D.S.R. Varma, J.
1. Heard Sri C.P. Sarathy, learned Senior Counsel, representing Smt. C. Jayashree Sarathy, learned Counsel appearing for the appellant, and Sri P. Harinatha Gupta, learned Standing Counsel appearing for Respondent No. 3-The Oriental Insurance Company Limited, Hyderabad, in both the civil miscellaneous appeals.
2. Since both the civil miscellaneous appeals are inter-related and the accident being one and the same, they are being heard and disposed of by this common judgment.
3. Aggrieved by the order and decree, dated 31-7-1999, passed by the Motor Accident Claims Tribunal-cum-I Additional District Judge, Nalgonda (for brevity 'the Tribunal No. 1') allowing O.P. No. 250 of 1995, filed under Section 166 of the Motor Vehicles Act, 1988 (for brevity 'the M.V. Act'), and awarding a sum of Rs. 1,00,000/- towards compensation to the petitioners therein, with proportionate costs and interest at the rate of 12 (twelve) per cent per annum from the date of the petition till the date of realisation, for the death of one Pollagoni Laxmi @ Laxmamma (for brevity 'the deceased No. 1'), in a motor vehicle accident that occurred on 18-10-1994, due to rash and negligent driving on the part of the driver of Car bearing Registration No. AAM-889, fastening the liability only against respondent No. 1 therein-owner of the said Car and exonerating the respondent No. 2 therein-The Oriental Insurance Company Limited from its liability, the owner/insured of the said Car has preferred the appeal CM. A. No. 2638 of 1999.
4. And, aggrieved by the order and decree, dated 8-1-2001, passed by the Motor Accident Claims Tribunal-cum-II Additional District Judge, Nalgonda (for brevity 'the Tribunal No. 2') partly allowing the petition O.P. No. 481 of 1997, filed under Section 166 of the M.V. Act, and awarding a sum of Rs. 50,000/-, as against the claim of Rs. 1,00,000/-, towards compensation to the petitioners therein, with proportionate costs and interest at the rate of 12 (twelve) per cent per annum from the date of the petition till the date of realisation, for the death of one Bantu Bixam (for brevity 'the deceased No. 2'), in the very same accident, fastening the liability only against the respondent No. 2 therein-owner of the said Car and exonerating the respondent No. 3 therein-The Oriental Insurance Company Limited from its liability, the owner of the said Car has also preferred the appeal C.M.A. No. 630 of 2001.
5. In both the civil miscellaneous appeals, appellant is the owner of the Car, respondent Nos. 1 and 2 are the claimants and respondent No. 3 is the Oriental Insurance Company Limited, in the O.Ps. before the Tribunals, respectively.
6. For the sake of convenience, in this common judgment, the parties will be referred to as 'the insured', 'the claimants', and 'the insurer', respectively.
7. It was the case of the claimantsi before the Tribunal Nos. 1 and 2 that on 18-10-1994 at about 2 p.m., when deceased Nos.l and 2 along with some others were waiting at Uppalapadu Bus Stage on National Highway No. 9 to go to Cherukupally and Nakrekal, respectively, the driver of the Car drove the same in a rash and negligent manner with high speed and dashed them, due to which both the deceased Nos. 1 and 2 sustained multiple and grievous injuries and died on the spot. Therefore, the claimants filed the said O.Ps., before the Tribunal Nos. 1 and 2 claiming a sum of Rs. 1,00,000/- each towards compensation.
8. The driver of the Car, who is respondent No. 1 in O.P. No. 481 of 1997, remained ex parte before the Tribunal No. 1.
9. The insured filed two separate counters in the O.Ps., before the Tribunal Nos. 1 and 2 denying the averments in the said O.Ps., and alleging that on 7-10-1994 he sent a sum of Rs. 168/- (Rupees one hundred and sixty eight only) by way of cheque under 'certificate of posting' for renewal of the policy to the insurer and the policy was issued on 22-10-1994; that the policy being renewed, it is deemed to be a continuing policy and as the accident said to have occurred on 18-10-1994, it is the insurer that is liable to pay the compensation and that the amounts of compensation claimed by the claimants are highly excessive.
10. The insurer filed separate counters denying the claims made by the claimants in the O.Ps., before the Tribunals, contending that the amounts of compensation claimed by the claimants are highly excessive and untenable and sought for dismissal of the O.Ps.
11. Basing on the above pleadings, the Tribunals Nos. 1 and 2 framed appropriate issues for consideration.
12. In order to substantiate their claim before Tribunal No. 1, the Claimant No. 1, who is the husband of deceased No. 1, examined himself as P.W. 1 and got marked Exs. A-1 to A-6. On behalf of the insured, he examined himself as R.W. 1 and got marked Exs. B-1 to B-5. The insurer got marked Exs. B-6 and B-7 with consent of both parties; whereas before Tribunal No. 2, the Claimant No. 1, who is the eldest son of deceased No. 2, examined himself as P.W. 1 apart from examining an eye-witness to the accident as P.W. 2 and got marked Exs. A-1 to A-4. On behalf of the insured, he examined himself as R.W. 1 and got marked Exs. B-1 to B-6. On behalf of the insurer, the policy, dated 21-10-1994, is marked as Ex.B-7. No oral evidence is adduced on behalf of the insurer in both the OPs.
13. Considering the entire material, including the evidence, both oral and documentary, available on record, the Tribunal Nos. 1 and 2 have allowed the O.Ps., granting a sum of Rs. 1,00,000/- and Rs. 50,000/- towards compensation to the claimants in both the O.Ps, respectively, with costs and proportionate costs, respectively, with interest at the rate of 12 (twelve) per cent per annum from the dates of filing of the O.Ps., till the dates of realisation, fastening the liability only against the insured and exonerating the insurer from its liability.
14. Aggrieved by the quantum of compensation awarded by the Tribunal Nos. 1 and 2 as well as fastening the liability only against the insured and exonerating the insurer from its liability, the insured has preferred the present civil miscellaneous appeals.
15. The only staring question that is required to be answered by this Court in the present civil miscellaneous appeals is - as to whether the date on which money order has booked or the cheque is posted is a crucial and acceptable date for the purpose of renewal of insurance policy as envisaged under the explanation of Section 64VB of the Insurance Act, 1938 (for brevity 'the Insurance Act').
16. The relevant facts, after pruning irrelevant, insofar as the present question is concerned, are as under:
The vehicle involved in the accident is covered by an insurance policy. The relevant period of existence of the policy is 17-9-1993 to 16-9-1994. The policy was marked as Ex.B-3. On 7-10-1994 through Ex.B-1 letter, the insured sought for renewal of policy. Obviously, the said letter was addressed subsequent to the currency of the policy. A cheque was drawn for a sum of Rs. 168/- (Rupees one hundred and sixty eight only) towards premium and the same was sent to the insurer along with the said letter (Ex.B-1) under certificate of posting. The receipt, dated 10-10-1994, for such certificate posting was marked as Ex. B-2. Consequently, the policy was renewed for the vehicle with effect from 22-10-1994. From the said letter (Ex. B-2), it could be seen that the insured had requested to renew the policy, dated 7-10-1994, was referred to. Subsequently, on 18-10-1994, the vehicle met with an accident resulting in the death of the deceased Nos. 1 and 2.
17. Both the Tribunal Nos. 1 and 2, having considered the matter on merits and relying on the evidence on record, both oral and documentary, held that the policy was renewed only after the death of both the deceased Nos. 1 and 2. Therefore, no liability can be fastened against the insurer and eventually the insured was girdled with the liability of paying the compensation. Aggrieved by the same, the insured has preferred the present civil miscellaneous appeals.
18. Sri C.P. Sarathy, learned Senior Counsel, representing Mrs. C. Jayasree Sarathy, learned Counsel appearing for the insured in both the civil miscellaneous appeals, contends that as per the explanation of Sub-section (2) of Section 64VB of the Insurance Act, the premium paid should be understood as paid on the date on which the money order is booked or the cheque is posted.
19. For convenience and ready reference, Section 64VB of the Insurance Act is extracted, to the extent relevant, which is as under:
64-VB. 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.
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) ...
(5) ...
20. Sub-section (2) of Section 64VB of the Insurance Act postulates that risk would be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the insurer. In other words, it presupposes that the risk should arise or commerce only from the date on which the premium has been paid in cash.
21. However, the explanation of Sub-section (2) of Section 64VB of the Insurance Act is to the effect that 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.
22. In other words, in the present context, posting of the cheque assumes significance and consequently posting of the cheque by way of 'certificate of posting' would be the crucial date for the purpose of renewal of the policy.
23. It is not in dispute that the certificate of policy had already been issued and the same had been in force till 16-9-1994. It is also not in dispute that the policy would be in force for one year and can be renewed from time to time subject to the request by the insured and acceptance by the insurer.
24. It is common practice that even after expiry of policy, for various reasons, many of the insured would be addressing letters to the insurer seeking renewal of policies and the same, as a matter of routine, would be accepted and consequently policies could get renewed. It may also be not uncommon that sometimes, by fraudulent methods, the insured may apply for renewal of policy or a certificate of insurance under Section 145(b) of the M.V. Act, only in order to get undue advantage or enrichment.
25. In the instant case, such contingencies are totally absent.
26. From the very basic facts, it could be seen that the insured, with all bona fide intention, addressed a letter to the insurer on 7-10-1994 seeking renewal of policy and the cheque drawn had been posted on 10-10-1994. The unfortunate event of the accident and the consequential death of both the deceased Nos. 1 and 2 had taken place on 18-10-1994. Therefore, it can safely be inferred that the insured had, bona fidely and will all prudence, drawn a cheque for a sum of Rs. 168/- (Rupees one hundred and sixty eight only) and sent it by 'certificate of posting' to the insurer.
27. Here, what is required to be noticed in such a case is - from what date the risk would be assumed to commence?
28. As per the explanation to Sub-section (2) of Section 64VB of the Insurance Act, undoubtedly, the risk would commence or the operation of renewal of the policy will come into effect from the date on which the cheque was posted. The date of posting of the cheque, which is not in dispute, was 10-10-1994.
29. Therefore, can it be said that the policy would come into operation only from 10-10-1994?
30. The answer would be negative for the reason that there is a fine distinction between issuance of certificate of insurance and renewal of policy. The former indicates with no ambiguity that the certificate of insurance would, in normal course, denote that a fresh policy, as and when applied, for a certificate of insurance, would be issued and such certificate would constitute a policy containing various terms and conditions of the contract. For all purposes, policy is a contract under the general law i.e., the Indian Contract Act, 1872.
31. If we put it in a different way, the policy, since possessing all trappings of contract, is a contract with binding effect under the general law.
32. Sub-section (3) of Section 64VB of the Insurance Act is another significant provision, which envisages that premium can be refunded to the insured on account of any reason including cancellation of policy or on account of alteration of the terms and conditions of policy.
33. In the case on hand, the undisputed fact is that though the policy in force had expired on 16-9-1994, a request had been made by the insured to the insurer through a letter, dated 7-10-1994, under Ex. B-1, seeking renewal of the policy. Further, it is not in dispute that on 10-10-1994, the said letter along with a cheque for a sum of Rs. 168/- (Rupees one hundred and sixty eight only) was posted by way of 'certificate of posting' and the same had been received by the insurer. Exs. B-1 and B-2, which are the letter and the receipt for 'certificate of posting' are later to the last date of expiry of policy i.e., 16-9-1994.
34. But, it is on record and admitted fact that the letter of request as well as the cheque has been accepted by the insurer and the cheque has been encashed also and renewal was recorded through Ex. B-4 policy
35. Here, the expression 'renewal' gives much significance. As already noticed, renewal is slightly different from a new policy, which otherwise called as 'certificate of insurance', as contemplated under Section 145(b) of the M.V. Act. A policy, if issued for the first time, would commence from the date of its issuance, or from the midnight of the previous day of the payment of premium; whereas, renewal stands on a different footing. Any failure on the part of the insured at a later date can be accepted by the insurer antedated. That antedate can always be the last date of the efficacy of the existing policy.
36. In other words, it is a deemed continuation of policy by way of renewal antedated. From Ex. B-4, it could clearly be seen that the insurer had accepted the cheque, encashed the same and further issued a letter specifically intimating the insured that the policy was renewed with special reference to the letter under Ex. B-1, dated 7-10-1994.
37. When once the expression 'renewal', with reference to the letter of request, dated 7-10-1994, in Ex.B-1, was accepted, such 'renewal' is understandably with no ambiguity revives the continuation of policy, by way of renewal, from the last date of expiry of the existence of policy i.e., 16-9-1994.
38. Therefore, the offer made by the insured, by sending a sum of Rs. 168/-(Rupees one hundred and sixty eight only) by way of cheque and posting it, shall be construed as an offer and encashment of the said cheque and renewal of the policy by the insurer would, undoubtedly, amounts to renewal of the contract or renewal of the policy with no interruption. After all, renewal shall be understood as 'continuity'. Black's Law Dictionary defines 'renewal' as 'extension of time in which that obligation may be discharged'.
39. Though a plain reading of explanation to Sub-section (2) of Section 64VB of the Insurance Act indicates assumption of risk from the date of the money order is booked or the cheque is posted, still the policy or the time for coverage of risk would continue to operate, or get extended by virtue of the undisputed facts of the acceptance by way of not only accepting and encashing the cheque but also addressing a letter under Ex. B-4 for renewing the policy.
40. Therefore, I am of the considered view that by the conduct of both parties, more particularly the conduct of the insurer in accepting and encashing the cheque and issuing a letter for renewal of policy to the insured would only indicate that the offer made by the insured had been accepted resulting in a concluded contract with binding force on both parties with enforceability from the last date of expiry of the existing policy.
41. I am fortified with the observations made in the decision rendered by the Apex Court in I.T. Commr. v. Ogale Glass Works Ltd. : [1954]25ITR259(SC) , which are thus:
The position, therefore, is that in one view of the matter there was, in the circumstances of this case, an implied agreement under which the cheques were accepted unconditionally as payment and on another view, even if the cheques were taken conditionally, the cheques not having been dishonoured but having been cashed, the payment related back to the dates of the receipt of the cheques and in law the dates of payments were the dates of the delivery of the cheques.
(12) ...According to him the cheques were delivered to the assessee as soon as they were posted
42. From the above observations, the necessary implication is that the date on which the cheque posted is the date of payment; provided the issuance of such a cheque is for a fraudulent purpose, for example bounced or dishonoured cheque.
43. Another indication is that, if really the insurer is not interested with the offer of the insured, the payment of money by the insured requesting for renewal, exercising its jurisdiction vested under Sub-section (3) of Section 64VB of the Insurance Act, can be rejected and, in fact, could have been rejected by the insurer by refunding the same to the insured. But that did not happen.
44. As already noticed, the insurer, with all promptitude, at its command, received the cheque, encashed it and issued the policy after renewal. Renewal, as already noticed, is uninterrupted or continuation or extension of policy, which was in force though expired as on the date of posting of the letter coupled with the posting of cheque.
45. For the foregoing reasons, both the appeals are liable to be allowed.
46. In the result, both the civil miscellaneous appeals are allowed and consequently all the necessary formalities would automatically follow. The impugned orders and decrees of the Tribunal Nos. 1 and 2 are set aside to the extent of fastening the liability to pay compensation awarded to the claimants only against the insured and exonerating the insurer from its liability. Instead, the liability to pay compensation awarded to the claimants by the Tribunal Nos. 1 and 2 is fastened against the insurer. In all other respects and aspects, the impugned orders and decrees of the Tribunal Nos. 1 and 2 shall remain unaltered. However, there shall be no order as to costs.
47. This Court records its gratitude for the assistance rendered by Sri Kakara Venkata Rao, learned Counsel.