UNITED INDIA INSURANCE CO. LTD. vs SUJIT @ LITAN SAHA

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IN THE HIGH COURT AT CALCUTTA
Civil Appellate Jurisdiction
Appellate Side

Present:

The Hon’ble Justice Biswaroop Chowdhury

F.M.A. 448 of 2007
With
IA NO: CAN 2 of 2009 (Old No: CAN 9326 of 2009)
United India Insurance Co. Ltd.
VERSUS
Sujit Saha @ Litan Saha & Ors.


For the appellant/Insurance Co.:
Mr. Rajesh Singh, Adv.


Mr. Niranjan Maity, Adv.
Mrs. Indrani Ghosh, Adv.

For the respondents:


Last Heard on: August 21, 2026
Judgment on: September 21, 2026
Biswaroop Chowdhury, J:
The appellant before this Court was an opposite party in a case under
Section 163A of the Motor Vehicles Act 1988 and is aggrieved by the Judgment
and Award dated 20-05-2006 passed by Learned Additional District Judge
Alipore South 24 Parganas in MACC 84 of 2005.

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The case of the claimant before the Learned Trial Court may be summed
up thus:
On 25-06-2005 while the victim Sunita @ Mita Saha was going a motor
cycle bearing No- WB-20J-9855 near Uttam Laminates Factory and thereby
dashed her causing almost instantenous death of Sunita @ Mita Saha.
The applicants have sustained immense pecuniary loss besides their
suffering from perpetual pain, shock and mental agony.
Pursuant to the filing of the case notice was issued upon the opposite
parties. Opposite Party vehicle owner did not contest the case by filing written
statement. However opposite party Insurance Company contested the case by
filing written statement. ISSUES were framed and evidence was adduced.
Learned Trial Judge upon considering the evidence adduced and upon hearing
the Learned Advocates was pleased to dispose of the claim case by observing
and directing as follows:-
‘Hence AWARDED. That MACC No. 84/2005 is hereby allowed on contest
without cost against the OP No. 2 United India Insurance Co. Ltd. and ex-parte
against the rest.
The petitioners do get an amount of Rs. 1,87,000/- (Rupees One lakh
eighty seven thousand) only from the OP No-2 United India Insurance Co. Ltd.
in equal shares u/s. 163A of the Motor Vehicles Act.

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The OP No. 2 United India Insurance Co. Ltd. is directed to pay the
aforesaid amount to the petitioners in equal shares within 2 months from the
date of order failing which simple Interest @9% per annum be charged from the
date of filing of this case i.e. from 29.1.2005 till final realization.
The petitioner, Sujit @ Litan Saha is permitted to receive cheques which
will be issued by the Insurance Co. in his name as well as in favour of his
minor children. The petitioner no. 1 is also directed to keep the shares of the
minors in any Nationalized bank or Post Office till the minors attain majority
and to file Xerox copies of the deposit certificate in Court within one month
from the date of receiving the cheque.’
The appellant Insurance Company being aggrieved by the Judgment and
Award passed by the Learned Trial Court has come up with the instant appeal.
Heard Learned Advocate for the appellant Insurance Company and
Learned Advocate for respondent claimant. Perused the evidence adduced and
materials on record.
Learned Advocate for the appellant submits that the Learned Tribunal
accepted the fact that the premium cheque was dishonored and the intimation
regarding the same was given to the owner/insured. Moreover it was also
observed that the Insurance Company would be at liberty to recover the
amount from the owner of the offending vehicle. However in the ordering
portion the right to recover was not granted to the appellant.

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Learned Advocate submits that the Learned Trial Judge erred in directing
the appellant to pay compensation in absence of contract of Insurance.
Learned Advocate also submits that his client should be exonerated.
Learned Advocate relies upon the following Judicial decisions.
Dedappa and ors. VS Branch Manager National Insurance Company
Limited.
Reported in MANU/SC/4587/2007
United India Insurance Co. Ltd. VS Laxmamma and ors
Reported in MANU/SC/0314/2012.
National Insurance Company Limited VS Sunita Devi.
MANU/SC/1052/2025
Madhusudan Das VS Smt. Narayanibai
Reported in (1983) 1 SCC-35.
Learned Advocate for the respondents/claimants submits that even if
there is non-payment of premium the Insurance Company should satisfy the
award and recover the same from the vehicle owner.
Learned Advocate further submits that mere notice of dishonour of
cheque to the vehicle owner or RTO is not sufficient but the same should be
within the knowledge of vehicle owner.

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Learned Advocate also submits that compensation awarded should be
enhanced to Rs. 500,000/-.
Learned Advocate relies upon the following Judicial decisions.
Oriental Insurance Co. Ltd. VS Inderjeet Kaur.
Reported in 1998 ACJ 123.
United India Insurance Co. Ltd. VS Laxmannma and ors.
Reported in 2012 ACJ-1307.
Keshar Bai and ors. VS Afsar Ali and ors
2011 ACJ 2023
Upon considering the Judicial decisions it is clear that if on the date of
accident there was a policy of insurance in respect of the vehicle in question
the third party would have a claim against the Insurance Company and the
owner of the vehicle would have to be indemnified in respect of the claim of
that party. Subsequent cancellation of the insurance policy on ground of non-
payment of premium would not affect the rights already accrued in favour of
the third party.
Thus it is clear that during existence of policy if accident takes place
Insurance Company is liable to third party. However if the policy is cancelled
and intimated prior to accident there is no liability of the Insurance Company.
In the instant case the appellant Insurance Company proved that the policy

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was cancelled and intimated to the vehicle owner. Hence there is neither
contractual obligation nor statutory obligation to pay the compensation by
Appellant Insurance Company. However it is also to be considered that
Insurance Policies although are entered for one year but due to existence of
business relations the Insurance Companies make endeavour to renew for
every year. As these Insurance Contracts are not isolated contract for one year
but entered every year and even in case of default and cancellation of Polices
opportunities are granted to renew policies issuing reminders, and attempts
are made to continue the policy contracts with the existing vehicle owners and
intimating the Regional Transport Authority in case of cancellation of policies
will go to show that public interest is involved. As Motor Vehicle claim
legislation is a beneficial legislation the Insurance Contracts cannot be said to
be a purely business contract confined between insurer and vehicle owner but
third party benefit is involved.
Thus Appellant being a Government Company and State within the
meaning of Article 12 of the Constitution of India has certain Constitutional
obligation apart from the right to do business. These obligations arise in case of
some exigency or undeserved want. Thus when third party victims suffer
hardship due to wrong acts of vehicle owners Insurance Companies where
feasible may grant some relief to come out of the helpless situation. These
undeserved want arises mainly in case of violation of Policy condition and
cancellation of policies for non-receipt of premium for which third party is not
liable. In a case where a policy is detected to be fake in Court proceedings and

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Insurance Company did not have any business relation Courts cannot direct
an insurance company to compensate a third party and then recover the same
from the owner, but in cases where policy existed and thereafter cancelled or
not renewed, there existed a business relation earlier between Insurance
Company and vehicle owner. In such cases Courts for the purpose of giving
effect to the beneficial legislation may direct the Insurance Company to pay
compensation and recover from vehicle owner or direct part payment and
recovery by Insurance Company and part payment directly by the vehicle
owner.
Motor Vehicle claim Legislation which is a beneficial legislation was
framed with the idea that vehicle owners will get their vehicle insured at all
point of time without breach and there is no scheme framed by Government for
compensating victims of accident committed by uninsured vehicle. In such a
situation it becomes extremely difficult to proceed against vehicle owner and
recover compensation. Till a scheme is framed in this regard Courts may in
exercise of discretion direct Insurance Company to pay compensation and
recover the same from vehicle owners.
In the case of Smt. Sova Dey and ors VS National Insurance Company
Ltd. FMA-1442 of 2014 it was observed as follows:-
‘As the Motor Accident claim Legislation is a Welfare legislation Tribunals
and Courts have to see that the compensation amount reaches to the victims or
their legal heirs without delay and without any unnecessary hardship. When

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after adjudicating compensation cases insured/vehicle owners are directed to
pay it may take considerable time for them to arrange the compensation amount
and when there is failure to pay the amount the victims or their families will
again have to knock the doors of Court to get the compensation realized. Thus
after suffering injury in accident or losing near relation in accident, and after
pursuing case in Court of Law if the victim or their family is unable to get the
compensation realized the object of the welfare legislation will be frustrated. On
the other hand if the Insurer/Insurance Company is directed to make the
payment they can do so within a short period and pursuant to payment may
either settle the matter with the insured to repay the compensation by granting
instalments or recover the same by instituting recovery proceeding.
In the conduct of recovery proceedings it may be possible for Insurance
Companies to engage its officers and employees to pursue the recovery case for
long period and to make all necessary enquiries for realization of the amount
paid which may not be possible for the victims of accident or their relatives. A
victim of accident or their relatives if made to institute a recovery case to realize
compensation from vehicle owner/insured they will be in a helpless situation
even after obtaining award of compensation which is not the object of a welfare
legislation. Moreover the vehicle owner/insured who has to enter into contract of
Insurance with Insurance Companies under the Law can be approached by the
Insurance Companies for settlement before initiating recovery proceedings which
is not possible for third party victims. It is held in different judicial
pronouncements that Tribunals are not required to adhere rigidly to the doctrine

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of stare decis so that they can consider the claim more sympathetically. The
contribution of the Tribunals should be to ensure that the benefits reach the
helpless person.’
Article 41 of the Constitution of India Provides that the State shall within
the limits of its economic capacity and development make effective provision for
securing the right to work to education and to public assistance in cases of
unemployment old age, sickness and disablement and in other cases of
undeserved want. The suffering of third party due to fault of vehicle owner is
also an undeserved want. In different judicial pronouncement it is held that
Court should so interpret an Act as to advance Article 41 the Constitution.
As business relation of Insurance Companies with vehicle owner is not
for one year but continues, for default of vehicle owner the Insurance
Companies should in case of exigency pay the third party compensation which
should be treated as loan to vehicle owner with right to recover after some
period from the said owner.
In the instant matter although Appellant Insurance Company is not
liable to pay under contract but in view of above discussion and considering
the fact that respondents claimants after losing their near relation pursued the
litigation for twenty years they should not be relegated to Tribunal to institute
recovery proceedings against the vehicle owner as it will cause immense
hardship. As the compensation awarded is not very high and the compensation
amount is already deposited in Court claimants should be permitted to

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withdraw part of the compensation. As no cross-objection is filed for
enhancement prayer for enhancement is rejected.
Hence this Appeal FMA-448/2007 stands disposed. Judgment and
Award dated 20-05-2006 passed by Learned Additional District Judge Alipore
South 24 Parganas in MACC-84 of 2025 stands modified to the extent that the
Appellant Insurance Company shall pay Rs. 1,30,000/- to the respondents
claimants with right to recover from vehicle owner, and Rs. 57,000/- to be paid
by vehicle owner to the claimants. The recovery proceedings may be instituted
by both parties if necessary payments are not made by vehicle owner within 8
weeks from date of communication of this order.
As the entire compensation is deposited the claimants are permitted to
withdraw Rs. 1,30,000/- along with accrued interest. Balance amount with
accrued interest if any be returned to Insurance Company.
Before concluding this Court is constrained to observe that as uninsured
vehicles could not be prevented by administration from plying on roads and
accident caused by uninsured vehicles throws the third party victim and their
families in a helpless situation to recover compensation from vehicle owners
time has come for the Government Authority to frame scheme to compensate
victims of accident caused by uninsured vehicle. As per Article 38 of the
Constitution of India to secure a social order for the promotion of Welfare of the
people, necessary decision may be taken in this regard.

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Let a copy of this Order be sent to the Registrar General to Communicate
the same to the Chief Secretary State of West Bengal with a request for
consideration and necessary decision regarding framing of scheme as observed
above. Copy be also sent to the Advocate General State of West Bengal and
Additional Solicitor General and Secretary State Legal Service Authority West
Bengal for information.
Urgent photostat certified copy of this order, if applied for, should be
made available to the parties upon compliance with the requisite formalities.

(Biswaroop Chowdhury, J.)