F.A.O.NO. 2429 to 2442 OF 1996 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH F.A.O.NO. 2429 OF 1996 Date of decision:6th September, 2010 United India Insurance Company Limited through its Manager, Regional Office, Sector 8, Madhya Marg, Chandigarh .......Appellant Versus Anil Kumar and others ........Respondents F.A.O.NO. 2430 OF 1996 United India Insurance Company Limited through its Manager, Regional Office, Sector 8, Madhya Marg, Chandigarh .......Appellant Versus Smt. Lalita Kumari and others ......Respondents F.A.O.NO. 2431 OF 1996 United India Insurance Company Limited through its Manager, Regional Office, Sector 8, Madhya Marg, Chandigarh .......Appellant Versus Smt. Lalita Kumari and others ......Respondents F.A.O.NO. 2432 OF 1996 United India Insurance Company Limited through its Manager, Regional Office, Sector 8, Madhya Marg, Chandigarh .......Appellant Versus Smt. Sheela Devi and others ......Respondents F.A.O.NO. 2429 to 2442 OF 1996 2 F.A.O.NO. 2433 OF 1996 United India Insurance Company Limited through its Manager, Regional Office, Sector 8, Madhya Marg, Chandigarh .......Appellant Versus Harish Kumar and others ......Respondents F.A.O.NO. 2434 OF 1996 United India Insurance Company Limited through its Manager, Regional Office, Sector 8, Madhya Marg, Chandigarh .......Appellant Versus Sumit and others ......Respondents F.A.O.NO. 2435 OF 1996 United India Insurance Company Limited through its Manager, Regional Office, Sector 8, Madhya Marg, Chandigarh .......Appellant Versus Shri Jagdish Chand and others ......Respondents F.A.O.NO. 2436 OF 1996 United India Insurance Company Limited through its Manager, Regional Office, Sector 8, Madhya Marg, Chandigarh .......Appellant Versus Shri Jagdish Chand and others ......Respondents F.A.O.NO. 2437 OF 1996 United India Insurance Company Limited through its Manager, Regional Office, Sector 8, Madhya Marg, Chandigarh F.A.O.NO. 2429 to 2442 OF 1996 3 .......Appellant Versus Renu and others ......Respondents F.A.O.NO. 2438 OF 1996 United India Insurance Company Limited through its Manager, Regional Office, Sector 8, Madhya Marg, Chandigarh .......Appellant Versus Smt. Sheela Devi and others ......Respondents F.A.O.NO. 2439 OF 1996 United India Insurance Company Limited through its Manager, Regional Office, Sector 8, Madhya Marg, Chandigarh .......Appellant Versus Smt. Sheela Devi and others ......Respondents F.A.O.NO. 2440 OF 1996 United India Insurance Company Limited through its Manager, Regional Office, Sector 8, Madhya Marg, Chandigarh .......Appellant Versus Harish Kumar and others ......Respondents F.A.O.NO. 2441 OF 1996 United India Insurance Company Limited through its Manager, Regional Office, Sector 8, Madhya Marg, Chandigarh .......Appellant Versus Smt. Sheela Devi and others F.A.O.NO. 2429 to 2442 OF 1996 4 ......Respondents F.A.O.NO. 2442 OF 1996 United India Insurance Company Limited through its Manager, Regional Office, Sector 8, Madhya Marg, Chandigarh .......Appellant Versus Smt. Lalita Kumari and others ......Respondents BEFORE: HON'BLE MR. JUSTICE K.KANNAN Present: Ms. Vandana Malhotra, Advocate, for the appellant. None for the respondents. 1. Whether Reporters of local papers may be allowed to see the judgment? Yes/No 2. To be referred to the Reporters or not?Yes/No 3. Whether the judgment should be reported in the Digest? Yes/No K.Kannan, J.(Oral) 1. This judgment would dispose of the aforesaid 14 petitions which arise out of the same accident. The Insurance Company is on appeal in all the cases, challenging the liability on the ground that on the day when the accident took place on 10.01.1994, the premium payable for the policy had not been encashed due to insufficiency of funds in the bank account of the insured and the cheque which he had delivered towards payment of premium had not been encashed on that day. The further details are as follows:- 2. Cover note had been issued on acceptance of a cheque from the insured on 23.12.1993. It appears on that day F.A.O.NO. 2429 to 2442 OF 1996 5 the insured had only an amount of Rs. 4,83.02/- credited to his bank account. He has deposited further cash only on 10.01.1994 whereupon, the cheque was cleared by collecting banker. It was on the same day when the accident also took place. The amount to the Insurance Company stood credited to its account only on 21.01.1994 by the drawee banker. This according to the learned counsel would show that there was no payment of premium on the date of the accident. 3. As far as the liability for a third party is concerned even the dishonor of cheque ought not to make a difference and the insurer will become liable in terms of the law laid down in Oriental Insurance Company Ltd. vs. Inderjeet Kaur (1998) 1 SCC 371. This was followed subsequently in New India Assurance Company Ltd. vs. Rula and others (2000) 3 SCC 195. As regards liability between the insured and the insurer for non payment of premium, the difference lies in the fact whether there had been a cancellation of policy for a dishonor of cheque before the accident or not. If the cancellation had taken place anterior to the accident and the insured had also been informed about the cancellation, then the insurer shall be entitled to plead that there was no valid insurance. This was the situation that obtained in Deddappa and others vs. The Branch Manager, National Insurance Co. Ltd. (2008) 1 SCC 517, on the other hand, when, after the issue of cover note on receipt of a cheque, the accident took place and there has been dishonor of a cheque, subsequently. If the amount was credited F.A.O.NO. 2429 to 2442 OF 1996 6 subsequent to the accident and if the Insurance Company had not at all times cancelled the policy, it cannot contend by invoking Section 164 (Vb) of the Insurance Act that the policy of Insurance itself had elapsed, or had not come into effect. This was the law laid down by the Hon'ble Supreme Court in National Insurance Company Limited vs. AbhaysingPratapSing Waghela and others (2008) 9 SCC 133. That case dealt with the situation where the cover note had been issued on 23.01.1995 that was prior to the accident. It remained valid till it was cancelled and that cancellation took place only after the accident had taken place. The cash was received on 30.1.1995 and till that date, the policy had not been cancelled. In this case also, cash was paid subsequent to the dishonor of the cheque and the purported cancellation was not made till after this accident. The insurer was found liable and also to indemnify the insured. It is properly founded and it cannot be a successful appeal. The awards of the Tribunal in the above cases are confirmed and all the appeals by the Insurance company are dismissed. [K.KANNAN] JUDGE 6th September, 2010 Shivani Kaushik