Full Text
HIGH COURT OF DELHI
Date of Decision: 28th October, 2024
NANHE LAL .....Appellant
Through: Mr. C.M Thapliyal, Mr. S.P Paul, Ms. Kiran Lata Pal, Ms. Kanchan Thapliyal, Advocates.
Through: Mr. S.N. Parashar, Advocate for R1.
Ms. Suman Bagga, Advocate for R2.
JUDGMENT
1. The Appeal under Section 173 of the Motor Vehicle Act, 1988 read with Section 151 CPC, 1908 has been preferred on behalf of Mr. Nanhe Lal/ owner of the offending vehicle, against the Impugned Judgment dated 08.09.2016, wherein the Insurance Company has been exonerated on the ground that there was no valid Insurance Policy on the date of accident i.e. 02.06.2013 at 12:00 noon.
2. The sole ground on which the exoneration of the Insurance Company has been challenged, is that at the time of accident, which took place on 02.06.2013 at about 12:00 noon, the Appellant was having a valid Insurance Policy. His previous Insurance Policy had expired on 30.05.2013 which was renewed before the accident, by paying the premium on 31.05.2013. Though the Policy was issued on 31.05.2013, it was made effective from 02.06.2013 w.e.f. 02:32 p.m. only to evade liability.
3. It is argued that since the premium for the Insurance Policy had been deposited two days prior to the accident and the Insurance policy was also issued on 31.05.2013, there is no justification with the Insurance Company to make their Insurance Policy valid from 02.06.2013 at 02:30 p.m. The owner had taken all the necessary steps for obtaining the Insurance of the Policy and the Insurance Company having received the premium much prior to the date of accident, cannot now seek its exoneration by making the Insurance Policy effective w.e.f. 02.06.2013 from 02:32 p.m.
4. It is, therefore, argued that there being valid Insurance Policy on the date of accident and thus, it is the Insurance Company and not the appellant, which is liable to pay the compensation.
5. Learned counsel on behalf of the Insurance Company has admitted that the premium was received on 31.05.2013; however, it is contended that the computer recorded that the payment of the premium was received at 02:32 pm on 31.05.2013. The Circular of the Insurance Company-Ex. R3W1/6, makes it abundantly clear that they would require two days to verify the facts for issuance of the Insurance Policy. It is because of this that the Policy was made effective after two days of receipt of payment i.e. from 02.06.2013. It is further submitted that the time of payment of premium is automatically recorded by the Computer and the Policy is consequently made effective from that particular time. Even otherwise, the Insurance Policy is generally valid up to midnight of the given date and thus, does not cover the period of accident.
6. It is asserted that it has been duly proved that there was no valid Insurance Policy on the date of accident and therefore, the Insurance Company has been rightly exonerated by the learned Tribunal.
7. Learned counsel has placed reliance on National Insurance Co. Ltd. vs. Sobina Iakai (Smt.) and Others, Civil Appeal No. 1393/2001 and National Insurance Co. Ltd. vs. Kerolin P. Marak (Smt) and Others, Civil Appeal No. 1394/2001, (2007) 7 Supreme Court Cases, 786, decided on July 9, 2007; National Insurance Co. Ltd. vs. Balkar Ram and Ors., 2013 SCC Online SC 592; National Insurance Company Ltd. vs. Abhaysing Pratapsing Waghela and Others, (2008) 9 SCC 133; The Branch Manager, National Insurance Co. Ltd. vs. Vijayalakshmi and Ors., 2017 (1) TNMAC 168 (DB); Oriental Insurance Co. Ltd. vs. Sunitha Rathi and Others, [1998 ACJ 121 (SC)]; National Insurance Co. Ltd. vs. Jikubhai Nathuji Dabhi [1997 ACJ 351 (SC)]; New India Assurance Co. Ltd. vs. Bhagwati Devi and Others [1999 ACJ 534]; New India Assurance Co. Ltd. vs. Sita Bai and Others (2000 ACJ 40); National Insurance Co. Ltd. Motor Third Party Claims, Chennai-2 vs. N. Ponnaiyan @ Kolappan & Others, [2004 (1) TN MAC 63 (DB)]; Oriental Insurance Co. Ltd. vs. Porselvi and Another, [2009 (2) TNMAC 161 (SC)]; The Divisional Manager, New India Assurance Co. Ltd. vs. Poovarasan and another, [2012(1) TN MAC 571]; Oriental Insurance Co. Ltd., Salem-1 vs. Vedathal and 3 others, [2013 (1) TN MAC 103 (DB)]; Oriental Insurance Company Ltd. Nagercoil, Kanyakumari District vs. S. Mariyal and 2 others, [1999-1-L. W.578]; Asma Begum and Others vs Nisar Ahmed and Others, [1990 ACJ 832 (FB)]; Manager Oriental Insurance Company Ltd. Namakkal vs. Latha and 5 others, [2000-1, L.W. 739]; New India Assurance Co. Ltd. vs. Ram Ratan and Others, [2003 ACJ 323 (Madhya Pradesh –DB); United India Insurance Co. Ltd. vs. Surendran Nair, 1990 ACJ 581 (Kerala); Bijeram vs. Mangudas and Others, [2004 ACJ 153 (MP)]
8. Submissions heard and record perused.
9. Briefly stated, on 02.06.2013, at around 12:00 hours, the injured/Satinder Giri was loading the truck at Container Depot Okhla, New Delhi, when suddenly the offending vehicle, a truck, bearing No.HR 38 N 7451, driven rashly and negligently by the Driver/ Dilraj, was reversed at a high speed without blowing any horn which hit the injured with great force because of which he suffered injuries. FIR No. 280/2013, under Sections 279/337 IPC, 1806 was registered at P.S.-Okhla, New Delhi. Upon completion of investigation charge-sheet was filed against the driver.
10. Injured-Respondent No.1- Satinder, filed a Claim Petition under Section 166 of the MV Act, 1988 for compensation. A sum of Rs.3,80,586/along with interest @9% per annum was granted to the injured.
11. The only grievance of the owner is that even though he had paid the premium for renewal of his Insurance Policy on 31.05.2013 while the accident occurred on 02.06.2013, the Insurance Company has been exonerated from paying any compensation.
12. The Appellant-Nanhe Lal appeared as R2W[1] and tendered his affidavit of evidence as Ex.R2W1/2. He deposed that his vehicle was duly insured with the Insurance Company/ Respondent No.2. The payment of the premium of the Insurance Policy was made to the Insurance Company on 31.05.2013 and Insurance Policy Cover Note-Ex.PW1/13 was issued in his favour on 31.05.2013 at about 15.02.40 hours. It is however stated the period of insurance was from 02.06.2013, 14.32.42 hours till midnight 01.06.2014 hours.
13. Pertinently, Sh. Nanhe Lal/R2W[1] was cross-examined by the Insurance Company, wherein he stated that the Insurance Policy for the previous period was taken from TATA AIG which expired in the midnight of 31.05.2013. Thereafter, on the same day he got the vehicle insured from IFFCO Tokio General Insurance Company Ltd. He clarified that there was a gap of few hours between expiry of the first Policy and deposit of premium of the new Policy with Respondent No.2, however, the premium was duly paid on 31.05.2013.
14. The Insurance Company examined R3W1/Dheeraj Babbar, Marketing Manager, Insurance Company, who proved the copy of the Insurance Policy as R3W1/1. He also produced the Computer-generated Office Copy of Circular dated 21.11.2011-Ex. R3W1/6 issued by the Insurance Company to its Department, to establish that the Insurance Company recommended that there should be a gap of three days between the issuance /receipt of premium and commencement date of risk.
15. The relevant part of the Circular dated 21.11.2011 reads as under:- “To deal with Own Damage claims, we have started the process of mandatory inspection report in the system but inspection report cannot check the third party claims. Therefore in order to control the Close Proximity Claims under Third Party, we recommend that the inception date/ commencement date and the time of the risk should be a minimum of three days later than the issuance date of cover note of policy issuance/premium receipt in case of break in cases. We are not making it mandatory in our system, but we strongly recommend that they should be a gap of 3 days (three days), between issuance/receipt of premium and commencement date of risk. It is not being made compulsory because some genuine customers may protest that if we are collecting premium today, then the coverage should be from today only. However, we strongly recommend to push the system of 3 days postponement of coverage as compared to issuance./receipt of premium. ”
16. This Circular clearly reflects that it was an internal direction issued in order to control close proximity of third party Claims. It was further only recommended that the commencement date and the time of risk should be minimum three days later than the issuance date of Cover Note of Policy and the Premium Receipts. It specifically mentioned that this was not being made mandatory in the system, but a strong recommendation that there should be gap of three days. It was further noted that it has not been made compulsory because some genuine customer may protest if premium is collected today, then the coverage should also be from the same day. The language used in the Circular itself shows that it was only an internal Policy only to monitor the close proximity Insurance Claims. It was neither a mandate of law nor was a mandatory Policy of the Insurance Company and it stands recorded that there may be genuine claimants.
17. It is pertinent to note that admittedly the premium for renewal of Insurance Policy had been received on 31.05.2013 i.e. almost two days prior to the date of the accident which occurred on 02.06.2013 at about 12 noon. The appellant-owner had taken the requisite steps and even paid the premium in cash, which was admittedly received by the Insurance Company.
18. Since there was admittedly a valid insurance Cover Note/ Insurance Policy issued in the name of the Appellant two days prior to the accident, the Insurance Company could not have avoided to pay the compensation when it has not been able to show that there was any fraud or manipulation on the part of the owner or that the accident had been faked only for the purpose of claiming insurance. Its own Circular provides that genuine Claims must be considered.
19. The decisions relied upon the Insurance Company are distinguishable on facts of the case as these were passed in the context of curbing the mischief of Motor vehicle owners who attempt to obtain the Insurance policy after the date and time of the accident, only to evade their liability. It has been held that the Policy would be effective from the date and time as mentioned therein if the Insurance Policy was issued and the premium had been paid after the date of accident or the cheque for paying the premium was returned dishonoured, leading to non-payment of premium and thus, non-conclusion of the Contract as on the date of the accident.
20. The judgments rather support the case of the Owner/Nanhe Lal and re-affirm that the payment of premium is a critical condition for deciding the validity of the Insurance policy and the liability of the insurer. The date on which premium stands paid, is generally considered the date of commencement of Policy coverage.
21. Rather, the judgment of National Insurance Company Ld. Vs. Abhiyansingh Pratap Singh (Supra), relied upon by the Insurance Company, squarely covers the case of the Owner/Nanhe Lal. It has been observed therein that if the insurance Cover Note has been issued prior to the date of the accident, then it is valid till it is cancelled and the Insurance Company which has received the premium in cash prior to the accident from the owner of the vehicle, cannot subsequently cancel the Cover Note merely because the accident has taken place, to evade its liability.
22. Similarly, in a recent decision in of Reliance Life Insurance Company Ltd. Vs. Jaya Wadhwani, 2024 LiveLaw (SC) 19, the Apex Court, though in the context of Life Insurance, has reaffirmed the proposition of law that where the initial deposit is made in cash and the issuance of Policy happens on the same date, then the Policy becomes effective immediately. It is only in such like cases where the premium is tendered by way of cheque which gets dishonoured or the payment is stopped, that the Insurance contract does not get concluded. In such case, it may be held that the valid Insurance Policy has not been issued. However, where the payment is received and the Policy is issued immediately, it becomes effective and valid from that date itself.
23. The learned Tribunal thus, fell in error in relying on the time of commencement of the Policy as the date of issuance of Cover Note/ Insurance Policy. It is established that there existed a valid Insurance Policy which was issued on 31.05.2013 and thus, the Insurance Company was liable to pay the compensation.
24. It is therefore held that the compensation amount, as determined vide Impugned Award dated 08.09.2016 shall be paid by the insurance Company.
25. The Appeal is accordingly allowed and the Impugned Award is accordingly, modified to the extent as stated above. The pending application(s), if any, are also disposed of accordingly.
JUDGE OCTOBER 28, 2024 RS/r