Karnataka High Court
Yellamma vs Sukhdev Singh And Anr. on 23 March, 2005
Equivalent citations: IV(2006)ACC886, 2007(6)KARLJ486, AIR 2006 KARNATAKA 240, 2006 (6) ALL LJ NOC 1323, 2006 (4) AIR KANT HCR 443, 2006 A I H C 2493, (2006) 4 ACJ 2173, (2008) 1 CIVILCOURTC 137, (2007) 1 TAC 718, (2007) 6 KANT LJ 486, (2006) 4 ACC 886, 2006 (4) AIR KAR R 443
Author: K. Sreedhar Rao
Bench: K. Sreedhar Rao
JUDGMENT Sreedhar Rao, J.
1. One Hanumanthappa a minor boy aged about 5 years is the deceased in M.V.C. No. 1062 of 1991. Parents are the petitioners. The Tribunal awarded compensation and directed the owner to pay the compensation. The claim against the insurer is rejected. Hence the appeal.
2. The facts and evidence discloses the owner had taken cover note on 3.9.1992 against a cheque lor Rs. 4,260 by his friend in favour of the insurer. The Development Officer after couple of hours found that the cheque is not issued by the insured, therefore approached the insured, collected the cover note and cancelled the policy.
3. The provisions of Section 64VB of the Insurance Act, 1938 reads thus:
64VB. No risk to be assumed unless that premium is received in advance.--(1) No insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily payable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and until deposit of such amount as may be prescribed, is made in advance in the prescribed manner.
(2) For the purposes of this section, in the case of risks 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.
Explanation.--Where the premium is tendered by postal money order or cheque sent by post, the risk may be assumed on the date on which the money order is booked or the cheque is posted, as the case may be.
(3) Any refund of premium which may become due to an insured on account of the cancellation of a policy or alteration in its terms and conditions or otherwise shall be paid by the insurer directly to the insured by a crossed or order cheque or by postal money order and a proper receipt shall be obtained by the insurer from the insured, and such refund shall in no case be credited to the account of the agent.
(4) Where an insurance agent collects a premium on a policy of insurance on behalf of an insurer, he shall deposit with, or dispatch by post to, the insurer, the premium so collected in full without deduction of his commission within twenty-four hours of the collection excluding bank and postal holidays.
(5) The Central Government may, by rules, relax the requirements of Sub-section (1) in respect of particular categories of insurance policies.
4. The above provision disclose that a policy can be issued against the issuance of a cheque and the liability commences from the date of issuance of cheque and not from the date of its encashment. There is no provision in law that the consideration for policy should flow only from the insured and not from the third party. The Development Officer has acted in a hasty manner. No attempt was made to present the cheque for encashment. If the cheque was encashed it was well and good for the insurer otherwise steps could have been taken for cancellation of the policy, Exh. Rl. The reason that the cheque is not issued by the insured is not a ground for valid cancellation. The endorsement of cancellation is vague, it does not bear the date. The officer who has made endorsement of cancellation is not examined. The endorsement of the insured is not taken on the policy to substantiate that the cancellation was with due notice and knowledge by the insured. Therefore, under the above circumstances, the very cancellation of the policy for untenable reason is bad in law. Accident has occurred within 15 days from the date of issue of cover note. Hence, the insurer is liable to pay the compensation.
5. The Division Bench of this Court in Puttamma v. D.V. Krishnappa 2000 ACJ 103 (Karnataka), has held that in the case of death of non-earning minor, the minimum compensation of Rs. 1,50,000 is to be payable. Therefore, in this case also, the insurer is liable to pay a compensation of Rs. 1,50,000 with interest at 6 per cent from the date of petition till payment.