- 1 - NC: 2025:KHC:6442-DB MFA No.1307/2016 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 13TH DAY OF FEBRUARY, 2025 PRESENT THE HON'BLE MRS JUSTICE K.S.MUDAGAL AND THE HON'BLE MR JUSTICE C.M. POONACHA MISCELLANEOUS FIRST APPEAL NO.1307/2016 (MV-D) BETWEEN: 1. SMT.NIRMALA L W/O LATE LALITH JAIN AGED ABOUT 55 YEARS 2. SRI SAJJANRAJ S/O LATE SIREMALL AGED ABOUT 90 YEARS BOTH ARE R/AT NO.147/1-2 1ST MAIN ROAD, 1ST CROSS AZADNAGAR, CHAMARAJPET BANGALORE – 560 018 … APPELLANTS (BY SMT.BHUSHANI KUMAR, ADVOCATE) AND: 1. RAVIKUMAR N S/O NAGARAJ R/AT NO.41/A, DOMBARAHALLI LAKSHMIPURA POST DASANAPURA HOBLI BANGALORE NORTH – 562 123 2. M/S.ROYAL SUNDARAM ALLIANCE INSURANCE COMPANY LIMITED H.O.46, WHITE’S ROAD CHENNAI – 600 014 REP. BY IT’S BRANCH MANAGER … RESPONDENTS (BY SRI O.MAHESH, ADVOCATE FOR R2; SERVICE ON R1 HELD SUFFICIENT V/O DATED 08.06.2023) Digitally signed by K S RENUKAMBA Location: High Court of Karnataka - 2 - NC: 2025:KHC:6442-DB MFA No.1307/2016 THIS MISCELLANEOUS FIRST APPEAL IS FILED UNDER SECTION 173(1) OF MV ACT PRAYING TO MODIFY THE JUDGMENT AND AWARD DATED 15.10.2015 PASSED IN MVC NO.2759/2014 ON THE FILE OF THE I ADDITIONAL SMALL CAUSES JUDGE & XXVII ADDITIONAL CHIEF METROPOLITAN MAGISTRATE, MACT, BENGALURU, PARTLY ALLOWING THE CLAIM PETITION FOR COMPENSATION AND SEEKING ENHANCEMENT OF COMPENSATION. THIS MISCELLANEOUS FIRST APPEAL HAVING BEEN RESERVED FOR JUDGMENT ON 28.01.2025, COMING ON FOR PRONOUNCEMENT THIS DAY, K.S.MUDAGAL. J., DELIVERED THE FOLLOWING: CORAM: HON'BLE MRS JUSTICE K.S.MUDAGAL AND HON'BLE MR JUSTICE C.M. POONACHA CAV JUDGMENT (PER: HON'BLE MRS JUSTICE K.S.MUDAGAL) Questioning adequacy of the compensation awarded to them and exoneration of the Insurer from payment of the award amount, the petitioners in M.V.C.No.2759/2014 on the file of I Additional Small Causes Judge and XXVII Additional Chief Metropolitan Magistrate, Member MACT, Bangalore (SCCH-11) have preferred this appeal. 2. Appellant Nos.1 and 2 were petitioner Nos.1 and 2 and respondent Nos.1 and 2 were respondent Nos.1 and 2 in M.V.C.No.2759/2014 before the Tribunal. For the purpose of convenience, the parties are referred to henceforth according to their ranks before the Tribunal. - 3 - NC: 2025:KHC:6442-DB MFA No.1307/2016 3. Petitioner No.1 is the wife and petitioner No.2 is the father of deceased Lalith Jain. On 14.03.2014 at about 9:15 p.m., when Lalith Jain was travelling as pillion rider on Honda Activa vehicle bearing Registration No.KA-01-HD-6249, near Sumanahalli Circle, the driver of Tata Ace goods vehicle bearing registration No.KA-01-AA-8461 drove the same in rash and negligent manner, hit the scooter of Lalith Jain from the hind side causing grievous injuries to the victim. Injured Lalith Jain was shifted to Sri Lakshmi Multi-Speciality Hospital. On giving preliminary treatment in the said hospital, he was shifted to Suguna Hospital, Bangalore for further treatment. Lalith Jain was treated in the said hospital as inpatient for 50 days from 14.03.2014 to 02.05.2014. He succumbed to the injuries on 15.05.2014. 4. Petitioners filed M.V.C.No.2759/2014 before the Tribunal contending that the accident and death of Lalith Jain occurred due to actionable negligence on the part of the driver of Tata Ace goods vehicle bearing No.KA-01-AA-8461. They further contended that Lalith Jain was working as Real Estate Agent, earning income of Rs.70,000/- per month and they were dependent on his income. They further contended that they have incurred medical expenses of Rs.35,00,000/- and sought - 4 - NC: 2025:KHC:6442-DB MFA No.1307/2016 total compensation of Rs.95,00,000/-. They contended that respondent Nos.1 and 2 being the owner and insurer of the offending vehicle are liable to compensate the damages. 5. Respondent No.1 did not contest the petition. Respondent No.2 contested the petition denying the occurrence of the accident due to the actionable negligence on the part of the driver of the insured vehicle, age, occupation and income of the deceased and its liability to pay the compensation. Respondent No.2 further contended the cheque issued towards premium of the policy was dishonoured, therefore, the policy was duly cancelled before the accident. 6. On behalf of the petitioners, petitioner No.1 was examined as PW.1 and Exs.P1 to P30 were marked. Respondent No.1 did not adduce any evidence. Respondent No.2 examined its State Head- Legal as RW.1 and the Assistant Superintendent of Posts as RW.2 and got marked Exs.R1 to R5 were marked. 7. The Tribunal on hearing the parties, by the impugned judgment and award held that the accident and death of Lalith Jain occurred due to actionable negligence on the part of the driver of Tata Ace Goods Vehicle bearing - 5 - NC: 2025:KHC:6442-DB MFA No.1307/2016 Registration No.KA-01-AA-8461 in driving the said vehicle. The Tribunal considered the age of the deceased as 57 years, his income notionally at Rs.5,000/- per month, added 15% to the same by way of future prospects, deducted 1/3rd from his income for his personal expenses, applied 9 multiplier and awarded compensation of Rs.4,14,000/- on the head of loss of dependency. The Tribunal assessed the compensation at Rs.16,62,747/- on different heads as follows: Sl. No. Particulars Amount in Rs. 1. Medical Expenses 10,63,747/- 2. Transportation of dead body and funeral obsequies 25,000/- 3. Loss of love and affection 30,000/- 4. Loss of estate 30,000/- 5. Loss of consortium 1,00,000/- 6. Loss of dependency 4,14,000/- Total 16,62,747/- 8. The Tribunal accepted the defence of respondent No.2 that much before the accident, it had cancelled the policy of insurance due to dishonour of cheque issued by respondent No.1 towards premium and thus exonerated respondent No.2 of payment of compensation and directed respondent No.1 to pay the award amount with interest at 6% per annum. 9. The petitioners have challenged the said award in the above appeal. - 6 - NC: 2025:KHC:6442-DB MFA No.1307/2016 Submissions of Smt.Bhushani Kumar, learned Counsel for the appellants/claimants: 10. The Tribunal was in error in considering the income of the deceased only at Rs.5,000/- per month irrespective of production of his income tax returns/Ex.P23. Compensation awarded on the head of future prospects is on the lower side. The compensation awarded on the other heads is also on the lower side. The findings of the Tribunal that insurer/respondent No.2 has proved its defence is contrary to the evidence on record, therefore the claim petition be allowed as prayed by the petitioner by modifying the impugned award. 11. In support of her submissions, she relies on the judgment in Deddappa & Ors. Vs The Branch Manager, NICL1 Submissions of Sri O.Mahesh, learned Counsel for the Insurer: 12. Appeal against respondent No.1 is not maintainable as he has contested the case. The evidence of RWs.1 and 2 and Exs.R1 to R5 clearly show that the cheque issued by respondent No.1 towards premium of policy was dishonoured. Therefore respondent No.2 had duly cancelled the policy. As the contract was terminated respondent No.2 is not liable to indemnify the compensation payable by respondent No.1. As 1 ILR 2008 KAR 1397 - 7 - NC: 2025:KHC:6442-DB MFA No.1307/2016 per Section 64VB of the Insurance Act, 1938 and Regulation 4 of the Insurance Regulatory and Development Authority (Manner of Receipt of Premium) Regulations, 2002 (‘IRDA’ for short), risk of the insurer commences only after receipt of premium. The judgment relied on by learned Counsel for the appellants/petitioners is not applicable as in that case liability was fastened to the insurer invoking Article 142 of the Constitution. The compensation awarded is also just one. Therefore, there is no merit in the appeal and the same be dismissed. 13. On hearing submissions of both side and on examination of the material on record, the points that arise for consideration are: (i) Whether the compensation assessed by the Tribunal under the impugned award is just and fair one? (ii) Whether the findings of the Tribunal that respondent No.2/Insurer is not liable to pay the compensation is sustainable? Analysis 14. Respondents have not challenged the findings of the Tribunal that when Lalith Jain was traveling on Honda - 8 - NC: 2025:KHC:6442-DB MFA No.1307/2016 Activa bearing Registration No.KA-01-HD-6249 accident occurred on 14.03.2014 at 9.15 p.m. due to actionable negligence on the part of driver of Tata Ace Goods vehicle bearing Registration No.KA-01-AA-8461. The finding that Lalith Jain suffered grievous injuries in the accident and he succumbed to the injuries on 15.05.2014 i.e. after two months of the accident is also not challenged. Relationship of the petitioners is also not disputed. Reg. Quantum: 15. The petitioners contended that deceased was working as Real Estate Agent and earning Rs.70,000/- per month. To prove the said avocation and the income, the petitioners relied on the evidence of PW.1 i.e. petitioner No.1 and Ex.P23 alleged income tax returns. Ex.P23 is purportedly income tax returns submitted by deceased to the income tax department. The said document purportedly the income tax returns for the assessment year 2013-2014. But the same purports to be submitted on 31.07.2013. How the assessee could submit the returns retrospectively, even before assessment year was completed was not explained. His income tax returns of the previous years were not produced. His bank statements were also not produced before the Court to prove - 9 - NC: 2025:KHC:6442-DB MFA No.1307/2016 that he was earning Rs.70,000/- per month. Except self serving statement of PW.1, there was absolutely no material to show that the deceased was working as Real Estate Agent. Therefore the Tribunal was justified in disbelieving Ex.P23 or the evidence of PW.1 in that behalf. 16. As per Ex.P21/aadhar card of the deceased, he was born in the year 1957, therefore the Tribunal considered his age as on the date of the accident as 57 years. Even as per postmortem report/Ex.P17, he was aged 57 years as on the date of the accident. Therefore the Tribunal was justified in considering his age as 57 years. Petitioners relying on Ex.P23/the income tax returns contended that deceased was earning Rs.2,42,839/- per annum and they have lost the said income. The Tribunal held that as per Ex.P23 much of the income was from investments in different organizations. It was further held that even after the death of the victim, the petitioners continued to receive the returns from those investments and therefore there is no loss of income to the tune of Rs.2,42,839/- as claimed by the petitioners and assessed his income notionally at Rs.5,000/- per month. - 10 - NC: 2025:KHC:6442-DB MFA No.1307/2016 17. It is no doubt true that the petitioners continue to receive the income from investment. However, the same income tax returns shows salary income from M/s.Nimma Polymers. The accident took place in the year 2014. Considering cost of living, prevailing wage rates and price index during the said period, the deceased would have earned reasonably Rs.8,500/- per month. 18. As per the judgment of the Hon’ble Supreme Court in National Insurance Company Ltd., v. Pranay Sethi2 and having regard to the occupation of the deceased, 10% of the income of the deceased has to be superadded towards future prospects. Considering that he had two dependants, in view of the judgment of the Hon’ble Supreme Court in Sarla Verma v. Delhi Transport Corporation3, 1/3rd has to be deducted towards his personal expenses and the applicable multiplier is 9. Therefore the compensation payable on the head of loss of dependency comes to Rs.8,500/- + Rs.850/- (10% of Rs.8,500/-) = Rs.9,350/-. Rs.9,350/- x 12 x 9 x 2/3 = Rs.6,73,200/-. 2 (2017) 16 SCC 680 3 (2009) 6 SCC 121 - 11 - NC: 2025:KHC:6442-DB MFA No.1307/2016 19. Compensation awarded on the head of medical expenses was based on the evidence and the medical bills produced. That needs to be maintained. 20. As per the judgments of the Hon'ble Supreme Court in Pranay Sethi’s case referred to supra and Magma General Insurance Company Ltd., v. Nanu Ram4 each of the petitioners are entitled to compensation on the head of consortium at Rs.40,000/- with escalation of 10% which comes to (Rs.44,000/- x 2 =) Rs.88,000/-. 21. As per the judgment of the Hon'ble Supreme Court in Pranay Sethi’s case referred to supra, the petitioners are entitled to compensation of Rs.15,000/- + Rs.15,000/- respectively on the heads of loss of estate and funeral expenses and transportation with escalation at 10%. Therefore the just compensation payable is as follows: Sl. No. Particulars Compensation awarded in Rs. 1. Loss of dependency 6,73,200/- 2. Medical Expenses 10,63,747/- 2. Loss of consortium 88,000/- 3. Loss of estate 16,500/- 4. Funeral expenses & transportation charges 16,500/- Total 18,57,947/- Less: Awarded by the Tribunal 16,62,747/- Enhancement 1,95,200/- 4 (2018) 18 SCC 130 - 12 - NC: 2025:KHC:6442-DB MFA No.1307/2016 Reg. Liability: 22. Respondent No.2/Insurer contended that cheque issued by respondent No.1 towards payment of premium was dishonoured, much before the accident, the insurer had cancelled the policy, therefore insurer is not liable to pay the compensation. When insurer took defence that it had cancelled the policy, the burden of proving the said fact was on the insurer. To prove the said fact, insurer examined RWs.1 and 2 and relied on Exs.R1 to R5. According to respondent No.2, following were some of the dates and events which it relied on: Date Exhibit Particulars 28.08.2013 R1 Cheque for Rs.18,205/- 30.08.2013 R2 Presentation of cheque 31.08.2013 R2 Cheque dishonour memo 31.08.2013 R3 Cheque returned 10.09.2013 R4 Policy cancellation notice 10.09.2013 R5 Policy cancellation endorsement 14.03.2014 Date of accident 23. It is interesting to note that though respondent No.2 contended that it had cancelled the policy and produced several other documents, it did not produce the policy or copy of the same. No proof of service of notice of Exs.R4 and R5 was produced. Leave aside postal acknowledgements, not even postal receipts were produced. RW.1 in his cross-examination baldly states that postal receipts were misplaced. - 13 - NC: 2025:KHC:6442-DB MFA No.1307/2016 24. Though it was contended that cancellation of insurance policy was intimated to the RTO, no RTO was examined. RW.2/the Assistant Superintendent of Posts was examined to prove that insurer had sent postal articles to the insured and those records were misplaced in the post office. But that will not help the insurer to prove postal articles mentioned therein, were the notice issued to the insured or the RTO. Even in the judgment in Deddappa’s case referred to supra relied on by Sri O.Mahesh, learned Counsel for the insurer, it was held that insurer is not liable to pay the compensation provided he had intimated about cancellation before the accident. In this case, the fact of service of notice and cancellation of policy was not proved. Therefore the said judgment does not advance the case of the insurer. 25. Larger Bench of the Hon’ble Supreme Court in para 9 of the judgment in Oriental Insurance Co. Ltd. V. Inderjit Kaur5 while considering whether insurer can avoid liability on the ground of dishonour of cheque held as follows: “ 9. 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 without receiving the 5 (1998) 1 SCC 371 - 14 - NC: 2025:KHC:6442-DB MFA No.1307/2016 premium therefor. By reason of the provisions of Sections 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.” (Emphasis supplied) 26. Similarly, the Hon’ble Supreme Court in para 26 of the judgment in United India Insurance Co. Ltd. V. Laxmamma6 referring to the judgment of Inderjit Kaur’s and Deddappa’s cases held as follows: “26. In our view, the legal position is this: where the policy of insurance is issued by an authorized insurer on receipt of cheque towards the payment of premium and such a cheque is returned dishonoured, the liability of the authorized 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 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 6 (2012) 5 SCC 234 - 15 - NC: 2025:KHC:6442-DB MFA No.1307/2016 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 to which that policy covered ceases and the insurance company is not liable to satisfy awards of compensation in respect thereof.” (Emphasis supplied) 27. Even in the said judgment it is clearly held that unless the insurer proves the service of intimation of cancellation of the policy to the insured, insurer’s liability to pay the compensation to the third party/claimants does not cease. Merely because, respondent No.1 did not deny the service of notice of cancellation of policy, it does not absolve the insurer of its burden of proving the fact of service of intimation of cancellation of the policy to the insured and such cancellation. As held in the above judgments, if at all there was any cancellation of the policy/termination of the contract of insurance, the insurer’s remedy is against the insured. Since in this case the insurer failed to prove its defence of such cancellation, it is bound to satisfy the award. For the aforesaid reasons, the appeal deserves to be allowed in part. Hence the following: ORDER The appeal is partly allowed. - 16 - NC: 2025:KHC:6442-DB MFA No.1307/2016 The impugned award is modified as follows: Claimants are entitled to compensation of Rs.18,57,947/- with interest thereon at 6% per annum from the date of the petition till its realization. Respondent No.2/Insurer shall deposit the compensation amount before the Tribunal within four weeks from the date of receipt of copy of this judgment. On such deposit, the Tribunal shall digitally release 75% and 25% of the award amount to petitioner Nos.1 and 2 respectively on furnishing required documents. Registry shall transmit the trial Court records to the Tribunal forthwith. Sd/- (K.S.MUDAGAL) JUDGE Sd/- (C.M. POONACHA) JUDGE KSR List No.: 2 Sl No.: 1