Cover Note vs Policy: Punjab & Haryana High Court Holds Insurer Cannot Rewrite Contract After Accident
Case Name: Subhash v. Sheela and Others
Date of Judgment: 12 February 2026
Citation: FAO-696-2016
Bench: Hon’ble Mrs. Justice Sudeepthi Sharma
Held: The Punjab and Haryana High Court held that a cover note forms part of the certificate of insurance under Sections 145(b) and 147 of the Motor Vehicles Act, 1988 and remains valid and binding unless lawfully cancelled. An insurer cannot unilaterally alter the classification of the insured vehicle in the policy after issuance of the cover note. In absence of proof of cancellation or breach, the Insurance Company remains liable to satisfy the award.
Summary: The appeal was filed by Subhash, owner of tractor bearing registration No. HR-08-P-1577, challenging the award dated 10.02.2015 passed by the Motor Accident Claims Tribunal, Hisar, whereby liability to pay compensation of ₹10,79,000/- was fastened upon him.
The accident occurred on 26.12.2012 when Gordhan allegedly fell between the tractor and trolley and succumbed to injuries. The Tribunal held that the deceased was sitting on the mudguard of the tractor, which was transporting bricks, and that the vehicle was insured for agricultural purposes only. Holding that commercial use was not covered, the Tribunal absolved the Insurance Company and fastened liability upon the owner and driver.
Before the High Court, it was argued that Ex.R3 (Cover Note) issued on 28.06.2012 specifically described the vehicle as a “Commercial vehicle only,” whereas Ex.R2 (Insurance Policy) later described it as an “Agricultural Tractor.” The appellant contended that such unilateral alteration was impermissible and that the cover note had statutory sanctity.
The Court examined Sections 145 and 147 of the Motor Vehicles Act and held that a cover note falls within the definition of “certificate of insurance” and forms part of the insurance contract. Relying upon National Insurance Co. Ltd. v. Abhaysing Pratapsingh Waghela, (2008) 9 SCC 133, the Court reiterated that a cover note remains valid and binding until cancelled in accordance with law. No evidence was led by the Insurance Company to show cancellation of the cover note or breach of policy terms.
The Court further observed that the Tribunal had erred in preferring the contents of the FIR over the ocular testimony recorded before it. It reiterated that evidence led before the Tribunal carries greater evidentiary value than contents of the FIR, relying upon National Insurance Co. Ltd. v. Chamundeswari, 2021 INSC 592.
Holding that the Insurance Company failed to discharge its burden of proving breach, the Court concluded that the insurer remained liable to indemnify the insured.
Decision: The appeal was allowed. The award dated 10.02.2015 was modified to the extent that the Insurance Company was held solely liable to satisfy the compensation awarded in favour of the claimants.