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Try out our Premium Member services: Free for one month and pay only if you like it. Under a contract of insurance the insured gave a cheque to the insurer towards the first premium amount, but the cheque was dishonoured by the drawee bank due to insufficiency of funds in the account National insurance vs seema malhotra the drawer.
Is the insurer liable in such a situation to honour the contract of insurance? There is no dispute that the insurer is liable as against third parties because it is covered National insurance vs seema malhotra the statutory provisions contained in Chapter X of the Motor vehicles Act But the insurer vehemently disputed the liability when the claim is made by the insured himself or his legal heirs, without any third party being involved.
To avoid confusion we may point out that the insurance company has no dispute that the claims, if any, made by the kith and kin of the insured for the injuries sustained by them in the accident including the claims made by the legal representatives of the deceased in such accident would also be treated as third party claims.
A division bench of the High Court of Jammu and Kashmir held, on the facts of the case, that the insurance company is still liable because it chose to cancel the policy with effect from the date of bouncing of the cheque, whereas the liability was incurred prior to it.
The question can be dealt with after summarizing the facts in this case which led to the impugned judgment of the High Court. The insured was one Yash Paul Malhotra.
He and the appellant insurance company entered into an insurance contract on 21st December,by insuring a Maruti car for a sum of Rupees one lakh and fifty thousand.
On the same day, the insured gave a cheque for Rs.
But unfortunately, the last day in the year became the last day of the insured as well as his Maruti car because the insured died and the car was completely damaged in an accident which occurred on Notwithstanding anything contained to the contrary, it is hereby agreed and declared that your cheque has been dishonoured by the bank.
So we are cancelling the above said policy with immediate effect. The company is not at risk. The respondents who are the widow and children of the insured, who died in the accident, filed a claim for the loss of the vehicle. When the claim was repudiated, the respondents moved the State Consumer Protection Commission.
As per a judgment pronounced by the Commission the said claim was rejected. The judicial member of the State Commission, who delivered the judgment, has stated thus: In so far the facts of the present case are concerned, it is a settled law that the insurer even if it had issued a cover note is entitled to cancel the policy if it fails to cash the cheque for premium.
The concept of contract in essence envisages a proposal, acceptance and passing of consideration. In the absence of any consideration there can be no contract and that is all what is recognised by section VB of the Insurance Act. The insurer was justified in repudiating the contract and it has done it in time and soon after the cheque bounced.
In this view of the matter there is no need for us to go to any other point that may arise in this case. When the respondents legal heirs of the insured moved the High Court of Jammu and Kashmir, the division bench which heard the matter reversed the order passed by the State Consumer Commission and held the insurance company liable to honour the claim.
The Division Bench directed the State Commission to assess the compensation in accordance with law and pay the same after deducting the amount of premium as the cheque was dishonoured.
The following reasoning was mainly adopted by the learned judge of the division bench for holding that the insurance company is liable on the fact situation: While ordering the cancellation of policy in question, respondent insurance company instead of cancelling the same due to dishonour of cheque of the premium from the date it was issued i.
This clearly indicates that till the issuance of this communication respondent insurance company itself treated the policy subsisting.
Besides this, it had not chosen to treat the same cancelled from the date of issue. In the face of this position, this case need not detain us any further and for this reason the argument addressed on behalf of the insurance company based on section VB of the Insurance Act also does not hold good.
There was nothing which prevented the insurance company to have informed the appellants that the policy stood cancelled from the date of its issuance, and as such it is not liable for the payment of any compensation.
The direction that insurance company can now deduct the premium amount from the compensation to be fixed is no solace to the insurer. The essence of the insurance business is the coverage of the risk by undertaking to indemnify the insured against loss or damage.
They agree to pay the damages arising out of any accident by taking a chance that no accident might happen. Motivation of the insurance business is that the premium would turn to be the profit of the business in case no damage occurs.
Such business of the insurance company can be carried on only with the premium paid by the insured persons on the insurance policy. The only profit, if at all the insurance company makes, of the insurance business is the premium paid when no accident or damage occurs.
But to ask the insurance company to bear the entire loss of damages of somebody else without the company receiving a pie towards premium is contrary to the principles of equity, though the insurance companies are made liable to third parties on account of statutory compulsions due to the initial agreement, entered between the insured and the company concerned.
Inderjit Kaur 1 SCC left this point unconsidered. In that case also the premium was paid by cheque which was later dishonoured and the insured was intimated about it by the insurance company two months after the vehicle got involved in the accident.
When a claim was made by the legal heirs of the driver who died in the accident the insurance company resisted the claim on the strength of Section VB of the Insurance Act of Repelling the contention of the insurance company, the three-Judge Bench held thus: We have, therefore, this position.7P. GSKJ4, a H3K27me3 demethylase inhibitor, effectively suppresses the breast cancer stem cells.
Nov 16, · Supreme Court of India Vimla Devi. vs The National Insurance Company on 16 November, Author: J Abhay Sapre REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.
OF (Arising out of S.L.P.(C) No. of ) Vimla Devi & Ors. . LIVE - MCD Election Results ward wise Winners List: Get the names of winning candidates of the AAP, BJP, Congress, AIMIM and other parties.
- MCD Delhi Election Results ward wise winners. In the case of National Insurance Co. Ltd. v. Seema Malhotra and Ors., (2) AWC (SC), relied on by the learned counsel for the appellant, the insured was one Yash Paul Malhotra.
He and the appellant Insurance Company, entered into an insurance contract on by insuring a Maruti car for Rs. one lakh and fifty thousand.
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