JUDGMENT 1. Invoking Section 30 of the Employee's Compensation Act, 1923 (for short 'the E.C. Act') the appellants/claimants have filed this appeal questioning the award dated 05/11/2009 passed by Commissioner for Workmen's Compensation-cum-Labour Court, Jagdalpur, Bastar, Chhattisgarh (for short 'the Commissioner') in Case No. B-75/2007/W.C.Act/Fatal, by which, respondent-Insurance Company has been exonerated from its liability to indemnify the amount under award, and the penalty has also not been awarded to the appellants/claimants. 2. Brief facts in nutshell necessary for adjudication of this appeal are as under: 2.1 Sardar Satpal Singh employed as a driver in the Truck (offending vehicle), owned by, Sardar Nishan Singh, lost his life during course of employment ill an accident occurred on 05/07/2005 while driving the offending vehicle No. UP-75/E/9739, leading to filing of claim application under Section 10 of the E.C. Act stating inter alia that on the date of accident, deceased-Sardar Satpal Singh was aged about 35 years, earning Rs.5,000 per month as driver. Appellants/claimants claimed compensation of Rs.4,87,650 from the owner and insurer of the offending vehicle jointly and severally. 2.2 In the written statement filed before the Commissioner by the owner, it was averred that the offending vehicle was brought to Jagdalpur on 03/07/2005 after purchase from Kanpur with no-objection certificate issued from Regional Transport Officer Kanpur. On 04/07/2005, it was registered with Regional Transport Office, Jagdalpur, new permit to ply the vehicle was also obtained, thereafter, he contacted Mr. V.P. Shukla, Development Officer, United India Insurance Company, Jagdalpur for insurance coverage. It was further pleaded that on 04/07/2005 Mr. Shukla agreed to insure the vehicle, after inspection, offending vehicle and R.C. Book and collected a Cheque No. 153499 from Union Bank of India of Rs.19,639, which was the amount of premium. He allowed him to ply the vehicle in question on road. It was further pleaded that the said Cheque was duly encashed into account of Insurance Company on 05/07/2005 at about 12.13 A.M. Since, the accident occurred in the evening of 05/07/2005 at about 7.30 P.M. and at that time, the offending vehicle was duly insured with the Insurance Company, therefore, Insurance Company is liable to make payment of compensation. It was further pleaded that the said Cheque was duly encashed into account of Insurance Company on 05/07/2005 at about 12.13 A.M. Since, the accident occurred in the evening of 05/07/2005 at about 7.30 P.M. and at that time, the offending vehicle was duly insured with the Insurance Company, therefore, Insurance Company is liable to make payment of compensation. 2.3 In the written statement filed by the Insurance Company before the Commissioner, it was pleaded that on 04/07/2005 at about 6.00 P.M., owner of the vehicle submitted a proposal form (Exhibit D/2) for insurance of the vehicle for covering risk from the period 06/07/2005 to 05/07/2006 to the Development Officer of United India Insurance Company Limited. In this regard, insurance policy (Exhibit D/1) was issued to the owner for covering the risk from period 06/07/2005 at 00.00.00 to midnight of 05/07/2006. Since, the accident occurred on 05/07/2005 at about 7.30 P.M., at that time, the said vehicle was not insured with the Insurance Company, therefore, the Insurance Company is not liable to indemnify the amount under award if any. 2.4 On close scrutiny of the evidence, learned Commissioner has partly allowed the claim application filed by the claimants finding inter alia that: (i) Appellants/claimants are entitled for total sum of Rs.3,94,120 along with 10% interest from the date of accident till the date of actual payment and not entitled for penalty. (ii) Respondent No. 2/Insurance Company is not liable to indemnify the amount under award as the vehicle was insured w.e.f. 06/07/2005, and the accident occurred on 05/07/2005. 3. Mr. Ratan Pusty, learned counsel appearing for the appellants/claimants would submit that the Commissioner has committed legal error by exonerating the Insurance Company from its liability to indemnify the amount under impugned award. He would further submit that the Commissioner ought to have awarded penalty on compensation amount in view of Section 4-A(3)(d) of the E.C. Act. 4. Per contra, Mr. S.P. Sahu, learned counsel appearing for the respondent No. 1/owner would submit that the Commissioner has committed legal error in fastening the liability upon him. He would further submit that premium having been collected by Insurance Company on 04/07/2005, the vehicle stood insured covering the third party risk immediately thereof, therefore, he is not liable to pay the compensation and the Insurance Company is liable to pay the compensation awarded by the Commissioner. 5. Mr. He would further submit that premium having been collected by Insurance Company on 04/07/2005, the vehicle stood insured covering the third party risk immediately thereof, therefore, he is not liable to pay the compensation and the Insurance Company is liable to pay the compensation awarded by the Commissioner. 5. Mr. Dashrath Gupta, learned counsel appearing for the respondent No. 2/Insurance Company supported the impugned award and would submit that the insurance policy covering risk of the vehicle in question was issued w.e.f. 06/07/2005 and the accident occurred on 05/07/2005, therefore, the Insurance Company has rightly been exonerated from its liability to indemnify the amount under award and appeal deserves to be dismissed. 6. I have heard learned counsel for the parties and considered the rival submissions and have carefully perused the records of the Commissioner. Substantial Questions of Law: 7. This appeal was admitted on 29/07/2010 for hearing on following two substantial questions of law: (i) Whether the Commissioner, Workmen Compensation has committed an error of law by exonerating the Insurance Company from liability of satisfying the award? (ii) Whether the Commissioner, Workmen Compensation committed an error of law by not awarding penalty on the award amount for which the claimants are entitled under Section 4-A(3)(d) of the Workmen Compensation Act, 1923? 8. Answer to 1st substantial question of Law : 8.1 The moot question that would arise for consideration is whether the insurer can defer the assumption of risk at a later point of time other than from the date and time of receipt of the premium. 8.2 it would be pertinent to notice Section 64-VB of the Insurance Act, 1938, Section 64- VB of the Insurance Act, 1938 status as under: "No risk to be assumed unless premium is receipt in advance – (1) No insurance 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 receipt 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, 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." 8.3 A bare reading of Section 64-VB of the Insurance Act, 1938 would show that the Insurance Company shall not assume any risk unless premium has received by the Insurance Company, the said provision should be understood that as soon as the amount is paid, insurance policy is deemed to have commenced. Explanation of sub-section 2 of Section 64-VB of the Insurance's Act, 1938 says that once the authorized agent accepts the proposal form with advance premium either in cash or by cheque or by a bank draft, payment is complete, of course, subject to realization of the negotiable instrument. Today's world payment made by cheque is ordinarily accepted as valid tender. Payment by cheque; however is subject to its encashment. In Damadilal Vs. Parashran (1976) 4 SCC 855 , the Supreme Court observed as under: "13. Today's world payment made by cheque is ordinarily accepted as valid tender. Payment by cheque; however is subject to its encashment. In Damadilal Vs. Parashran (1976) 4 SCC 855 , the Supreme Court observed as under: "13. On the ground of default, it is not disputed that defendants tendered the amount in arrears by cheque within the prescribed time. The question is whether this was a lawful tender. It is well established that a chequet sent in payment of debt on request of creditor, unless dishonoured, operates a valid discharge of debt and it the cheque was sent by post and was ment on presentation, the date of payment is the date when cheque was posted." 8.4 The decision of the Supreme Court in Sunita Rathi’s case [1998 ACJ 121 (SC)], also lays down salutary principle of law that the liability of the insurer would commence from the date of the policy. If any time is mentioned in the policy, from that time the liability becomes effective and not earlier to that. The coverage of insurance for a motor vehicle would virtually stand on a different footing unlike in the other types of contract of insurance. By virtue of Section 146 of the M.V. Act, it is mandatory that third party risk should be covered when a vehicle has to ply in a public place. The respondent/Insurer being the State authority doing business of insurance is duty-bound to honour and implement the provisions of law. Section 64-VB declares that the insurer can assume the risk only upon the receipt of premium. May be, that in other types of contracts when insurance is sought, the insurer may have the discretion to enter into a contract or not. But in respect of motor vehicles there is no discretion left on the part of the respondent/insurer. The insurer has to enter into the contract and issue policy in accordance with law, if proper premium is paid. In the context of the said factual and legal situation, it is to be held that in a contract of insurance in respect of motor vehicles the issuance of policy becomes effective when premium is received. The insurer cannot postpone the assumption of liability after receipt of premium. However, under the said pretext, the insurer cannot postpone the assumption of risk, other than from the date and time of receipt of premium. The insurer cannot postpone the assumption of liability after receipt of premium. However, under the said pretext, the insurer cannot postpone the assumption of risk, other than from the date and time of receipt of premium. Otherwise, the insurer would be guilty of abetting the use of vehicle in a public place without insurance policy. 8.5 Respondent/insurer in the present case is a nationalized Insurance Company owned by the government and would constitute the State within the meaning of Article 12 of the Indian Constitution are expected to act fairly and in name of insurance contract, they cannot put unilateral and unconscionable causes and employ them against insured. It is mandatory under the provisions of the Motor Vehicles Act that no vehicle can ply in a public place without a valid policy to cover the risk of third party. Whenever the owner of a vehicle makes an offer for issue of policy, it is unavoidable obligation of the insurer to receive the required premium and after proper verification or necessary details issue a policy. The respondent/insurer has no discretion to arbitrarily postpone the issuance of policy to a later date/time as it is the mandate of law that every vehicle can ply in a public place only when covered with valid Insurance policy covering the risk of the third party. 8.6 The Supreme Court while dealing with the question of liability on the Insurance Company in case of Balbir Kaur & Anr. Vs. New India Assurance Co. Ltd. & Ors. 2009 AIR SCW 4583, has held that Insurance Company cannot issue a policy unilaterally from a future date without the consent of the holder of a policy. Paras-12 & 13 reads as under: "12. Section 64 VB of the Insurance Act, 1938 merely provides that 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 receipt by him or is guaranteed to be paid by such persons 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. 13. For the purpose of this, we would assume that an insurance policy, in law, could be issued from a future date. 13. For the purpose of this, we would assume that an insurance policy, in law, could be issued from a future date. A policy, however, which is issued from a future date must be with the consent of the holder of the policy. The insurance company cannot issue a policy unilaterally from a future date without the consent of the holder of a policy. Even the said circular latter had not been produced and/or no material was placed as to why the policy was issued from a later date. It is, however, not necessary for us to delve deep into the matter in view of the limited notice issued by this Court." 8.7 Thus, after having considered legal position with regard to the responsibility of the Insurance Company to issue policy upon receipt of the premium. Now, I revert back to the facts of the present case. On behalf of the Insurance Company, Mr. Pradeep Govind has been examined as NAW-2(1). He has proved the certificate of insurance policy Exhibit D/1, proposal form Exhibit D/2 and gap certificate Exhibit D/3. 8.8 A bare perusal of the proposal form dated 04/07/2005 would show that a premium of 19,639 was received by agent/officer of the Insurance Company on 04/07/2005 at 6.00 P.M. Exhibit D/3 is a gap certificate provides as under: "I/We confirm that I/We have remitted the premium at Jagdalpur on 4/7/05 for the Insurance of the above vehicle with you. It is understood and agreed that you have no liability of whatsoever nature for any loss/damage/liability arising out of any accident earlier to on (Date) 4/7 /05 (Time) 6 P.M. Place: Jagdapur Date: 4/7/05 Signature of Insured (FOR OFFICE USE ONLY) 1 Name of Officer inspecting the vehicle V.P. Shukla 2 Date/Place of inspecting the vehicle 4/7/05 Jagdalpur 3 Colour and Registration No. of the vehicle Almunium show white yeloow body UP-75E-9739 I Confirm the vehicle to be in externaily good condition and recommended I accepatance of coverage. Date: 4/7/05 6 P.M. Placer Jagdalpur SIGNATURE OF INSPECTION OFFICER (AAO/ADM/DM) 8.9 Exhibit D/5 is a certificate in respect of compliance of Section 64 VB of the Insurance Act, 1938, which clearly shows that owner of the vehicle Mr. Nishan Singh has paid premium of Rs.19,639 through cheque No. 153499 on 04/07/2005 and Insurance Company has accepted the same, and issued scroll No. 1007 and date 05/07/2005 by receipt No. 19050581050000002937. Nishan Singh has paid premium of Rs.19,639 through cheque No. 153499 on 04/07/2005 and Insurance Company has accepted the same, and issued scroll No. 1007 and date 05/07/2005 by receipt No. 19050581050000002937. The said vehicle in question was met with an accident on 05/07/2005 at 7.30 P.M. and the certificate of insurance policy (Exhibit D/l) shows that the said vehicle was insured from the period 06/07/2005 to 05/07/2006. 8.10 Admittedly and undisputedly, premium was collected by the Insurance Company on 04/07/2005 at 6.00 P.M., and it has been deposited vide scroll No. 1007 dated 05/07/2005 and no reason has been assigned as to why the period of coverage was made effective from 06/07/2005, especially when the amount was received by the Insurance Company on 04/07/2005 at 6.00 P.M and vehicle in question and R.C. Book was inspected at the same time. Having received the premium on 04/07/2005, it is obligatory upon the Insurance Company to issue insurance coverage policy immediately commencing the period from the time of receiving the premium amount in view of Section 146 of the M.V. Act, it can not unilaterally fix subsequent time or date as starting time for covering policy coverage w.e.f. 06/07/2005. 8.11 Apart from this, owner of the vehicle has examined himself as AW-1 and would clearly stated on oath that he brought the offending vehicle bearing No. UP-75-E-9739 from Kanpur (U.P.) on 03/07/2005 and got the same registration with the Office of Regional Transport Office, Jagdalpur on 04/07/2005 and also got premium issued on the same date. He further stated that the vehicle was duly inspected by Mr. V.P. Shukla on 04/07/2005 and cheque was got on the same date and he allowed the vehicle to be brought on road by accepting premium. Thus, from the perusal of the pleadings and evidence of the parties, following facts would emerge that: (i) The offending vehicle was purchased and brought by the respondent No. I/owner of the vehicle on 03/07/2005 at Jagdalpur. (ii) The said offending vehicle was registered with the Office of Regional Transport Office, Jagdalpur and permit to ply the vehicle was issued on 04/07/2005. (iii) The offending vehicle was inspected by Mr. V.P. Shukla, agent/officer of the Insurance Company on 04/07/2005. (iv) In order to issue insurance coverage, an amount of Rs.19,639 was receipt as premium by Mr. (ii) The said offending vehicle was registered with the Office of Regional Transport Office, Jagdalpur and permit to ply the vehicle was issued on 04/07/2005. (iii) The offending vehicle was inspected by Mr. V.P. Shukla, agent/officer of the Insurance Company on 04/07/2005. (iv) In order to issue insurance coverage, an amount of Rs.19,639 was receipt as premium by Mr. V.P. Shukla, agent/officer of the Insurance Company on 04/07/2005 at 6.00 P.M. 8.12 In the opinion of this Court, the respondent/insurer having inspected the vehicle in question and registration Book on 04/07/2005 and received the premium cheque on the same date at 6.00 P.M., had no option except to issue insurance policy covering the risk of the vehicle as per statutory requirements under Section 14 6 of the M.V. Act w.e.f. 04/07/2005, and the non-issuance of the said policy covering the risk of the vehicle after receipt of the premium is bad in law. 8.13 In case of Zameer Ahamed Vs. B.R. Narayan Shetty and another 2012 ACJ 1322, High Court of Karnataka has held that in a contract of motor insurance, the policy becomes effective from the date and time of receipt of premium and insurance company cannot postpone assumption of liability after receipt of the premium on any other ground. 8.14 In view of the foregoing discussion, it is held that the Insurance Company cannot avoid its liability to indemnify the amount under award and the learned Commissioner has committed serious legal error in exonerating the Insurance Company from its liability to indemnify the amount under award. The part of the impugned award in relation to exonerate the Insurance Company from its liability is set-aside and it is held that the Insurance Company would indemnify the amount awarded by the Commissioner in toto. Thus, this question is answered accordingly. 9. Answer to 2nd substantial question of Law: 9.1 Learned Commissioner has declined to award penalty to the claimants holding that in the facts and circumstances of the case, penalty has not been imposed upon the employer. Thus, this question is answered accordingly. 9. Answer to 2nd substantial question of Law: 9.1 Learned Commissioner has declined to award penalty to the claimants holding that in the facts and circumstances of the case, penalty has not been imposed upon the employer. Section 4-A(3)(b) of the Employee's Compensation Act, 1923 provides as under: "[4-A. Compensation to be paid when due and penalty for default.- (1) * * * * (2) * * * * (3) * * * * (a) * * * * (b) if, in his opinion, there is no justification for the delay, direct that the employer shall, in addition to the amount of the arrears and interest thereon, pay a further sum not exceeding fifty percent of such amount by way of penalty." 9.2 A bare perusal of Section 4-A(3)(b) of the E.C. Act would show that if there is no justification for the delay, then, the Commissioner may award the penalty not exceeding fifty percent of such amount. 9.3 In the case in hand, learned Commissioner after considering the material available on record, has found justification for not awarding the penalty in the impugned award and I do not find any ground to interfere with the finding so arrived by the learned Commissioner with regard to penalty. I hereby affirn1 the finding so recorded by the Commissioner. Thus, this question is answered accordingly. Conclusion: 10. Resultantly, the appeal is allowed. The impugned award dated 05/11/2009 passed by the Commissioner is modified directing that Respondent No. 2/Insurance Company shall satisfy the impugned award in place of the owner of the offending vehicle. The respondent/Insurance Company shall deposit the award amount within 2 months from the receipt of certified copy of this judgment. No order as to costs. Appeal Partly Allowed.