MIRNAL DEEP KHATRI vs NEW INDIA ASSURANCE CO. LTD.

THIS is an appeal against the judgment and order dated 21.2.2002 passed by the District Forum, Nainital whereby the claim of the complainant was rejected.

THE brief facts of the case are that the complainant was the owner of the vehicle in dispute. It was insured from 29.10.1997 to 28.10.1998. On 14.11.1997 it met with an accident. Information was given to the Insurance Company, but it rejected the claim on 25.3.1998 and offered to return the premium amount. The claim was repudiated, therefore, the complaint was filed. The following facts are admitted and are necessary to be discussed.

The complainant was the owner of a Tempo Tarex No. UP-03-2789. The complainant applied for insurance on 29.10.1997 and gave a cheque of Rs. 6,491/- to the Insurance Company on 29.10.1997. Cover note was issued.

THE banker of the complainant is Pithoragarh Shetriya Gramin Bank, Pithoragarh, whereas, the insurance was done at Haldwani. THE banker of the Insurance Company is Central Bank of India. The Insurance Company sent the cheque for clearance on 6.11.1997. It was submitted for clearance by the banker of the Insurance Company with the banker of the complainant on 11.11.1997. The cheque was dishonoured on 11.11.1997 on the ground that there was no money in the accounts of the complainant. Again on 17/18.11.1997, the complainant deposited a sum of Rs. 7,000/- in his Bank and on 18.11.1997 the cheque was cashed from the Bank of the complainant and it was deposited in the Bank of the Insurance Company on 19.11.1997. As the luck could have it, the truck met with an accident on 14.11.1997. The learned Forum has summoned the account books of the complainant. On 27th May, 1997, there was only Rs. 751/- in the account of the complainant. On 2nd June, 1997, Rs. 300/- was withdrawn. It remained only Rs. 451/- in the account of the complainant. On 11th June, 1997, again, Rs. 400/- was withdrawn. There remained only Rs. 51/- in the account of the complainant. On 14th October, 1997, Rs. 1,500/- was deposited and on 27th October, 1997, Rs. 1,300/- was withdrawn. On 27th October, there remained only Rs. 251/- in the account of the complainant. We mean to say that on 29.10.1997 there was only Rs. 251/- in the account of the complainant and a sum of Rs. 7,000/- has been deposited after the accident and has been cashed by the Insurance Company after the accident. Now the question is whether any information of the accident on 14.11.1997 was given to the Insurance Company before 19.11.1997. In the complaint, it is nowhere said when the information of accident was sent to the Insurance Company. The complainant has attached the letter of Vikas Adhikari dated 24.11.1997 to show that on 15.11.1997, he has read in a paper that the vehicle has met with an accident. This cannot be treated to be an information to the Company for the purpose of claim. However, this information to the Vikas Adhikari will not mean to say that before 19.11.1997 the Insurance Company could have known that the vehicle has met with an accident and should not encash the cheque. Even otherwise, the Company has not encashed the cheque, there is a Bank of the Insurance Company, there is Bank of the complainant. When on 11.11.1997 the cheque of the complainant was dishonoured, it should have been returned to the Insurance Company. But the case of the Insurance Company appears to be totally correct that the complainant managed, after the accident to deposit the money and to persuade the Bank of the Insurance Company to collect the amount. It is true that the Central Bank is the agent of the Insurance Company, but, there is nothing on record that the Insurance Company has authorised his Bank to reproduce the cheque which has been dishonoured.

THE matters of insurance are of utmost bona fide and good faith. THE cover note is always issued subject to the realisation of the cheque. THE fact remains that on 29.10.1997 there was only a sum of Rs. 51/- in the account of the complainant, but, he issued a cheque of Rs. 6,491/-. How it could have been encashed. If it could not have been encashed, there was no insurance. THE vehicle met with an accident on 14.11.1997 and the complainant ran from pillar to post to ligalise the insurance. What happens that these dishonest transporters get a cover note and run their transport on the basis of the cover note as the vehicle has been insured. Had the vehicle not met with an accident, it was possible that the complainant could not have deposited the amount for 6 months or 8 months and could have got his vehicle running on the basis of this cover note. It is, therefore, apparent that this deposit on 17/18.11.1997 was made only to get the claim showing the vehicle insured. The matter of the insurance is a matter of contract and this is of utmost faith and bona fide. It is totally mala fide on the part of the complainant to have issued a cheque without any money in his account. This is also a matter of bad faith on his part to have got the cover note and to run the vehicle knowing fully well that there is only a sum of Rs. 51/- in his account and his cheque could not have been encashed which was for Rs. 6,491/-. Had the cheque even been of the last two digits i.e., Rs. 91/- then also it could not have been cashed, what to say of this handsome amount. If a party has got the insurance with mala fide intention in bad faith and had entered into contract with mischievous intentions, he should not be protected by any Forum or Commission. The learned Counsel for the complainant referred the ruling reported in III (1993) ACC 439=1993 (2) TAC 322, United India Insurance Co. Ltd. v. Thakor Swarupji Dhiraji. In this ruling the cheque was dishonoured. The Insurance Company accepted the amount of cheque in cash. That was in renewal policy. In the matters of renewal policy, deposit by cash will date back to the date of policy. This case was decided by the principle of estoppel that once the amount has been received in cash, the Insurance Company was bound to honour that. In this particular case the cheque was dishonoured and after the accident the amount was deposited in the Bank of the complainant and the banker of the Insurance Company collected the amount of the same dishonoured cheque. There cannot be any estoppel on the part of the Insurance Company in such case, if the two bankers have colluded to help the complainant. In the ruling reported in III (1997) CPJ 1, Chet Ram Bathata v. Oriental Insurance Co. Ltd., also, that was a renewal policy and ordinarily in renewal policy, the policy was renewed, no fresh policy was issued and payment may be on any date but the policy is presumed to have been in continuance. In the ruling reported in III (1993) CPJ 358 (NC), M/s. National Insurance Co. Ltd. v. J.J. 749, Pattarai Perumbandur, Primare Agricultural Co-op. Bank, there was a Burglary Policy. It was taken from 11.5.1990 to 10.5.1992. On 10.5.1991 the insured sent the premium by post. The policy was renewed w.e.f. 16.5.1991. Theft was committed in the night of 12/13.5.1991. The claim was repudiated by the Insurance Company. The National Commission held that the cheque was ante-dated and its alleged depatch on 10.5.1991 was manipulated. The National Commission set aside the order of the State Commission. On the basis of this ruling, it is safe to find out that when the deposit made by the complainant after accident is a manipulated deposit only to legalise his insurance to get the claim from the Insurance Company. In the ruling reported in III (1996) CPJ 32 (NC), New India Assurance Co. Ltd. v. Kumodchandra B. Hemade, where the cheque was dishonoured, the policy was cancelled. It was held that the policy is non-existent. In the same manner, it can be very well said that on 14.11.1997 there was absolutely no policy in favour of the complainant and he could not have got any claim. In the ruling reported in II (1997) CPJ 74 (NC), Bam Dev v. United India Insurance Co. Ltd., the cheque was encashed after the accident, State Commission dismissed the complaint. The same view was confirmed by the National Commission. It was held that there was no deficiency in service.

BEFORE concluding, we shall like to refer the ruling reported in I (2001) ACC 317 (SC)=II (2001) SLT 229=2001 ACJ 638, National Insurance Co. Ltd. v. Seema Malhotra. This ruling is of the Hon''ble Supreme Court''s judgment and it covers all the aspects of the case fully. In this ruling, it has been held that the insurance is not complete till the payment is made to the Insurance Company i.e., contract between the parties. A contract without consideration is a void. While referring Section 64-VB of the Insurance Act which apply to all types of insurance business in India, it has been specifically provided that for the purpose of Section 64-VB in case of risk for which premium can be ascertained in advance, the risk may be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the insurer. It has been held that if the insured makes up the premium even after the cheque was dishonoured but before the date of accident, it would be a different case as payment of consideration can be treated as paid in the order in which the nature of transaction required it.

ON the basis of this ruling, we can safely say that it is a very profitable proposition to get a cover note and ply the vehicle, don''t have any pie in the Bank, draw the cheque, it may or may not be cashed, deposit Rs. 7,000/- and get Rs. 3 lacs. It is true that the complainant was not knowing that his vehicle was to meet with an accident but it is also true that deposit of money in the passbook after the accident is purely with mala fide intention to get money from the insurance, otherwise, God knows the complainant might not have deposited any money till the end of the insurance period of that year. As regards the repudiation in this claim, that is perfectly justified. The proceedings before the Forum and the State Commission are summary proceedings. When the repudiation is justified, there shall not be any deficiency in service and in that case, if there is no deficiency in service, the petition shall not lie before the District Forum. The District Forum has rightly dismissed the petition. However, the complainant is free to go to the Civil Court and to file his claim in regular proceeding. ORDER

The appeal is dismissed. The complainant is free to file a civil suit in the regular proceedings and in case, such a suit is filed, the judgment of the learned Forum or the State Commission shall not, in any way, prejudice the finding on merits by the Court of competent jurisdiction. Cost of the appeal shall be easy. Appeal dismissed.