APPEARED AT THE TIME OF ARGUMENTS

ORDER

C.VISWANATH

1.          The Revision Petitions are filed by the Petitioner under Section 21(b) of the Consumer Protection Act, 1986 against the Orders passed by the U.P. State Consumer Disputes Redressal Commission (hereinafter referred to as the “State Commission”) in First Appeal Nos. 1100/2010 & 2178/2010 dated 08.12.2015.  

2.          The Petitioner/Complainant stated in his Complaint that he is a registered owner of a Santro Car No. UP21S3986.  The Petitioner took a comprehensive insurance for his car. In August 2006, the Petitioner requested the Respondents to renew the insurance policy by submitting a cheque dated 16.08.2006 towards premium of Rs.8,974/-. The same was accepted by the Respondent, vide cover note No. VP00179214000101. In the above stated policy, the insurance was from 17.08.2006 to 16.08.2007 and the insured amount was Rs.2,84,818/-.  On 07.05.2007, the Petitioner was returning home from Delhi in his Car. At Hamirpur Village, his Car met with an accident. The Car got completely damaged and the Petitioner suffered  injuries.  The Petitioner filed FIR No. 254/2007 at PS Bhojpur and after completing all the formalities and filing all the required documents, claimed insurance amount from Respondent No.1. The Petitioner received letter dated 09.09.2006 from Respondent No.2 stating that  due to non-realisation of cheque issued to the Company by the assured, the above policy stood cancelled from inception”. Thereafter, the Petitioner met Respondent No.2 and notified that he did not receive the concerned letter dated 09.09.2006. The Petitioner always had sufficient amount in his account and if by any reasons the cheque had been dishonoured, then as per the provisions of the N.I. Act, 1881, the Petitioner would have received the notice and the Insurance Policy would not have been cancelled without hearing the Petitioner.  It was alleged that the letter dated 09.09.2006 was completely fake and receipt of the speed post attached with the letter was also  fake. Hence, the Petitioner was to be provided with the insurance amount  immediately. As the, actions of Respondents caused huge mental as well as economic loss, Complaint was filed.   

3.          The Respondents filed written statement in which they reiterated that the Petitioner had willfully concealed facts. Cheque issued by the Petitioner was dishonoured and therefore the policy was cancelled. The Respondents contended that no accident took place nor did the Petitioner got hurt. It was denied that the Respondents ever promised an amount of Rs.2,84,418/- to the Petitioner. It was also denied that the Petitioner received the letter dated 09.09.2006 from the Respondent on 25.07.2006. It was also argued that the provision of N.I. Act does not apply in this case and the Petitioner was not entitled to receive any compensation.  

4.          District Forum, vide order dated 30.04.2010, allowed the Complaint on the ground that Petitioner informed the Respondent Company after his car met with an accident on 07.07.2007 and on being told by the Respondent, deposited an amount of Rs.5,612/- as estimation charges with Natasha Automobile, the receipt of which had been submitted by the Petitioner. It was mentioned that if the Petitioner knew that his policy dated 09.09.2006 had lapsed, then he would not have submitted an amount of Rs.5,612/- with Natasha Automobile, as estimation charges. It is seen from the available evidence, that after the estimation charges were deposited by the Petitioner, the insurance company stated that as the insurance amount was not paid, the policy was cancelled.  The District Forum held that there was a deficiency in service by the Respondents and hence, the Complaint was allowed. The Respondents were ordered to deduct the premium amount of Rs.8, 974/- from the insurance amount of Rs.2,84,818/- and provide the remaining amount to the Petitioner within a month from the date of the order. The litigation expenses of Rs.1,000/- were also given.

5.          Aggrieved by the order of District Forum, the Petitioner filed an Appeal for grant of interest and cost of litigation and Respondents filed Appeal for setting aside the order of District Forum.  State Commission, vide orders dated 08.12.2015, allowed Appeal No. 1100/2010 filed by the Respondents and dismissed the Appeal No. 2178/2010 filed by the Petitioner on the ground that the cheque was dishonoured and hence there was no contract of insurance. The Petitioner was not entitled to receive any insurance claim and the order of the District Forum dated 30.04.2010 was set aside.

6.          Aggrieved by the orders passed by the State Commission, the Petitioner filed the Revision Petitions before this Commission. 

7.          Heard the Counsels for the Parties.  I have also carefully gone through the record.

8.          The Petitioner has filed two Revision Petitions against the orders of State Commission. Both the Revision Petitions are disposed of by a common order. The Cheque got bounced/ dishonoured which amounted to violation of the terms and conditions of the policy due to non-payment of insurance amount. Hence, the Petitioner was not entitled to the insurance amount claimed by him from the Respondents.  The judgement passed by the State Commission is correct and justified as it was supported with the relevant judgements.

9.          This is a case where the petitioner insured his car with the Respondent Insurance Company and sent cheque dated 16.8.2006 of Rs.8,974/-. Unfortunately this cheque got dishonoured and the amount could not be encashed by the Respondent as seen from evidence placed on record. Due to non-realization of the premium cheque of the Petitioner, the Respondent cancelled the Policy.

10.        Hon’ble Supreme Court in the case of National Insurance Co. Ltd. vs. Seema Malhotra & Ors. Relevant paragraphs of this judgment being material are reproduced as under: -

          “In a contract of insurance when an insurer gives a cheque towards payment of premium or part of the 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. It 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 to pay a certain sum of money to a certain person. It involves a promise that such money would be paid.

          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.

          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.

          However, if the insured makes up the premium even after the cheque was dishonoured but before the date of accident it would be a different case as payment of consideration can be treated as paid in the order in which the nature of transaction required it. As such an event did not happen in this case the insurance company is legally justified in refusing to pay the amount claimed by the respondents.”

11.        Ratio of this decision applies to the facts of the present case. The State Commission based on the above decision has rightly upheld the Appeal filed by the Respondents and set aside the order of the District Forum. Consequently, State Commission did not find any relevance of increasing the compensation or interest rate in the Appeal filed by the Petitioner and dismissed the same. There is no illegality or infirmity in the orders passed by the State Commission. The Revision Petitions are therefore dismissed.