FAO No.1202 of 2003 -1- IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH FAO No.1202 of 2003 Date of Decision. 22.09.2010 National Insurance Company Ltd., SCO No.337-340, Sector 35-B, Chandigarh through its Asstt Admn. Officer ......Appellant Versus Jai Bhagwan son of Shri Mansa Ram resident of Garhi Alawalpur, Tehsil and District Rewari and others ......Respondents Present: Mr. L.M. Suri, Senior Advocate with Mr. Neeraj Khanna, Advocate for the appellant. None for the respondents. CORAM:HON'BLE MR. JUSTICE K. KANNAN 1. Whether Reporters of local papers may be allowed to see the judgment ? 2. To be referred to the Reporters or not ? 3. Whether the judgment should be reported in the Digest? -.- K. KANNAN J.(ORAL) 1. The insurance company is on appeal challenging the award on the ground that on the relevant date of the accident, there was no valid policy since the premium paid through cheque dated 18.02.2000 stood dishonoured on 25.2.2000 and a notice of dishonour and cancellation of policy was made on 22.03.2000. Admittedly, a cover note had been issued on 18.2.2000 itself and the Development Officer, who had issued the cover note gave evidence to the effect that the cheque had been drawn by one R.P. Jain, who had been an agent of the company at one time but he had been black-listed and therefore, the cheque on presentation was dishonoured. Although the insured's brother had given evidence that FAO No.1202 of 2003 -2- the premium had been paid in cash to Vijay Kumar Suneja, the Development Officer, admitted that he was giving such evidence on the basis of what the brother of the insured had told him. Actually this could not true for what was received on that day was only a cheque and it had been dishonoured. If the insured were to still contend that payment of premium had been made through cash, the insured himself must have examined himself and given evidence about his alleged payment in cash. The evidence of the brother of the insured, who, though a power of attorney, was not competent to give evidence about his brother if it was not within his direct knowledge. His evidence was merely hearsay and it cannot provide to the insured a right to contend that the premium had been paid. In this case, the Tribunal failed to note yet another aspect that the policy had been cancelled subsequently through a registered notice on 22.3.2000 and nothing has been brought on record as to how the owner/insured had responded to this notice. The accident took place on 31.07.2000 nearly 5 months after the date of dishonour and four months after the notice of cancellation. The insurance company could not be expected to undertake a risk without receiving the premium as statutorily mandate under Section 64(V) of the Insurance Act provides for. 2. A Division Bench of this Court dismissed the appeal qua the claimants and the case now requires an adjudication only with reference to whether the right of recovery exists for the insurer or not against the insured. The proof of payment of premium comes only through the receipt of cheque and if it was shown to have been FAO No.1202 of 2003 -3- dishonoured, in the absence of any positive assertion by the insured himself that he had paid the amount by way of cash and without even explaining how he respondended to a notice of cancellation of policy, the Tribunal ought not to have held that the policy subsisted at the time of accident. 3. The award of the Tribunal, under the circumstances, is modified to provide to the insurer a right of recovery of the amount, which it has paid to the claimant, from the insured. The appeal is allowed to the above extent. (K. KANNAN) JUDGE September 22, 2010 Pankaj*