# National Insurance Company Ltd v. Smt. Reeta Devi & Ors

- **Citation:** (2019) 4 ILRA 1000
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2019-10-22
- **Case number:** FAFO No. 2257 of 2010
- **Bench:** Virendra Kumar Srivastava
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/national-insurance-company-ltd-v-smt-reeta-devi-ors-44908
- **Pages:** 12

## Headnote

Civil Law - Motor Accident claim - Motor
Vehicles Act (59 of 1988) - Section 149 -
Insurance policy / cover note not issued
- Insurance Company not liable to pay
the compensation - owner of the vehicle
merely
issuing
cheque
without
mentioning any details of the particular
vehicle & cheque encashed by the
Insurance Company after the accident -
cannot be deemed that insurance policy
issued in favour of owner

Accident on 23.2.2001 - Owner sent a back
dated cheque on 15.2.2001, without entering
details of particular vehicle & sent through
post to insurance company without any offer
or proposal - Cheque encased by insurance
company on 28.3.2001 i.e. after accident -
Owner of the vehicle neither filed any policy of
Insurance nor any cover note before the
Tribunal - Held As no valid & effective
insurance policy issued by the appellant
Insurance Company for insuring any risk of the
alleged vehicle, Insurance company not liable
to pay compensation - Owner liable to pay
compensation to claimants

First Appeal from Order allowed. (E-5)

List of cases cited: -

## Text

1000 INDIAN LAW REPORTS ALLAHABAD SERIES

D. Future Prospect at the Rate of
30%

 - Rs. 661348

Total - Rs. 2865844

E. Addition under Conventional
Head

 1.
Loss of Consortium - Rs. 40000

 2.
Funeral Expences - Rs. 15000

 3.
Loss of estate - Rs. 15000
__________________________________
_______________________
Total of Amount under Conventional
Head

- Rs. 70000
__________________________________
_____________________
Total Amount of Compensation

- Rs. 2935844

22. As calculated above the total
amount of compensation should have
been Rs. 2935844/-, whereas, the learned
Tribunal has awarded an amount of Rs.
3075048/-.
Therefore,
the
awarded
amount needs to be modified accordingly.

23. The submission of the learned
counsel for the respondents-claimants has
been that the Insurance Company has wrongly
deducted TDS. In view of the judgment in
Pranay Sethi (supra), income tax is required
to be deducted. Therefore, if the income tax
has been deducted, there appears to be no
illegality. If the amount deducted as TDS is
wrong or in excess, the same can be returned
according to the legal process and by filing
return and claiming the excess amount.
Accordingly, the objection/application/crossappeal of the respondents-claimants is
disposed of.

24. The amount of compensation is
modified to become Rs. 2935844/- in
place of Rs. 3075048 which has been
awarded by the learned Tribunal by the
impugned award. The remaining part of
the
impugned
award
shall
remain
undisturbed.
The
difference
of
Rs.139204/- (Rs. 3075048 - 2935844 )
shall be deducted in half proportion from
the share of claimant wife and half of the
amount shall be deducted in equal
proportion from the share of other four
claimants.

25. With the above modification,
this appeal is finally disposed of. Stay
order if any shall stand vacated.

26. The amount of Rs. 25000/-
deposited at the time of filing of this
appeal be remitted back to the learned
Tribunal which shall be adjusted against
the awarded amount.

27. The office is directed to send a
copy of this judgment to the concerned
Tribunal for information and necessary
compliance. If the lower court record has
been received, the same is directed to be
returned to the concerned Tribunal.
----------
(2019)12 ILR A1000

APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 22.10.2019

BEFORE
THE HON'BLE VIRENDRA KUMAR
SRIVASTAVA, J.

FAFO No. 2257 of 2010
along with
FAFO No. 2256 of 2010

National Insurance Company Ltd.
 ...Appellant
Versus
Smt. Reeta Devi & Ors. ...Respondents
4 All. National Insurance Company Ltd. Vs. Smt. Reeta Devi & Ors.
1001
Counsel for the Appellant:
Sri Saral Srivastava, Sri Amit Manohar

Counsel for the Respondents:
Sri Anurag Tripathi, Sri Poonam Dubey,
Sri Vashistha Tiwari

Civil Law - Motor Accident claim - Motor
Vehicles Act (59 of 1988) - Section 149 -
Insurance policy / cover note not issued
- Insurance Company not liable to pay
the compensation - owner of the vehicle
merely
issuing
cheque
without
mentioning any details of the particular
vehicle & cheque encashed by the
Insurance Company after the accident -
cannot be deemed that insurance policy
issued in favour of owner

Accident on 23.2.2001 - Owner sent a back
dated cheque on 15.2.2001, without entering
details of particular vehicle & sent through
post to insurance company without any offer
or proposal - Cheque encased by insurance
company on 28.3.2001 i.e. after accident -
Owner of the vehicle neither filed any policy of
Insurance nor any cover note before the
Tribunal - Held As no valid & effective
insurance policy issued by the appellant
Insurance Company for insuring any risk of the
alleged vehicle, Insurance company not liable
to pay compensation - Owner liable to pay
compensation to claimants

First Appeal from Order allowed. (E-5)

List of cases cited: -

1. Vikram Greentech India Ltd. & ors Vs New
India Assurance Company Ltd (2009) 5 SCC
599

2. Life Insurance Corporation of India Vs Raja
Vasireddy Komallavalli Kamba (1984) 2 SCC
719

3. Deokar Export Pvt. Ltd Vs New India
Assurance Company Ltd (2008) 14 SCC 598

4. Shamanna and Others Vs The Divisional
Manager The oriental Insurance Co. Ltd. And
Ors. 2018
ACJ 2163 (SC)

5.National Insurance Company ltd Vs Abhay
Singh Pratap Singh Waghela 2008 Law Suits
(SC) 1329

6. National Insurance Co. Ltd Vs Swaran Singh
and others 2005 (1) JLJ 85

(Delivered by Hon'ble Virendra Kumar
Srivastava,J.)

1. First Appeal From Order 2257 of
2010 (National Insurance Company Ltd.
vs. Smt. Reeta Devi and others) against
the award and order dated 24.4.2010,
passed in M.A.C.P. No. 117/2001 (Smt.
Reeta Devi and others vs. Anthoni John
and others) and First Appeal From Order
2256
of
2010
(National
Insurance
Company Ltd. vs. Smt. Lalmati Devi and
others) against the award and order dated
24.4.2010, passed in M.A.C.P. No.
119/2001 (Smt. Lalmati Devi and others
vs. Anthoni John and others), have been
filed under Section 173 of Motor Vehicle
Act (in short ''Act'), whereby both the
claim petitions, filed by the respondentsclaimants (hereinafter referred to as
'claimants'), have been allowed for
compensation of Rs. 5,27,900/- each
along with 7.5% per annum simple
interest.

2. Since both the impugned awards
and orders have been arisen out from the
accident caused at the same time and
place by the Bus bearing registration no.
UP 78 N 8663 on 23.2.2001, owned by
the same respondent-owner i.e. Anthoni
John, both the appeals are being decided
together.

3. The brief facts, arising out of both
the appeals, are that on 23.2.2001,
Prasanjeet Yadav S/o Sabru Yadav,
1002 INDIAN LAW REPORTS ALLAHABAD SERIES
Mahendra Yadav S/o Chanchal Yadav
and their friend Kishan Chauhan @ Heera
Nishad S/o Aklu Nishad were coming by
their motorcycle Hero Honda from
Meereganj to Kinnarpati and when they
reached nearby Kinnarpatti village they
stopped their motorcycle and as they were
talking with each other, bus no. UP 78 N
8663, owned by respondent-Anthoni
John, driven by its driver rash and
negligently, dashed and crushed them at
about 6:30 p.m., whereby, they died on
spot and their motorcycle was also
damaged.

4. Claim petition no. 117/2001 (Smt.
Reeta Devi vs. Anthoni John and others)
filed for death of Prasanjeet Yadav by
claimants, Smt. Reeta Devi and others and
claim petition no. 119/2001 (Smt. Lalmati
Devi and others vs. Anthoni John and
others) filed for death of Heera Nishad @
Kishan Chauhan by claimants Smt.
Lalmati Devi and others were allowed as
above and appellant-Insurance Company
was directed to pay the amount of
compensation to the claimants of both
petitions.

5. Aggrieved by the said awards and
orders, both the appeals have been
preferred by the Insurance Company.

6. Heard Sri Amit Manohar, learned
counsel for the appellant and Sri Anurag
Tripathi, learned counsel for the claimants
appearing in both the appeals. No one is
present on behalf of the owner of the
vehicle despite sufficient services of
notice.

7. Learned counsel for the appellant
has submitted that the alleged Bus bearing
registration no. UP 78 N 8663 was never
insured by the appellant-Insurance Company
at the time of occurrence. Learned counsel
further submitted that the respondent-owner
of the vehicle has neither filed any policy of
Insurance nor any cover note before the
Tribunal to prove that the alleged vehicle
was insured by Insurance Company at the
time of accident. Learned counsel further
submitted that after the accident, the owner
of the vehicle sent a back dated cheque to
Lucknow office of the Insurance Company
without any offer or proposal, whereas he
was resident of District Kushi Nagar where
office of the Insurance Company is already
situated. No policy has ever been issued by
the Insurance Company covering any risk of
the alleged vehicle for the alleged accident.
Learned counsel further submitted that
neither at the time of issuing cheque nor at
the time of accident, any sufficient amount
was available in the bank account of owner
of the alleged vehicle to honour the said
cheque, which shows that no money or
premium was paid by the owner to insurance
company at or prior to alleged accident and
despite that Tribunal made liable to the
Insurance Company for the payment of
compensation. Impugned awards and orders
in both the claim petitions, as challenged
under both the appeals, are illegal, improper
and unjustified which are liable to be set
aside. Learned counsel for the appellant has
relied on the law laid down by Hon'ble
Supreme Court in Vikram Greentech India
Ltd. And others vs. New India Assurance
Company Ltd. (2009) 5 SCC 599, Life
Insurance Corporation of India vs. Raja
Vasireddy Komallavalli Kamba (1984) 2
SCC 719 and Deokar Export Pvt. Ltd. vs.
New India Assurance Company Ltd.,
(2008) 14 SCC 598.

8. Per-contra, learned counsel
appearing in both the appeals for
claimants submitted that the impugned
orders and awards passed by the Tribunal
4 All. National Insurance Company Ltd. Vs. Smt. Reeta Devi & Ors.
1003
in both the claim petition are legal and
valid, and requires no interference.
Learned counsel further submitted that
even if it is found that no insurance policy
was issued, Insurance Company is liable
to pay the compensation awarded to
claimants and recover the same from
owner of the vehicle. Learned counsel
placed reliance on Shamanna and
Others vs. The Divisional Manager The
oriental Insurance Co. Ltd. And Ors.
2018
ACJ
2163
(SC),
National
Insurance Company ltd. vs. Abhay
Singh Pratap Singh Waghela 2008 Law
Suits (SC) 1329 and National Insurance
Co. Ltd. vs. Swaran Singh and others
2005 (1) JLJ 85.

9. I have considered the rival
submissions made by the learned counsels
for the parties and perused the record.

10. In view of the submission made
by learned counsels for the parties, the
only point of issue involved in both the
appeals is whether or not Insurance
Company
is
liable
to
pay
the
compensation to the claimants in such
cases where no policy insurance or cover
note was issued for covering any risk
arising out of any accident caused by the
alleged vehicle, only on the basis of a
cheque, issued without mentioning any
details of the particular vehicle by the
owner of the vehicle, and encashed by the
Insurance Company after the accident.

11. Both the claim petitions were
filed by the claimants for compensation
under Section 140 and 160 of the Act.
Various provisions of the Act put an
obligation on the driver as well as on
owner of the vehicle to get the vehicle
insured from the authorized insurer and
not to ply it without valid and effective
insurance certificate. Section 145, Section
146, Section 147, Section 149 (1), Section
156 of the Act, Section 64 of VB of
Insurance Act, 1938 and Section 2(a),
2(b), 2(e), 2(h) and Section 10 of Indian
Contract Act are relevant at this juncture
which deals with meaning, necessity, risk
coverage, continuance and ingredient of
insurance policy. Section 145, 146, 147,
149(1) and 156 of the Act are as follows:-

Section 145. Definitions. - In
this Chapter, - (a) "authorised insurer"
means an insurer for the time being
carrying on general insurance business in
India under the General Insurance
Business (Nationalisation) Act, 1972, and
any
Government
insurance
fund
authorised to do general insurance
business under that Act,

(b) "certificate of insurance"
means a certificate issued by an
authorised insurer in pursuance of subsection (3) of section 147 and includes a
cover
note
complying
with
such
requirements as may be prescribed, and
where more than one certificate has been
issued in connection with a policy, or
where a copy of a certificate has been
issued, all those certificates or that copy,
as the case may be;

(c) "liability", wherever used in
relation to the death of or bodily injury to
any person, includes liability in respect
thereof under section 140;

(d)
"policy
of
insurance"
includes "certificate of insurance";

(e)........

(f)......

(g) ..........
(Emphasis Supplied)

Section146.
Necessity
for
insurance against third party risk. -

(1) No person shall use, except
as a passenger, or cause or allow any
1004 INDIAN LAW REPORTS ALLAHABAD SERIES
other person to use, a motor vehicle in a
public place, unless there is in force in
relation to the use of the vehicle by that
person or that other person, as the case
may be, a policy of insurance complying
with the requirements of this Chapter

Provided that in the case of a
vehicle carrying, or meant to carry,
dangerous or hazardous goods, there
shall also be a policy of insurance under
the Public Liability Insurance Act, 1991.

Explanation. - A person driving
a motor vehicle merely as a paid
employee, while there is in force in
relation to the use of the vehicle no such
policy as is required by this sub-section,
shall
not
be
deemed
to
act
in
contravention of the sub-section unless he
knows or has reason to believe that there
is no such policy in force.

(2) .................

(3)
.................
(Emphasis
Supplied)

Section 147. Requirement of
policies and limits of liability.

(1) In order to comply with the
requirements of this Chapter, a policy of
insurance must be a policy which -

(a) is issued by a person who is
an authorised insurer; and

(b) insurers the person or
classes of persons specified in the policy
to the extent specified in sub - section (2)
-

(i) against any liability which
may be incurred by him in respect of the
death of or bodily [injury to any person,
including owner of the goods or his
authorised representative carried in the
vehicle] or damage to any property of a
third party caused by or arising out of
the use of the vehicle in a public place ;
(ii) against the death of or bodily injury
to any passenger of a public service
vehicle caused by or arising out of the
use of the vehicle in a public place;

Provided that ................

(2) Subject to the proviso to
sub-section (1), a policy of insurance
referred to in sub-section (1), shall cover
any liability incurred in respect of any
accident, up to the following limits,
namely :-

(a) save as provided in clause
(b), the amount of liability incurred.

(b) in respect of damage to any
property of a third party, a limit of rupees
six thousand :

Provided that any policy of
insurance issued with any limited liability
and in force, immediately before the
commencement of this Act, shall continue
to be effective for a period of four months
after such commencement or till the date
of expiry of such policy whichever is
earlier.

(3) A policy shall be of no effect
for the purposes of this Chapter unless
and until there is issued by the insurer in
favour of the person by whom the policy is
effected a certificate of insurance in the
prescribed form and containing the
prescribed particulars of any condition
subject to which the policy is issued and
of any other prescribed matters; and
different forms, particulars and matters
may be prescribed in different cases.

(4) where a cover note issued by
the insurer under the provisions of this
Chapter or the rules made thereunder is
not followed by a policy of insurance
within the prescribed time, the insurer
shall, within seven days of the expiry of
the period of the validity of the cover
note, notify the fact to the registering
authority in whose records the vehicle to
which the cover note relates has been
registered or to such other authority as
the State Government may prescribe.
4 All. National Insurance Company Ltd. Vs. Smt. Reeta Devi & Ors.
1005

(5) Notwithstanding anything
contained in any law for the time being in
force, an insurer issuing a policy of
insurance under this section shall be
liable to indemnify the person or classes
of persons specified in the policy in
respect of any liability which the policy
purports to cover in the case of that
person or those classes of persons.

(Emphasis Supplied)

Section149 (1). Duty of insurers
to satisfy judgments and awards against
persons insured in respect of third party
risks.
(1) if, after a certificate of insurance has
been issued under sub-section (3) of
section 147 in favour of the person by
whom a policy has been effected,
judgement or award in respect of any
such liability as is requirement to be
covered by a policy under clause (b) of
sub-section (1) of section 147 (being a
liability covered by the terms of the
policy) or under the provisions of section
163 - A is obtained against any person
insured
by
the
policy,
then,
notwithstanding that the insurer may be
entitled to avoid of cancel or may have
avoided or cancelled the policy, the
insurer shall, subject to the provisions of
this section, pay to the person entitled to
the benefit of the decree any sum not
exceeding the sum assured payable
thereunder, as if he were the judgement
debtor, in respect of the liability, together
with any amount payable in respect of
costs and any sum payable in respect of
interest on that sum by virtue of any
enactment
relating
to
interest
on
judgements.

Section156. Effect of certificate
of insurance. - When an insurer has issued
a certificate of insurance in respect of a
contract of insurance between the insurer
and the insured person, then -

(a) if and so long as the policy
described in the certificate has not been
issued by the insurer to the insured, the
insurer shall, as between himself and any
other person except the insured, be
deemed to have issued to the insured
person a policy of insurance conforming
in all respects with the description and
particulars stated in such certificate; and

(b) if the insurer has issued to
the insured the policy described in the
certificate, but the actual terms of the
policy are less favourable to persons
claiming under or by virtue of the policy
against the insurer either directly or
through the insured than the particulars of
the policy as stated in the certificate, the
policy shall, as between the insurer and
any other person except the insured, be
deemed to be in terms conforming in all
respects with the particulars stated in the
said certificate.

Section 64VB Insurance Act,
1938 is as under:-

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 purposes of this
section, in the case of risks for which
premium can be ascertained in advance,
1006 INDIAN LAW REPORTS ALLAHABAD SERIES
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 or
order 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 dispatch 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.

(6) The Authority may, from
time to time, specify, by the regulations
made by it, the manner of receipt of
premium by the insurer.
 (Emphasis
Suipplied)

Section 2(a), 2(b), 2(e), 2(h)
and Section 10 of the Indian Contract
Act. 1872 are as under:-

 2(a) When one person signifies
to another his willingness to do or to
abstain from doing anything, with a view
to obtaining the assent of that other to
such act or abstinence, he is said to make
a proposal;

2(b) When the person to whom
the proposal is made signifies his assent
thereto, the proposal is said to be
accepted. A proposal, when accepted,
becomes a promise;

2(e) Every promise and every
set of promises, forming the consideration
for each other, is an agreement;

2(h) An agreement enforceable
by law is a contract.

Section 10. All agreements are
contracts if they are made by the free
consent of parties competent to contract,
for a lawful consideration and with a
lawful object, and are not hereby
expressly declared to be void.

Nothing herein contained shall
affect any law in force in India and not
hereby expressly repealed by which any
contract is required to be made in writing
or in the presence of witnesses, or any
law relating to the registration of
documents.

12. Thus the aforesaid provision
clearly provides that a policy
for
insurance
includes
a
certificate
of
insurance
which
is
issued
by
an
authorized insurance company as required
by Section 147 of the Act and also
includes a cover note complying with
such requirement as may be prescribed;
no person is authorized to use any vehicle
except as a passenger or allow any person
to use it at any public place without a
policy of insurance as required under the
provision of Chapter XII of the Act.
Section 147 specifically further provides
that the policy of Insurance issued by an
authorized insurer must specify the person
or class of person and extent of liability
4 All. National Insurance Company Ltd. Vs. Smt. Reeta Devi & Ors.
1007
incurred by the insurer in respect of death
or bodly injury of any person including
the owner of the goods or its authorized
representative or damage to any property
of third party caused by or arising out of
use of the vehicle in public place. Section
149 of the Act specifically provides that
the liability of insurer to cover the risk of
third party only arises after the certificate
of insurance issued under Sub Section 3
of Section 147 of the Act in favour of the
insured i.e. owner of the vehicle. Thus, it
is clear from the above mentioned
provision that there must be a valid and
effective insurance certificate / policy
issued
by
an
authorized
insurer
mentioning the particulars of vehicle,
details of owner of the vehicle as well as
person insured, to the extent of liability
and period of its effectiveness and it is the
duty of the owner of the vehicle to
produce / disclose the particulars of the
insurance policy before the Tribunal. In
addition to above, it is also clear from the
aforesaid provision of Insurance Act that
no policy can be issued unless the
premium has been paid and the coverage
of risk starts only after payment of
premium.

13. In view of provisions of Indian
Contract Act (supra), it is further clear
that without lawful agreement, there will
be no contract and mandatory requirement
of agreement of contract is that there must
be meeting of mind on proposal and offer
made by the parties and its acceptance
before agreement.

14.

In
National
Insurance
Company ltd. vs. Abhay Singh Pratap
Singh Waghela 2008 Law Suits (SC)
1329, relied by the learned counsel for the
claimant, Hon'ble Supreme Court while
interpreting the Section 64 of VB of
Insurance Act, 1938 held that if the cover
note was issued, the cheque issued by the
owner for premium was tendered on
23.1.1995 and dishonoured but the
amount of premium was accepted in cash
on 30.1.1995 thereafter, the Insurance
Company cannot deny its liability to pay
the compensation to the third party for an
accident caused on 23.1.1995.

15. In Shamanna and Others vs.
The Divisional Manager The oriental
Insurance Co. Ltd. And Ors. 2018 ACJ
2163 (SC), National Insurance Co. Ltd.
vs. Swaran Singh and Others 2005 (1)
JLJ 85, relied by the learned counsel for
the claimant, it has been held by Hon'ble
Supreme Court that in case of breach of
policy, the insurer is bound to pay the
compensation to claimant in view of
Section 149 of the Act and recover the
same from the owner of the vehicle.

16. In view of the peculiar facts and
circumstances of this case, while it has
been found that no policy has been issued
by the appellant Insurance Company for
insuring any risk of the alleged vehicle,
the law laid down by the Hon'ble
Supreme Court in Abhay Singh Pratap
Singh
Waghela
(supra),
Shamanna
(supra), and in Swarn Singh (supra),
relied by the learned counsel of claimants,
is not applicable to this case.

17. In Vikram Greentech India
Ltd.
And
others
vs.
New
India
Assurance Company Ltd. (2009) 5 SCC
599, Hon'ble Supreme Court in para no.
16 to 19 has held as under:-

16. An insurance contract, is a
species of commercial transactions and
must be construed like any other contract
to its own terms and by itself. In a
1008 INDIAN LAW REPORTS ALLAHABAD SERIES
contract
of
insurance,
there
is
requirement of uberimma fides i.e. good
faith on the part of the insured. Except
that, in other respects, there is no
difference
between
a
contract
of
insurance and any other contract.

17. The four essentials of a
contract of insurance are, (i) the
definition of the risk, (ii) the duration of
the risk, (iii) the premium and (iv) the
amount of insurance. Since upon issuance
of
insurance
policy,
the
insurer
undertakes to indemnify the loss suffered
by the insured on account of risks covered
by the insurance policy, its terms have to
be strictly construed to determine the
extent of liability of the insurer.

18. The endeavour of the court
must always be to interpret the words in
which the contract is expressed by the
parties. The court while construing the
terms of policy is not expected to venture
into extra liberalism that may result in rewriting the contract or substituting the
terms which were not intended by the
parties.
The
insured
cannot
claim
anything more than what is covered by
the insurance policy. [General Assurance
Society Ltd. Vs. Chandumull Jain and
another, Oriental Insurance Co. Ltd. Vs.
Sony
Cheriyan
and
United
India
Insurance Co. Ltd. Vs. Harchand Rai
Chandan Lal] .

19. Document like proposal form
is a commercial document and being an
integral part of policy, reference to proposal
form may not only be appropriate but rather
essential. However, the surveyors' report
cannot be taken aid of nor can it furnish the
basis for construction of a policy. Such
outside aid for construction of insurance
policy is impermissible.

18. Life Insurance Corporation of
India vs. Raja Vasireddy Komallavalli
Kamba (1984) 2 SCC 719, Hon'ble
Supreme Court in para no. 14 and 15 has
held as under:-

When
an
insurance
policy
becomes effective is well- settled by the
authorities but before we note the said
authorities, it may be stated that it is clear
that the expression "underwrite" signifies
accept liability under'.

The dictionary meaning also
indicates that. (See in this connection The
Concise oxford Dictionary Sixth Edition
p. 1267.) It is true that normally the
expression "underwrite" is used in Marine
insurance but the expression used in
Chapter III of the Financial powers of the
Standing order in this case specifically
used the expression "underwriting and
revivals" of policies in case of Life
Insurance Corporation and stated that it
was the Divisional Manager who was
competent to underwrite policy for Rs
50,000 and above.

The mere receipt and retention
of premium until after the death of the
applicant or the mere preparation of the
policy document is not acceptance.
Acceptance must be signified by some act
or acts agreed on by the parties or from
which the law raises a presumption of
acceptance.

See in this connection the
statement of law in Corpus Juris
Secundum, Vol. XLV page 986 wherein it
has been stated as:-

"The mere receipt and retention
of premiums until after the death of
applicant does not give rise to a contract,
although the circumstances may be such
that approval could be inferred from
retention of the premium. The mere
execution of the policy is not an
acceptance;
an
acceptance,
to
be
complete, must be communicated to the
4 All. National Insurance Company Ltd. Vs. Smt. Reeta Devi & Ors.
1009
offeror, either directly, or by some
definite act, such as placing the contract
in the mail. The test is not intention alone.
When the application so requires, the
acceptance must be evidenced by the
signature of one of the company's
executive officers."

Though
in
certain
human
relationships silence to a proposal might
convey acceptance but in the case of
insurance proposal silence does not
denote consent and no binding contract
arises until the person to whom an offer is
made says or does something to signify
his acceptance. Mere delay in giving an
answer cannot be construed as an
acceptance, as, prima facie, acceptance
must be communicated to the offeror. The
general rule is that the contract of
insurance will be concluded only when
the party to whom an offer has been made
accepts
it
unconditionally
and
communicates his acceptance to the
person making the offer. Whether the final
acceptance is that of the assured or
insurers, however, depends simply on the
way in which negotiations for an
insurance have progressed.

(Emphasis Supplied)

19. Deokar Export Pvt. Ltd. vs.
New India Assurance Company Ltd.,
(2008) 14 SCC 598, Hon'ble Supreme
Court while interpreting the provision of
Section 64 of VB Act, 1938 has held in
paras 13 and 14 as under:-

13. A policy of insurance is a
contract based on an offer (proposal) and
an acceptance. The appellant made a
proposal. The respondent accepted the
proposal with a modification. Therefore,
it was a counter proposal. The appellant
had three choices. The first was to refuse
to accept the counter-proposal, in which
event there would have been no contract.
The second was to accept either expressly
or impliedly, the counter-proposal of the
respondent
(that
is
respondent's
acceptance with modification) which
would result in a concluded contract in
terms of the counter proposal. The third
was to make a counter proposal to the
counter-proposal of the respondent in
which event there would have been no
concluded contract unless the respondent
agreed to such counter-counter- proposal.
But the appellant definitely did not have
the fourth choice of propounding a
concluded contract with a modification
neither proposed nor agreed to by either
party. If the appellant did not agree to the
policy covering the period 26.8.1988 to
25.8.1989 instead of the period 12.3.1988
to 12.9.1989, the result would never
create an insurance contract effective
from 30.6.1989 or any other date.

14. The contention of the
learned counsel for the appellant that an
equitable
view
must
be
taken
is
untenable. In a contract of insurance,
rights
and
obligations
are
strictly
governed by the policy of insurance. No
exception or relaxation can be made on
the ground of equity.

(Emphasis Supplied)

20. Thus, in view of the law
pronounced by the Hon'ble Supreme
Court as above, and aforesaid relevant
provision of Indian Contract Act, it is
further clear that the contract of insurance
is a contract of indemnity. For a valid
contract, there must be an agreement
enforceable by law and unless there is
offer, proposal and acceptance which are
essentials of agreement, there cannot be
any agreement. In addition to it, there
must be a valid and effective insurance
policy or a certificate issued in favour of
1010 INDIAN LAW REPORTS ALLAHABAD SERIES
insured
i.e.
owner
of
the
vehicle
containing the details and particulars
required in the said policy, and in absence
thereof, the Insurance Company is not
liable to pay any compensation or
indemnify any person.

21. Coming to the facts of this case,
record shows that the respondent-owner of the
vehicle appeared before the Tribunal and filed
a written statement, wherein he admitted that
he is owner of the alleged vehicle UP 78 N
8663; he stated that he had issued cheque no.
738677 dated 15.2.2001 of Rs. 8,500/- and
sent it through postal dak in favour of
National Insurance Company Ltd. Shah Najaf
Road, Lucknow along with registration
certificate of the vehicle for insurance and the
said cheque was encashed by the Insurance
Company. He has further stated that despite
several requests, insurance policy / certificate
was not issued by the Insurance Company. In
his additional written statement, he stated that
the aforesaid cheque of Rs. 8,500/- was
encashed from his current account no.
0150061087.

22. Insurance Company, in its
written statement, specifically denied the
issuance or existence of any insurance
policy covering the risk of any accident of
alleged vehicle, owned by the respondentowner. OPW-2, Arun Kumar Katiyar,
Officer of State Bank of India, Padrauna,
District Khushi Nagar, filing the account
statement
of
current
account
No.
01050061087 of Janta Electricals, has
stated that from this account, cheque no.
00738677
dated
22.3.2001
bearing
aforesaid account, issued in favour of
National
Insurance
Company
Ltd.
Lucknow, was encashed on 28.3.2001.

23. The accident was happened on
23.2.2001. It is admitted fact that no
insurance policy was issued either prior to
the said accident or after the accident by
the
appellant-Insurance
Company
covering any risk of the alleged accident.
It is not the case of the respondent-owner
that on the date of accident, any premium
was paid by him or any cover note was
issued. He did not produce any proposal,
offer or cover note whereby it can be
presumed that the alleged cheque was
issued by him for the insurance of the
alleged Bus No. UP 78 N 8663. Merely
by issuing cheque without mentioning the
particulars of vehicle or its encashment by
the Insurance Company, after one month
of the accident it cannot be presumed that
the said cheque was issued for the
insurance policy of the alleged vehicle.

24. It is also pertinent to note at this
juncture that respondent-owner has not
assigned any reason or justification as to
why he sent cheque to office situated at
Lucknow without any requisition or offer
of Insurance Company. He is neither
resident of Lucknow nor alleged Bus was
registered at Lucknow. Learned counsel
for the respondent-owner has also not
shown any provision of law which
provides that merely issuing a cheque will
amount to insurance policy.

25. Mere issuing a cheque and
sending it by registered post, without any
further details which are necessary for
insurance policy, cannot be deemed as
insurance policy as required by relevant
provision of M.V. Act from another point
of view because suppose if a person
(owner) has more than one vehicle and he
sends
a
cheque
by
post
without
mentioning details of any particular
vehicle, how it can be presumed that such
cheque was issued for premium of that
particular vehicle for particular period and
4 All. M/S Kapila Udyog Ltd. Vs. M/S Kamdhenu Cattle Feeds (P) Ltd.
1011
if one or more vehicle caused accident
and how tribunal can arrive on conclusion
regarding identity of vehicle and period of
continuation of coverage of risk.

26. Thus in view of the above
discussion, in absence of valid and
effective insurance policy, Insurance
Company is not liable to pay any
compensation and only the respondentAnthoni John, owner of the alleged
vehicle No. UP 78 N 8663, is liable to pay
the compensation along with the interest
to the claimant-respondents of both the
M.A.C.P. No. 117/2001 and 119/2001.

27. Accordingly, both the appeals
F.A.F.O. No. 2256 of 2010 (National
Insurance Company Ltd. vs. Smt. Lalmati
Devi and others) and F.A.F.O. No. 2257 of
2010 (National Insurance Company Ltd. vs.
Smt. Reeta Devi and others) are allowed.
The judgments and awards dated 24.4.2010
passed by the Tribunal in M.A.C.P. No.
117/2001 (Smt. Reeta Devi and others vs.
Anthoni John and others) and M.A.C.P. No.
119/2001 (Smt. Lalmati Devi and others vs.
Anthoni John and others) are modified to the
extent
as
discussed
above.
Insurance
company is exonerated from its liability to
pay the compensation. Registry is directed to
refund the statutory amount paid by the
appellant-Insurance
Company,
if
not
remitted to the Tribunal. The respondentowner of the alleged vehicle is directed to
pay the compensation awarded in both the
aforesaid petitions along with up to date
interest within a period of one month to
claimants of both the appeals.

28. Office is directed to send back
the lower court record of both the appeals
along with the copy of this judgment to
the Tribunal for its compliance.
----------
(2019)12 ILR A1011

APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 26.11.2019

BEFORE
THE HON'BLE GOVIND MATHUR, C.J.

FAFO No. 2622 of 2019

M/S Kapila Krishi Udyog Ltd. ...Appellant
Versus
M/S Kamdhenu Cattle Feeds (P) Ltd.
 ...Respondent

Counsel for the Appellant:
Sri Anurag Khanna, Sri Kartikeya Saran,
Sri Devesh Saxena

Counsel for the Respondent:
Sri Abhinava Krishna Srivastava, Sri
Saurabh Srivastava

A. Civil Law - Code of Civil Procedure,
1908 - Order 39, Rule 1 & 2 - Temporary
Injunction - Power of appellate court -
Appellate
court should be slow
in
upsetting order granting or rejecting a
temporary
injunction
-
Merely
a
possibility of the appellate court to arrive
at a different conclusion on basis of the
same facts and evidence will not justify
interference with an order granting or
rejecting temporary injunction.

B. Civil Law - Code of Civil Procedure,
1908 - Order 39, Rule 1 & 2 - Specific
Relief Act - Section 41(h) - Temporary
injunction - to restrain from using the
Trade Mark - Temporary Injunction
refused - as Plaintiff have equally
effective relief by pursing the pending
and alive issue under Section 57 of the
Trade Marks Act before the Intellectual
Property Appellate Tribunal.

Trial
court
while
dismissing
temporary
injunction application examined facts stated on
affidavits, facts pertaining to the other
litigation existing between the parties - noticed