Section 64VB of the Insurance Act Clarified – Insurer Bound to Honour Policy Once Premium for Renewal received
Section 64VB of the Insurance Act – No risk to be assumed unless premium is received in advance
Explanation – Where the premium is rendered by postal money order or cheque sent by post, the risk may be assumed on the date on which the money order is booked or the cheque posted, as the case may be.
On 25.4.2004, the respondent no.1 housing society had taken fire and special perils policy from the petitioner.
On 17.7.2005, the society paid the premium for renewal of policy after expiry on 17.7.2005 vide cheque of Rs.18,910/- drawn on Thane Cooperative Bank.
On 22.7.2005, the petitioner issued fresh policy for 25.7.2005 to 24.7.2006.
On 26.7.2005, torrential rains struck Mumbai leading to severe damage caused to the property of the society.
On 7.8.2005, the society filed the insurance claim.
In the meanwhile, the Insurer had deposited the cheque of 22.7.2025 in its SBI account only on 30.7.2005.
On 4.8.2005, the Insurer sent the standard letter to the society that it is cheque was dishonoured for insufficient funds.
On 11.8.2005, Thank Bank of Society informed to Insurer that the society cheque was not processed own to torrential rains and that cheque ought to be presented afresh by SBI.
The State Consumer Commission partly allowed the consumer complaint of the society and directed the Insurer & Thane Bank to jointly pay Rs.5 lakhs.
The National Commission allowed the appeal of the society and relieved Thane Bank from any liability.
HELD that as per Section 64VB – Explanation of the Insurance Act, the cheque of the society was received before assuming the risk. Thus, the Insurer in compliance with Section 64VB assumed the risk from 25.7.2005. Indeed, receipt of premium amount by cheque is subject to realization but if the realization was delayed owing to the Insurer’s own deficiency in its own operational conduct the consequence of the same cannot be visited on the innocent Society
Judgment dated 15.12.2025 of the High Court of Bombay in Writ Petition No.12510 of 2024 of New India Assurance Co. Ltd Vs. Gayatridham Phase Cooop Housing Society and another
