FAO No.3629 of 2002 -1- IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH FAO No.3629 of 2002 Date of Decision. 30.08.2010 United India Insurance Company Ltd. through Deputy Manager, Regional Office, Ludhiana ......Appellant Versus Jaswinder Kaur widow of Sarwan Singh and others .....Respondents Present: Mr. Amit Rawal, Advocate for the appellant. Mr. Sunil Chadha, Advocate for the respondents. CORAM:HON'BLE MR. JUSTICE K. KANNAN 1. Whether Reporters of local papers may be allowed to see the judgment ? Yes 2. To be referred to the Reporters or not ?Yes 3. Whether the judgment should be reported in the Digest? Yes -.- K. KANNAN J. 1. The insurance company has come on appeal challenging the award on the ground that the liability could not be fastened on the company since at the relevant time of the accident namely on 28.12.1996, there had been no policy of insurance with the offending vehicle, which was a truck bearing registration No.MH-04H-5077. The contention was that the registered owner had taken a policy on 15.10.1996, which was to be valid till 14.10.1997 by paying premium through cheque. The cheque bounced on 15.10.1996 and returned unpaid by the drawee bank on 18.10.1996. 2. It was the further contention of the insurance company that the owner of the truck was one Gulzar Singh and also referred to engine No.697023 and chassis No.728778 and it was purported to FAO No.3629 of 2002 -2- have been sold in favour of one Amrik Singh. The purchaser had claimed that he had obtained a transfer of insurance policy by depositing a transfer fee of Rs.15/- but in the transferred policy, chassis number and the engine number that had been given did not tally with the original numbers given in the policy when it was taken by Gulzar Singh. 3. The Tribunal held that after the alleged cancellation of the policy for dishonour of the cheque, cash had actually been paid on 30.10.1996 and a fresh policy had also been issued. Examining the rival contentions between the parties, the Tribunal reasoned that when the contention was that owner of the offending vehicle had actually paid the premium through cash after the dishonour of the cheque, the cash book or receipt book had not been brought by the insurance company to show that there was no cash payment. Non- production of the best evidence showed that an adverse inference was to be drawn against the insurance company. CW-2, who was a witness brought by the insurance company admitted that the particular insurance policy was held by the insured, when it was confronted to him that it bore a stamp of the company on the policy to the effect that payment had been accepted. He had also admitted to the fact that the policy could have been issued only on receipt of money. The registration certificate itself showed that the truck was transferred from the name of Gulzar Singh to Amrik Singh. The chassis number and the enginer numbers were the same as per the registration certificate and transfer policy. Rejecting the contention of the insurer that an employee of the insurance FAO No.3629 of 2002 -3- company must have colluded with the vehicle owner to make it appear as though that the cash had been paid, the Tribunal reasoned that if any employee committed a mistake, the fault could not be attributed to the claimant or insured. In Oriental Insurance Company Limited Vs. Inderjit Kaur 1998 ACJ 123, the Hon'ble Supreme Court held that even if the premium has not received by the fact of dishonour of cheque and if the company had issued a policy to cover the risk of the passengers in bus without receiving the premium by virtue of Section 147(5) and 149, the insurance company would become liable to indemnify a third party. Yet again, even earlier in National Insurance Co. Ltd. Vs. Madhab Chandra Das and others 1994 ACJ 890, the insurance company was made liable to satisfy the claim of a third party, even in a case where a cancellation of the policy had not been intimated to the registering authority. It said that once the policy of insurance had been issued, the presumption was that the premium was received and the onus was on the insurance company to prove the absence of payment which it failed to discharge. 4. Before the Tribunal, the reliance was placed on a Division Bench ruling of the Madhya Pradesh High Court of Indore Bench in Kanhiaya Lal and another Vs. Mustakim Khan and others 2001 ACJ 50 that held that the conduct of a Development Officer of an insurance company unauthorizedly extending period of insurance so as to cover the date of the accident would not bind the insurance company. 5. Having regard to the extensive arguments placed on both FAO No.3629 of 2002 -4- sides, I have examined the records myself. It is clear that the cheque which had been issued towards the premium for the policy on 15.10.1996 had been returned with memo from the bank on 17.10.1996 that it was dishonoured with endorsement "exceeds arrangement". A notice has been issued on 05.11.1996 to Gulzar Singh that the cheque had been dishonoured and consequently that the cover stood cancelled from the institution and consequently receipt issued bearing No.7194 stood cancelled. The notice further advised that if he desired to cover the risk afresh to remit either in cash or a bank draft, the sum was of Rs.13,396/- that was required to be paid. 6. As against the document relied by the insurance company, the subsequent purchaser Amrik Singh had brought on record evidence to the effect that a transfer fee of Rs.15/- had been collected from him towards transfer of insurance policy on 18.12.1996. The transfer policy had been issued on the same day that purported to effect a transfer of certificate No.121002/31/05/534/7172/96. The policy number that has been given is 7172 of 1996. The engine number that is given in the transferred policy is LTQ 822197 and chassis number is LTQ 737845. The commencement of the transferred policy was from 18.12.1996 to 14.10.1997. To show that there could not have been any fraud practiced by either the original owner or the subsequent purchaser, the learned counsel appearing on behalf of the respondent would point out that the policy number given was 7172 of 1996, which was also the very same number which was seen in the transfer policy. FAO No.3629 of 2002 -5- The policy itself bore a stamp endorsement for receipt of cash on 30.10.1996. If the amount had not been received on that day on 30.10.1996, it was inconceivable that a transfer policy could have been issued on 18.12.1996 in favour of the subsequent purchaser. The insurance company ought to have verified its own record when it received the amount from the subsequent purchaser and issued a fresh policy to commence from 18.12.1996 to 14.10.1997. The learned counsel appearing for the respondent would slight the effect of variation of the engine number and chassis number even in the policy issued to Gulzar Singh and the policy found issued in the name of the subsequent purchaser by stating that if there was a discrepancy it was on account of some mistake which the insurance company itself had committed and so long as the policy number was the same both in the original policy and in the transferred policy, it must be taken that the payment had been received by the insurer at the relevant time as contended by Gulzar Singh, the original policy holder. 7. If in this case, the accident had taken pace between the period of original issue and between the date of transfer, it could not have been possible that some manipulation was made by the subsequent purchaser to obtain a policy of insurance but if the transfer of policy has taken place on 18.12.1996 and accident had also occurred subsequently on 18.12.1996, it is difficult to accept the contention of the insurer that the fresh policy did not pertain to the vehicle which was involved in the accident. It shall not become possible for me to accept the contention that the vehicle which had FAO No.3629 of 2002 -6- been originally insured was not the vehicle to which the subsequent transfer of policy had been effected. There are far too many coincidences to be ignored. The year of manufacture is the same; the policy number is the same; the certificate of insurance is also the same and the year of manufacture of the vehicle and the make of the vehicle are also the same. If there had been a discrepant reference to engine number or chassis number, it should only be taken that the mistake had arisen at the office of the insurance company and not at the instance of the insured. 8. I cannot also accept the plea that no money had been paid on 30.10.1996. On an argument made by the learned counsel appearing for the insurer that no receipt had been produced by the insured and if any amount had been received subsequently by cash, a receipt must have been issued, I would held that a separate receipt ought to have existed, if there was no endorsement on the policy itself. If the policy contained an endorsement of receipt by cash, there ought to have been no necessity for the remitter to secure a separate receipt. It is under these circumstances that the evidence adduced by the officials of the insurance company assume significance. CW-1 was the Divisional Manager of the insurance company, who claimed that she had been working at the Vashi branch office between 27.07.1991 to 31.03.2000. She has spoken about the fact of dishonour of cheque and the cancellation of policy that was made on 05.11.1996. She was confronted in the cross- examination about the stamp that the policy bore which endorsed the fact of receipt of cash on "30.10". It did not record the year. FAO No.3629 of 2002 -7- While she denied that cash had been received on 30.10.1996, she admitted that she had not brought the original record relating to the papers produced before her. She did not also know whether the policy had been transferred to one Amrik Singh. She also admitted that even the cancellation of policy said to have been made on 05.11.1996 was not shown to have been received or acknowledged by Gulzar Singh. The Development Officer, who was examined as CW-2 gave evidence to the effect that he took the insurance policy with Gurlzar Singh and the cheque had been received by him. His evidence is not in any way helpful for he had nothing to say about the endorsement of receipt of fund in the policy on 30.10.1996. CW- 3, Senior Assistant of the insurance company gave evidence to the effect that the policy issued to Gulzar Singh had been cancelled. He has given evidence to the effect that he transferred the policy and issued it in the name of Amrik Singh on 18.12.1996. He also admitted in the cross-examination that the policy was valid from 18.12.1996 to 17.12.1997. The manager of the drawee bank, which gave notice to dishonour was examined as CW-4 and his evidence proceeded no more than showing that the cheque was dishonoured. CW-5 was also a manager of the bank, who was spoken only about the dishonour of the cheque. 9. The evidence produced by the insurance company for the cancellation of policy does not advance the case of the insurance company to its advantage. On the other hand, it shows positively two aspects; one, the receipt of cash on 30.10.1996 was not disproved when there was an endorsement on the policy itself, which FAO No.3629 of 2002 -8- could have been done by producing the receipt book maintained by the insurance company. The manager of the insurance company herself was not able to deny that the original policy did bear the company's rubber stamp for receipt and she could give no particular as to who could have caused such an endorsement. Further the evidence of CW-3 clearly showed that a transfer of policy had been effected. A policy could not have been renewed or transferred if the original policy had been cancelled through notice of cancellation. The alleged notice of cancellation itself is suspect since no proof of receipt of that notice or acknowledgment from Gurlzar Singh was produced before the Court. I have pointed out to the fact that the transfer policy makes reference to the very same policy number, the year of manufacture of the vehicle and the date of original issue of policy as what was found in the policy issued to Gulzar Singh. The mere discrepancy in the chassis number and the engine number ought not to avail to the benefit of the insurer to contend that it was some other vehicle and the vehicle involved in the accident had not been insured. 10. The contention of the insurer that the vehicle had not been validly insured at the relevant time of the accident is rejected and the finding of the Tribunal is confirmed. No other argument is advanced before me as regards liability or quantum. 11. The appeal filed by the insurance company is dismissed. (K. KANNAN) JUDGE August 30, 2010 Pankaj*