Durga,

Case 2 is more accurate.

For Case 1, you cannot use the same force (F1 for example) for forces impacting on elbow/closing valve/tee along liquid flow and reverse liquid flow because these forces will cancel with each other.

For code compliance check, just check F1, F2, and so on only. No need to combine all forces because you may get a very conservative result. Plus transient is not happening at the same time. the wave will travel from its originated point so better to treat the forces individually.