National Consumer Disputes Redressal
Divisional Manager, Oriental ... vs Sanjay Kumar Panigrahi on 22 July, 2004
Equivalent citations: IV(2004)CPJ29(NC)
ORDER
K.S. Gupta, J. (Presiding Member)
1. In this revision, challenge is to the order dated 21.10.2002 of Consumer Disputes Redressal Commission, Orissa, Cuttack whereby holding that the petitioner/opposite party was liable to pay claim under the policy, the case was remanded to District Forum for fixing quantum of compensation to be paid to the respondent/complainant.
2. Respondent, owner of vehicle No. OR-07-5193 purchased an insurance policy commencing from 12.12.1994 to 11.12.1995 from the petitioner and issued a cheque towards premium amount on 12.12.1994. The vehicle met with an accident on 17.2.1995 at about 9.30 a.m. Said cheque on being presented was dishonoured on 1.3.1995. On claim being lodged, same was repudiated by the petitioner on the ground of its not being at risk. Complaint filed by the respondent alleging deficiency in service, which as contested by the petitioner was allowed by the District Forum with direction to the petitioner to settle the claim within a month. Dissatisfied with District Forum's order petitioner filed appeal which came to be disposed of by the State Commission in the manner noticed above.
3. Relying on the decision in National insurance Company Ltd. v. Seema Malhotra and Ors., I (2001) ACC 317 (SC)=II (2001) SLT 229=2002 (1) Accident Judicial Reporter 1.69, submission advanced by Mr. S.L. Gupta for petitioner was that as the cheque dated 12.12.1994 issued towards premium amount by the respondent was dishonoured on 1.3.1995, petitioner is not liable to pay any amount under the policy. In Seema Malhotra's case, one Yashpal Malhotra purchased policy for a Maruti car for a sum of Rs. 1,50,000/- on 21.12.1993 from the appellant-Insurance Company and Sri Malhotra on the same day gave a cheque for Rs. 4,482/-towards premium to the Insurance Company. In the accident which occurred on 31.12.1993, the car was completely damaged and insured also died. On 10.1.1994, Bank on which cheque was drawn by the insured intimated the Insurance Company about dishonour of cheque want of funds. On 20.1.1994, Insurance Company repudiated the claim. Widow and children of the insured filed complaint for the loss of vehicle which was dismissed by the State Commission, Dissatisfied with State Commission's order, widow and children moved the High Court of Jammu & Kashmir and the High Court directed the State Commission to assess compensation which was to be paid after deduction of the amount of premium by the Insurance Company. Against order of State Commission, the Insurance Company filed SLP which was allowed by the Supreme Court and order of State Commission restored. Paras 17, 18, 19 and 20 of the decision at pp. 22-23 of the report which are material, are reproduced below:
"(17) In a contract of insurance when an insurer gives a cheque towards payment of premium or part of premium, such a contract consists of reciprocal promise. The drawer of the cheque promises the insurer that the cheque, on presentation, would yield the amount in cash. In cannot be forgotten that a cheque is a Bill of Exchange drawn on a specified banker, A Bill of Exchange is an instrument in writing containing an unconditional order directing a certain person. It involves a promise that such money would be paid.
(18) Thus, when the insured fails to pay the premium promised, or when the cheque issued by him towards the premium is returned dishonoured by the Bank concerned the insurer need not perform his part of the promise. The corollary is that the insured cannot claim performance from the insurer in such a situation.
(19) Under Section 25 of the Contract Act an agreement made without consideration is void. Section 65 of the Contract Act says that when a contract becomes void any person who has received any advantage under such contract is bound to restore it to the person from whom he, received it. So, even if the insurer has disbursed the amount covered by the policy to the insured before the cheque was returned dishonoured, insurer is entitled to get the money back, (20) However, if the insured makes up the premium even after the cheque was dishonoured but before the date of accident consideration can be treated as paid in the order in which the nature of transaction required it. In this case the Insurance Company is legally justified in refusing to pay the amount claimed by the respondents."
4. Ratio of this decision applies on all fours to the facts of present case. Deposit, if any, made by the respondent with petitioner-Insurance Company of premium amount after the dishonour of said cheque dated 12.12.1994 will not be of any help. Impugned order, thus, deserves to be set aside being legally erroneous.
Consequently, while allowing revision, aforesaid order dated 21.10.2002 is set aside and complaint dismissed. No order as to cost.