IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Cross Objection No.8-CII of 2001 in/and FAO No.935 of 2000 (O&M) Date of decision:18.05.2011 Oriental Insurance Company Limited ...Appellant versus Kiran Kaur and others ....Respondents CORAM: HON’BLE MR. JUSTICE K. KANNAN ---- Present: Mr. Sanjiv Pabbi, Advocate, for the appellant. None for respondents/cross objectors 1 to 3. Mr. Tribhuwan Singla, Advocate, for respondents 4 to 6. ---- 1. Whether reporters of local papers may be allowed to see the judgment ? No. 2. To be referred to the reporters or not ? No. 3. Whether the judgment should be reported in the digest ? No. ---- K.Kannan, J. (Oral) 1. The appeal by the Insurance Company is on the issue of liability cast on it directing the Insurance Company to pay the claimants and fully indemnify the insured. The accident had taken place on 14.02.1998 while the cover note and the policy produced showed that it had been issued on 09.02.1990 itself. The contention by the insurer was that the cover note and the policy had been issued on the basis of a fake receipt alleged to have been issued by the Bank for remittance of the premium of Rs.8,957/-. The insured had contended that the money had been paid to the Development Officer Vinod Kumar Kansal and he was Cross Objection No.8-CII of 2001 in/and FAO No.935 of 2000 (O&M) - 2 - not in any way a participant in the alleged fraud. The Insurance Company proved through communication from the Bank that the amount which was said to have been deposited to the credit of the Insurance Company was in a non-operative account where money could not be withdrawn and that further the amount had been deposited only on 24.02.1998. The Branch Manager certified that the alleged remittance on 09.02.1998 was not true. 2. The learned counsel for the Insurance Company Mr. Pabbi contends that the insured had not made any payment 09.02.1998 and he had merely relied on a forged receipt to secure the policy. The counsel for respondents 4 to 6 joins issue on this point by pointing out that even the Investigator appointed by the Insurance Company and whose report was also filed before the Court as Ex.R-9 showed that the Development Officer had collected the money but he had not deposited the same on 09.02.1998 and that the amount had been credited to the account of the Insurance Company only on 24.02.1998. 3. Even if the pay-in-slip issued by the Bank for remittance of Rs.8,957/- were to be held as fake, the insured cannot be denied the right of indemnity unless it shown that a receipt was fake at his instance and that he had committed a fraud in producing a fabricated document. When the Development Officer issued a cover note and the Insurance Company subsequently also issued a policy, unless it was established that the insured had committed a fraud in connivance with the Development Officer, the Insurance Company cannot deny to the insured a right of indemnity. That proof would have been possible if the Cross Objection No.8-CII of 2001 in/and FAO No.935 of 2000 (O&M) -3 - Development Officer himself had been examined and if he had stated that he had not received any money from the insured and that he merely acted on the remittance slip produced by the insured to him. In this case, the insured himself has been examined to state that the amount was paid to the Development Officer. It would only mean that the Development Officer had not deposited the amount on the date when the cover note was issued. Section 65-BB of the Insurance Act which requires premium to be paid for under writing risk and to issue a policy could absolve the Insurance Company of liability only if the amount had not been paid by the insured. If the amount had, on the other hand, been paid but the Development Officer, who was an Agent of the Insurance Company, committed fraud, the right of action will lie in damages for the principal Insurance Company against the Development Officer but not enable the insurer to plead that there was no valid policy of insurance to satisfy the claim or to provide indemnity to the insured. The award casting liability on the insurer and providing to the insured a right of indemnity was, under the circumstances, justified. I do not find any reason to modify the award. The award is confirmed and the appeal by the insurer is dismissed. 4. There is cross objection also at the instance of the claimants for enhancement. There is no representation for the cross-objectors. Cross objection is dismissed for default of appearance. (K.KANNAN) JUDGE 18.05.2011 sanjeev