New India Assurance Co. Ltd. vs KUMODCHANDRA B. HEMADE

FIRST Appeal No. 660/93 is filed against the Order dated 2.8.93 of the Maharashtra State Consumer Disputes Redressal Commission in Complaint No. 188/92. Opposite party No. 3, New India Assurance Company Ltd. before the State Commission is appellant herein and the complainant is respondent No. 1 before us. Respondent No. 2 (Bank of India) and No. 3 (Bank of Maharashtra) were opposite party No. 1 and No. 2 respectively before the State Commission. The facts of the case are that the complainant''s vehicle was insured with the appellant to cover comprehensive risk between the period 7.12.91 to 6.12.92 for which the premium of Rs. 3,850/- was paid through cheque drawn on respondent No. 3 (complainant''s Bank) on 6.12.91, and on 16.12.91 the said vehicle came to be stolen. In the meanwhile the aforesaid cheque for the premium which was presented on 10.12.91 by respondent No. 2 to respondent No. 3 for payment was returned unpaid with remarks of respondent No. 3 "funds expected. Please present on 13.12.91". It was alleged by the complainant that on the return of the said cheque, respondent No. 2 did not act as advised by respondent No. 3 but kept quiet upto 16.12.91. In the result the insurance contract was not effective on the date of the theft and the appellant without settling the complainant''s claim informed that the policy has been cancelled from inception. According to the complainant, the contract of insurance was complete the moment he handed over the cheque to the appellant on 6.12.91. He further contended that through sufficient funds were available in his account, respondent No. 3 wrongly returned the cheque. The complainant, therefore, alleged deficiency in the service of appellant herein and respondents Nos. 2 & 3 jointly. The State Commission went through the records and found that the complainant had sufficient balance in his account in respondent No. 3-Bank on 6.12.91 and 10.12.91 for discounting the said cheque for the payment of premium and that though the cheque given to respondent No. 2 was asked to be presented again on 13.12.91, no steps were taken by them in this regard. The State Commission concluded that there was negligence in service of the appellant herein as also respondent Nos. 2 and 3 jointly. The State Commission held that after accepting the cheque from the complainant on 6.12.91 and issuing the cover note providing necessary comprehensive insurance for the vehicle for the value of Rs. 1,90,000 /- the policy was in force on the date of incident of theft i.e. 16.12.91; the appellant''s action of cancelling the policy from the inception and repudiating the claim is, objectionable and atrocious. The State Commission directed the appellant, respondents Nos. 2 and 3 jointly and severally to pay to the complainant Rs. 1,90,000/- towards loss suffered by him on account of the theft alongwith interest @ 18% per annum towards compensation from the date of complaint i.e., 5.5.92. Aggrieved by this order the appellant has filed this appeal before us. Respondent Nos. 2 and 3 had filed separate Appeals FA 461/93 and FA 466/93 before us and by our orders dated 18.11.93 and 15.12.95, we have respectively allowed the appeal of respondent No. 2-opposite party No. 1 and remanded the case of respondent No. 3 opposite party No. 2 to the State Commission.

WE have gone through the records and heard the Counsel. WE have already held in United India Insurance Company v. N. Mohan Reddy & Anr. (R.P. No. 780/1994) decided on I (1996) CPJ 11 (NC) that when the cheque for premium is dishonoured and hence the premium has not been received by the Insurance Company, the insurance policy is non-existent even if the Insurance Company did not intithate the cancellation of the policy nor inform the complainant about the dishonouring of the cheque. Law has been settled by an earlier order of the Supreme Court in "United India Insurance Company Ltd. v. Ayeb Mohammed & Ors. in SLP No. 6043 decided on 1.4.91 (1991 ACJ 650). In the light of the aforesaid, we allow the present appeal and set aside the impugned order of the State Commission. There will be no order as to costs. Appeal allowed. ______________