IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. 1) FAO No. 2387 of 1996 Date of decision: 04.10.2010 The Oriental Insurance Co. Ltd. ..Appellant Vs. Prem Kumari & Ors. ..Respondents 2) FAO No. 2388 of 1996 The Oriental Insurance Co. Ltd. ..Appellant Vs. Vishnu Kumar and Ors. ..Respondents 3) FAO No. 2389 of 1996 The Oriental Insurance Co. Ltd. ..Appellant Vs. Vatrise & Ors. ..Respondents CORAM: HON'BLE MR. JUSTICE K. KANNAN Present: Mr. Tejinder Pal Singh, Advocate for the appellant. Mr. Vipin K. Bali, Advocate for the respondents. **** K. KANNAN, J.(ORAL) 1. All these three cases are at the instance of the Insurance Company claiming that on the date of the accident, namely on 1.8.92, there was no valid insurance policy. The Insurance Company FAO No. 2387 of 1996 -2- claimed that the proposal form has been signed and the cover note has not been issued on 1.8.92 but the cheque which was purported to have been given for premium for the policy was presented for payment but it was returned back for want of insufficiency of funds. The Insurance Company contended that it had intimated this fact to the owner through notice issued on 31.7.1992 and the accident had taken place the following date on 1.8.92 at 6.00 AM. 2. During the course of the proceedings, it appears that all these cases were taken for settlement in the Lok Adalat. The Insurance Company admitted liability without taking the plea of cancellation of policy and this was taken by the Tribunal as a point for rejecting plea that there was no Insurance. 3. I do not want to fetter myself on the issue whether the compromise before the Lok Adalat would stop the insurer from contending that there was no policy of insuance. In this case, the owner had examined himself as RW-1 and gave evidence to the effect that he had paid cash and had collected the cover note on the same day on 16.7.92 and denied the factum of dishonour of cheque. The notice of cancellation of policy was rececived by him only on 1.9.92. As far as the the issue of the 3rd party liability for an insurer in case of cheque bouncing is concerned, they have been dealt with in several cases. If the cancellation of policy had been effected and communicated prior to the accident, it shall certainly give a right to the insured to contend that it is not liable to Indemnify the insured. Even then the right of the 3rd party cannot FAO No. 2387 of 1996 -3- be affected. There is a statutory requirement of compulsory insurance and Court has provided for recovery against the insurers, even in situation where the policy cancelled for non-payment of premium. The Supreme Court has held in Oriental Insurance Co. Versus Inderjit Kaur 1998 (1) SCC 371 that the isurer will be liable to a 3rd party even if the premium paid through cheque was not realised by bouncing of cheque. The cancellation of policy could be effected only through communication. The notice of purported cancellation was issued on 31.7.92 and there is nothing to suggest on record that the owner had been served the such notice of cancellation before the accident. In this case, it is in evidence and admitted by both parties that the accident took place at 6.00 AM on 1.8.92. The receipt of a notice from the insurer was alleged by RW-1, to have been received on 1.9.92. The Insurance Company cannot, therefore, plead exclusion liability. The law has been so laid down in National Insurance Co. Ltd. Versus Abheysingh Pratapsingh Waghela & Ors. 2008 (9) SCC 133. All the awards passed by the Tribunal are confirmed and the appelas filed are dismissed. (K. KANNAN) October 04, 2010 JUDGE Poonam(II)