It Is The Burden Of Insured To Prove That Intimation Of Cancellation Of Insurance Policy Was Not Received From Insurer : Kerala HC Full Bench [Read Judgment]

"The burden is on the addressee to rebut the presumption by conclusive evidence that he did not really receive the letter and it is not a case of deliberate avoidance. The burden is not on the insurer to establish conclusively that the intimation of cancellation of insurance coverage was in fact served on the insured or the registering authority", held the judgment authored by Justice V Chitambaresh for Full Bench answering the reference.

The Full Bench of the High Court of Kerala has clarified that once the insurer shows that it has intimated the cancellation of insurance policy to the insured through post addressed to him, then the burden to show that the intimation was not received shifts to the insured. The Court was considering third party insurance policy under the Motor Vehicles Act.

The Full Bench of Justices V. Chitambaresh, P B Suresh Kumar and Satish Ninan  relied on the presumption under Section 27 of the General Clauses Act to reach the conclusion. A presumption in favour of the sender regarding proper receipt of post by addressee for a properly addressed and prepaid post is supported in law  by Section 27 of the General Clauses Act, 1897.

The issue was referred to the Full Bench to decide the question 'On whom does the burden lie to prove that the insurer has so intimated about the cancellation on the dishonour of the cheque received towards premium?'

In United India Insurance Company Limited v. Laxmamma and others, the Supreme Court held that insurance company will not be liable to indemnify loss arising out of motor vehicle accident, if it has cancelled the policy and has intimated the cancellation to the insured and the motor vehicle authorities before the occurrence of the motor accident.  The SC held that to escape from liability it had to be proved that insurance is cancelled by the
authorised insurer and intimation of such cancellation has reached the insured before the accident.

In this context, the Full Bench considered the question : Is it sufficient if there is proof that the insurer has sent intimation about the cancellation of the insurance coverage to the insured and the registering authority or is it necessary to prove that the addressees have received the same?

Relying on the presumption under Section 27, the Full Bench held :

"It would suffice if the insurer establishes prima facie that the letter about the cancellation of insurance coverage sent under Certificate of Posting or by registered post would have been delivered in the ordinary course".

It was further held that a period of one week from the date of dispatch can safely be adopted as the time necessary to serve the letter in the ordinary course after which the intimation is presumed to have been served on the addressee.

"The burden is on the addressee to rebut the presumption by conclusive evidence that he did not really receive the letter and it is not a case of deliberate avoidance. The burden is not on the insurer to establish conclusively that the intimation of cancellation of insurance coverage was in fact served on the insured or the registering authority", held the judgment authored by Justice V Chitambaresh for Full Bench answering the reference.

A judgment of Division Bench which had held that it was the obligation of the insurer to establish the service of the intimation on the addressee was overruled.

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