On 3.3.1992 at about 6.30 p.m. while the deceased Kandasamy was riding his bi-cycle, his father Sengamalai Padayachi was sitting on the back seat. While the cycle was proceeding along Ammamapalayam Road near Bungalow Kadu, a tractor bearing registration No.TN-27-Z-2151 was driven by its driver in a rash and negligent manner and dashed against the cycle from the back and hence the accident occurred. Both of them sustained serious injuries and were removed to Government 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 agriculturist and tapioca broker. Agricultural lands to the extent of 2.49.5 hectare belong to the family of the deceased. He was earning not less than Rs.2,000/- per month. The first petitioner is wife of the deceased, second and third petitioners are minor sons and fourth and fifth petitioners are parents of the deceased. Hence a sum of Rs.2,00,000/- is claimed as compensation.
2. In the counter filed by the first respondent, it is stated that the deceased was aged more than 40 years and was not doing any work. He was neither an agriculturist nor a tapioca broker. The accident occurred due to the natural causes. The compensation claimed is excessive. The deceased was responsible for the accident. He lost control over his cycle. He was already sick. This respondent's vehicle was hypothecated to Indian Bank, Attur Branch and the understanding was that the banker should pay the insurance premium at the appropriate date. Hence the petition has to be dismissed.
3. In the additional counter filed by the first respondent, it is stated that on 2.3.1992, the fourth respondent bank debited Rs.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 was paid to the third respondent Insurance Company. Due to oversight the third respondent had not insured the vehicle in time and to avoid payment of compensation, they insured the vehicle on 4.3.1992 alone. Hence, both the Insurance Company and Bank are responsible to compensate the claimants.
4. In the counter filed by the third respondent Insurance Company, it is alleged that the driver did not possess valid driving licence on the date of the accident and there was no valid permit and R.C. for the vehicle. The avocation, income as alleged in the petition are denied. This respondent was impleaded on 3.10.1997 alone and hence the rate of interest has to be computed only from the said date. It is not correct to say that the accident took place due to the negligent driving of the driver. The negligence was on the part of the deceased. The claim is excessive. Hence, the petition has to be dismissed.
5. In the additional counter filed by the third respondent Insurance Company, it is mentioned that only on 4.3.1992 the first respondent's vehicle was insured with this respondent and hence this respondent is not liable to pay compensation.
6. In the counter filed by the fourth respondent, it is averred that this respondent is neither a necessary party nor a proper party to the claim petition. This respondent has nothing to do with the case and is not responsible for compensation.
7. After analysing the evidence on record, the learned Tribunal Judge fastened the responsibilty on the owner of the vehicle, Insurance company and Indian Bank holding them jointly and severally liable to pay compensation of Rs.1,75,000/- to the claimants with interest 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 with reference to the particulars available in the oral evidence on record and it reached a conclusion that under
Section 64 (b) of the Insurance Act, the Insurance Company has to be held liable since on 2.3.1992 itself the banker's cheque for Rs.1,411/- was despatched by the bank.
9. As far as the anchoring of liability upon the driver for causing the accident is concerned, there was not much quarrel. The parties are at loggerheads with reference to the responsibility to pay compensation. The bank contends that as per the records on 02.03.1992 itself banker's cheque was drawn, which was duly despatched to the insurance company and with this, their responsibility was over. But the Insurance Company would contend that only on 4.3.1992 the said banker's cheque was received and the policy was prepared on that day itself giving effect from 04.03.1992 to 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 received the banker's cheque dated 02.03.1992 for Rs.1,411/- but it is stated by the bank that the cheque was despatched along with the covering letter Ex.B.3 to the Insurance Company. But they kept it and put the seal of 4.3.1992 and prepared policy on that date.
11. Conversely, the Insurance Company would submit that inasmuch as Ex.P.3 bears office seal of the insurance company of 4.3.1992, the issuance policy dated 4.3.1992 is proper and there is no foul play in it.
12. From the oral evidence, it transpires that both the bank and the Insurance Company are situated in the same building. Even though it is stated that the bank delivered cheque on 2.3.1992 itself to the insurance company, it does not produce any document. But Ex.P.3 is a clear evidence to show that only on 4.3.1992 the cheque was received. In this context it is stressed by the learned counsel for the claimants that by virtue of Section 64 (V) (B) of the Insurance Act 1938, the date of the cheque has to be taken into consideration for the purpose of payment of premium. The said provision goes thus:
(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 otherwise shall be paid by the insurer directly to the insured by a crossed or other cheque or by postal money order and a proper receipt shall be obtained by the insurer from the insured and such refund shall in the 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."
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 by post, the date on which the cheque is posted has to be considered as the 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 bank agreeing to insure the vehicle and renew the same from time to time till the entire loan is cleared, then the bank is responsible to pay the compensation if any lapse on its part is found.
14. Learned counsel for the appellant would place reliance on the decision of the Supreme Court in 2007 (5) CTC 892 [National Insurance Co., Ltd., v. Sobina lakai] wherein Their Lordships have held that when there is a specific time mentioned in the policy, it would operate from the said time and date indicated therein and it is the obligation of the Court to look into the contract of insurance to discern whether time has been specified for commencement or expiry of policy and the effectiveness of Insurance Policy would start from time and date specifically incorporated in policy and not from an earlier point of time. Their Lordships have also observed as follows:
"19. In order to curb this widespread mischief of getting Insurance Policies after the accidents, it is absolutely imperative to clearly hold the effectiveness of the Insurance Policy would start from the time and the date specifically incorporated in the policy and not from an earlier point of time."
15. In the case on hand, the facts are distinguishable. In the present case, the cheque was already drawn on 2.3.1992 itself in the name of the insurance company earmarking the payment towards premium for the policy and despatched on the same date. There is no such circumstances in the case before the Supreme Court.
16. Learned counsel for the appellant also garnered support from a Division Bench decision of this Court in 2004 (1) TN MAC 174 (DB) [National Insurance Co. Ltd., v. Geetha & others] wherein the learned Judges have elaborately dealt with the matter with reference to the date and time of the policy, after referring to various decisions. Finally the Division Bench has held as follows:
"11. The Indian Contract Act, 1872 covers the relationship between the parties to an insurance contract generally except in regard to some of its special features. So, unless the Insurance company accepts and issue policy, the person who paid the premium cannot come forward with the plea that the Insurance Company is having an obligation to pay the compensation, especially when the premium was paid to get a new policy. In the present case, it is not in dispute that in the policy issued on the basis of the premium paid by the owner of the vehicle, it is specifically mentioned that the insurance policy covers for the period from 15.06.1998 10.00 a.m. But the accident took place about 5.30 a.m. on the said date.
15. In view of the above settled principles of law, the appellant-insurance company is correct in challenging the award of the Tribunal on the ground that they are not liable as the insurance policy was issued with the specific mention of the time and date of commencement of the insurance and the accident took place before the said time mentioned in the policy. There is, thus, a basic fallacy in the conclusion reached by the Tribunal on this point."
17. Repelling the arguments of the learned counsel for the appellant, learned counsel for the respondents 1 to 4 cited another Division 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 this case. The operative portion of the Judgment goes thus:
"6. ... ... Therefore, we are of the view that the case of the owner of the vehicle is acceptable and from the evidence of the owner of the vehicle it is clear that the cheque has been handed over on 20.2.1992 itself, and therefore on the date of the accident ie., on 23.2.1992, there was a valid insurance coverage. We uphold the decision of the Tribunal that the vehicle was validly insured on the date of the accident and there is no reason to interfere or alter this finding. Therefore, we find that there was a valid insurance policy on the date of the accident."
18. In the case discussed above, the cheque was handed over on 20.2.1992 itself and the accident took place on 23.2.1992, however, on 2.3.1992 only the policy was issued. It has been observed that the policy becomes effective on the date when the cheque was issued by the owner to the Insurance company.
19. As far as the facts of the present case are concerned, the time of giving effect to the policy on 4.3.1992 need not be considered for the reason that the accident occurred on the previous date i.e., 3.3.1992 itself. In so far as the payment of premium is concerned, on 2.3.1992 itself cheque was drawn in the bank and it has been duly established by the bank. However, it was received by the Insurance Company on 4.3.1992 and thereafter the policy was issued on that date. In the case of Geetha and others (supra), the accident took place at about 5.30 a.m. on 15.06.1998 but the insurance policy took effect only from 10.00 a.m. on 15.06.1998 and the Division Bench of this Court has observed that even though premium was paid by the person, unless the Insurance Company accepts and issued policy it does not have any obligation to pay compensation when the premium was paid to get a new policy. The Division Bench has also referred to the case of S. Viswanathan (supra) distinguished the facts that it was with reference to the renewal of policy and the case of Geetha and 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 was drawn on 2.3.1992 itself, even though it was received by the Insurance Company on 4.3.1992, it has to be treated that valid premium was paid to the Insurance company and following the guidelines in the Division Bench decision of this Court in S. Viswanathan's case, it is held that the Insurance Company is also liable for compensation.
21. As far as the liability of the bank is concerned, there is no appeal and hence the award passed by the Tribunal has to be confirmed and it is accordingly confirmed. The Civil Revision Petition suffers dismissal.
In the result, the Civil Miscellaneous Appeal is dismissed. No costs.
ggs To The III Additional District Judge, Motor Accidents Claims Tribunal Salem