2013 INSC 0604
                                    SUPREME COURT OF INDIA

                                       National Insurance Co. Ltd.

                                                      Vs.

                                           Balkar Ram & Ors.

                                           C.A.No. 2159 of 2007

                              (Gyan Sudha Misra and Kurian Joseph JJ.)

                                                 09.07.2013

                                                   ORDER

GYAN SUDHA MISRA, J.

1. This appeal has been preferred by way of special leave against the judgment and order
passed by the High Court of Punjab and Haryana in F.A.O. No. 2941 of 2004 dated
28.09.2004 wherein the appeal filed by the Appellant-insurance company was dismissed
holding therein that the intimation by the Appellant-Insurance Company regarding dishonor
of the cheque towards the issuance of policy was communicated to the policyholder after the
accident. Hence, it was liable to pay the compensation to the claimants/ Respondents and it
could not recover the same from the owner.

        To clarify the position, it may be stated that the vehicle which was insured with the
        appellant met with an accident and a compensation of Rs.1,24,035/- was ordered to be
        paid to the respondents-claimants along with interest and the owner as also the
        insurance company were jointly and severally held liable by the Motor Accidents
        Claims Tribunal (`Tribunal1 for short)to pay the amount of compensation to the
        claimants.

2. The Appellant/Insurance Company assailed the award passed by the Tribunal essentially
on the ground that the cover note for the policy of insurance was issued on 7.04.2000 for
which a cheque was submitted by the owner. However, the cheque was dishonored by the
bank on 17.04.2000. Subsequently, the vehicle which was insured with the
appellant-insurance company met with an accident on 19.04.2000. The appellant-insurance
company, therefore, contended that as the policy of insurance could not be held to be a valid
document in view of the fact that the cheque towards the policy had been dishonored even
before the accident had taken place, the insurance company was not liable to indemnify the
claimants by paying the amount which fell into its share as per the Tribunal`s award and it is
the owner which is liable to pay the entire amount of compensation to the respondents/
claimants.

3. However, we compliment Ms. Kiran Suri, learned counsel for the appellant for cutting
short the controversy by fairly pointing out the ratio of the judgment (2012)5 SCC 234 titled
United India Insurance Co. Ltd. Vs. Laxmamma & Ors1. wherein it has been held that the
insurance company is liable to satisfy the award if the intimation regarding the dishonor of
the cheque and cancellation of policy is communicated to the policy-holder after the date of
the accident. Thus, the defence of the insurancecompany that the policy of insurance was not
valid since the cheque had been dishonored prior to the accident would not exonerate them
from making the payment of compensation. In the matter, admittedly the accident had taken

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place on 19.04.2000 and the cheque although had been dishonored prior to the accident on
17.04.2000, the intimation to the policy-holder had been given by the insurance company on
26.04.2000, in view of which the insurance company cannot be allowed to contend that the
policy-holder was not holding a valid policy of insurance in regard to the vehicle which met
with an accident. Admittedly, the policyholder had already issued another cheque
substituting the cheque which had earlier been dishonored.

        In that view of the matter and following the ratio of the judgment referred to
        hereinbefore, this appeal has no substance and accordingly it is dismissed. No order as
        to costs.

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