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2006 DIGILAW 851 (ORI)

Divisional Manager v. Umakanta Behera

2006-12-17

L.MOHAPATRA

body2006
JUDGMENT L. MOHAPATRA, J. : This appeal is directed against the judgment and award dated 11.5.2000 passed by the Deputy Labour Commissioner-cum-Commissioner for Workmens’ Compensation, Cuttack in W.C. Case No.44-D of 1987 directing payment of compensation of Rs.89,600/- to the claimant-respondents. 2. The claimants are the legal heirs of the deceased Laxmidhar Behera. The case of the claimants is that on 25.6.1987 the vehicle bearing registration No.OSC 6038, a trekker was being driven by the deceased from Dhamnagar to Bhadrak. Near Brahama¬barada another vehicle bearing registration No.ABK-9289 (Truck) dashed from the behind of the trekker as a result of which, the deceased sustained injuries and died on the way to the hospital. The further case of the claimant-respondents is that the deceased was getting salary Rs.1,500/- per month from the employer and was aged about 20 years at the time of accident. The insurer of the trekker was made an opposite party in this case. The employer/owner of the trekker did not contest the case and the appellant filed a written statement refuting all the allegations made in the claim petition. A specific stand was taken by the appellant in the additional written statement that the vehicle was not covered under the insurance policy on the day it met with an accident and accordingly, the Insurance Company is not liable for indemnifying any compensation payable to the claimants. On the pleading of the parties, the Commissioner framed five issues. With reference to the evidence adduced before it, the Commission¬er answering issue Nos.1 and 2 held that the deceased was em¬ployed as driver by the owner of the trekker and died due to vehicular accident, which arose, out and in course of employment. Answering issue Nos.3 and 4 the Commissioner also held that the claimants are entitled to compensation. The wage of the deceased was calculated by the Commissioner at Rs.1,000/- per month and taking the age of the deceased to be 20 years at the time of death, compensation of Rs.89,600/- was awarded. Issue No.5 re¬lates to the question of liability. The Commissioner held that there as cover note covering the period from 31.7.1987 to 30.7.1988 which was valid under the policy and, therefore, the Insurance Company is liable to indemnify the compensation. 3. Shri A. K. Mohanty, the learned counsel appearing for the appellant challenges the award on two grounds. Issue No.5 re¬lates to the question of liability. The Commissioner held that there as cover note covering the period from 31.7.1987 to 30.7.1988 which was valid under the policy and, therefore, the Insurance Company is liable to indemnify the compensation. 3. Shri A. K. Mohanty, the learned counsel appearing for the appellant challenges the award on two grounds. The first ground of challenge is that when the agent of the appellant-company accepted a cheque for insuring the trekker comprehensive¬ly, it was not known that the vehicle was an old one and compre¬hensive compensation cannot be made. Accordingly, the cheque was never encashed and was returned to the owner with a further request for depositing the money for a third party policy. During the aforesaid period the accident having taken place, it cannot be said that there was a valid insurance policy covering the date of accident. 4. The second ground of challenge is concerned, reliance is placed by the learned counsel for the appellant on the cover note issued on 24th June, 1987 as well as the letter dated 28.8.1987 issued by the appellant to the owner. Referring to the cover note, it was contended by the learned counsel for the appellant that the said cover note was issued by an agent of the company after receipt of a cheque for a comprehensive insurance policy of the vehicle. When it was found that the vehicle is of 1978 model and comprehensive policy was not permissible, a letter was written to the owner on 28.8.1987 to return the cover note and to take back the cheque. On the basis of these documents, it was contended by the learned counsel appearing for the appellant that the cheque which had been given by the owner against the cover note was returned to him and had not been encashed by the appellant and, therefore, the cover note will not create any liability so far as the appellant is concerned. 5. The learned counsel appearing for the claimant-respondents, on the other hand, submitted that having accepted the cheque and issued a cover note, the appellant cannot now say that the vehicle was not covered on the date of accident merely because it had written a letter to return the cover note and take back the cheque. 5. The learned counsel appearing for the claimant-respondents, on the other hand, submitted that having accepted the cheque and issued a cover note, the appellant cannot now say that the vehicle was not covered on the date of accident merely because it had written a letter to return the cover note and take back the cheque. According to the learned counsel for the clai¬mant-respondent, once the cheque was accepted and cover note was issued, the regular policy is required to follow and if an acci¬dent takes place during the period covered under the cover note, the Insurance Company is liable to pay the compensation. Admit¬tedly in the present case not only cheque was accepted by the agent Amiya Nayak from the owner but also a cover note bearing No.231455 was issued in favour of the owner covering the period from 24th June, 1987 to 23rd June, 1988. 6. The question to be determined in this appeal is whether non-encashment of the cheque absolves the insurer from any lia¬bility and whether a third party is affected due to the above reason. In this connection, the learned counsel for the appellant relied upon a decision of the Apex Court in the case of Life Insurance Corporation of India v. Raja Vasireddy Komalavalli Kamba and others reported in AIR 1984 Supreme Court 1014. The Apex Court in the aforesaid case observed that “A 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 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 delaying giving an answer cannot be construed as an acceptance, as, prima facie, acceptance must be communicat¬ed to the offeror. Similarly, the mere receipt and retention of premium until after the death of the applicant or the mere prepa¬ration of the policy document is not acceptance.” 7. Mere delaying giving an answer cannot be construed as an acceptance, as, prima facie, acceptance must be communicat¬ed to the offeror. Similarly, the mere receipt and retention of premium until after the death of the applicant or the mere prepa¬ration of the policy document is not acceptance.” 7. Relying on the aforesaid decision, it was contended by the learned counsel for the appellant that though the cheque was accepted by the agent of the appellant-company and cover note was issued and it was retained for sometime by the appellant, it was never encashed, which obviously means the premium paid was never utilised by the appellant for any purpose whatsoever. At a later stage, when it was found that the vehicle cannot be comprehen¬sively insured, a letter had been written to the owner to return the cover note and take back the cheque. The learned counsel appearing for the claimant-respondents submitted that the agent of the Insurance Company who was examined in Court has stated that on 24.6.1987 he received a proposal form from the owner for giving insurance coverage for the period from 24.6.1987 to 23.6.1988 and after receiving the proposal form, he issued the cover note after acceptance of the cheque for an amount of Rs.529/- towards premium. It is also contended by the learned counsel for the claimant-respondents that the cheque was returned to the owner at a later stage and as per request of the insured, another cover note bearing No.229704 was issued in his favour on payment of cash of Rs.128/- vide money receipt No.471459 and the said cover note was issued covering the risk from 31.7.1987 to 30.7.1988. The learned counsel for the claimant-respondent further submitted that one stand was taken in the written state¬ment filed by the Insurance Company and in additional written statement a contrary stand was taken with regard to the insurance coverage. Reliance was placed by the learned counsel for the claimant-respondent in a decision of the Apex Court in the case of New India Assurance Co. Reliance was placed by the learned counsel for the claimant-respondent in a decision of the Apex Court in the case of New India Assurance Co. Ltd. v. Rule and others reported in 2000 (2) TAC 1 and it was submitted that liability of the In¬surance Company to indemnify a third party is not affected by mere cancellation of insurance policy as the thirty party has no concern does not come into the picture at all in the matter of payment of premium or cancellation of policy and third party would have a claim against insurer, if on the date of accident there was policy of insurance in respect of offending vehicle and the owner of the vehicle would have to be indemnified in respect of the claim to that party. 8. In the case of Oriental Insurance Co. Ltd. v. Indrajit Kaur and others reported in 2006(1) S.C. on Accident Claims 288, the Apex Court held that where an authorized insurer issued a policy of insurance to cover the risks without receiving the premium therefore, it cannot be absolved of its obligations to third parties under policy because it did not receive the premium. In view of the above decisions and other decisions cited by the learned counsel for the claimant-respondents in this regard, it cannot be said that the Insurance Company can be absolved of its liability to pay compensation to a third party merely because either it did not receive the premium or that the cheque was not encashed. 9. The second question that arises for consideration is as to whether the deceased can be treated as a third party being the driver of the vehicle insured by the appellant. In this connec¬tion, reliance is placed by the learned counsel for the claimants on a decision of this Court in the case of Gyan Singh Babaji v. Jitendra Nath Bisoi and another reported in 2000 (2) T.A.C. 318 (Ori.). In the aforesaid case the second driver of the vehicle was not driving the vehicle at the time of accident.The policy covered only one driver. Under these circumstances, the Court held that the deceased not being a gratuitous nor unathorized passenger, is entitled to compensation to be paid by the insurer because the deceased was to be treated as a third party. The present case is distinguishable on facts. Under these circumstances, the Court held that the deceased not being a gratuitous nor unathorized passenger, is entitled to compensation to be paid by the insurer because the deceased was to be treated as a third party. The present case is distinguishable on facts. Admittedly, the de¬ceased was driving the vehicle and, therefore, cannot be treated as a thirty party. Since the deceased cannot be treated as a third party as a driver of the vehicle, whether the Insurance Company can be made liable to indemnify the compensation awarded. In this connection, the cover note as well as the subsequent policy issued by the Insurance Company are required to be looked into. The cover note bearing No.31455 was issued on 24th June, 1987 on payment of premium for a comprehensive policy covering the period from 24th June, 1987 to 23rd June, 1988. Though this cover note was not acted upon or followed by a regular policy, from the lower Court record, it appears that the third party policy was issued covering the period from 31st June, 1987 to 30th July, 1988 and premium was paid for the driver. Admittedly, much after aforesaid third party policy was issued, a letter was written by the appellant-Insurance Company to return the cover note and take back the cheque. So it is clear from the documents that the cover note was issued on 24th June, 1987 and the owner was asked by the appellant-Insurance Company to return the cover note and take back the cheque on 28th August, 1987 whereas the third party policy was issued in between covering the period from 30th June, 1987 to 31st July, 1988. Under these circumstances, I am of the view that premium for the driver having been paid in the third party policy, it can be said that the comprehensive compensation for which the cover note was issued was converted to third party policy and accordingly, the appellant-Insurance Company shall be liable for payment of compensation. 10. In view of the discussions made above, the appeal has no merit and accordingly the same is dismissed. Appeal dismissed.