Dishonor of cheque inspite of sufficient fund amounts to deficiency in service

Dishonor of cheque inspite of sufficient fund amounts to deficiency in service. No insurer shall assume any risk in respect of insurance business until and unless the premium is received by the insurer.

In a Case No. 14/07 of Joginder Singh Vs. Vijaya Bank and ICICI Lombard General Insurance Co. Ltd., Consumer Disputes Redressal Forum-II, Delhi directed Vijaya Bank to pay to the complainant a sum of Rs.54,288/- which was paid by the complainant for the repair of his vehicle due to damage in an accident for the deficiency of service on the part of the Bank. Besides Bank shall also pay a sum of Rs.20, 000/- as compensation for causing him mental pain and agony.

Complainant insured his vehicle with the ICICI Lombard on making a premium amount of Rs.26, 346/-.

After complainant’s said vehicle met with an accident, a claim was lodged with Insurance Company for Rs.54, 288/- which was repudiated. Complainant came to know that the insurance company could not mature the payment of his cheque which was drawn on Vijaya Bank for an amount of Rs.26, 346/-. Insurance Company stated that as per rule 4 of the IRDA regulations 2002, no insurer shall assume any risk in respect of insurance business until and unless the premium is received by the insurer. Insurance company also stated that the cheque of the premium was dishonored and therefore, the company was not liable to reimburse complainant for the amount spent for the repair of his vehicle. Vijaya Bank dishonored the cheque based on insufficient funds whereas complainant proved that he was having sufficient funds to meet the payment of insurance for a sum of Rs.25, 346/- during the month of September. The cheque for the premium was issued on 06/09/2006. Between the period 04/09/2006 to 18/09/2006, the complaint has got a minimum balance of Rs.1,09,928/-. District Consumer Redressal Forum observed that had the bank been quite vigilant then the amount of premium of insurance would have reached to the insurer which in turn would have been liable to compensate the complainant for the repair of his vehicle because the vehicle met with an accident within the period of insurance cover.