The Supreme Court has held that an insurance company is liable to pay compensation to a third party in a road accident case even if a policy had been nullified due to bouncing of the vehicle owners cheque for premium. Dismissing an appeal by the United India Insurance Company Ltd, it said that where the policy of insurance is issued by an authorised insurer on receipt of cheque towards payment of premium and such cheque is returned dishonoured, the liability of authorised insurer to indemnify third parties in respect of the liability which that policy covered subsists. However, the apex court said an insurance firm can get relief only if the insurance policy is cancelled by it and the intimation of such cancellation has reached the insured before the accident. In this case, UIIC had challenged the findings of the Karnataka High Court and the Motor Accident Claims Tribunal, Bangalore, which held that the insurer was bound to indemnify the claim. In this case, Nagraj had fell down from a bus and died. His wife had claimed R15 lakh as compensation from the company, which denied its liability to cover the third party risk on the ground that the insurance policy of April 2004 covering the bus was not valid as the premium was paid through cheque which had been dishonoured. The tribunal, however, rejected the companys argument and awarded the deceaseds family a compensation of more than R6 lakh. The high court also endorsed the tribunals view.
The Supreme Court in the case of Lufthansa German Airlines vs Airport Authority of India has held that the arbitration clause will survive even if the contract which contained such a clause expired by the efflux of time. It appointed retired Karnataka High Court chief Justice NK Sodhi as the sole arbitrator in a dispute between the airlines and the authority. Merely because the contract which contained the arbitration Clause has come to an end by the efflux of time would not itself put to an end the arbitration clause, the apex court said, while allowing the parties to raise any further additional issues before the arbitrator. AAI had entered into an agreement in December 2005 with the airline for providing cargo handling services. One such cargo package for delivery at Frankfurt was not shipped in time. The consignor made a claim on the airline for damage to the machinery which was contained in the package that was subsequently delivered. The claim was ultimately settled by the carrier for $51,720.While the agreement had expired in March 2007, the dispute started during the subsistence of the agreement spilled over to later years till 2008-09. Even AAI had failed to appoint its arbitrator despite a notice of arbitration being sent to it in 2009. So Lufthansa moved the apex court for appointment of an arbitrator.
Fast track courts
Upholding a policy decision of the Centre and state governments to discontinue 1,734 fast track courts, the Supreme Court has ordered the creation of 1,800 fresh posts of judges in the lower judiciary to blunt the impact of sudden discontinuance of FTCs that were operating for more than a decade. Stressing the importance of the constitutional mandate under Article 21 that guarantees expeditious dispensation of justice, it directed the Union government to allocate R5,000 crore to the states for upgrading their judicial infrastructure and for recruiting judges. The State cannot be permitted to deny the constitutional right to speedy trial to the accused on the ground that it does not have adequate financial resources to incur the necessary expenditure needed, for improving the administrative and judicial apparatus to ensure speedy trial, it said, adding that the FTCs would come to an end on the different dates stipulated by the states, with the last of the FTCs ceasing functioning in Haryana from March, 2016. The top court clarified that the state government can go ahead with the scheme with a condition that it should not be done on an ad-hock basis but be made a permanent feature of the justice delivery system.