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NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
Ashok Bhan, President and Vineeta Rai, Member
BAJAJ ALIANZ GENERAL INSURANCE CO. LTD. - Appellant
Versus
MEHFOOZ MIRZA - Respondent
Revision Petition No. 4296 of 2007 from Order dated 29.10.2007 in Appeal No. A-379 of 2004 of State Consumer Disputes Redressal Commission, Delhi
Decided on : 10-05-2012
Ms. Kanika Areja, Advocate, for the Appellant; Ms. A. Sushashini, Advocate, for the Respondent
The central legal point established in the judgment is the impact of a dishonoured cheque on the existence of an insurance contract and the liability of the insurance company in such circumstances.
Headnote:
Insurance - Insurance Claim - [Motor Vehicle Insurance, Dishonoured Cheque, Deficiency in Service] - [Insurance Act, Section 64VB; Consumer Protection Act, Section 21] - The court discussed the dishonoured cheque and its impact on the existence of the insurance contract, the duty of the insurance company to inform the insured about the dishonoured cheque, and the liability of the insurance company in case of a dishonoured cheque. The court's decision was influenced by the interpretation of the Insurance Act and the Consumer Protection Act, particularly Section 64VB and Section 21, which governed the rights and obligations of the parties in the insurance claim dispute.
Fact of the Case:
The Respondent's vehicle was insured with the Petitioner Insurance Company. The insurance claim was repudiated by the Petitioner due to the dishonoured cheque issued by the Respondent for policy renewal.
Finding of the Court:
The State Commission found the insurance company's failure to inform the insured about the dishonoured cheque as deficiency in service and awarded compensation to the Respondent. However, the Revision Petition was allowed, setting aside the State Commission's order and restoring that of the District Forum.
Issues: The key issues involved the existence of the insurance contract in light of the dishonoured cheque, the duty of the insurance company to inform the insured about the dishonoured cheque, and the liability of the insurance company in case of a dishonoured cheque.
Ratio Decidendi: The court held that the insurance company's duty to inform the insured about the dishonoured cheque was fulfilled, and as there was no insurance cover in existence on the date of the accident, the insurance company was not liable to reimburse the loss suffered by the Respondent.
Final Decision: The Revision Petition was allowed, setting aside the State Commission's order and restoring that of the District Forum.
ORDER
Ashok Bhan, President - Petitioner Insurance Company which was the Opposite Party before the District Forum has filed this Revision Petition against the order and judgment dated 29.10.2007 passed by the State Consumer Disputes Redressal Commission, Delhi (in short, the State Commission ) in appeal No. A-379/04 whereby the State Commission reversing the order of the District Forum partly allowed the complaint filed by the Respondent and directed the Petitioner Insurance Company to pay Rs. 28,000 to the Respondent towards the repair of the vehicle. Rs. 5,000 were awarded as compensation and cost of litigation.
Facts:
2. Complainant/Respondent got his vehicle Daewoo Matiz Sd. 2000 insured with the Petitioner Insurance Company for the period valid from 19.2.2002 to 18.2.2003. Respondent issued a cheque on 10.2.2003 for Rs. 5,035 for renewal of the policy. On 10.8.2003, the said vehicle met with an accident and was damaged. Respondent lodged the claim. On receiving intimation, Petitioner appointed a Surveyor to assess the loss who assessed the loss at Rs. 31,000. Rs. 28,000 were spent on the repair of the vehicle. However, Petitioner repudiated the claim of the Respondent on the ground that the cheque issued by the Respondent was dishonoured and there was no privity of contract between the Petitioner and the Respondent. Respondent, being aggrieved, filed the complaint before the District Forum.
3. District Forum dismissed the complaint holding that no contract of insurance had come into existence as the cheque issued by the Respondent had been dishonoured. That there was no privity of contract between the parties.
Respondent, being aggrieved, filed the appeal before the State Commission.
State Commission allowed the appeal by observing thus:
"The contention of the Counsel for the respondent that the cheque was presented on 18.2.2003 and was received back dishonoured on 24.2.2003, the intimation of which was given on 26.2.2003 does not inspire confidence at all as no convincing documentary evidence has been produced by the respondent to show the intimation of the dishonouring of the cheque. The factum of dishonouring of the cheque was not in the knowledge of the insured and as such he has been honouring under the belief that the cheque given by him had been duly encashed. Act of omission on the part of the respondent - company in not informing the insured about the dishonouring of the cheque for such a long time itself amounts to deficiency in service and calls for compensation."
Petitioner, being aggrieved, has filed the present Revision Petition.
Counsel for the parties have been heard.
4. Cheque issued by the Respondent for renewal of the policy was presented to the bank on 18.2.2003 and was received back dishonoured on 24.2.2003. Petitioner sent an intimation to the Respondent about the dishonouring of the cheque and requested the Respondent to remit the premium in cash immediately to assume the risk from the date of fresh collection subject to the confirmation that there has been no loss or damage to the vehicle so far. State Commission has held that the intimation sent on 26.2.2003 by the Petitioner to the Respondent did not inspire confidence as no convincing documentary evidence had been produced by the Petitioner to show the intimation of the dishonour of the cheque. Petitioner has produced the copy of the letter sent by it which reads as under:
"Sub: Dishonour of premium cheque against your policy No. OG-03-1101-1801-00005795
Please note that cheque for payment of premium against cover note No. 276987/Policy No. OG-03-1101-1801-00005795 (Cheque No. 430826 dated 10.2.2003 on Janta Sahakari Bank Ltd. Pune Bank, Darya Ganj) has been returned to us uncleared for reasons given under as advised by the Bank.
Insufficient Fund (fill in reason given by the bank for cheque dishonour).
Please note that the policy stands cancelled since inception and we are not on risk in respect of the above cover note/policy certificate of insurance.
In case
