. The case of the claimants before the Learned Trial Court may be summed up thus:- On 18-08-2004 at 9.30 hours while the victim was going by cycle through the G.T. Road and when he reached near Budbud bazaar in front of Indira Gandhi statue, then at that time one truck bearing no. WB-25B/0235 dashed the victim as a result he fell down on the road and seriously injured and died on the spot. The said accident was due to rash and negligent driving by the driver of the said truck. The said victim was aged about 30 years and was carrying on business and had monthly income of Rs. 3,000/-. Pursuant to filing of the claim case notice was issued to both the opposite parties. Both the vehicle owner and Insurance Company contested the case by filing written statement. ISSUES were framed and evidence was adduced. Learned Trial Court upon considering the evidence adduced and 3 upon hearing Learned Advocates for the parties was pleased to dispose of the claim case by observing and directing as follows:- „Hence IT IS ORDERED that the MAC Case u/s-163 of the MV Act is allowed on contest against the O.P/National Insurance Co. Ltd. and dismissed on contest against the OP No-1 owner. Petitioners do get an award of Rs. 1,90,000/- (Rs. One lakh and ninety thousand only) from the OP no-2/National Insurance Co. Ltd. OP No. 2/National Insurance Co. Ltd. is therefore, directed to pay the decretal award to the petitioners having equal shares each by issuing separate „A/C PAYEE CHEQUE‟ in their favour through this Tribunal within sixty days from this date failing which the award will carry an interest of 9% per annum from the date of the default till realization and the petitioners will be at liberty to realize the award as per provisions of law. The cheques of the minors be handed over to the petitioner no-1, their mother on her executing a bond and on condition that she will deposit the share of the minors in any nationalized Bank with short term Fixed Deposit which will be renewed from time to time till the minor claimants attain their majority. On attaining majority minor claimants will be entitled to withdraw the amount deposited in their name.‟ Both National Insurance Company Limited and the claimants preferred an appeal against Judgment and Award passed by Learned Trial Court. 4 The Appeal FMA 1082 of 2008 was preferred by the Insurance Company on the ground that the alleged offending Truck bearing No. WB-25B/0235 was never insured with the appellant, and that the owner of the offending Truck (M/S Haryana Transport Corporation) issued a premium cheque for the Insurance coverage of the said vehicle which was dishonoured by the bank and as such no premium was paid by the owner in connection with the offending vehicle, and accordingly as per policy conditions, the insurance policy if any issued by the insurer was automatically cancelled from its inception, thus the Learned Trial Judge erred in not absolving the appellant from paying compensation. The ground of challenge in FMA-437 of 2008 filed by the claimants is that the compensation awarded by the Learned Trial Court is inadequate and compensation should be enhanced. Heard Learned Advocates for the parties. Perused the materials on record. With regard to the enhancement of compensation which is the ground in FMA-437 of 2008 this Court is of the view that as by virtue of amendment of Section 164 of the Motor Vehicles Act 1988 which deals with no fault liability and by virtue of repeal of Section 163A of the said Act, which contained similar provisions it is necessary to discuss the contents of both the provisions. Section 163A of the Act stood as follows:- 5 163A:- Special Provisions as to payment of compensation on structured formula basis. 1) Notwithstanding anything contained in this Act or in any other law for the time being in force or instrument having the force of law, the owner of the motor vehicle of the authorized insurer shall be liable to pay in the case of death or permanent disablement due to accident arising out of the use of motor vehicle, compensation as indicated in the second schedule to the legal heirs or the victim as the case may be. Explanation- For the purpose of this sub-section „permanent disability‟ shall have the same meaning and extent as in the Workmen‟s Compensation Act 1923 (8 of 1923). 2) In any claim for compensation under sub-section(1) the claimant shall not be required to plead or establish that the death or permanent disablement in respect of which the claim has been made was due to any wrongful act or neglect or default of the owner of the vehicle or vehicles concerned or of any other person. 3) The Central Government may keeping in view the cost of living by notification in the official Gazette from time to time amend the second schedule. 6 Section 163A of the Motor Vehicles Act 1988 being repealed and the Principle of no fault liability introduced in Section 164 of the Act it is necessary to consider the provision contained in the said section which is as follows:- Section 164 Payment of compensation in case of death or grievous heart etc. 1) Notwithstanding anything contained in this Act or in any other law for the time being in force or instrument having the force of law the owner of the motor vehicle or the authorized insurer shall be liable to pay in the case of death or grievous hurt due to any accident arising out of the use of motor vehicle a compensation of a sum of five lakh rupees in case of death or of two and a half lakh rupees in case of grievous hurt to the legal heirs or the victim as the case may be. 2) In any claim for compensation under sub-section (1) the claimant shall not be required to plead or establish that the death or grievous hurt in respect of which the claim has been made was due to any wrongful act or neglect or default of the owner of the vehicle concerned or of any other person. 3) Where in respect of death or grievous hurt due to an accident arising out of the use of motor vehicle, compensation has been paid under any other law for the time being in force, such amount of compensation shall be reduced from the amount of compensation payable under this section. 7 Thus upon comparative reading of both sections of the act and the fact that compensation in case of no-fault liability is uniformly made Rs. 5 lakh at present and the Motor accident claim legislation being a beneficial legislation the compensation awarded should be Rs. 5 lakhs. Now with regard to absolving of the Appellant Insurance Company from paying compensation on the ground that the premium cheque issued by Vehicle owner was dishonoured it is necessary to consider some judicial decisions:- In the case of Oriental Insurance Co. Ltd. VS Inderjit reported in AIR- 1998 S.C. P-588 the Hon‟ble Supreme Court 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 8 any liability which the policy purports to cover in the case of that person or those 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 9 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.‟ 10 In the case of National Insurance Co. Ltd. VS Abhaysing Pratap Sing Wagheta. Reported in 2018ACJ. 2697 the Hon‟ble Supreme Court was pleased to observe 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 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 11 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, 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: 12 “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.” 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.” 13 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 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 14 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 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.‟ In the case of Sova Dey VS National Insurance Co. Ltd. FMA-1442 of 2014 it was observed as follows:- „As the Motor Accident claim Legislation is a Welfare legislation Tribunals and Courts have to see that the compensation amount reaches to the victims or their legal heirs without delay and without any unnecessary hardship. When after adjudicating compensation cases insured/vehicle owners are directed to pay it may take considerable time for them to arrange the compensation amount and when there is failure to pay the amount the victims or their families will again have to knock the doors of Court to get the compensation realized. Thus after suffering injury in accident or losing near relation in accident, and after pursuing case in Court of Law if the victim or their family is unable to get the 15 compensation realized the object of the welfare legislation will be frustrated. On the other hand if the Insurer/Insurance Company is directed to make the payment they can do so within a short period and pursuant to payment may either settle the matter with the insured to repay the compensation by granting instalments or recover the same by instituting recovery proceeding. In the conduct of recovery proceedings it may be possible for Insurance Companies to engage its officers and employees to pursue the recovery case for long period and to make all necessary enquiries for realization of the amount paid which may not be possible for the victims of accident or their relatives. A victim of accident or their relatives if made to institute a recovery case to realize compensation from vehicle owner/insured they will be in a helpless situation even after obtaining award of compensation which is not the object of a welfare legislation. Moreover the vehicle owner/insured who has to enter into contract of Insurance with Insurance Companies under the Law can be approached by the Insurance Companies for settlement before initiating recovery proceedings which is not possible for third party victims. It is held in different judicial pronouncements that Tribunals are not required to adhere rigidly to the doctrine of stare decis so that they can consider the claim more sympathetically. The contribution of the Tribunals should be to ensure that the benefits reach the helpless person.‟ In the instant case the opposite party vehicle owner although filed written statement and contested the case but did not dispute the contention of 16 Insurance Company that the Premium cheque was dishonoured. It is also not contended that the offending vehicle No. WB-25B/0235. was insured at the time of accident. Thus the fact of dishonor of premium cheque is admitted. When the involvement of vehicle No. WB-25B/0235 in accident is established and dishonor of premium cheque is admitted Learned Trial Judge ought not to have dismissed the claim case against vehicle owner and allowed claim case only against opposite party Insurance Company. It is well settled that when involvement of vehicle in an accident is established the compensation case must be allowed against vehicle owner, and when the said vehicle is insured the said case should be allowed against vehicle owner as well as Insurance Company with a direction upon Insurance Company to satisfy the compensation Award in favour of the claimant/victim. In the instant case considering the fact that premium cheque was dishonoured Learned Trial Judge ought to have granted liberty to the Appellant Insurance Company to recover the compensation from vehicle owner, after paying the claimant. Hence both FMA 1082 of 2007 and FMA 437 of 2008 stands disposed. The Judgment and Award dated 21st July 2006 passed by Learned Additional District Judge 4th Court Burdwan District Purba Bardhaman in MAC Case No. 103 of 2005/500 of 2004, stands modified to the extent that the claimants respondents are entitled to compensation of Rs. 500,000/- along with interest @6% per annum from date of filing claim case till today. The claim amount should be disbursed in the following ratio. 17 A. Appellant No-1 Nabika Begum to get Rs. 1,80,000/- along with interest @6% p.a. B. Appellant no-4 Golam Mortuaza son of deceased to get Rs. 1,40,000/- along with interest @6% per annum. C. Appellant no-5 Sabina Yasmin daughter of deceased will get Rs. 1,40,000/- along with interest @6% per annum. D. Appellant no-3(a) Saidul Sekh to get Rs. 10,000/- along with interest @6% per annum. E. Appellant no-3(b) Sekh Hafizul to get Rs. 10,000/- along with interest @6% per annum. F. Appellant No. 3(c) Rehima Begum Sister of deceased will get Rs. 10,000/- along with interest @6% per annum. G. Appellant no. 3(d) Kerima Begum Mondal sister of deceased will get Rs. 10,000/- @6% per annum. The Appellant National Insurance Company Ltd. shall deposit Rs. 500,000/- along with interest @6% per annum from date of filing claim case till today. Such deposit shall be made within 8 weeks from the date of communication of this Order. In the event amount awarded by Learned Trial Court is deposited the balance amount be deposited. The claimants/respondents will be entitled to withdraw compensation upon compliance of necessary formalities. 18 Upon depositing the compensation amount the appellant Insurance Company will be entitled to recover the compensation amount in accordance with law. Such proceedings may be instituted by filing recovery proceedings before Trial Court which passed the Award. As the dishonor of cheque and cancellation of Policy is admitted before trial Court separate enquiry by Insurance Company in this regard is not necessary. However considering the fact that twenty years have passed and considering the quantum of compensation awarded this Court is of the view that reasonable time should be given to the vehicle owner to pay the compensation. Thus the vehicle owner M/S. Haryana Transport Corporation is given 3 years time to pay the entire compensation amount awarded by equal monthly installment. The monthly installment shall be decided upon discussion between parties, failing which either party may apply before Trial Court. In the event there is default of payment of 4 consecutive installments the Insurer Company may apply to Trial Court for execution of entire balance amount which is due. 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.)