C O M M O N J U D G M E N T

C.M.A.No.340, 1761, 2087 and 2097 of 2000 arise out of a common order, dated 17.09.1999, in O.P.No.606 of 1997 and batch, on the file of the Motor Accidents Claims Tribunal (IV-Additional District Judge), Kurnool. The rest of the C.M.As arise out of the common order dated 31.12.1999, in O.P.No.209 of 1997 and batch, on the file of the above said Tribunal. All these C.M.As were filed by the United India Insurance Company Limited.

2. The limited question that arises in all these 8 C.M.As is, when the insurance company had issued the insurance policy and subsequent thereto the cheque given by the insured towards first premium was dishonoured and the insurer cancelled unilaterally the policy, whether the insurer is liable to pay compensation to the claimants in a motor accident case.

3. The insurance company is the appellant in all these cases. The claimants were awarded different sums of amount as compensation. The facts that are necessary for the purpose of disposal of these C.M.As stated in a narrow compass are:

4. The insured i.e., the owner of the vehicle issued a cheque in favour of the insurer on 04.01.1997 towards the premium payable. A cover note bearing the even date was issued to him. Insurance policy, dated 06.01.1997, was also issued by the insurer. While so, the cheque was returned by the banker of the insurer. The banker of the insured i.e. Jalna People’s Co-operative Bank Limited, Jalna sent back the cheque to the bank of Maharastra, the banker of the insurer along with a memo, dated 08.01.1997, with the following endorsement:

“Funds expected. Please present again in 09.01.1997”

5. On 10.01.1997 the insurer addressed a letter to the insured as follows:

“Notwithstanding anything contained therein to the contrary it is hereby declared and agreed that the insurance under this policy stands cancelled as from inceptions i.e. 06.01.97. Since the cheque paid by the insured towards payment of premium returned from our Bankers duly dishonoured, and in consequence whereof premium amounting to Rs.5783/- is hereby written off.”

6. The original registration receipt dated 14-01-1997 issued by the postal authorities was marked in one case and the Xerox copies in the rest of the cases. The insured i.e. the owner of the vehicle remained ex parte in all these cases. In view of the evidence of R.W.1 and the registration receipt filed into the Court and marked, it must be held that the cancellation order was received by the insured, the owner of the vehicle. In fact, the served postal acknowledgement was filed into the Court and was got marked. But it does not contain the date of receipt of the notice by the insured, owner of the vehicle. The accident covered by all these cases occurred on 21.01.1997 i.e. exactly one week after the cancellation letter was sent to the insured by registered post.

7. Three decisions of the Supreme Court have been cited before me by both sides in this context. The earliest one of them is ORIENTAL INSURANCE CO. LTD., V. INDERJIT KAUR AND OTHERS(1) and this is referred to in the latter two cases i.e. NEW INDIA ASSURANCE CO. LTD., V. RULA AND OTHERS(2) and NATIONAL INSURANCE CO. LTD. V. SEEMA MALHOTRA AND OTHERS(3).

8. An analysis of these three decisions would ultimately lead to an answer to the question raised in these C.M.As. In Inderjit Kaur’s case (1 supra) the policy of insurance was issued by the insurer on 30.11.1989. The premium for the policy was paid by cheque. While so, the vehicle of the insured met with an accident on 19.04.1990. Thereafter, the insurance company addressed a letter to the insured stating that the cheque was dishonoured and therefore, the premium was not received. Thereafter, the premium was paid in cash on 02.05.1990. After discussing all the provisions of Section 64-VB of the Insurance Act (4 of 1938) and after adverting to a decision i.e. UNITED INDIA INSURANCE CO. LTD. V. AYED MOHAMMED(4), cited before their Lordships by the counsel for the appellants, S

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