FAO No.903 of 2011 (O&M) -1- IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH FAO No.903 of 2011 (O&M) Date of Decision. 28.01.2011 National Insurance Co. Ltd., having its regional office at SCO No.332- 334, Sector 34-A, Chandigarh through its duly constituted attorney Shri Manmohan Singh Kalsi, Manager ......Appellant Versus Smt. Balwinder Kaur wd/o of Shri Balbir Singh and others ......Respondents Present: Mr. Paul S. Saini, Advocate for the appellant. 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.(ORAL) 1. The appeal is by the insurance company stating that the amount purported to have been paid by way of premium was not received. Only a cover note had been issued and it had not been followed with issuance of an insurance policy. 2. The cover note is a provisional acceptance of a proposal and if it is not cancelled and if the insurer has not communicated to the insured that the contract was not cancelled, a third party who had a claim against the owner of the vehicle and who wants to rely on a cover note to secure the right of enforcement against the insurer also, the insurance company cannot fend off the liability on a specious that the premium had not been received. While the Section 64 VB of the Insurance Act enjoins that an insurance company could be compelled to FAO No.903 of 2011 (O&M) -2- undertake the risk only on receipt of premium, it is a question of fact as to whether the premium has to be paid or agreed to be paid. A cover note is an evidence of an undertaking by the insurer to cover the risk and if it had not been followed up with receipt of premium, the right of the insurer will be either to recover the premium or cancel the contract. Admittedly, in this case the liability undertaken through a cover note had not been disowned by the insurer by serving a notice to the person on whose behalf the proposal was received. 3. Learned counsel appearing for the appellant states that some investigation was being undertaken by the insurer for the non-receipt of premium. I cannot find any fault with the award of the Tribunal that cast the liability on the insurer to pay to the third party so as to cover the risk. 4. The appeal is dismissed. (K. KANNAN) JUDGE January 28, 2011 Pankaj*