JUDGMENT
M. Karpagavinayagam, J.
1. Oriental Insurance Co. Ltd., Salem is the appellant herein.
2. The claimants, the widow and two daughters of the deceased, filed a claim petition before the Tribunal, stating that Periyathambi, deceased, died in the accident occurred due to negligent driving of the driver of the lorry belonging to the respondent No. 4 herein, insured with the appellant and claimed the compensation of Rs. 1,00,000.
3. The Tribunal awarded Rs. 52,000, holding that the insurance company is liable to pay the said amount on behalf of the owner of the lorry.
4. Questioning the finding with reference to liability fastened on the insurance company, this appeal has been presented before this court. Aggrieved over the inadequacy of quantum, the claimants, the respondent Nos. 1 to 3 herein, have filed Cross-objection No. 97 of 1995.
5. Few facts, which are required for the disposal of this appeal and cross-objection could be stated as follows:
On 20.5.1991, at about 2.00 p.m., the deceased Periyathambi was going on his bicycle, keeping to his left side, at Nara-simhachetty Road at Shevapet. While so, near S.M.C. Service Station, a lorry bearing the registration No. MDL 2984 came behind the deceased, at a high speed, in a rash and negligent manner and dashed against him. Due to the injuries sustained, he died on the spot. The deceased was aged about 47 years. He was a mason by profession. Claimant No. 1 is the wife and claimant Nos. 2 and 3 are his daughters. The deceased was sole breadwinner to the entire family. Hence claim petition was filed for compensation of Rs. 1,00,000.
6. Before the Tribunal, the claim petition was resisted by both the owner of the lorry as well as the insurance company, the appellant herein, through the counter stating that the driver of the lorry was not negligent.
7. On behalf of claimants, the claimant No. 2 Mariammal was examined as PW 1 and one Periyathambi, the son-in-law of the deceased, the eyewitness, was examined as PW 2. Exhs A-1 to A-4 were marked on their side.
8. On the other side, the owner of the lorry, respondent No. 4 herein and one Viswanathan from insurance company were examined as RW 1 and RW 2 respectively and Exhs. R-1 to R-4 were marked.
9. The Tribunal, on analysing the materials, placed by both the parties, concluded that the driver of the lorry was negligent and the insurance company, on behalf of the owner of the lorry, would be liable to pay the amount of Rs. 52,000 as compensation to the claimants.
10. Learned counsel for the appellant, while assailing the award, would mainly contend that the accident had occurred on 20.5.1991, whereas the insurance policy became valid only from 21.5.1991 and, as such, the insurance company cannot be fastened with liability to pay any amount as compensation to the claimants. In order to support his plea, he would cite several authorities.
11. On the other hand, the learned counsel for claimants and the owner of the lorry, respondent Nos. 1 to 4, in justification of the impugned award would, with equal vehemence, contend that the pre-and, therefore, the policy commences on that date itself and mere mentioning in the policy as 21.5.1991 would not absolve the insurance company of the statutory liability. He would also cite many authorities.
12. In the light of the rival contentions indicated above, the question that arises for consideration in the present case is as to when exactly the risk on the part of the insurer commences.
13. I shall mention, at the outset, that the question in relation to the liability had not at all been raised by the insurance company in its counter filed on 12.2.1992 before the Tribunal.
14. On the other hand, in the counter filed by the owner of the lorry, on the same date, i.e., 12.2.1992, it is specifically stated that in the event the Tribunal comes to the conclusion that the driver was negligent and the owner of the lorry is liable, it is for the insurance company to pay such amount. The relevant portion is as follows:
(9) …if this Honourable court still comes to a conclusion to hold that this respondent No. 1 is also liable to certain extent in meeting the award to be passed, it is respondent No. 2 insurance company to owe such liability for which purpose this respondent duly insured his vehicle with respondent No. 2 insurance company and this respondent need not pay anything in law.
15. Despite this counter, there is no denial on the part of the insurance company with reference to the assertion made by the owner of the lorry, fastening the entire liability on the insurance company.
16. On the contrary, RW 1, the owner of the lorry, during the course of chief-examination, would state that he has insured the vehicle with the insurance company. He would also further clarify in the cross-examination that the policy which was taken in respect of his vehicle with the insurance company was in force from 24.4.90 to 23.4.1991 and that on 20.5.91, he went to the office and gave proposal and on the same date, he paid the premium which was accepted by the company. When a suggestion was put to him that at his request the policy was insured from 21.5.91 to 20.5.1992, he denied the same. In the re-examination, he would further state that on 20.5.1991 at about 10.30 a.m., he went to the office of the insurance company and paid the premium and that, only thereafter, at about 2.00 p.m., the accident had occurred.
17. RW 2, who is working in the insurance company, was examined to show that the policy commenced from 21.5.1991 midnight and was in force up to 20.5.1992. However, he would also admit that the owner of the vehicle came on 20.5.1991 and gave the proposal on the same day and paid the premium. He also admitted that:
xxx xxx xxx
Despite this practice, it is mentioned in the policy that the effective date of insurance was from midnight of 21.5.91 to 20.5.92.
18. A perusal of the policy would clearly show that the amount of Rs. 1,320 was paid on 20.5.1991 itself and the policy was signed on the same day. Even then, there is no reason as to why it was mentioned in the policy that the effective date of commencement is from midnight of 21.5.1991, contrary to the regular practice.
19. In this context, it is relevant to note that when a suggestion was put to the owner of the vehicle RW 1, that the date of commencement of the policy was put as 21.5.1991 only at his request, it was denied. It is in this context, it shall be quite relevant to note that the story of putting the effective date of commencement of policy as from midnight of 21.5.1991 was only at the request of the owner of the vehicle, had never been mentioned in the counter.
20. Under these circumstances, I am not able to reject the submission made by the claimants as well as the owner of the vehicle that “midnight of 21.5.1991 has been deliberately put by the insurance company with an oblique motive, in order to escape from the liability, for the accident took place on 20.5.1991 at 2.00 p.m.”
21. There are number of authorities cited by the counsel for both parties. Before dealing with the said authorities, it would be quite appropriate to refer Section 64-VB of the Insurance Act, 1938:
64-VB. No risk to be assumed unless premium is received in advance.-(1) No insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily payable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and until deposit of such amount as may be prescribed, is made in advance in the prescribed manner.
(2) For the purpose of this section, in the case of risks for which premium can be ascertained in advance, the risk may be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the insurer.
Explanation: Where the premium is tendered 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 is posted, as the case may be.
(3) Any refund of premium which may become due to an insured on account of the cancellation of a policy or alteration in its terms and conditions or otherwise shall be paid by the insurer directly to the insured by a crossed cheque or by postal money order and a proper receipt shall be obtained by the insurer from the insured and such refund shall in no case be credited to the account of the agent.
(4) Where an insurance agent collects a premium on a policy of insurance on behalf of an insurer, he shall deposit with, or despatch by post to, the insurer, the premium so collected in full without deduction of his commission within twenty-four hours of the collection excluding bank and postal holidays.
(5) The Central Government may, by rules, relax the requirements of Sub-section (1) in respect of particular categories in insurance policies.
22. The words used in Sub-section (1) of Section 64-VB of the Insurance Act, 1938, “No insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily payable outside India unless and until the premium payable is received by him”, are quite important. These words go to indicate the time of the insurance, i.e., the time when the payment is made, is the time when the premium of the insurance is paid and the risk is assumed only from then by the insurance company. A reading of Sub-section (2) of Section 64-VB would also clarify this:
The risk may be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the insurer.
Thus, the assumption of the risk could be only from the date of receipt of premium whether by cash or by cheque.
23. In the instant case, the date on which the premium was received is 20.5.91. The date means “the ‘day’ and the ‘date’ commence just after midnight, i.e., 12 o’clock and one minute”. Therefore, the risk in respect of the accident which had taken place at 2.00 p.m. on the same date, though earlier to the issue of policy, stands covered.
24. In the instant case, the premium was paid, according to PW 1, on 20.5.1991 at 10.00 a.m. The accident took place at 2.00 p.m. Regarding the date and time of the payment of premium, there is no denial by the insurance company.
25. As indicated earlier, the insurance policy had been signed by the authorities on 20.5.1991.
26. Under those circumstances in the absence of the time mentioned in the policy, regarding the receipt of the premium, it shall be assumed that the effective date of the commencement of the policy was just after the midnight, i.e., after 12 o’clock on 20.5.1991. Therefore, the mentioning in the policy as ‘midnight from 21.5.1991’ would not disentitle the owner of the vehicle to make a plea that the real effective date of commencement of policy would only be the date of receipt of the premium.
27. As stated earlier, a bare reading of Section 64-VB of the Insurance Act, 1938 would make it manifestly clear that the insurance coverage should start from the date of the payment of premium whether in cash or by cheque or by money order. The ‘Explanation’ to Sub-section (2) of Section 64-VB makes the position further clear. The accepter of the amount of premium, if it is paid by postal money order, or cheque, sent by post, it shall be assumed that the postal department would be accepting the money as an agent of the insurance company as it will be deemed to have been received by the postal department on behalf of the insurance company on the date the money order is booked.
28. When that is the case, there is no difficulty in the present case to hold that the date of the receipt of the premium by the insurance company directly shall be considered to be the date of effective date of commencement of the policy.
29. As a matter of fact, in the decision in New India Assurance Co. Ltd. v. Ram Dayal , it is held that when a policy is taken on a particular date, its effectiveness would be from the commencement of the said date. If this principle is applied, it can be safely held in the present case that the effectiveness of the policy commences just after midnight, i.e., 12 o’clock on 20.5.1991.
30. Following are the decisions cited by the counsel for the insurance company, the appellant herein:
(1) Oriental Insurance Co. Ltd. v. Inderjit Kaur .
(2) National Insurance Co. Ltd. v. Jiku-bhai Nathuji Dabhi .
(3) L.I.C. of India v. Raja Vasireddy Komalavalli Kamba 1984 ACJ 345 (SC).
(4) Oriental Insurance Co. Ltd. v. S. Mariyal (1991) 1 LW 578.
The above decisions cited by the counsel for appellant would be of no use to the appellant, as in the instant case, it shall be considered that the date of the commencement of the policy is 20.5.1991 itself.
31. On the other hand, the citations referred to by the counsel for the respondents, viz.:
(1) Pedda Kempaiah v. Berappa (1992) 2 LW 494.
(2) Asma Begum v. Nisar Ahmed .
(3) (1990) 2 Supreme Court Cases 680.
(4) United India Insurance Co. Ltd. v. Tulsi Bai 1998 ACJ 799 (MP).
(5) Bhal Nalkantha Khadi v. Jayantilal 1996 ACJ 976 (Gujarat).
(6) Kishore Singh v. Bharat Singh 1987 ACJ 700 (Rajasthan);
would clearly say, in the light of Section 64-VB of the Insurance Act, 1938, that the risk on the part of the insurer will commence only on the date of payment of the premium by the insured.
32. Under these circumstances, the Tribunal’s finding in regard to the liability of the insurance company is perfectly valid and the same is confirmed.
33. Before parting with this case, I shall refer to one para, which contains some observations regarding the attitude of the insurance company to escape from the liability, from the decision in Kishore Singh v. Bharat Singh 1987 ACJ 700 (Rajasthan) and the same is as follows:
21. …What is required to be considered is the validity of the insurance. Issue of insurance policy after accepting the premium by the insurance company and issuing a cover note is a ministerial act and the insurance company cannot get rid of the liability merely by not issuing the insurance policy. This would be adding insult to injury because the insurance company by this device would deprive several persons from whom it has accepted the premium for the whole year, to be not available and by non-issue of policy it cannot deprive the injured of the legal right to be compensated in case of accident or otherwise. All formalities of issue of cover note or insurance policies, etc., are meant to regulate and to provide evidence or to make precise the term of the insurance but they cannot alter the fundamental and basic liabilities of the insurance company. In my opinion, the basic liability of the insurance company as soon as the premium is accepted with the eye open and without there being any fraud on the part of the insured, the insurance company must and should pay the compensation without any demur or protest, without any technical defences, without any excuses and without any alibi. This is the only spirit of the social welfare legislation and this is the spirit in which the insurance company should function because they are not meant to make under profit like Shylock of Shakespeare’s ‘Merchant of Venice’ but they are really required to serve the society and the insured.
34. On going through the above observation, the belated defence plea put forward by the insurance company stating that the date of commencement of the policy was put as midnight of 21.5.1991 only at the request of the owner of the vehicle, though the same was not mentioned in the counter, would certainly remind me to hold that the above observation made by the High Court of Rajasthan would apply in all fours to the present case also.
35. Even with regard to the quantum, though a cross-objection has been filed by the claimants, I do not find any reason to enhance the same and the award passed by the Tribunal on that aspect also is liable to be confirmed and accordingly it is confirmed.
36. In the result, both the appeal and cross-objection are dismissed. No costs.