National Insurance Co. Ltd.,Attur. v. Deivanai & Ors.

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 17-03-2009CORAMTHE HONOURABLE MR.JUSTICE S. PALANIVELUC.M.A.No.1833 of 2002 National Insurance Co. Ltd.,Attur. ... Appellant vs.1. Deivanai2. Minor Venkatesan3. Minor Ramesh4. Valliammal5. Vavayee Ammal6. Murugesan [given up]7. Indian Bank, Attur. ... Respondents Civil Miscellaneous Appeal filed under Section 173 of MotorVehicles Act, 1988, against the Judgment dated 26.12.2001 made inMACT OP No.1642/92 on the file of the Motor Accidents Claims Tribunal(III Additional District Judge) Salem. For Appellant : Mr. N. Vijayaraghavan For Respondents : Mr. T. Murugamanickem [for R-1 to R-4] Mr. Kaithamalai Kumaran [for R-5]JUDGMENTOn 3.3.1992 at about 6.30 p.m. while the deceased Kandasamy wasriding his bi-cycle, his father Sengamalai Padayachi was sitting onthe back seat. While the cycle was proceeding along AmmamapalayamRoad near Bungalow Kadu, a tractor bearing registration No.TN-27-Z-2151 was driven by its driver in a rash and negligent manner anddashed against the cycle from the back and hence the accidentoccurred. Both of them sustained serious injuries and were removed toGovernment Hospital, Attur. Kandasamy was referred to M.K.G.M.C.Hospital, Salem, for further treatment, however, on the way, he died.He was aged about 28 years at the time of accident. He was an https://hcservices.ecourts.gov.in/hcservices/ agriculturist and tapioca broker. Agricultural lands to the extentof 2.49.5 hectare belong to the family of the deceased. He wasearning not less than Rs.2,000/- per month. The first petitioner iswife of the deceased, second and third petitioners are minor sons andfourth and fifth petitioners are parents of the deceased. Hence asum of Rs.2,00,000/- is claimed as compensation. 2. In the counter filed by the first respondent, it is statedthat the deceased was aged more than 40 years and was not doing anywork. He was neither an agriculturist nor a tapioca broker. Theaccident occurred due to the natural causes. The compensationclaimed is excessive. The deceased was responsible for the accident.He lost control over his cycle. He was already sick. Thisrespondent's vehicle was hypothecated to Indian Bank, Attur Branchand the understanding was that the banker should pay the insurancepremium at the appropriate date. Hence the petition has to bedismissed.3. In the additional counter filed by the first respondent, itis stated that on 2.3.1992, the fourth respondent bank debitedRs.1,411/- from this respondent's loan account towards policy amount.On 2.3.1992 itself by way of banker's cheque, the policy amount waspaid to the third respondent Insurance Company. Due to oversight thethird respondent had not insured the vehicle in time and to avoidpayment of compensation, they insured the vehicle on 4.3.1992 alone.Hence, both the Insurance Company and Bank are responsible tocompensate the claimants.4. In the counter filed by the third respondent InsuranceCompany, it is alleged that the driver did not possess valid drivinglicence on the date of the accident and there was no valid permit andR.C. for the vehicle. The avocation, income as alleged in thepetition are denied. This respondent was impleaded on 3.10.1997alone and hence the rate of interest has to be computed only from thesaid date. It is not correct to say that the accident took place dueto the negligent driving of the driver. The negligence was on thepart of the deceased. The claim is excessive. Hence, the petitionhas to be dismissed.5. In the additional counter filed by the third respondentInsurance Company, it is mentioned that only on 4.3.1992 the firstrespondent's vehicle was insured with this respondent and hence thisrespondent is not liable to pay compensation.6. In the counter filed by the fourth respondent, it is averredthat this respondent is neither a necessary party nor a proper partyto the claim petition. This respondent has nothing to do with thecase and is not responsible for compensation. https://hcservices.ecourts.gov.in/hcservices/

7. After analysing the evidence on record, the learned TribunalJudge fastened the responsibilty on the owner of the vehicle,Insurance company and Indian Bank holding them jointly and severallyliable to pay compensation of Rs.1,75,000/- to the claimants withinterest at the rate of 9% p.a. Aggrieved against the said award,the Insurance Company is before this Court.8. A thorough discussion has been taken up by the Tribunal withreference to the particulars available in the oral evidence on recordand it reached a conclusion that under Section 64 (b) of theInsurance Act, the Insurance Company has to be held liable since on2.3.1992 itself the banker's cheque for Rs.1,411/- was despatched bythe bank.9. As far as the anchoring of liability upon the driver forcausing the accident is concerned, there was not much quarrel. Theparties are at loggerheads with reference to the responsibility topay compensation. The bank contends that as per the records on02.03.1992 itself banker's cheque was drawn, which was dulydespatched to the insurance company and with this, theirresponsibility was over. But the Insurance Company would contendthat only on 4.3.1992 the said banker's cheque was received and thepolicy was prepared on that day itself giving effect from 04.03.1992to 03.03.1993. It was in force from 0.00 hours on 4.3.2002.10. It is an admitted fact that the insurance company receivedthe banker's cheque dated 02.03.1992 for Rs.1,411/- but it is statedby the bank that the cheque was despatched along with the coveringletter Ex.B.3 to the Insurance Company. But they kept it and put theseal of 4.3.1992 and prepared policy on that date.11. Conversely, the Insurance Company would submit that inasmuchas Ex.P.3 bears office seal of the insurance company of 4.3.1992, theissuance policy dated 4.3.1992 is proper and there is no foul play init.12. From the oral evidence, it transpires that both the bank andthe Insurance Company are situated in the same building. Eventhough it is stated that the bank delivered cheque on 2.3.1992 itselfto the insurance company, it does not produce any document. ButEx.P.3 is a clear evidence to show that only on 4.3.1992 the chequewas received. In this context it is stressed by the learned counselfor the claimants that by virtue of Section 64 (V) (B) of theInsurance Act 1938, the date of the cheque has to be taken intoconsideration for the purpose of payment of premium. The saidprovision goes thus:(1) No insurer shall assume any risk in Indiain respect of any insurance business on which https://hcservices.ecourts.gov.in/hcservices/ premium is not ordinarily payable outside Indiaunless and until the premium payable is received byhim or is guaranteed to be paid by such person insuch manner and within such time as may beprescribed or unless and until deposit of suchamount as may be prescribed, is made in advance inthe prescribed manner.(2) For the purpose of this section, in thecase of risks for which premium can be ascertainedin advance, the risk may be assumed not earlier thanthe date on which the premium has been paid in cashor by cheque to the insurer.Explanation: Where the premium is tendered bypostal money order or cheque sent by post, the riskmay be assumed on the date on which the money orderis booked or the cheque is posted, as the case maybe. (3) Any refund of premium which may become dueto an insured on account of the cancellation of apolicy or otherwise shall be paid by the insurerdirectly to the insured by a crossed or other chequeor by postal money order and a proper receipt shallbe obtained by the insurer from the insured and suchrefund shall in the case be credited to the accountof the agent.(4) Where an insurance agent collects a premiumon a policy of insurance on behalf of an insurer, heshall deposit with, or despatch by post to, theinsurer, the premium so collected in full withoutdeduction of his commission within twenty four hoursof the collection excluding bank and postalholidays.(5) The Central Government may by rules, relaxthe requirements of sub-section (1) in respect ofparticular categories in insurance policies."When the explanation to sub-section 2 of Section 64 (v) (B), is read,it is seen if the premium is tendered by means of a cheque sent bypost, the date on which the cheque is posted has to be considered asthe date of premium.13. In 2002 (3) MLJ 415 [K. Ramalingam v. Parvathi and others]it is held by the Division Bench of this Court that when a bankagreeing to insure the vehicle and renew the same from time to time https://hcservices.ecourts.gov.in/hcservices/ till the entire loan is cleared, then the bank is responsible to paythe compensation if any lapse on its part is found.14. Learned counsel for the appellant would place reliance onthe decision of the Supreme Court in 2007 (5) CTC 892 [NationalInsurance Co., Ltd., v. Sobina lakai] wherein Their Lordships haveheld that when there is a specific time mentioned in the policy, itwould operate from the said time and date indicated therein and itis the obligation of the Court to look into the contract of insuranceto discern whether time has been specified for commencement or expiryof policy and the effectiveness of Insurance Policy would start fromtime and date specifically incorporated in policy and not from anearlier point of time. Their Lordships have also observed asfollows:"19. In order to curb this widespread mischief ofgetting Insurance Policies after the accidents, it isabsolutely imperative to clearly hold the effectivenessof the Insurance Policy would start from the time and thedate specifically incorporated in the policy and not froman earlier point of time."15. In the case on hand, the facts are distinguishable. In thepresent case, the cheque was already drawn on 2.3.1992 itself in thename of the insurance company earmarking the payment towards premiumfor the policy and despatched on the same date. There is no suchcircumstances in the case before the Supreme Court. 16. Learned counsel for the appellant also garneredsupport from a Division Bench decision of this Court in 2004 (1) TNMAC 174 (DB) [National Insurance Co. Ltd., v. Geetha & others]wherein the learned Judges have elaborately dealt with the matterwith reference to the date and time of the policy, after referring tovarious decisions. Finally the Division Bench has held as follows:"11. The Indian Contract Act, 1872 covers therelationship between the parties to an insurancecontract generally except in regard to some of itsspecial features. So, unless the Insurance companyaccepts and issue policy, the person who paid thepremium cannot come forward with the plea that theInsurance Company is having an obligation to pay thecompensation, especially when the premium was paid toget a new policy. In the present case, it is not indispute that in the policy issued on the basis of thepremium paid by the owner of the vehicle, it isspecifically mentioned that the insurance policycovers for the period from 15.06.1998 10.00 a.m. Butthe accident took place about 5.30 a.m. on the said https://hcservices.ecourts.gov.in/hcservices/ date.15. In view of the above settled principles oflaw, the appellant-insurance company is correct inchallenging the award of the Tribunal on the groundthat they are not liable as the insurance policy wasissued with the specific mention of the time and dateof commencement of the insurance and the accidenttook place before the said time mentioned in thepolicy. There is, thus, a basic fallacy in theconclusion reached by the Tribunal on this point." 17. Repelling the arguments of the learned counsel for theappellant, learned counsel for the respondents 1 to 4 cited anotherDivision Bench decision of this court reported in 2003 (2) CTC 72[M/s. United India Insurance Co. Ltd., v. S. Viswanathan and another]wherein similar set of facts are available as those available in thiscase. The operative portion of the Judgment goes thus:"6. ...... Therefore, we are of theview that the case of the owner of the vehicle isacceptable and from the evidence of the owner of thevehicle it is clear that the cheque has been handedover on 20.2.1992 itself, and therefore on the dateof the accident ie., on 23.2.1992, there was a validinsurance coverage. We uphold the decision of theTribunal that the vehicle was validly insured on thedate of the accident and there is no reason tointerfere or alter this finding. Therefore, we findthat there was a valid insurance policy on the dateof the accident."18. In the case discussed above, the cheque was handed over on20.2.1992 itself and the accident took place on 23.2.1992, however,on 2.3.1992 only the policy was issued. It has been observed thatthe policy becomes effective on the date when the cheque was issuedby the owner to the Insurance company. 19. As far as the facts of the present case are concerned, thetime of giving effect to the policy on 4.3.1992 need not beconsidered for the reason that the accident occurred on the previousdate i.e., 3.3.1992 itself. In so far as the payment of premium isconcerned, on 2.3.1992 itself cheque was drawn in the bank and it hasbeen duly established by the bank. However, it was received by theInsurance Company on 4.3.1992 and thereafter the policy was issued onthat date. In the case of Geetha and others (supra), the accidenttook place at about 5.30 a.m. on 15.06.1998 but the insurance policytook effect only from 10.00 a.m. on 15.06.1998 and the Division Benchof this Court has observed that even though premium was paid by the https://hcservices.ecourts.gov.in/hcservices/ person, unless the Insurance Company accepts and issued policy itdoes not have any obligation to pay compensation when the premium waspaid to get a new policy. The Division Bench has also referred tothe case of S. Viswanathan (supra) distinguished the facts that itwas with reference to the renewal of policy and the case of Geethaand others is otherwise, i.e., taking of new policy.20. When explanation appended to sub-section 2 of Section 64(V)(B) of the Insurance Act is concerned, since the banker's cheque wasdrawn on 2.3.1992 itself, even though it was received by theInsurance Company on 4.3.1992, it has to be treated that validpremium was paid to the Insurance company and following theguidelines in the Division Bench decision of this Court in S.Viswanathan's case, it is held that the Insurance Company is alsoliable for compensation.21. As far as the liability of the bank is concerned, there isno appeal and hence the award passed by the Tribunal has to beconfirmed and it is accordingly confirmed. The Civil MiscellaneousAppeal suffers dismissal. In the result, the Civil Miscellaneous Appeal is dismissed. Nocosts.Sd/Asst.Registrar/true copy/Sub Asst.RegistrarggsTo1. The III Additional District Judge, Motor Accidents Claims Tribunal Salem. 2. The Section Officer,VR Section, High Court, Madras.+1cc to Mr.T.Murugamanikkam,Advocate Sr 8293RSI(CO)km/3.4. C.M.A.No.1833 of 2002