HIGH COURT OF UTTARAKHAND AT NAINITAL FIRST APPEAL NO. 85 OF 2007 (Old No. 1461/01) M/s New India Assurance Company Limited. …..…….Appellant. Versus Shashi Dhar Dimri and another. …...Respondents. Dated: 12.5.2008 Hon’ble Rajesh Tandon, J. Heard T.A. Khan, counsel for the appellant and Sri N.S. Negi, counsel for the respondent. 2. By the present First Appeal filed under Section 96 of the Code of Civil Procedure, appellant has prayed for setting aside the judgment and decree dated 2.7.2001 passed by the District Judge, Chamoli in Civil Suit No. 43 of 1994 Shashi Dhar Dimri Vs. The New India Assurance Company and another. 3. Briefly stated, a suit was filed by the plaintiff / respondent no. 1 being Civil Suit No. 43 of 1994 Shashi Dhar Dimri Vs. The New India Assurance Co. and another praying to the following effect: “vr% fuosnu gS fd oknh ds Ik{k esa izfroknhx.k ds fo:) la;qDr:is.k vFkok izFkd:is.k fuEu vuqrks"k dh vkKfIr ikfjr djus dh d`ik dj nh tk;& v& ;g fd eqo0 2]20]000@& :0 dh vkKfIr oknh ds Ik{k esa izfroknhx.k ds fo:) la;qDr :is.k ;k Ik`Fkd :is.k ikfjr djus dh d`ik dj nh tk,A c& ;g fd oknh ds Ik{k eas izfroknhx.k ds fo:) nkok nk;j djus ds Ik’pkr vkSj nkSjkus lquokbZ nkok rFkk nkoh jde ij vkbZUnk olwy gksus rd 14% okf"kZd C;kt dh vkKkfIr ikfjr djus dh d`ik dj nh tk;A l& ;g fd] oknh ds Ik{k esa izfroknhx.k ds fo:) okn O;; dh vkKfIr ikfjr djus dh d`ik dj nh tk,A n& ;g fd] vU; tks Hkh vuqrks"k ekuuh; U;k;ky; esa mfpr le>s vkSj ekaxus ls NwV x;s gksa oknh dks izfroknhx.k ls fnykus dh d`ik dj nh tk,A” 4. According to the plaint averments, the plaintiff was the owner of U.M.S. 8153, which was insured with defendant no. 1 / appellant bearing Policy No. 3132190300079 for a period of one year commencing from 4.4.1989. For further renewal of the Insurance Policy, the plaintiff contacted the representative of the Insurer on 15th March, 1989 and paid a sum of Rs., 2,932/- by way of Cheque drawn on Chamoli Zila Sahkari Bank. The Defendant no. 2 after receiving the payment of Cheque in terms of the Policy No. 3132198300424, insured the Vehicle No. U.M.S. 8153 for the period from 4.4.1989 to 3.4.1990 for a sum of Rs. 2,10,000/-. The vehicle met with the accident on 2nd September, 1989 near Khari Chattan towards Gochar, when it was coming to Karn Prayag from Kotdwar. The information of the said accident ws sent on 4th September , 1989 to the Insurer. The insurer has also sent the Surveyor on the spot. Again the Surveyor was sent to inspect the vehicle. On 4th December, 1989, the insurer / defendant no. 1 informed that the cheque has not been encashed and he has required to pay the cash amount immediately. According to the plaintiff, he went to the Office along with the premium amount and the amount was not accepted on the ground that the vehicle has already met with the accident. On 18.12.1989, the plaintiff received a message while returning that the policy had already been cancelled. Hence the suit has been filed for the recovery of the said amount. 5. The defendants have filed a written statement stating denying the plaint averments. The Insurer has filed a written statement, where in paragraphs 26 and 27, it has been stated to the following effect: “26& fd mRrjnkrk izfroknh dh Jhuxj fLFkr 'kk[kk dk;kZy; esa fnukad 12& 12 & 89 dks Hkkjrh; LVsV cSad ls lwpuk izkIr gqbZ fd mDr pSad dk ftyk lgdkjh cSad d.kZiz;kx us Hkqxrku ugha fd;k gS QyLo:Ik fnukad 18&12&1989 dks fuxZr ikfylh o mRrjnkrk izfroknh us fujLr dj nhA 27& fd oknh us tkucw>dj fd mlds [kkrsa esa iSlk ugha gS mRrjnkrk dEiuh ds uke fnukad 15 & 3& 89 dk pSd tkjh fd;k vkSj mlds vk/kkj ij ikfylh gkfly dhA tks fd vius vki esa 'kwU; gS vkSj mlls oknh dks dksbZ vf/kdkj gkfly ugha gksrk gSA Lo;a Hkh oknh ds nkos ds izLrj 16 ds fooj.k ls Li"V gS fd 15&3&89 ls 31&5&89 rd mDr [kkrsa esa vksoj M~k¶~V Hkh tkjh fd;k x;kA ftldk lkQ eryc gS fd [kkrs esa iSlk vo’ks"k Fkk gh ughaA oknh Lo;a Lohdkj djrk gS fd oknh dk pSd ekg ebZ 1989 esa ftyk lgdkjh cSad d.kZiz;kx esa Hkqxrku gsrq izLrqr gks x;k FkkA D;ksafd cSad }kjk izhe;e pSd vLohd`r fd;k x;k gS vr% okgu ds chp dh izhf;;e dEiuh ds [kkrs esa tek ugha gqbZA ;g /kkjk 64 VB dk Li"V mYya?ku gS bl dkj.k ikfylh tkjh djus dh frfFk ls gh oS| ugha gS ,oa izhfe;e jkf’k da0 dks izkIr u gksus ds dkj.k izfroknh chek da0 mDr okgu ls lacaf/kr fdlh Hkh izdkj ds eqvkots dks nsus gsrq mRrjnk;h ugha Bgjk;h tk ldrh gSA vr% okn dkfcys [kkfjt gksus ;ksX; gSA” 6. On the pleading of the parties, the court below the framed the following issues: “1- D;k oknh }kjk vius okgu la0 ;w0,e0,l0 8153 dh ikfylh la0 3132190300079 dks fnukad 4-4- 1989 ls vkxs uohuhdj.k djus ds fy;s fnukad 15-3- 89 dks vadu 2932-00 :Ik;s dk pSd izfroknh la0 1 dks izfroknh la0 2 ds ek/;e ls fn;k x;k vkSj izfroknh la0 1 us mDr ikfylh fnukad 4-4-89 ls 3-4-90 bZloh rd nks yk[k :Ik;s ds fy;s uohuhd`r dj nh\ 2- D;k oknh }kjk fnukad 15-3-89 dks Hksts x;s pSd dk Hkqxrku izfroknh la0 dks u gksus dh n’kk esa izfroknh la0 1 us fnukad 12-12-89 dks lwfpr fd;k fd oknh rRdky izhfe;e la0 1 ds dk;kZy; esa igWqpk rks mlus izhfe;e dk /ku izkIr djus ls bUdkj dj fn;k] ;fn gk¡ rks bldk izHkko | \ 3- D;k izfroknh la0 2 ds cSad esa oknh ds [kkrs esa oknh }kjk fnukad 15-3-89 dks pSd tkjh djus dh mijkUr /ku tek ugha Fkk] fd izfroknh la0 2 dk dFku gS] ;fn gka rks izHkko \ 4- D;k izfroknh la0 2 }kjk lkekU; cSafdax iz.kkyh dks ikyu ugha fd;k x;k rFkk oknh dks iz’uxr CkSad dks fcuk Hkqxrku fd; okil djus ls iwoZ dksbZ lwpuk ugha nh ;fn gk¡ rks izHkko \ 5- D;k oknh }kjk fnukad 15-3-89 dks tkjh fd;k x;k cSad] oknh ds [kkrs esa /ku tek u gksus ds dkj.k] egt /kks[ks ls ikfylh dk uohuhdj.k djk;k x;k vkSj D;k oknh }kjk izhfe;e dh 'krksZ dk mYya?ku fd;k x;k] vkSj D;k izfroknh la0 1 chek dEiuh fdlh {kfriwfrZ dh ftEesnkj ugha gS \ 6- vuqrks"k ;k {kfriwfrZ ;fn dksbZ gks] ftldk fd oknh izkIr djus dk vf/kdkjh gS] ;fn gk¡ rks fdl izfroknh ds fo:) \ 7- D;k oknh }kjk chek dEiuh dks fn;s x;s pSad ds vuknj.k dh lwpuk oknh dks nsus dk mRrjnkf;Ro izfroknh la0 3 dh d.kZiz;kx 'kk[kk dk Fkk] ;fn gk¡ rks izHkko \ 8- D;k izfroknh la0 3 ds fo:) dky ckf/kr gS tSlk fd izfroknh la0 3 ds tokcnkos ds izLrj la0 27 esa mfYyf[kr fd;k x;k gS \” 7. While deciding the issues no. 8 as to whether suit is time barred against the defendant no. 3 as has been mentioned in paragraph 27 of the written statement filed by the defendant no.3, the court below has recorded a finding that the defendant no. 3 has been deleted from the array of the parties on 20.8.1999, therefore, the aforesaid question does not arise. This issue has been decided in negative. 8. While deciding the issue no. 7 as to whether Karn Prayag Branch of the defendant no. 3 was liable to give information regarding the dishonour of the cheque of the plaintiff, the court below has recorded a finding that neither the plaintiff was having any account in the State Bank of India, Branch Karn Prayag, nor any cheque was issued by the plaintiff in the name of State Bank of India Branch Karn Prayag and nor the plaintiff sent the cheque to the State Bank for being discounted, but the cheque issue by the plaintiff on 15.3.1989 was of District Sahkari Bank, Chamoli, Karn Prayag, which was sent to Sri B.P. Snehi agent of the defendant no. 1 and the agent sent it to Branch Manager of the said Company for depositing the premium of the policy, therefore, the plaintiff was not directly related with the State Bank, nor the State Bank was the banker of the plaintiff. State Bank was the banker of the New India Assurance Company / defendant no. 1, therefore, there was no occasion to give information to the plaintiff and if the Bank had to give information, it would have given the information to defendant no.1 as the cheque had come through them. This issue has been decided in negative. 9. While deciding the issue no. 1 as to whether the plaintiff on 15.3.1989 gave a cheque of Rs. 2932.00 to the defendant no. 1 through defendant no. 2 in order to get his Insurance Policy No. 3132190300079 of Vehicle No. U.M.S. 8153 renewed from 4.4.1989 and the defendant no. 1 renewed the said policy from 4.4.1989 for a sum of Rs. 2,00,000/-, the court below has recorded the finding that since the defendant no.1 has admitted paragraphs 5 and 6 of the plaint and after receiving the cheque dated 15.3.1989, renewed the policy from 4.4.1989 to 3.4.1990 for a sum of Rs. 2,10,000/-. This cheque had not been given through the defendant no. 2, but this cheque had been given to the defendant no. 2 from the account of defendant no. 1 and after receiving the payment, the policy was issued. This issue has been decided accordingly. 10. While deciding the issue no. 2 as to whether in non- receipt of the amount of cheque by the defendant no. 1 sent by the plaintiff, the defendant no. 1 on 12.12.1989 intimated the plaintiff to deposit the premium immediately and when the plaintiff went to the office of the defendant no.1 to deposit the amount of premium, he refused to accept the same, the court below has recorded the finding to the following effect: “mudk dFku nks ckrksa ls ljklj xyr gS] izFke ;g fd ;g V~d nq?kZVukxzLr 2-9-89 dks gks x;k Fkk vkSj nwljh ckr ;g fd chek dEiuh dk dk;kZy; 'kfuokj ds fnu ugha [kqyrk gS vkSj 'kfuokj ds fnu Hkqxrku djus dk dksbZ iz’u ugha mBrk gSA chek dEiuh dh vksj ls dksbZ Hkh lwpuk fyf[kr :Ik ls ;g Hkh ugha dh x;h fd oknh fnukad 16-12-89 'kfuookj dks vk;k Fkk vkSj mldk Hkqxrku vLohdkj dj fn;k x;k vr% okn I= dh /kkjk 13 esa ;g dFku dgk x;k gS tks loZFkk cukoVh o dkYifud FkkA oknh }kjk u rks dksbZ Hkqxrku fd;k x;k vkSj u gh Hkqxrku djus dks dksbZ iz’u Fkk D;ksafd ml le; rd okgu nq?kZVukxzLr gks x;k Fkk vr% Hkqxrku djus dk dksbZ iz’u ugha mBrkA chek dEiuh us fnukad 12-12-89 dks vo’; lwfpr fd;k ijUrq 'krksZ ds lax ;g lwpuk nh x;h Fkh fd okgu lqjf{kr gks rHkh Hkqxrku djsa D;ksafd okgu nq?kZukxzLr gks x;k Fkk blfy;s mlds }kjk Hkqxrk djsa D;ksafd okgu nq?kZVukxzLr gks x;k Fkk blfy;s mlds }kjk Hkqxrku fd;s tkus dk dksbZ iz’u ugha mBrk FkkA okn in la0 2 rn~uqlkj fu.khZr fd;k tkrk gSA” 11. While deciding the issues no. 3 and 4 as to whether the money was not deposited in the account of the plaintiff after the issuance of the cheque dated 15.3.1989 as has been stated by the defendant no. 2 and further as to whether the defendant no. 2 did not follow the general procedure of the banking and no information was given to the plaintiff before returning the cheque of the plaintiff to him, the court below has recorded a finding that on 16th May, 1989, the plaintiff has a balance of Rs. 500.98 and even after the intimation on 23.5.1989, the amount regarding the premium was not sent. 12. While deciding the issue no. 5 as to whether due to non deposit of the sufficient amount in the account of the plaintiff and the cheque issued by the plaintiff on 15.3.1989, the policy has illegally be renewed and as to whether the plaintiff has violated the terms and conditions of the policy and as to whether the defendant no. 1 Insurance Company is not liable to pay any compensation, the court below has recorded a finding to the following effect: “bl izdkj tks Hkwppwd chek dEiuh o LVsV cSad us vkil esa fd;k mldh dksbZ ftEesnkjh oknh ij ugha gSA vc ftyk lgdkjh CkSad d.kZiz;kx us fn0 23.5.89 dks lwfpr dj fn;k Fkk fd bl pSad dk Hkqxrku fd;k tkuk lEHko ugha gS rks bldh rRdky lwpuk izfroknh la0 1 }kjk oknh dks djrk rks oknh Lo;a ftEesnkj gksrk yfdu bl izdj.k esa pwafd izfroknh la0 1 dk LVsV cSad ds }kjk 12-12-89 dks lwfpr fd;k x;k rks og CkSad o dEiuh ds chp dh Hkwypwd gS mlds fy;s oknh fTkEesnkj ugha gks ldrk gS vkSj foi{kh la0 2 us Hkh lgh :Ik ls /kujkf’k u gksus ds dkj.k pSad dks vLohd`r fd;k mudh rjQ ls dksbZ =qfV ugha gSA leLr rF;ksa dks n`f"Vxr j[krs gq;s foi{kh la0 1 }kjk =qfV dh x;h gS vr% oknh muls gtkZ izkIr djus dk vf/kdkjh gSA okn fcUnq la0 5 rn~uqlkj fu.khZr fd;k tkrk gSA” 13. While deciding the issue no. 6 writ regard to relief, the court below has recorded a finding that the plaintiff is entitled to get Rs. 2,00,000/- (Two lacs) from the defendant no. 1 along with interest @ 9% per annum. 14. The court below has decreed the suit of the plaintiff on 2.7.2001. 15. Counsel for the appellant has submitted that the matter is fully covered by the judgment of National Insurance Co. Vs. Seema Malhotra and others (2001) 3 SCC 151 where relying upon the judgment of Oriental Insurance Co. Ltd. Vs. Inder Jeet Kaur (1998) 1 SCC 371, it has been held as under: “9. A three-Judge Bench in Oriental Insurance Co. Ltd. V. Inderjit Kaur (1998) 1 SCC 371 left this point unconsidered. In that case also the premium was paid by cheque which was later dishonoured and the insured was intimated about it by the Insurance Company two months after the vehicle was involved in the accident. When a claim was made by the legal heirs of the driver who died in the accident the Insurance Company registered the claim on the strength of Section 64- VB of the Insurance Act of 1938. Repelling the contention of the Insurance Company, the three-Judge Bench held thus: “9. We have, therefore, this position. Despite the bar created by Section 64-VB of the Insurance Act, the appellant, an authorized insurer issued a policy of insurance to cover the bus without receiving the premium therefor. By reason of the provisions of Sections 147(5) and 149 (1) of the Motor Vehicles Act, the appellate became liable to indemnify third parties in respect of the liability which that policy covered and to satisfy awards of compensation in respect thereof notwithstanding its entitlement (upon which we do not express any opinion) to avoid or cannel the policy for the reason that the cheque issued in payment of the premium thereon had not been honoured.” 10. Thus, the three-Judges Bench refrained from expressing any opinion on the question of Insurer’s entitlement to avoid or cancel the policy as against the insured when the cheque issued for payment of the premium was dishonoured. 11. Subsequently the same question was mooted before a two-Judge Bench of this Court in New India Assurance Co. Ltd.v. Rula but the question of insurer’s right to repudiate the claim as against the insurer in a similar situation did not arise therein and hence the Bench parried the question. 12. Thus the question has now to be considered as the same is crux of the issue involved in this case. As pointed out earlier the insurance is a contract whereby one undertakes to indemnify another against loss, damage or liability arising from an unknown or contingent event and is applicable only to some contingency or act to occur in future. We have to consider how far the legislature has controlled the insurance business. Section 2 (9) of the Insurance Act defines “insurer”. inter alia, as “any body corporate … carrying on the business of insurance, which is a body corporate incorporated under any law for the time being in force in India”. Section 2-D of the Act says that: “2-D. Every insurer shall be subject to all the provisions of this Act in relation to any class of insurance business so long as his liabilities in India in respect of business of that class remain unsatisfied or not otherwise provided for. 13. It is in the aforesaid context that we have to consider the impact of Section 64-VB of the Insurance Act. As sub - sections (1) and (2) of the said action alone are material for the purpose we extract them herein: “64-VB. (1) No insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily payable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and until deposit of such amount as may be prescribed, is made in advance in the prescribed manner. (2) For the purposes of this section, in the case of risks for which premium can be ascertained in advance, the risk may be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the insurer.” 16. Section 54 of the Contract Act is to be read in that background. It is extracted below: “54. When a contract consists of reciprocal promises, such that one of them cannot be performed or that its performance cannot be claimed till the other has been performed, and the promisor of the promise last mentioned fails to perform it, such promisor cannot claim the performance of the reciprocal promise, and must make comensation to the other party to the contract for any loss which such other party may sustain by the non- performance of the contract.” 17. In a contract of insurance when the insurred gives a cheque towards payment of premium or part of the premium, such a contract consists of reciprocal promise. The drawer of the cheque promises the insurer that the cheque, on presentation, would yield the amount in cash. It cannot be forgotten that a cheque is a bill of exchange drawn on a specified banker. A bill of exchange is an instrument in writing containing an unconditional order directing a certain person to pay a certain sum of money to a certain person. It involves a promise that such money would be paid. 18. Thus, when the insured fails to pay the premium promised, or when the cheque issued by him towards the premium is returned dishonoured by the bank concerned the insurer need not perform his part of the promise. The corollary is that the insured cannot claim performance from the insurer in such a situation.” 16. Considered the facts and circumstances of the case. While deciding the issue no. 2 as to whether in non-receipt of the amount of cheque by the defendant no. 1 sent by the plaintiff, the defendant no. 1 on 12.12.1989 intimated the plaintiff to deposit the premium immediately and when the plaintiff went to the office of the defendant no.1 to deposit the amount of premium, he refused to accept the same, the court below has recorded the fining to the following effect: “mudk dFku nks ckrksa ls ljklj xyr gS] izFke ;g fd ;g Vªd nq?kZVukxzLr 2-9-89 dks gks x;k Fkk vkSj nwljh ckr ;g fd chek dEiuh dk dk;kZy; 'kfuokj djus dk dksbZ iz’u mBrk ugha mBrk gSA chek dEiuh dh vksj ls dksbZ Hkh lwpuk fyf[kr :Ik ls ;g Hkh ugha dh x;h fd oknh fnukad 16-12-89 'kfuookj dks vk;k Fkk vkSj mldk Hkqxrku vLohdkj dj fn;k x;k vr% okn Ik= dh /kkjk 13 esa ;g dFku dgk x;k gS tks loZFkk cukoVh o dkYifud FkkA oknh }kjk u rks dksbZ Hkqxrku fd;k x;k vkSj u gh Hkqxrku djus dk dksbZ iz’u Fkk D;ksafd ml le; rd okgu nq?kZVukxzLr gks x;k Fkk vr% Hkqxrku djus dk dksbZ iz’u ugha mBrkA chek dEiuh us fnukad 12-12-89 dks vo’; lwfpr fd;k ijUrq 'krksZ ds lax ;g lwpuk nh x;h Fkh fd okgu lqjf{kr gks rHkh Hkqxrku djsa D;ksafd okgu nq?kZVukxzLr gks x;k Fkk blfy;s mlds }kjk Hkqxrku djsa D;ksafd okgu nq?kZVukxzLr gks x;k Fkk blfy;s mlds }kjk Hkqxrku fd;s tkus dk dksbZ iz’u ugha mBrk FkkA okn in la0 2 rn~uqlkj fu.khZr fd;k tkrk gSA” 17. Since, it is proved from the findings recorded while deciding the issue no. 2 that the plaintiff / respondent did not intend to deposit the amount of premium either in cash or by cheque, therefore, no liability can be fastened upon the Insurance Company as will appear from the judgment of National Insurance Co. Vs. Seema Malhotra and others (2001) 3 SCC 151. 18. In view of the aforesaid, the appeal is remanded to the court below for deciding the same afresh in the light of the aforesaid judgment. The findings recorded by me shall not come in the way of the court below while deciding the case afresh. 19. Consequently, Appeal is allowed. No order as to costs. (Rajesh Tandon, J.) 12.5.2008 Rathour