- 1 - HC-KAR NC: 2025:KHC:25465-DB MFA No. 7964 of 2023 C/W MFA No. 5841 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 11TH DAY OF JULY, 2025 PRESENT THE HON'BLE MR. JUSTICE B M SHYAM PRASAD AND THE HON'BLE MR. JUSTICE G BASAVARAJA MISCELLANEOUS FIRST APPEAL NO. 7964 OF 2023 (MV-D) C/W MISCELLANEOUS FIRST APPEAL NO. 5841 OF 2023 (MV-D) IN MFA No. 7964/2023 BETWEEN: 1. SMT. HASEENA W/O LATE RAFIQ @ MOHAMMED RAFI, AGED ABOUT 35 YEARS, 2. SHABREENA D/O LATE RAFIQ @ MOHAMMED RAFI, AGED ABOUT 20 YEARS, 3. SRI SUHEL S/O LATE RAFIQ @ MOHAMMED RAFI, AGED ABOUT 18 YEARS, 4. SRI RASOOL SAB S/O LATE KASIM SAB, AGED ABOUT 68 YEARS, RESIDING AT HAMPASANDRA VILLAGE, GUDIBANDE TALUK, Digitally signed by VANAMALA N Location: High Court of Karnataka - 2 - HC-KAR NC: 2025:KHC:25465-DB MFA No. 7964 of 2023 C/W MFA No. 5841 of 2023 CHIKKABALLAPURA DISTRICT, PIN 561209. …APPELLANTS (BY SMT. INDUMATHI S R.,ADVOCATE) AND: 1. SRI.B.V. VENKATASHIVA REDDY S/O VENKATA REDDY, AGED ABOUT 74 YEARS, R/AT ETIGADDAPALLI, BAGEPALLI TALUK, CHIKKABALLAPURA DISTRICT 561207. 2. THE REGIONAL MANAGER ICICI LOMBARD GEN INSURANCE CO LTD, REGIONAL OFFICE 9TH FLOOR, ESTATE BUILDING, DICKENSON ROAD, M G ROAD, BANGALORE 560046. …RESPONDENTS (BY SMT. SUGUNA R REDDY., ADVOCATE FOR R1; SRI. A.N. KRISHNA SWAMY, ADVOCATE FOR R2) THIS MFA IS FILED U/S 173(1) OF MV ACT AGAINST THE JUDGMENT AND AWARD DATED 03.06.2023 PASSED IN MVC NO. 1546/2020 ON THE FILE OF THE MEMBER, MACT, XVIII ADDITIONAL JUDGE, COURT OF SMALL CAUSES, BENGALURU SCCH-4 PARTLY ALLOWING THE CLAIM PETITION FOR COMPENSATION AND SEEKING ENHANCEMENT OF COMPENSATION. - 3 - HC-KAR NC: 2025:KHC:25465-DB MFA No. 7964 of 2023 C/W MFA No. 5841 of 2023 IN MFA NO. 5841/2023 BETWEEN: ICICI LOMBARD GENERAL INSURANCE COMPANY LTD REGIONAL OFFICE, 9TH FLOOR, ESTATE BUILDING DICKENSON ROAD M G ROAD BENGALURU-560046 REPRESENTED BY ITS REGIONAL MANAGER. ...APPELLANT (BY SRI. A N KRISHNA SWAMY.,ADVOCATE) AND: 1. SMT. HASEENA W/O LATE RAFIQ @ MOHAMMED RAFI AGED ABOUT 35 YEARS 2. KUMARI SHABREENA D/O LATE RAFIQ @ MOHAMMED RAFI AGED ABOUT 20 YEARS 3. MASTER SUHEL S/O LATE RAFIQ @ MOHAMMED RAFI AGED ABOUT 18 YEARS PETITIONERS NO.2 AND 3 ARE NOW MAJOR HENCE THEY ARE NOT REPRESENTED BY GUARDIAN ALL ARE R/A HAMPASANDRA VILLAGE GUDIBANDE TALUK CHIKKABALLAPUR DISTRICT PINCODE-561209. - 4 - HC-KAR NC: 2025:KHC:25465-DB MFA No. 7964 of 2023 C/W MFA No. 5841 of 2023 4. SRI RASOOL SAB S/O LATE KASIM SAB AGED ABOUT 71 YEARS R/A HAMPASANDRA VILLAGE GUDIBANDE TALUK CHIKKABALLAPUR DISTRICT PINCODE NO.561209. 5. SRI B V VENKATASHIVA REDDY S/O VENKATA REDDY AGED ABOUT 74 YEARS R/A ETIGADDAPALLI BAGEPALLI TALUK, CHICKBALLAPUR DISTRICT-561207. ...RESPONDENTS (BY SMT. INDUMATHI S R.,ADVOCATE FOR R1 TO R4; SMT. SUGUNA R REDDY, ADVOCATE FOR R5) THIS MFA IS FILED U/S.173(1) OF MV ACT, AGAINST THE JUDGMENT AND AWARD DATED 03.06.2023 PASSED IN MVC NO.1546/2020 ON THE FILE OF THE XVIII ADDITIONAL JUDGE, COURT OF SMALL CAUSES, MEMBER, MACT, BENGALURU, (SCCH- 4), AWARDING COMPENSATION OF RS.30,20,500/- WITH INTEREST AT 6 PERCENT P.A. THESE APPEALS, COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD and HON'BLE MR. JUSTICE G BASAVARAJA - 5 - HC-KAR NC: 2025:KHC:25465-DB MFA No. 7964 of 2023 C/W MFA No. 5841 of 2023 ORAL JUDGMENT (PER: HON'BLE MR. JUSTICE B M SHYAM PRASAD) These cross appeals are as against the Judgment and Award dated 03.06.2023 in MVC No. 1546 of 2020 on the file of the Motor Accident Claims Tribunal, Bengaluru City [for short 'the Tribunal']. The appeal by the concerned Insurer is in MFA No.5841/2023 and the appeal by the claimants is in MFA No.7964/2023. The contesting parties, for reasons of convenience, are referred to as the claimants and the Insurer with the owner of the vehicle being referred to as the Insured. 2. Sri R Rafiq alias Mohammed Rafi was on his motorcycle on 16.01.2020 at 06.30 p.m. when a tractor with a water tank trolley [the Insured Vehicle] dashed against him. He has suffered head injuries, and the doctors, when shifted to Government Hospital, Bagepalli, Chikkaballapur District, have declared him dead. The claimants are his wife and - 6 - HC-KAR NC: 2025:KHC:25465-DB MFA No. 7964 of 2023 C/W MFA No. 5841 of 2023 two minor sons. The Tribunal has granted a total sum of Rs.30,20,500/- under the following heads: Sl. No. Heads of compensation Amount [In Rs.] 1. Loss of dependency 19,57,500 2. Loss of future prospects 7,83,000 3. Loss of consortium 1,60,000 4. Loss of love and affection 1,00,000 5. Funeral expenses 15,000 6. Transportation of dead body 5,000 TOTAL 30,20,500 3. The Insurer in its appeal does not dispute the accident or that the driver of the Insured Vehicle was rash and negligent. The Insurer contests its liability on the ground that two days prior to the date of accident [16.01.2020], a Cover Note dated 14.01.2020 was issued as against the cheque of even date and that this cheque when presented on 23.01.2020 is returned unpaid for 'insufficiency of funds'. In fact, the Insurer has filed Statement of - 7 - HC-KAR NC: 2025:KHC:25465-DB MFA No. 7964 of 2023 C/W MFA No. 5841 of 2023 objections resisting the claim petition on 10.03.2021 but without a defense in this regard, and later, on 07.05.2022, the Insurer, with the Tribunal’s permission, has amended the Statement of objection asserting that it is not liable to pay compensation because the premium is not received with the return of the cheque. 4. The Insurer has examined one of its officers as RW1. This witness has stated that Cover Note is issued because the Insured has issued a Cheque for payment of premium, and that when the cheque is sent for collection, an Endorsement is issued by the concerned Bank stating that the cheque is dishonored because of 'insufficiency of funds'. The witness asserts that, because the Insured had not paid the premium as on the date of the accident, there was no valid or effective Policy. The witness has produced the cheque [Ex.R1] in consideration of which the Cover Note is issued. - 8 - HC-KAR NC: 2025:KHC:25465-DB MFA No. 7964 of 2023 C/W MFA No. 5841 of 2023 5. Even at this stage, this Court must observe that the cheque is issued by one Sri Mani Nayaka A and not the Insured1, but the witness states that it is issued by the Insured which is factually incorrect. The Tribunal, relying upon the Apex Court's decision in 'Oriental Insurance Company Limited v. Inderjit Kaur and Others'2, has opined that even if there is cancellation of the Policy on the ground that the cheque is dishonored would not affect the rights of the third parties to receive compensation from the Insurer. 6. Sri A N Krishnaswamy, the learned counsel for the Insurer, has a two-fold submission to justify the Insurer's case. The first fold is that the Insurer cannot be liable howsoever, and the next fold is that even if the Insurer is held liable to answer the claimants’ claim as a third-party claim, it must be at 1 The First respondent with the Tribunal 2 AIR 1998 SC 588 - 9 - HC-KAR NC: 2025:KHC:25465-DB MFA No. 7964 of 2023 C/W MFA No. 5841 of 2023 liberty to recover from the Insured. On the first fold, the learned counsel submits that the decision of the Apex Court in Inderjit Kaur [supra] and the later decisions, including the decision of the Apex Court in 'United Insurance Company Limited v. Laxmamma and Others'3, is because of the provisions of Section 64VB of the Insurance Act, 1938 [the Insurance Act] as it stood prior to the amendment in the year 2002, but sub-clause [6] is included by amendment enabling the concerned authority to specify the Regulations for the manner in which the premium can be received by the Insurer. 7. Sri A N Krishnaswamy elaborates that consequent to the conferment of this power under Section 64VB [6] of the Insurance Act, the Insurance Regulatory and Development Authority [Manner Of Receipt of Premium] Regulations 2002 [for short 'the Regulations'] is published and that under these 3AIR 2012 SC 2817 - 10 - HC-KAR NC: 2025:KHC:25465-DB MFA No. 7964 of 2023 C/W MFA No. 5841 of 2023 Regulations, the Manner of Payment of premium is stipulated providing for Commencement of the Risk [except where premium is received in cash] only with the receipt of the premium by the Insurer. The learned counsel canvasses that under Regulation-3, the premium can be paid by any person [who is called a Proposer] or by a policy holder, that the premium can be tendered by cash or different instruments that are mentioned and that if the payment is made in any manner other than by cash, the commencement of the risk would only be with the receipt of the premium. 8. Sri A. N. Krishnaswamy argues that with this change in regime, the onus is on the Insured, whether the cheque is given by him or on his behalf, to ensure that the same is honoured, and that if the Insured has failed, the Insurer’s risk does not commence because the policy is declared void ab initio. The learned counsel emphasizes that the - 11 - HC-KAR NC: 2025:KHC:25465-DB MFA No. 7964 of 2023 C/W MFA No. 5841 of 2023 decision in Inderjit Kaur or Laxmamma [supra] cannot be applied contending that because in the present case it is beyond dispute that the cheque is returned unpaid and that the Apex Court has not considered this change in regime in any of the decisions. 9. Sri A. N. Krishnaswamy, on the second fold of the Insurer’s case, submits that the Apex Court in 'Deddappa and others v. The Branch Manager, National Insurance Company Limited'4 has underscored that insurance is a reciprocal promise; that the reciprocal promises are condition precedent for a valid contract; and that insurance contracts must be for consideration and if they are not backed by consideration, will be void ab initio as contemplated under Section 65 of the Indian Contracts Act, 1872. The learned counsel argues that, therefore, even if the Insurer is unable to 4AIR 2008 SC 767. This decision is also referred to in Laxmamma’s case. - 12 - HC-KAR NC: 2025:KHC:25465-DB MFA No. 7964 of 2023 C/W MFA No. 5841 of 2023 dispute its liability to answer the third-party claim, it must be entitled to recover the amount paid from the Insured. 10. Smt Suguna R Reddy, the learned counsel for the Insured, without joining debate on the Insurer's liability to pay the claimants, contests the assertion that the Insurer must be at liberty to recover the amount paid to the claimants from the Insured. The learned counsel canvasses that the Insurer cannot dispute that the crucial test is whether it has cancelled the Policy before the date of accident, and that if the policy is not cancelled before the date of the accident, then there cannot be any liberty to recover the compensation paid to third party claimants. 11. Smt. Suguna Reddy, on the facts relevant for the consideration, points out that the Cover Note is issued on 14.01.2020, that the accident is on 16.01.2020, that the cheque is presented on - 13 - HC-KAR NC: 2025:KHC:25465-DB MFA No. 7964 of 2023 C/W MFA No. 5841 of 2023 23.01.2020, that no notice of cancellation is issued at any stage, that the Insurer did not even take this contention during the subsistence of the Policy and it is only after the Policy period the Statement of Objection is amended to say that premium is not paid and therefore it is not liable. 12. On the quantum of compensation, Smt Indumathi S R, the learned counsel for the claimants, submits that the deceased is shown to be a 'Carpenter', but the Tribunal has computed the loss of dependency taking notional income which is only when the victim is an unskilled labourer. The learned counsel submits that because the deceased was a Carpenter, an income higher than the notional income should be taken. Sri A N Krishnaswamy is also heard on this aspect. 13. In the light of the rival submissions, the questions for consideration are: - 14 - HC-KAR NC: 2025:KHC:25465-DB MFA No. 7964 of 2023 C/W MFA No. 5841 of 2023 [i] Whether this Court must hold that the Insurer in the peculiarities of the case must answer the liability to pay compensation to the claimants, and if it must answer the liability, whether it can have the liberty to recover the same from the Insured, and [ii] Whether there must be any enhancement in the compensation granted by the Tribunal to the claimants. 14. The Apex Court in its decision in Laxmamma [supra] has exposited that the Insurer must indemnify the owner in respect of the third party claims and satisfy the award of compensation in view of the relevant provisions of the Motor Vehicles Act, 1988, unless it has, before the accident, cancelled the policy and ensured that the intimation of such cancellation has reached the Insured. The Apex Court's exposition reads as under: - 15 - HC-KAR NC: 2025:KHC:25465-DB MFA No. 7964 of 2023 C/W MFA No. 5841 of 2023 "26. In our view, the legal position is this: where the policy of insurance is issued by an authorised Insurer on receipt of cheque towards the payment of premium and such a cheque is returned dishonoured, the liability of the authorised 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 authorised 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 authorised Insurer to cover a vehicle on receipt of the cheque paid towards premium and the 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 which that policy covered ceases and the insurance company is not - 16 - HC-KAR NC: 2025:KHC:25465-DB MFA No. 7964 of 2023 C/W MFA No. 5841 of 2023 liable to satisfy awards of compensation in respect thereof." 15. This Court is now called upon to make a distinction based on the Regulations published in exercise of the power conferred under sub-section [6] of Section 64 of the Insurance Act, 1938. It is argued that with Regulations 3 and 4, the commencement of the risk would only be if the Insurer has received premium whether it is offered by the owner of the vehicle or any other person and whether the premium is offered by way of a cheque or other instruments as mentioned in Regulation-3. It is argued that because the cheque issued by the Insured is returned unpaid, the risk never commenced. 16. The Regulations 3 and 4 read as under: "3. Manner of premium payments- The premium to be paid by any person proposing to take an insurance policy (hereinafter referred to as the Proposer) or by the policyholder to an Insurer may be - 17 - HC-KAR NC: 2025:KHC:25465-DB MFA No. 7964 of 2023 C/W MFA No. 5841 of 2023 made in any one or the of the following manner(s), namely: - (a) Cash, (b) any recognised banking negotiable instrument such as cheques, including demand drafts, pay orders, banker's cheques drawn on any scheduled bank in India, (c) postal money orders, (d) credit or debit cards held in his name, (e) bank guarantee or cash deposit, (f) internet, (g) E-Transfer, (h) direct credits via standing instructions of proposer or the policyholder or the life insured through bank transfers, and (i) any other method of payment as may be approved by the Authority from time to time. 4. 4. Commencement of risk- In all cases of risks covered by the policies issued by an Insurer, the attachment of risk to an Insurer will be in consonance with the terms of section 64-VB of the Act and except in the cases where the premium has been paid in cash, in all other - 18 - HC-KAR NC: 2025:KHC:25465-DB MFA No. 7964 of 2023 C/W MFA No. 5841 of 2023 cases the Insurer shall be on risk only after the receipt of the premium by the Insurer: Provided that in the case of a policy of general insurance that where the remittance made by the proposer or the policyholder is not realised by the Insurer, the policy shall be treated as void ab initio: Provided further that in the case of a policy of life insurance, the continuance of the risk or otherwise shall depend on the terms and conditions of the policy already entered into." The Regulation-3 reads that the premium to an Insurer may be by any person proposing to take an insurance policy [the Proposer] or by the policy holder, and the payment can be by any of the mode, including by cash or cheque. The Regulation-4 reads that, unless when the premium is by cash, the commencement of the policy will be with the receipt of the premium, and the first proviso stipulates that if the premium is not realized, the Policy shall be - 19 - HC-KAR NC: 2025:KHC:25465-DB MFA No. 7964 of 2023 C/W MFA No. 5841 of 2023 treated as void ab initio but that is in the case of a general insurance. 17. This Court must observe that if the Insurer has issued a Cover Note [or a Policy] as against a cheque issued by its own agent and such cheque is returned unpaid, the default will be by its agent and therefore the default will be at its doorstep. Further, it cannot be gainsaid that the owner of the vehicle cannot be penalised if the default is by the Insurer’s agent. Therefore, a distinction must be made between cases where cheques are issued by owner [or on his/her behalf] and where the cheques are issued by the Insurer's agent. This Court is of definite opinion that the Insurer cannot invoke the expression 'any person proposing to take an insurance policy' as found in Regulation 3 to deny its liability when its agent has offered the cheque. Of course, whether the expression 'any person proposing to take an insurance policy' alters the position when the - 20 - HC-KAR NC: 2025:KHC:25465-DB MFA No. 7964 of 2023 C/W MFA No. 5841 of 2023 cheque is issued by the Owner/Insured[or on their behalf] must be examined. As such, whether the concerned cheque is issued by the Insured will be very germane. 18. It is indisputable that the Cover Note is issued as against the cheque issued by a certain 'A Mani Nayaka'. The Insurer's witness, though the subject cheque is issued by this Sri Mani Nayaka A, states in evidence [without any elaboration] that the Insured has issued the cheque. The Insurer has received this cheque as the consideration for issuance of the Cover Note and it has issued Cover Note contemporaneously but has presented the cheque only on 23.01.2020 i.e., after nine days. The burden will be on the Insurer to explain how the Cover Note was issued to the Insured against a cheque of Sri Mani Nayaka A. The Insurer has not established the identity of this person to discharge this burden. - 21 - HC-KAR NC: 2025:KHC:25465-DB MFA No. 7964 of 2023 C/W MFA No. 5841 of 2023 19. Incidentally, this Court must observe that Smt. Suguna Reddy [on behalf of the Insured, who has not let in evidence] proposes to contend that Sri Mani Nayaka A is the Insurance Agent who has collected premium in cash and has presented the cheque; and that it is not a solitary case, he has collected premium from many in cash and presented cheques which are returned. If the Insurer has failed to discharge the burden to show that the Cover Note is issued because the Insured has issued the cheque in question and if there is any doubt that the Insurer has collected the cash from the Insured through its agent and has issued the Cover Note [or Policy] as against such cheque, the Insurer cannot contend that the cheque is issued by the Insured. 20. This Court, in the facts and circumstances, finds that the proposition exposited by the Apex Court in the decision of Laxmamma [supra], after referring to the earlier decision, must - 22 - HC-KAR NC: 2025:KHC:25465-DB MFA No. 7964 of 2023 C/W MFA No. 5841 of 2023 prevail, and that the Insurer cannot succeed by relying on the Regulations 3 and 4 of Regulations. Indisputably, the Insurer has not presented the cheque though received on 14.01.2020, until 23.01.2020, and though the intimation of the return is received on 24.01.2020, the Insurer has not recalled or cancelled the Cover Note [and therefore the assurance to indemnify] during the term of the Policy. As such, the first question is answered opining that the Insurer cannot succeed even on the second ground, and the question, whether an Insurer can rely upon Regulations 3 and 4 when it has established that the owner has issued cheque is left open to be considered in an appropriate case. 21. The claimants seek enhancement in compensation on the ground that the deceased is shown to be a Carpenter and therefore a higher income than the notional income should be taken, but, it cannot be gainsaid that there is no evidence to - 23 - HC-KAR NC: 2025:KHC:25465-DB MFA No. 7964 of 2023 C/W MFA No. 5841 of 2023 demonstrate that the deceased was in fact working as a Carpenter - a skilled labourer. In the absence thereof, this Court is of the considered view that the Tribunal has rightly taken the notional income and capitalized loss of dependency with addition towards future prospects and the deduction towards personal expenses based on the deceased's age. In the light of the afore, the following: ORDER The appeals are dismissed, and the Registry is directed to transmit the amount in deposit in this appeal to the Tribunal for disbursement. SD/- (B M SHYAM PRASAD) JUDGE SD/- (G BASAVARAJA) JUDGE AN/-