F.A.O.NO. 386 OF 1996 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH F.A.O.NO. 386 OF 1996 Date of decision:1st September, 2010 The New India Assurance Co. Ltd. through Shri D.K.Dogra Legal Officer, Regional Office, Section 17-A, Chandigarh. .......Appellant Versus Mr. Arvind Maryan and others ........Respondents BEFORE: HON'BLE MR. JUSTICE K.KANNAN Present: Mr. Inderjeet Sharma, Advocate, and Mr. Pardeep Bedi, 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. The Insurance Company is in appeal challenging the liability on the ground that the premium which was paid through cheque on 23.04.1992 was dishonored on 25.04.1992 and a notice of dishonor was issued on 26.04.1992. The accident had taken place on 25.04.1992 itself and before a notice of dishonor was issued. The counsel appearing for the Insurance Company would contend that since payment of premium had not been effected, there was no consideration for the contract of insurance and therefore, the Insurance Company is not liable. 2. The contract is by reciprocal promises. If the insured F.A.O.NO. 386 OF 1996 2 paid the amount through cheque, the consideration is the promise that materialises on the encashment to a future date. If on the date of the accident a policy of insurance existed and it had not been cancelled, the liability of the insurer must be taken as clearly established. In this case it also appears that after dishonor of cheque it was again renewed on 28.04.1992. The issue of liability when the cheque was dishonored after the accident or before the cancellation of policy has come up for consideration before the Hon'ble Supreme Court in at least two cases recently, one in Deddappa and others versus The Branch Manager, National Insurance Co.Ltd. (2008) 2 SCC 565, where the accident took place on 6.02.1998 and the cheque had been returned as dishonored on 21.10.1997 itself. The Insurance was also cancelled through notice on 6.11.1997 and informed to the RTO. The Insurance Company was still found liable to satisfy the claimants. The Supreme Court merely provided for a right of recovery against the owner for a situation where there had been a cancellation of the policy before the accident took place. The other decision of the Hon'ble Supreme Court in National Insurance Company Limited versus AbhaySingPratapsingh Waghela and others (2008) 9 SCC 133, dealt with the same situation which I am now dealing viz., of a case where a cover note had been issued on 23.01.1995 prior to the accident, the premium failed by the dishonor of the cheque and the cancellation of the policy took place subsequent to the accident. The Court held that the insurer could not avoid F.A.O.NO. 386 OF 1996 3 liability. 3. The award of the Tribunal under circumstances is confirmed and the appeal is dismissed. [K.KANNAN] JUDGE 1st September, 2010 Shivani Kaushik