JUDGMENT
Banerjee, J.
1. In this appeal we are asked to reverse a decree made or 1st December 1950, by S. R. Das Gupta J., upholding the plaintiffs’ claim to recover Rs. 10,000 from the appellant Insurance Company, a defendant in the action. The plaintiffs’ title to the money is not disputed. The only question raised in this appeal is whether the Company is under any liability to pay the money and that depends on as to whether the proposal of the deceased was accepted by the Insurance Company.
2. The plaintiffs’ ‘case, as related in the Court below by plaintiff 1, (a brother of the deceased), so far as it is necessary to be stated for the purpose of this judgment, is as follows: In or about the first week of January 1939, at the request of N. P. Das an organiser of the company and also a defendant to the suit, the deceased verbally agreed to insure his life for the sum above mentioned on an endowment policy. The deceased was medically examined at Soro, in the district of Balasore, on 5-1-1939, by a doctor employed by the company. After the medical examination, the organiser told the deceased that the doctor had found his life to be first class, and that if he submitted the proposal form and deposited the half-yearly premium without delay, the company would, accept his life for insurance and would issue a policy promptly.
Plaintiff 1 and the deceased again went to Soro, in the afternoon, of 6-1-1939, and on that date it was settled that the insurance would be for the sum of Bs. 10,000 on an endowment policy of 21 years, the half-yearly premium payable being Rs. 295-10-0. The proposal form was filled in, was signed by the deceased and made over to the organiser with a cheque for Rs. 295-10-0, drawn on the Central Bank of India in favour of the company, being the sum payable for the half-yearly premium. The organiser gave a receipt for the cheque as being the ” half-yearly premium for a proposal of Rs. 10,000 with Hindusthan Co-operative Insurance Society Ltd., Calcutta, in advance.”
3. It appears from the prospectus of the company that all premiums are payable at the head-office of the company in Calcutta; but if it suits the convenience of the policyholders they may pay the premium at any branch office or agency office specially empowered to collect premiums on behalf of the company. It also appears from the prospectus that the company has opened accounts with banks in most places of importance and premium may also be paid in such banks, free of charge. The organisers or authorised agents as they are called, are empowered to receive and forward proposals for insurance and arrange for medical examination; but they have no authority to receive any premium as such. It is quite clear therefore that when in this case the organiser received the cheque from the deceased, he had no authority to receive it as premium on behalf of the company.
4. It appears from the evidence of plaintiff l that after the cheque was paid, the organiser said to the deceased that the policy would be issued in no time and received by the deceased in five or six days’ time. When the conversation took place, plaintiff 1, the organiser, an agent of the company and the doctor were present. It has been further said by plaintiff 1 that three or four days thereafter, that is to say, on 10th or 11-1-1939, he met the organiser in the Court-house at Balasore, and the organiser told him that the deceased had been medically examined once, but according to the rules of the company would have to be examined once again, and that he would send a doctor very soon from Cuttack for the purpose. On 15-1-1939, a doctor of the name of Earn Chandra Eau came to the village of the deceased and held the second medical examination.
After such examination, the doctor expressed his view that it was a first class life. “When he said this, the organiser was present. The organiser said that as soon as the report of the second medical examination was received by the company, the risk note and the policy would be issued. The plaintiff 1 has also said that about eight or tendays thereafter, that is to say, on or about 24th or 26-1-1939, he again met the organiser at Cuttack, who, being asked as to when the policy should be expected, said that the company had accepted the proposal and had cashed the cheque, suggesting that the policy would be received by the deceased without further delay. There is no dispute that the cheque in question was presented and cashed on 18-1-1939. Two or four days later the organiser again told plaintiff 1 that his brother’s life had been accepted.
5. On 1-2-1939, the deceased died of pneumonia. The plaintiffs as reversioners have claimed the sum of Rs. 10,000 for which sum a decree has been passed. From this decree, this appeal has been preferred. ‘
6. The defendant company denied its liability and has refused to pay. The defendant’s case before the learned Judge was that N. P. Das .was merely an organiser at Cuttack. The organisers canvass for policies and forward proposals to the head office for acceptance. They recruit agents and do such other work as the head office may direct. They furnish information which is considered to be necessary by the head office in order to come to a decision as to whether any proposal should be accepted or not. But the organiser cannot accept a proposal or any payment as premium. If anybody pays any money, he does so at his risk. The organiser merely forwards the money to the head office. In this case when the proposal and the cheque were received by the company, the money was credited to the proposer’s suspense, account. If the proposal had been accepted the amount would have been adjusted against his premium. But that was not done as the proposal was not accepted.
It has been said on behalf of the defendant company that the following procedure is adopted in the office, when a proposal is received. An assistant goes through the paper to see whether it is in order and whether it has been signed by the proposer and his witness. If it is found complete and is accompanied by the medical certificate, a number is allotted and then entries are made in the proposal register, and also in the agent’s ledger; thereafter the papers are sent to the machine department, and an index card is printed. Then the medical examiner’s bill is credited. After this, it is examined as to whether the proposer’s life has been rejected by any other Insurance company. If it is found that it has not been rejected, an assessment of the proposal is started. The final decision is made by the Secretary. If on assessment the proposal is found acceptable, a letter of acceptance is sent demanding the premium.
If necessary, an enquiry is made for further information from the medical officer, the agent or the organiser about the proposer. If ultimately the proposal is accepted, the company issues a risk note and the policy is then issued. No body except the Secretary has the authority to accept a proposal. In this ease, it struck the company that the proposer was an inhabitant of Balasore and was proposing insurance for a large amount rather late in life, being 44 years of age. In these circumstances the matter was taken to the Secretary, who directed further enquiry to be made and asked for a report from the organiser about the age, habit, etc. of the proposer, and a letter was sent to the organiser on 31-1-1939, accordingly. Before the report asked for in this letter was obtained by the defendant company, the proposer died. In short, the defendant company’s case was that there had been no acceptance of the proposal and no acceptance of the premium. The money was kept in suspense, pending final decision by the Secretary.
7. Several issues were framed by the learned Judge, which are not necessary to be stated. Because the only question debated before this Court was whether by cashing the cheque, the company accepted the proposal.
8. As I have already said, plaintiff l gave evidence in support of the plaintiffs’ case. Neither the organiser nor the agent nor the medical officer who examined the deceased, was called to give evidence. They had personal knowledge of the facts deposed to by plaintiff l. The learned Judge has accepted the evidence of plaintiff 1, observing that he gave evidence in a straight forward manner and that he was very much impressed by the demeanour of the witness.
9. In answer to a question put by the Court to the Advocate General, who appeared for the appellant as to why the organiser had not bees called, he said that the organiser was no longer in the employment of the company. Exit then no explanation has been given as to why a subpoena was not taken out and served on him. There is no satisfactory explanation as to why the medical officer or the agent was not called. It is to be observed that the organiser filed a written statement in which he denied that he had made any promise to the deceased to the effect that the proposal had been accepted by the defendant company, or that the policy would be issued soon or ever ”as alleged or at all.” He denied that he gave any assurance that’the policy would be issued within a week or ten days, etc. etc.
From his written statement, it is clear that he was supporting the case of the defendant company. No satisfactory explanation has been given as to why he was not called to contradict the evidence of plaintiff 1. Mr. Subrata Sen, the chief officer of the new business department of the company was called as a witness on its behalf. Nobody else. Mr. Sen had no personal knowledge of the facts deposed to by plaintiff’ 1. The Secretary has not been called to testify as to whether any paper was submitted to him for his decision and what, if any, his decision in the case was.
10. It is also curious that the company has not produced any books of accounts to prove that the cheque was kept in a suspense account and not credited in the books as half-yearly premium payable for the insurance. In answer to a question put by me to the Advocate General, he said that the books were at Krishnagore. But then Krishna-gore is not far off, and the Insurance company could, if it so desired, have brought down the books and produced them before the Court to prove that the money had been kept in the suspense account and was not appropriated as premium. So neither the important witnesses were called nor relevant books produced. We therefore draw the inference that if the witnesses had been called and the books produced, they would have been unfavourable to the defendant company. In the circumstances, we entirely agree with the learned Judge’s findings of fact.
11. There is certainly jurisdiction in the Court of appeal to consider the facts in the way they do reconsider them and to come to an opposite conclusion from that arrived at in the Court below. The Judge of first instance is not the possessor of infallibility and, like other tribunals, there may be occasions when he goes wrong on a question of fact; but first and last and all the time, he has the great advantage, which is denied to the Court of appeal, of seeing the witnesses and watching their demeanour. Powell v. Streatham Manor Nursing Home, (1935) A. C. 243. Unless it is clearly shown that the trial Judge is wrong on the facts, the Court of appeal will defer to the conclusion which the trial Judge has formed and accept his findings.
12. In this case nothing has been shown to us to prove that the Judge has gone wrong on the facts. We are in complete agreement with the findings of fact made by the learned trial Judge.
13. The appeal was really debated on a short point of law. That point is whether by reason of the cashing of the cheque on 18th January, the proposal can be said to have been accepted by the company. For if it was accepted, then the contract of insurance was made, and the letter of 31-1-1939, could not unmake the contract, which had already been made. The learned Advocate General in a concise argument before us said that a contract springs up from the acceptance of an offer and when the offer is accepted it becomes a promise; till the offer is accepted neither party is bound by the contract; but there cannot be an acceptance unless there is communication of the acceptance to the offerer. He referred to the relevant sections of the Contract Act. The statutory provisions in India on this point do not differ from the English Law. The English authorities, therefore, can safely be relied on.
14. In Anson’s law of Contract the law is summarised thus :
“Acceptance means in general communicated acceptance. * * * *
It must be something more than a mere mental assent. In an old case it was argued that where the produce of a field was offered to a man at a certain price if he was pleased with it on inspection, the property passed when he had seen and approved of the subject of the sale, But Brian 0. J., said :
‘It seems to me the plea is not good without showing that he had certified the other of his pleasure; for it is trite learning that the thought of man is not triable, for the devil himself knows not the thought of man; but if you had agreed that if the bargain pleaded then you should have signified it to such an one, then I grant you need not have done more, for it is matter’of fact.’
This dictum was quoted with approval by Lord Blackburn in the House of Lords in support of the rule that a contract is formed when the acceptor has done something to signify his intention to accept, not when he has made up his mind to do so, in Brogden v. Metro By. Co., (1877) 2 A. C. 666 at p. 692.”
15. There cannot be any doubt that a mere tacit formation of intention cannot constitute an acceptance of an offer. Something more is required. There must be some overt act or speech from which that intention can be manifest. Generally communication to the offerer is necessary. “But it is also not in doubt that in certain cases there can be acceptance though it has not been brought to the knowledge of the offerer. There is a distinction between an offer and acceptance. An offer is not made until it is brought to the knowledge of the offeree. In the case of acceptance, however, if there is an express or implied intimation from the offerer that a particular mode of acceptance will suffice, some overt act must be done or words spoken by the offeree which are evidence of an intention to accept, and which conform to the mode of acceptance indicated by the’ offerer (Anson).
16. The law on the subject was thus stated by Bowon L. J., in the Garlill v. Carbolic Smoke Ball Co. Case, (1893) 1 Q. B. 256 at p. 269.
“One cannot doubt that as an ordinary rule of law, an acceptance of an offer made ought to be notified to the person who makes the offer, in order that, the two minds may come together. Unless this is done the two minds may be apart, and there is not that consensus which is necessary according to the English Law-I say nothing about the laws of other countries-to make a contract. But there is this clear gloss to be made upon that doctrine, that as notification of acceptance is required for the benefit of the person who makes the offer, the person who mikes the offer may dispense with notice to himself if he thinks it desirable to do so, and I suppose there can be no doubt that where a person in an offer made by him to another person, expressly or impliedly intimates a particular mode of acceptance as sufficient to make the bargain binding, it is only nesessary for the other person to whom such offer is made to follow the indicated method of acceptance; and if the person making the offer, expressly or impliedly intimates in his offer that it will be sufficient to act on the proposal without communicating acceptance of it to himself, performance of the condition is a sufficient acceptance without notification.”
17. In the same case, Lindley L. J. said ‘{p. 262) :
“Unquestionably, as a general proposition, when an offer is made, it is necessary in order to make a binding contract, not only that it should be accepted, but that the acceptance should be notified…..I apprehend that they are an exception to that rule, or, if not an exception, they are open to the observation that the notification of the acceptance need not precede the performance … If notice of acceptance is required-which I doubt very much, for I rather think the true view is that which was enpressed and explained by Lord Blackburn in the case of Brogden v. Metropolitan By. Co,(1877) 2 A. C. 666-if notice of acceptance is required, the person who mike3 the offer gets the notice of accaptance contemporaneously with his notice of the performance of the condition. If he gets notice of the acceptance before his offer is revoked, that is principle, is all you want. I, however, think, that the true view, in a case of this kind, is that the person who makes the offer shews by his language and from the nature of the transaction that he does not expect and does not require notice of the acceptance apart from notice of the performance.”
18. The principle is stated thus in Pollock’s Principles of Contract (13th Edn.) by Winfield at p. 25 :
“There is a material distinction, though it is not fully recognised in the language of our authorities, between the acceptance of an offer which asks for a promise, and an offer which asks for an act, on the condition of the offer becoming a promise.”
19. Now in this case what happened ? All papers, namely, the proposal, the medical reports and the friends’ reports were completed and sent to the Insurance company thereafter, with the knowledge of the completion of the papers, the Insurance company cashed the cheque. The company knew that the organiser had no authority to receive the cheque as premium and, therefore, the cheque when it was sent to the company by the organiser had not been sent as premium. It was the company which could take it or not as premium. If the company had not accepted the proposal, or if its intention was not to accept the proposal, why did it cash the cheque ? Why did it appropriate the money ? There was no satisfactory answer to these questions, on behalf of the Insurance Company.
To us the position seems to be this: the assured sent the proposal form with the cheque, and in effect said to the company :
“I am sending herewith my proposal and the first half-yearly premium. .The orginiser cannot receive the cheque as premium. But you can. If you accept my proposal, cash the cheque.”
In other words the proposer in this case dispensed with express communication of the acceptance and from the nature of the transaction we may somewhat readily infer the offerer’s intention to dispense with the communication. The offerer in this case “asked for an act on the condition of the offer becoming a promise,” and that act was done by the company, namely, the cashing of the cheque. We have no doubt, therefore, that the company by cashing the cheque and appropriating the money accepted the proposal. No communication was necessary to be made to the assured to complete the acceptance.
20. The contract was made at the moment the money was appropriated. It was a completed con-tract. No subsequent communication by one of the parties could open the matter again. So the letter of 3lst January asking for a further report could not unmake the contract which had been made on the 18th by the appropriation of the money. Therefore, the company is liable to pay the insurance money.
21. This is the only point of law that has been argued in this appeal and no other. On a fall consideration of the evidence in the case and the law on the point, we are of the opinion that the learned trial Judge was right. His decree must therefore, be affirmed and the. appeal dismissed with costs. Certified for two counsel.
Harries C.J.
22. I agree. The main contention advanced by the learned Advocate General on behalf of the appellants was that even on the facts as found by the learned Judge there was no concluded agreement or contract binding on the parties. He urged that a contract was not complete until acceptance of the offer had been communicated to the offerer. On the findings of the learned Judge the most that could be said, he contended, was that the appellants had accepted the offerer’s proposal but had never communicated the same to him. Mere mental assent to an offer does not conclude a contract either under the Indian Contract Act or in English Law. The acceptance must in ordinary cases be communicated and if there is no such communication there is no concluded and binding agreement : Felthouse v. Bindley, (1862) 11 C B N S 869 and Powell v. Lee, (1908) 99 L. T. 284.
23. The offerer may however indicate the mode of communicating acceptance either expressly or by implication both in India and English Law. Thus a person who addresses to another an offer by post indicates unless anything to the contrary is said that the acceptance if any should or can be communicated by post. Such was the view of the English Courts in Household Fire Insurance Co. v. Giant (1879) 4 Ex. D 216 and Henthorn v. Fraser, (1892) 2 Ch. 27. Further the offerer may indicate expressly or impliedly that an offer can be accepted by the performance of an act or indeed he may dispense with the necessity of communicating the acceptance. See Carlill v. Carbolic Smoke Ball Co., (1893) 1 Q. B. 256.
In the latter case Bowen L. J. at p. 269 observed:
“One cannot doubt that, as an ordinary rule of law; an acceptance of an offer made ought to be notified to the person who made the offer, in order that the two minds may come together Unless this is so, the two minds may be apart, and there is not that consensus which is necessary according to the rules of English law-I say nothing about the laws of other countries – to make a contract. But there is this clear gloss to be made upon that doctrine, that as notification of acceptance is required for the benefit of the person who makes the offer, the person who makes the offer may dispense with notice to himself if he thinks it desirable to do so; and I suppose there can be no doubt that where a person in an offer made by him to another person expressly or impliedly intimates a particular mode of acceptance as sufficient to make the bargain binding, it is only necessary for the other person to whom such offer is made to follow the indicated mode of acceptance; and if the person making the offer expressly or impliedly intimates in his offer that it will be sufficient to act on the proposal without communicating acceptance of it to himself, performance of the condition is a sufficient acceptance, without notification.”
24. In the case before us I think it is clear from the facts that deceased indicated clearly the mode of acceptance of his proposal. It is true that no express words were used but such I think must be implied from what occurred. The deceased was examined by a medical’ officer and on being told by the appellant’s agent that the doctor had found him to be a “first class life” completed and signed a proposal form. The agent suggested that the deceased should draw a cheque in favour of the appellants for the first premium and the proposal form and cheque were handed to the agent for despatch to the appellant company.
25. It is clear from “the prospectus of the company which the deceased admittedly saw that the agent had no power to bind the company or pledge their credit in any way. It is therefore clear that acceptance of the amount of the premium by the agent did not conclude the contract with the appellant company. The agent gave a receipt for this payment which is described as “towards Hly premium for a proposal for Es. 10,000 with Hindusthan Co-operative Insurance Society Ltd., Calcutta in advance ”
26. On 18th January 1939 this cheque paid on account of the half yearly premium was paid by the appellants into their account and I agree that it was not found by any admissible evidence that it was paid into any suspense account. It must be held that it was paid into their account in the ordinary way. In my view the Court must infer from what occurred that the deceased indicated the mode of acceptance of his proposal. With the proposal form he sent a cheque to cover the first half yearly premium. The appellants could cash or appropriate that cheque if they accepted the proposal but not otherwise. In sending the cheque with the proposal the deceased was in effect saying “Take the cheque if you accept the proposal otherwise return it to me.”
It is, I think, clear that it could never have been the intention of the deceased that the appellants should retain the cheque in any event. It must have been obvious to both parties that the cheque should only be retained and appropriated by the appellants if they accepted the proposal. A second medical examination took place which also disclosed that the deceased was a “first class life” and it is most significant that it is only after this second examination that the appellants paid this cheque into their account.
27. From what occurred’the deceased indicated’ I think quite clearly that if the appellants accepted his proposal the cheque should be appropriated towards the first premium and that such-appropriation would conclude the bargain or contract. The cheque was received on that implied understanding and in my view the appellants accepted the offer in the manner indicated by the offerer, when they paid this cheque into their account. They must have accepted the proposal otherwise they could not have appropriated the cheque and having accepted it they signified their acceptance in the manner impliedly Indicated by the deceased. There was therefore a completed contract of insurance and the plaintiffs’ claim was rightly decreed by S. R. Das Gupta, J.
