If Insured Is Aware Of Factum Of Policy’s Cancellation, No Further Notice Is Required: Kerala High Court Asks Car Owner To Pay Motor Accident Compensation

The Insurer had filed the Motor Accident Claims Appeal before the Kerala High Court.

Update: 2025-06-22 09:00 GMT

Justice C. Pratheep Kumar, Kerala High Court

While allowing an Insurance Company’s appeal in a motor accident case, the Kerala High Court has asked the R.C. owner of the car (offending vehicle) to pay compensation after noting that the insurance policy was cancelled immediately after its preparation and execution, as the owner of the vehicle failed to pay the premium. The High Court also held that if the insured is aware of the factum of cancellation of the policy, no further notice to him in that respect is required.

The Insurer had filed the Motor Accident Claims Appeal before the High Court.

The Single Bench of Justice C. Pratheep Kumar held, “In other words, separate notice or intimation regarding cancellation of policy is required only when the policy was cancelled after it was executed and delivered to the insured. Since in the instant case, immediately after preparing and executing Ext.B1, it was cancelled then and there and it was retained by the insurer, absence of separate notice intimating the factum of cancellation is not fatal. Therefore, this is a case in which no insurance policy was issued to the offending vehicle and as such, the order of the Tribunal mulcting the liability on the appellant is liable to be interfered with.”

Senior Advocate George Cherian represented the Appellant while Advocate N. Ajith represented the Respondent.

Factual Background

The Original Petition was filed by the wife, minor children and mother of deceased who died in a motor vehicle accident that occurred in the year 2010. According to the petitioners, while the deceased was riding a motorcycle, a car driven by the first respondent stopped carelessly, and a passenger sitting on the rear side of the car negligently opened the back door. The door hit the motorcycle of the deceased as a result of which, the deceased fell, sustained serious injuries and succumbed to the injuries on the same day. The second respondent is the RC owner, third respondent is the passenger who opened the door of the car, the first respondent is the de facto owner and the additional fourth respondent is the insurer of the offending car.

The Tribunal found negligence on the part of the third respondent and also found that there was valid insurance coverage for the car at the time of the accident, and awarded a compensation of Rs. 42,34,589. The insurer was directed to pay the same. Being aggrieved by the above Award, the insurer approached the High Court.

Reasoning

The Bench found that in the instant case, in respect of the cancellation of Ext.B1 policy, no written intimation was given to the owner of the vehicle. The Bench explained, “As noted above, the law is well settled that once a policy of insurance is issued on the strength of a cheque and the policy is cancelled when the cheque got dishonoured, the factum of cancellation of the policy is to be intimated to the insured before the accident and till such intimation the insurer will be liable to the third parties.”

The Bench also found that the owner of the offending vehicle had no consistent case with regard to the payment of the premium for the policy. The Court could not be convinced of the fact that the second respondent/owner had actually paid the premium in respect of cover note/policy, either by way of cheque, cash or by any other means. In the case at hand, the respondents had not adduced any oral or documentary evidence and they remained ex-parte before the Tribunal.

“The 2nd respondent has not offered any explanation as to how the original of Ext.B1 along with it’s all four copies (including customer copy-1, customer copy-2, insurer's copy and copy for office use) happened to be in the possession of the Insurance Company. In the absence of any such explanation, the only presumption that can be arrived at on the basis of the evidence on record is that, Ext.B1 never reached the hands of the 2nd respondent/owner”, the Bench said.

The Bench was of the view that in the absence of evidence, the Tribunal was not justified in finding that the insurance Company might have received the original cover note from the R.C. owner subsequently. “Therefore, the evidence of RW1 in that respect that Ext.B1 was cancelled then and there as the 2nd respondent failed to pay the premium for the same can only be believed. Since Ext.B1 never reached the hands of the 2nd respondent and it was cancelled then and there and the same was retained by the Insurance Company itself, the reason for the same can only be as stated by RW1 that the R.C. owner failed to pay the premium”, it said.

The Bench did not interfere with the quantum of compensation awarded by the Tribunal as the quantum of compensation awarded by the Tribunal was not under challenge. The Bench set aside the direction to the insurer to pay the compensation as there was no valid insurance policy for the offending vehicle.

Allowing the appeal, the Bench set aside the impugned Award to the extent it directed the Insurer to pay the compensation, and the second respondent, being the RC owner, was directed to pay the compensation awarded by the Tribunal to the petitioners.

Cause Title: HDFC Ergo General Insurance Company Ltd. v. Zeenath w/o deceased Mohameed Aneefa (Neutral Citation: 2025:KER:36824)

Appearance

Appellant: Senior Advocate George Cherian, SC Latha Susan Cherian, Advocate K.S. Santhi

Respondent: Advocates N. Ajith, Nireesh Mathew, N.L.Bitto

Click here to read/download Order


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