NATIONAL INSURANCE COMPANY LIMITED Vs. SEEMA MALHOTRA

JUDGEMENT

(1.) Leave granted.

(2.) Under a contract of insurance the insured gave a cheque to the insurer towards the first premium amount, but the cheque was dishonoured by the drawee-bank due to insufficiency of funds in the account of the drawer. Is the insurer liable in such a situation to honour the contract of insurance There is no dispute that the insurer is liable as against third parties because it is covered by the statutory provisions contained in Chapter X of the Motor Vehicles Act, 1988. But the insurer vehemently disputed the liability when the claim is made by the insured himself or his legal heirs, without any third party being involved. To avoid confusion we may point out that the insurance company has no dispute that the claims, if any, made by the kith and kin of the insured for the injuries sustained by them in the accident including the claims made by the legal representatives of the deceased in such accident would also be treated as third party claims.

(3.) A Division Bench of the High Court of Jammu and Kashmir held, on the facts of the case, that the insurance company is still liable because it chose to cancel the policy with effect from the date of bouncing of the cheque, whereas the liability was incurred prior to it.