Jharkhand High Court
The National Insurance Company ... vs Ram Chandra Gope And Ors. on 25 April, 2007
Equivalent citations: 2007(2)BLJR2205, [2007(3)JCR221(JHR)], 2007 (2) AIR JHAR R 889, 2007 A I H C 2767, (2007) 3 TAC 573, (2007) 3 JCR 221 (JHA), (2007) 57 ALLINDCAS 905 (JHA), (2007) 54 ALLINDCAS 875 (JHA), (2008) 3 ACJ 1452, (2007) 3 JLJR 46
Author: M.Y. Eqbal
Bench: M.Y. Eqbal
JUDGMENT
M.Y. Eqbal and D.K.Sinha, JJ.
Page 2206
1. In this appeal notices were issued to the claimants-respondents and the owner of the vehicle as respondent No. 9. The claimants have appeared but in spite of notice respondent No. 9 owner of the vehicle did not appear. This Court after exhausting all the procedure for service of notices by registered post as also by ordinary process, the notice was served by publication in the newspaper. It has been specifically mentioned in the notice published in the newspaper that in the event of failure of the respondent No. 9 to appear in the appeal, the same shall be disposed of ex parte. Hence we are disposing of the appeal after hearing the counsel for the appellant Insurance Company and the respondents-claimants.
2. This appeal by the appellant-Insurance Company is directed against the judgment and award dated 27th March, 2004 passed by the 1st Additional District Judge-cum- Motor Vehicle Accident Claims Tribunal at Chaibasa in Compensation Case No. 14 of 1997 whereby the Tribunal awarded compensation of Rs. 1,66,000/- and directed the appellant-Insurance Company to pay the said amount. The appellant has assailed the impugned judgment and award on the sole ground that at the time when the accident took place the offending vehicle was not insured with the appellant- Insurance Company rather cover note was obtained by the owner of the vehicle after the said accident. In support of that the appellant-Insurance Company produced the cover note as also insurance policy, which were marked exhibits.
3. Mr. Alok Lal learned Counsel for the appellant appeared and submitted that in the cover note, which was marked Ext. B, it has been clearly mentioned that the cover note was issued on 31.10.1996 at 5 p.m. whereas the accident took place at 3.15 p.m. on the same day. The Tribunal although took notice of the cover note Ext. B and found that in the cover note the time of issuance is clearly mentioned at 5 p.m. but the Tribunal was of the view that since time was not mentioned in the insurance policy, therefore, the Company has liability for payment of compensation.
Page 2207
4. A contract of insurance is a species of commercial transactions and there is a well established commercial practice to send cover notes even prior to the completion of a proper proposal or while the proposal is being considered or a policy is in preparation for delivery. A cover note is a temporary and limited agreement. It may be self-contained or it may incorporate by reference the terms and conditions of the future policy. When the cover note incorporates the policy in this manner, it does not have to recite the terms and conditions, but merely to refer to a particular standard policy. If the proposal is for a standard policy and the cover note refers to it, the assured is taken to have accepted the terms of that policy. The reference to the policy and its terms and conditions may be expressed in the proposal or the cover note or even in the letter of acceptance including the cover note. The incorporation of the terms and conditions of the policy may also arise from a combination of references in two or more documents passing between the parties. Documents like the proposal, cover note and the policy are commercial documents and to interpret them commercial habits and practice cannot altogether be ignored. During the time the cover note operates, the relations of the parties are governed by its terms and conditions, if any, but more usually by the terms and conditions of the policy bargained for and to be issued. When this happens the terms of the policy are incipient but after the period of temporary cover, the relations are governed only by the terms and conditions of the policy unless insurance is declined in the meantime. Delay in issuing the policy makes no difference. The relations even then are governed by the future policy if the cover notes give sufficient indication that it would be so. In other respects there is no difference between a contract of insurance and any other contract except that in a contract of insurance there is a requirement of uberima fides i.e., good faith on the part of the assured and the contract is likely to be construed contra proferentem that is against the company in case of ambiguity or doubt. A contract is formed when there is an unqualified acceptance of the proposal. Acceptance may be expressed in writing or it may even be implied if the insurer accepts the premium and retains it. In the case of the assured, a positive act on his part by which he recognizes or seeks to enforce the policy amounts to an affirmation of it. This position was clearly recognized by the assured himself, because he wrote, close upon the expiry of the time of the cover notes, that either a policy should be issued to him before that period had expired or the cover note extended in time. In interpreting documents relating to a contract of insurance, the duty of the court is to interpret the words in which the contract is expressed by the parties, because it is not for the court to make a new contract, however, reasonable, if the parties have not made it themselves. Looking at the proposal, the letter of acceptance and the cover notes, it is clear that a contract of insurance under the standard policy for fire and extended to cover flood, cyclone etc. had come into being. This principle has been well enunciated by the Supreme Court in the case of General Assurance Society Ltd. v. Chandmull Jain and Anr. reported in A.I.R. 1966 S.C.C. 1644.
5. Applying the aforesaid principle, it is manifestly clear that the cover note, which is a temporary insurance policy, mentioned the time as 5 p.m which has not been disputed by the owner of the vehicle. Insurance policy is the continuing process after the issuance of cover note, therefore, it can well be presumed that the insurance policy commences at the time and from when the cover note was issued. In that view of the matter the Tribunal has committed serious error of law in holding that notwithstanding the time mentioned in the cover note the Insurance Company shall Page 2208 have liability to pay the compensation amount merely because the insurance policy subsequently issued there is no mention of time. In our considered opinion, therefore, it can safely be held that the accident having been taken place before the issuance of cover note the Insurance Company shall have no liability.
6. Mr. Ananda Sen, learned Counsel for the respondents-claimants submitted that in any view of the matter the Insurance Company may be directed to pay the compensation amount and recover the same from the owner of the vehicle. We have all sympathy with the claimants and in appropriate cases where there is valid insurance policy but the liability is denied by the Insurance Company on the ground of breach of terms and conditions as contemplated under Section 149 of the M.V. Act, the Apex Court has issued such direction. But in the instant case vehicle was not insured at the time when accident took place rather the owner of the vehicle obtained cover note after the accident took place, therefore, we cannot issue such direction directing the appellant Insurance Company to pay the amount and recover the same from the owner of the vehicle.
Before parting with the order we are constrained to observe that as an appellate court we are governed by the provisions of the Code of Civil Procedure in the matter of procuring the attendance of the respondents by issuing notices by various modes but the Tribunal while exercising power for executing the award can even take coercive steps for attendance of the person against whom award is given and also take recourse for recovery of the amount by attachment of the vehicle and other properties also.