- 1 - HC-KAR NC: 2025:KHC:26672 MFA No. 5357 of 2021 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 17TH DAY OF JULY, 2025 BEFORE THE HON'BLE MR. JUSTICE C M JOSHI MISCELLANEOUS FIRST APPEAL NO. 5357 OF 2021 (MV-I) BETWEEN: M/S ROYAL SUNDARAM GENERAL INSURANCE CO. LTD., (FORMERLY KNOWN AS ROYAL SUNDARAM ALLIANCE INSURANCE CO. LTD.,) GROUND FLOOR, NO.186/7, HOSUR MAIN ROAD, WILSON GARDEN, BANGALORE-560 027. PRESENTLY HAVING ITS REGIONAL OFFICE AT NO.30 3RD FLOOR, JNR CITY CENTER, RAJA RAM MOHAN ROY ROAD, SAMPANGIRAMA NAGAR,BENGALURU-560 027, REP. BY MANAGER. …APPELLANT (BY SRI RAVI SHANKAR S SAMPRATHI, ADVOCATE) AND: 1. SRI C VINAYAPRASAD, S/O CHANNAPPA, AGED ABOUT 32 YEARS, R/O CHIKKAMARALI VILLAGE, PANDAVAPURA TALUK, MANDYA DISTRICT. 2. SRI KAMALASHEKAR, S/O S KULAMDAIVAL, MAJOR IN AGE, R/O NO.4/72, PILLANATHAM, KATTUVALAVU, WARD-4, PILLANATHAM POST, TIRUCHANAGOD TALUK, NAMAKKAL, TAMIL NADU. …RESPONDENTS (BY SRI BASAVAIAH C, ADVOCATE FOR R-1; Digitally signed by NANDINI R Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:26672 MFA No. 5357 of 2021 R-2 KAMALASHEKAR- SERVED) THIS MFA IS FILED U/S 173(1) OF MV ACT AGAINST THE JUDGMENT AND AWARD DATED 13.06.2019 PASSED IN MVC NO. 1324/2015 ON THE FILE OF THE ADDITIONAL SENIOR CIVIL JUDGE AND JMFC, PANDAVAPURA, AWARDING COMPENSATION OF RS. 3,03,200/- WITH INTEREST AT 9 PERCENT P.A. FROM THE DATE OF PETITION TILL PAYMENT OF ENTIRE AMOUNT. THIS APPEAL, COMING ON FOR FINAL HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE C M JOSHI ORAL JUDGMENT (PER: THE HON'BLE MR. JUSTICE C M JOSHI) Being aggrieved by the judgment and award in MVC No.1324/2015 dated 13.6.2019 by learned Additional Senior Civil Judge and MACT, Pandavapura, the Insurance Company, who was respondent No.2 in the said petition has approached this court in appeal questioning the liability fastened upon it. 2. The factual matrix that is relevant for the purpose of this appeal are that, the petitioner while was walking near railway station at Pandavapura, on 12.06.2015 at about 9.10 a.m., met with an accident when the car bearing No. TN.34.S.9509 dashed against - 3 - HC-KAR NC: 2025:KHC:26672 MFA No. 5357 of 2021 him. He was shifted to the hospital for the grievous injuries sustained by him and had to suffer the injuries. Alleging that the accident was due to the rash and negligent driving of the car driver, and that the car was insured with the appellant-insurance company, petitioner filed a claim petition for compensation. 3. On service of notice, the owner did not appear before the Tribunal and as such, he was placed exparte. The respondent No.2, Insurance company appeared before the tribunal and contended that the owner of the vehicle had issued a cheque bearing No.95280 dated 27.6.2014 drawn on Axis Bank Limited, Thiruchangode, for an amount of Rs.21,664/- towards the payment of the premium of the insurance and that the said cheque was returned for insufficient funds by the said bank. It was contended that immediately, the Insurance Company had informed the owner about the cancellation of the policy by RPAD notice dated 01.07.2014 and also informed the concerned RTO where the vehicle was registered. - 4 - HC-KAR NC: 2025:KHC:26672 MFA No. 5357 of 2021 Therefore, alleging that the owner of the vehicle was very well aware of the cancellation of the policy and as such, there being no such contract subsisting between the Insurance Company and the owner as on date of the accident dated 12.6.2015, the Insurance Company sought exonerating it from any liability. 4. The Tribunal, framed appropriate issues, including the issue regarding the cancellation of the insurance policy and recorded the testimony of two witnesses as PWs.1 and 2 and Exs.P1 to P51 were marked. The official of the respondent No.2 was examined as RW1 and Exs.R1 to R4 were marked. 5. After hearing the arguments, the Tribunal held that soon after the cheque was returned for insufficient funds, there is no sufficient evidence to show that the appellant-Insurance Company had communicated the cancellation of the policy to the insured as well as the statutory authorities under the Motor Vehicles Act. Therefore, it fastened the liability to pay the compensation - 5 - HC-KAR NC: 2025:KHC:26672 MFA No. 5357 of 2021 upon the appellant-Insurance Company by determining such compensation to be Rs.3,03,200/-. 6. Being aggrieved by the same, the Insurance Company is before this court in appeal. 7. The arguments by learned counsel Sri Ravishankar S. Samptrathi, for the appellant and the learned counsel for respondent No.1/petitioner were heard. Respondent No.2, was served with the notice, but did not appear. 8. Learned counsel for the appellant contended that when there is positive evidence by the official of the Insurance Company and the copy of the notice issued to the insured intimating cancellation of the policy and the returned cheque were placed on record at Exs.R2 to R4, the Tribunal erred in holding that the appellant-Insurance Company is liable to pay the compensation. He contends that the finding of the Tribunal is contrary to Section 27 of the General Clauses Act, and therefore, is not sustainable in law. - 6 - HC-KAR NC: 2025:KHC:26672 MFA No. 5357 of 2021 9. Per contra, learned counsel for respondent No.1 has defended the impugned judgment of the Tribunal. 10. The testimony of RW1 and Exs. R 2 to 4 are of importance to address the contentions raised by the appellant. Ex.R2 is the copy of the notice by the appellant dated 01.07.2014, which states that the cheque issued towards the payment of the premium for the policy had been returned for want of sufficient funds and therefore, the policy stands cancelled. Ex.R3 is the said cheque and Ex.R4 is the memo of the bank showing insufficient funds as the reason for the return of the cheque. Obviously, there is no documentary evidence to show that the notice at Ex.R2 was served upon either the insured or the concerned RTO where the vehicle was registered. It is only the testimony of RW1, which states that the said notice was sent to the insured by registered post. There is nothing in the cross-examination by the petitioner which shows that the return of the cheque was informed to the insured. It is evident that the best evidence that was - 7 - HC-KAR NC: 2025:KHC:26672 MFA No. 5357 of 2021 available with the appellant-Insurance company in the form of the postal acknowledgement or the postal receipt for having sent such notice by RPAD is not produced. 11. Provisions of Section 27 of the General clauses Act, reads as below: "7. Meaning of service by post: Where any [Central Act] [Substituted by A.O.1937, for " Act of the Governor General-in-Council.] or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression serve or either of the expressions give or send or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post, a letter containing the document, and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post." 12. It is relevant to note that the deeming clause become operational when the postal window receipt and the proper address to which the document was sent by post is established. Obviously, such best evidence which - 8 - HC-KAR NC: 2025:KHC:26672 MFA No. 5357 of 2021 could have been produced by the appellant-Insurance Company was not placed on record, despite RW1 states the same. 13. The Tribunal, disbelieved the service of the said notice at Ex.R2 on the insured and the RTO by relying on the judgment in the case of M. Nageswara Rao vs. New India Assurance Company Limited and others reported in 2004 ACJ 1554. It also relied on the judgment in the case of The Oriental Insurance Company Limited vs. Smt. Honnamma reported in ILR 1998 Karnataka 1776 which laid down that, "if the policy was renewed in anticipation of encashment of the cheque, the Insurance Company was held to be liable unless the cancellation of the contract was communicated to the insured". 14. The evidence shows that the cheque was issued on 23.06.2014, and the policy was renewed on 25.06.2014 as admitted by RW1. The accident occurred on 12.06.2015. It is clear that there is no acceptable evidence to show that the notice of cancellation of the - 9 - HC-KAR NC: 2025:KHC:26672 MFA No. 5357 of 2021 policy was served upon either the insured or the concerned RTO. Therefore, there being no acceptable evidence to show the communication of cancellation of the policy being served upon the insured, the Tribunal was justified in concluding that the cancellation was not effective. Hence, the conclusions of the Tribunal to fasten the liability upon the appellant-Insurance Company cannot be faulted. 15. The learned counsel for the appellant places reliance on a judgment of a Division Bench of this Court in MFA 8329/2023 dated 27.06.2024 in the case of HDFC ERGO General Insurance Company Limited Vs. Mohammed Nawaq and another, where, by relying on Section 64 VB of the Insurance Act and the Regulation No.4, of IRDA, this Court had observed that the policy stood cancelled for non receipt of the premium and as such, the liability on the Insurance Company was absolved. The above judgment may be distinguished on - 10 - HC-KAR NC: 2025:KHC:26672 MFA No. 5357 of 2021 facts since the proof of service of notice of cancellation of policy to the insured was placed on record. 16. Learned counsel appearing for the appellant submits that its rights to agitate the matter with the insured may be protected. It is needless to say that if the appellant-Insurance Company has the proof of service of notice of cancellation of policy, its rights to take up the matter against the insured remains open, under extant laws. 17. For aforesaid reasons, the appeal fails and as such, the following: ORDER The appeal is dismissed. The amount in deposit shall be transmitted to the Tribunal forthwith. Sd/- (C M JOSHI) JUDGE tsn* List No.: 1 Sl No.: 54