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REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(s). 2159 OF 2007

NATIONAL INSURANCE CO. LTD.     Appellant  

                VERSUS

BALKAR RAM & ORS.                      Respondents

O R D E R

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  dishonour  of  the  cheque  towards  the  

issuance of policy was communicated to the policy-

holder 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

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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 ('Tribunal' for short)to pay the  

amount of compensation to the claimants.   

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 dishonoured 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  dishonoured  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

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is liable to pay the entire amount of compensation  

to the respondents/ claimants.

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  &  

Ors. wherein it has been held that the insurance  

company is liable to satisfy  the award if the  

intimation regarding the dishonour of the cheque  

and cancellation of policy is communicated to the  

policy-holder  after  the  date  of  the  accident.  

Thus, the defence of the insurance company that  

the policy of insurance was not valid since the  

cheque had been dishonoured prior to the accident  

would not exonerate them from making the payment  

of compensation.  In this matter, admittedly the  

accident  had  taken  place  on  19.04.2000  and  the  

cheque although had been dishonoured 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

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policy of insurance in regard to the vehicle which  

met  with  an  accident.   Admittedly,  the  policy-

holder  had  already  issued  another  cheque  

substituting  the  cheque  which  had  earlier  been  

dishonoured.

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.

........................J. (GYAN SUDHA MISRA)

........................J. (KURIAN JOSEPH)

NEW DELHI JULY 09, 2013