LI Network
Published on: December 20, 2023 at 16:50 IST
The Bombay High Court has declared that an insurance company, despite canceling a policy, remains liable under the ‘pay and recover’ principle if the vehicle owner was not notified about the cancellation before the accident date.
Justice Kishore C Sant, presiding at Aurangabad, dismissed an appeal filed by HDFC Ergo challenging a Motor Accident Claims Tribunal decision.
The Tribunal directed the insurance company to pay compensation to the family of a deceased individual involved in a motor accident and recover the amount later from the vehicle owner.
The court observed, “the appellant could not produce evidence to show that the intimation of cancellation of the policy was received by the insured prior to the date of the accident. It is the case of the appellant that the intimation was sent to the insured. However, said intimation was not served for want of a complete address. The fact remains that the intimation of cancellation of the policy was not received by the insured.”
The case centered around an accident between an auto-rickshaw and a truck, resulting in the death of an auto-rickshaw passenger. The deceased was traveling from Jalgaon to Nashirabad when a truck suddenly applied brakes, causing the auto-rickshaw to collide.
The family of the deceased claimed compensation from the rickshaw owner and the insurance company. The insurance company objected, citing a breach of policy terms due to the dishonoring of the premium payment check. It argued that the policy had been canceled.
The Tribunal partially allowed the claim, holding the vehicle owner liable for compensation. It directed the insurance company to make upfront payments and recover the amount from the vehicle owner later.
The insurance company appealed this decision, contending that the policy was not in force during the accident. The court considered the necessity for proper intimation of policy cancellation and emphasized that pay-and-recover orders could only be issued if a valid policy was in existence.
The Court concluded that the insurance company failed to prove that the insured received proper intimation of policy cancellation before the accident, dismissing the appeal.
Case Title: HDFC ERGO General Insurance Company Ltd. v. Nayajoddin Nijamuddin and Ors.
