P.C. Naik, J.
1. Aggrieved by the award of Rs. 30,000/- and interest thereon at the rate of 12 per cent per annum passed in favour of claimant-respondents 1, 2, and 3, the insurer has preferred this appeal.
Briefly stated, the facts are that on 23-3-1989, one Khetra Sahu died due to fatal injuries received in an accident caused by a truck bearing registration number ORR 1991. Accordingly, his widow, son and daughter moved the Second Motor Accident Claims Tribunal, Barhampur for compensation amounting to Rs. 90,000/-. It was pleaded that since the accident was due to rashness and negligence of the driver of the truck, the claimant-respondents 1, 2 and 3 are entitled to compensation from the owner and insurer of the vehicle. In Column 16 of the Claim Petition, it was specifically averred that the vehicle was insured with the United India Insurance Company Ltd., vide Cover Note bearing No. 329807. As the owner, after filing the written statement denying his liability did not enter appearance, he was proceeded ex parte. It may, however, be mentioned that in paragraph 11 of his written statement the owner had clearly stated that thetruck in question was insured under Comprehensive Insurance Policy, for which, the authorised agent Sri P.K. Pradhan of the insurer i.e. United India Insurance Company Ltd., (respondent No. 2 before the Tribunal) had taken the premium and issued Cover Note No. 329807 on 22-3-1989 which was valid for a period of one year.
2. The insurer filed a separate written statement and as usual took up defences which are not available to it under the law. The fact that the vehicle was insured with it, was denied. Though oral and documentary evidence was adduced on behalf of the claimants, no evidence in rebuttal was adduced by the Insurance Company. It may be stated that though the owner was set ex pane, no effort was made by the insurer to obtain permission of the Tribunal to contest the case on merits, as has to be done by moving an application under Section 110-C(2-A) of the Motor Vehicles Act, 1939. A Xerox copy of Cover Note No. 329807 for the period 22-3-89 to 21-3-90 was filed and marked as Ext. 3. Ext. 7 is a copy of the Seizure List which indicates that Xerox copy of the Insurance Certificate bearing Cover Note No. 329807 of United India Insurance Company Ltd., in respect of truck ORR-1991 valid up to 21-3-90 was seized on 10-5-89.
3. On a finding that the accident was due to rashness and negligence of the driver, the Tribunal held that the claimants are entitled to compensation of Rs. 30,000/- and being of the view that the vehicle was duly insured by Cover Note (Ext. 7). Respondent No. 2 (the present appellant) was directed to satisfy the award. Hence the appeal.
4. Learned Counsel for the appellant during course of hearing has strenuously urged that though the learned Tribunal has passed the award specifically holding the driver of the offending vehicle, guilty of rashness and negligence, the liability cannot be fastened on the insurer-appellant, who, from the very beginning, has been denying to be the insurer of the vehicle. He has further submitted that the appellant had not accepted any premium and as such there was non-compliance of the provisions of Section 64VB of the Insurance Act, for which it cannot be held liable and at any rate the compensation awarded is excessive, hence needs to be reduced.
5. Long back, a Full Bench of this Court in the case of National Insurance Co. v. Magikhaia Das(after him) Mst. Laxmi Dibya, reported in AIR 1976 Ori 175, has held that insurer cannot challenge the award on merits and its challenge is to be confined to the statutory defences available to it under the Act. In the present case, as permission of the Tribunal to contest the claim on merits had not been obtained as per the requirement of Section 110-C(2-A) of the Act, the insurer cannot be permitted to challenge the award on merits (see Shankarayya v. United India Insurance Company Ltd., 1998 (3) SCC 140 : (AIR 1998 SC 2968)). Therefore, the contention that the Tribunal erred in holding the driver guilty of rash and negligent driving, cannot be entertained in this appeal. Likewise, the appellant also cannot be permitted to contend that the award of Rs. 30,000/- is excessive. If I may add, the award in fact appears to be on the lower side.
6. The only contention which remains for consideration is, whether or not on the relevant day the vehicle in question was insured with the appellant herein. While considering this question, it may be reiterated that a Cover Note, copy whereof is Ext. 3, was filed in Court. In the claim petition, there is a specific averment that the vehicle in question was insured with the appellant herein under the said Cover Note. This fact has also been admitted in the written statement of the owner. Thus in view of the above, a mere denial by the appellant that it was not the insurer, was not sufficient. Once the number of the Cover Note was disclosed and a copy thereof containing the name of the Insurance Company and the agent, the date of Cover Note and the period of insurance was filed, it was for the Insurance Company to have rebutted the prima facie presumption that the vehicle was validly insured with it. It is no doubt true that the claimants are to disclose the particulars of the insurance, which they have done in the instant case. The particulars of insurance and a copy of the Cover Note containing alt necessary details having been filed and exhibited, it was open to the Insurance Company to disprove that it is not the insurer which has not been done. It is then contended that as the Insurance Cover Note was issued without collection of premium, it could not be made liable. If this was so, it was again open to the insurer to have led evidence in this regard and to explain as to why a Cover Note insuring the vehicle was issued without collection of premium. Since aCover Note was in fact issued, in view of the provisions contained in Sub-section (1) of Section 96 of the 1939 Act, the insurer cannot escape liability. At any rate, in view of the fact that the Cover Note indicates that a premium of Rs. 3,254/- was paid, it has to be presumed that the Cover Note was issued by the agent P.K. Pradhan after collection of the premium. As the Cover Note was issued on 23-3-89 which was the effective date of commencement of insurance for the purpose of the Act, the vehicle was covered by a valid insurance on the date of the accident i.e. 23-3-89. The contention that the Cover Note does not bring about a contract of insurance between the Insurance Company and the owner of the vehicle, being untenable, is rejected. Chapter 8 of the Motor Vehicles Act, 1939 and Chapter 11 of the 1988 Act contain provisions relating to insurance of Motor Vehicles against third party risks. Clause (b) of Section 93 of the 1939 Act and Clause (b) of Section 145 of the 1988 Act lay down that certificate of insurance means a certificate issued by an authorised insurer and includes a Cover Note. Accordingly, the Tribunal was justified in holding that the vehicle in question was validly insured with the appellant on the date of the accident.
7. As the question was raised, a reference may be made to Sub-sections (1), (2) and (4) of Section 64VB of the Insurance Act, 1938 which reads thus :
'64VB. 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, 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.
(3) xxx xxx xxx xxx xxx
(4) Where an insurance agent collects a premium on a policy of insurance on behalf of aninsurer, 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 collections excluding bank and postal holidays.
(5) xxx xxx xxx xxx xxx.'
8. From a perusal of the above provisions, it is clear that the insurer may assume the risk from the date on which it receives the premium either in cash or by cheque. And, the insurance agent who collects a premium on behalf of the insurer is obliged to either deposit or despatch by post the full premium collected to the insurer within twenty-four hours of the collection. Therefore, as per the provision, the payment and acceptance of premium by the agent brings into existence an insurance cover.
9. A reference may also be made to Section 94 of the 1939 Act corresponding to Section 146 of the 1988 Act which provides that no person shall use except as a passenger or cause or allow any other person to use a motor vehicle in a public place, unless there is in force in relation to the use of a vehicle by that person or that other person, as the case may be, a policy of insurance complying with requirements of the provision relating to insurance of motor vehicle against third party risks. Thus, it is clear that there is an injunction on use of a motor vehicle in a public place without an insurance. In this view of the matter, if the contention of the insurer that mere issuance of a cover note without issuance of a policy does not bring about an insurance coverage, is accepted, it would mean that despite collection of premium and issuance of a cover note, no vehicle will be used or plied till such time as a policy is issued which may take a time of days, weeks or months. This is not contemplated by the statute and indeed, as the 'certificate of insurance' includes 'a cover note', negatives the contention. The analogy that till a proposal of life insurance is accepted, mere collection of premium by the agent docs not bring about an insurance cover cannot, in view of the specific provision contained in Section 94 of the 1939 Act and Section 146 of the 1988 Act, come to the aid of the insurer in defending a claim under the Motor Vehicles Act on the ground that issuance of a cover note does not bring about a contract of insurance. In other words, vehicles will come to a standstill till a policy is issued notwithstanding issuance of a cover note.
10. In the result, the appeal fails and is dismissed accordingly.