NATIONAL INSURANCE Vs SEEMA MALHOTRA

Topics: Insurance, Contract, Boiler insurance Pages: 18 (858 words) Published: August 1, 2014
CASE--‐4
NATIONAL
INSURANCE
Vs
SEEMA
MALHOTRA
Facts
of
the
CASE--‐
In
this
case,
a
person
named
Yash
Paul
Malhotra
approaches
National
Insurance
Company
(NIC)
for
insuring
his
Maruti
car.
They
enter
into
an
insurance
contract
in
21/12/1993
for
􀀀1,50,000
and
the
insured
gives
a
cheque
for
􀀀4492
towards
the
first
instalment
of
the
premium
and
a
cover
note
is
issued
for
the
maruti
car
by
NIC.
Unfortunately,
on
31/12/1993
Yash
Malhotra
meets
with
an
accident
and
the
maruti
car
is
completely
damaged.
His
widow,
Seema
Malhotra
and
his
sons
file
a
claim
for
loss
of
vehicle.
On
10/1/1994
the
Bank
intimates
NIC
that
the
check
was
dishonoured
as
there
were
no
funds
in
the
account.
On
20/1/1994,
NIC
informs
Seema
Malhotra
that
the
cheque
issued
has
been
dishonoured
by
the
bank,
so
the
insurance
claim
has
been
cancelled.
21/12/93
10/1/94
Check
20/1/94
Bounce
Seema
Malhotra
initially
approaches
the
State
Consumer
Protection
Commission
who
rules
the
decision
against
her
by
stating
that
the
NIC
is
entitled
to
cancel
the
policy
if
the
cheque
gets
bounced.
Thereafter
she
goes
to
Jammu
Kashmir
High
court
which
reverses
the
decision
and
holds
NIC
liable
to
honour
the
claim.
The
Bench
states
that
the
co.
instead
of
cancelling
the
policy
on
the
date
it
was
issued
ie
21/12/1993
chose
to
cancel
it
with
“immediate
effect”
on
the
date
cheque
got
dishonoured
ie
on
20/1/1994
clearly
indicating
that
till
the
issuance
of
this
communication,
NIC
itself
treated
the
policy
subsisting.
For
this
reason,
the
argument
addressed
on
behalf
of
NIC,
based
on
Section
64--‐VB
of
the
Insurance
Act,
also
doesn’t
hold
good.
Issues
Involved--‐
NIC
was
now
supposed
to
pay
the
compensation
after
deducting
the
premium
amount.
This
was
the
major
shortcoming
of
the
decision
since
the
only
profit
the
insurance
companies
make
is
the
premium
paid
when
no
accident
or
damage
occurs.
But
to
ask
a
company
to
bear
the
entire
loss
of
somebody
else
without
receiving
any
part
of
the
premium
is
contrary
to
the
principle
of
equity.
Seema
Malhotra
Yash
Malhotra
NIC
BANK
Final
Verdict:
NIC
appealed
to
the
SC
and
this
time
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