Orissa High Court
Prasanna Kumar Acharya vs The Divisional Manager on 10 April, 2019
Equivalent citations: AIRONLINE 2019 ORI 259
Author: A.K.Rath
Bench: A.K.Rath
HIGH COURT OF ORISSA: CUTTACK
SA No.420 of 2001
From the judgment and decree dated 18.8.2001 and 30.8.2001 respectively
passed by Sri S.N. Sahoo, learned Addl. District Judge, Bhanjanagar-Aska,
circuit court at Aska in M.A. Nos.1 and 2 of 1999 confirming the judgment
and decree dated 30.11.1991 and 20.12.1991 respectively passed by Sri
K.B. Sahu, learned Sub-Judge, Aska in Money Suit No.44 of 1988.
-----------
Prasanna Kumar Acharya .... Appellant
Versus
The Divisional Manager,
Oriental Insurance Co. Ltd.,
Cuttack & another .... Respondents
For Appellant ... Mr. Ganeswar Rath, Sr. Adv.
JUDGMENT
PRESENT:
THE HONOURABLE DR. JUSTICE A.K.RATH Date of hearing: 04.04.2019 : Date of judgment: 10.04.2019 Dr. A.K.Rath, J This appeal, at the instance of the plaintiff, assails the judgment of the learned Addl. District Judge, Aska in Money Appeal Nos.1 and 2 of 1999.
2. Plaintiff-appellant instituted the suit for realisation of Rs.40,566.64 p. from defendant no.1 and Rs.27,772.69 p. from defendant no.2 with PI&FI. Briefly stated, the case of the plaintiff is that he is the owner of a shop, namely, M/s. Acharya Electronics. He availed a cash credit loan of Rs.20,000/- from the State Bank of India, Aska ('Bank'). He had stock of Rs.30,000/- in the shop. The Bank insured the shop with the New India Assurance Co. Ltd.- defendant no.2 for Rs.30,000/-. The policy was valid from 14.7.1984 to 14.7.1985. Thereafter, the stock was increased to Rs.50,000/-.
2The shop was insured with defendant no.1 from 7.10.1983 to 6.10.1984. On 1.10.1984, he sent a letter along with a cheque of Rs.300/- to defendant no.1 for renewal of policy for another year from 7.10.1984 to 6.10.1985. While matter stood thus, in the night of 13/14.10.1984 at about 3 to 4 A.M., a theft was committed in the shop in which goods worth Rs.45,383/- was stolen. On 14.10.1984, he reported the matter to Aska P.S; whereafter Aska P.S. Case No.175 of 1984 was registered. During investigation, police seized some stolen articles worth Rs.946.79 p. from the culprits. After completion of investigation, police submitted charge sheet in the G.R Case pending before the learned J.M.F.C., Aska. He had intimated the Bank about the incident. On 1.12.1984, he had also sent a letter to defendant no.1 intimating the theft in his shop. Thereafter, defendant no.1 had deputed a surveyor to assess the loss. On 3.10.1987, defendant no.1 sent a letter to him denying the liability on the ground that the risk was not covered on the material date. On 26.11.1987, he sent an advocate notice by registered post to the defendants claiming Rs.44,436.31 p. with PI&FI, but the defendants maintained a sphinx like silence.
3. Defendant no.1 entered contest and filed a written statement denying the liability. It was pleaded that the plaintiff insured the stock of Rs.50,000/- from 7.10.1983 to 6.10.1984. He had not sent a letter along with a cheque of Rs.300/- to defendant no.1 for renewal of policy, i.e., from 7.10.1984 to 6.10.1985. There was no policy on the date of alleged occurrence. It was not liable to pay compensation. It was further pleaded that the cheque in question had been sent to the L.I.C of India. L.I.C of India sent the same to the Regional Office of defendant no.1. Ultimately the cheque was received 3 by defendant no.1 on 21.12.1984 and as such, no risk was covered on 21.12.1984.
4. Defendant no.2 filed a written statement pleading, inter alia, that the plaintiff availed a cash credit loan of Rs.20,000/- from the Bank. The Bank insured the stock for Rs.30,000/-. Policy was valid from 14.7.1984 to 14.7.1985. He had no stock of Rs.50,000/- in the shop. On 15.10.1984, plaintiff intimated regarding theft of the shop. Thereafter, a surveyor was appointed. Plaintiff failed to produce the relevant document for enquiry. Due to non-cooperation of the plaintiff, the surveyor could not assess the loss.
5. Stemming on the pleadings of the parties, learned trial court struck six issues. Parties led evidence, oral and documentary. Learned trial court decreed the suit in part holding, inter alia, that the plaintiff had sent Rs.300/- to defendant no.1 for renewal of policy from 7.10.1984. There was no insurance of stock of goods on the date of alleged occurrence. Policy was not subsisting on the date of alleged occurrence. Defendant no.1 is not liable for compensation. Defendant no.2 is liable to pay Rs.30,000/- with interest @ 12% per annum from 26.11.1987 till the date of payment. Felt aggrieved, plaintiff filed M.A No.1 of 1999, whereas defendant no.2 filed M.A. No.2 of 1999 before the learned Addl. District Judge, Aska. Both the appeals were heard together and disposed of by a common judgment. Learned appellate court, on a threadbare analysis of the evidence and pleadings, came to hold that the plaintiff had not produced the policy said to have been issued by defendant no.1. Condition no.1 of the specimen copy of the policy, Ext.C, shows that every notice and communication to the company required by the policy shall be in writing to the office of the company through which the insurance is effected. There is no pleading or evidence that defendant no.1 had 4 issued the policy to him. Ext.D, letter issued by the Asst. Divisional Manager of the Cuttack Division Office, LIC of India addressed to the Divisional Manager, Cuttack Branch of defendant no.1 shows that the cheque issued by the plaintiff was received at the LIC Office, Cuttack. The same was sent to the Cuttack Branch of defendant no.1. Defendant no.1 had received Rs.300/- much after the commission of theft. There was no communication of the acceptance of the proposal of the plaintiff for renewal of the policy. No risk could be assumed by it in absence of a valid policy. Held so, it dismissed M.A No.1 of 1999 filed by the plaintiff and allowed M.A No.2 of 1999 filed by the insurer.
6. Heard Mr. Ganeswar Rath, learned Senior Advocate for the appellant. None appeared for the respondents.
7. Mr. Rath, learned Senior Advocate for the appellant submitted that explanation to Sec.64-VB of the Insurance Act, 1938 provides that 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. Plaintiff had sent a cheque of Rs.300/- under certificate of posting to defendant no.1. The cheque was encashed. In view of the same, there was concluded contract between the parties. The insurer is liable to pay the amount.
8. Sec.64-VB of the Insurance Act, 1938 provides no risk to be assumed unless premium is received in advance. The same is quoted hereunder;
"Sec.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 5 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.
xxx xxx xxx"
9. A policy of insurance is a contract based on an offer and an acceptance. Plaintiff asserts that he has sent a cheque of Rs.300/- along with a letter of renewal of policy to defendant no.1 from 7.10.1984 to 6.10.1985. The previous policy was expired on 6.10.1984. Learned appellate court held that the cheque was sent to the Asst. Divisional Manager of the Cuttack Division Office, LIC of India. Thereafter, it was sent to the Divisional Manager, Cuttack Branch of defendant no.1. No policy had been issued by defendant no.1 in favour of plaintiff. In condition no.1, specimen copy of the LIC policy, Ext.C, it is stated that every notice and communication to the company required by the policy shall be in writing to the office of the company through which the insurance is effected. There is neither any evidence or pleading that the policy had been issued by defendant no.1 covering the date of alleged theft. Defendant no.1 had not communicated its acceptance of proposal of the plaintiff for renewal of the policy. Thus no risk could be assumed in the absence of any valid policy. There is no perversity in the said findings.
10. In Life Insurance Corporation of India v. Raja Vasireddy Komalavalli Kamba, AIR 1984 SC 1014, the apex Court held that the mere receipt and retention of premium until after the death of the applicant or the mere preparation of the policy document is not 6 acceptance. Acceptance must be signified by some act or acts agreed on by the parties or from which the law raises a presumption of acceptance. 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 delay in giving an answer cannot be construed as an acceptance, as, prima facie, acceptance must be communicated to the offeror. The general rule is that the 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.
11. Reliance placed on explanation to sub-section (2) of Sec.64-VB of the Insurance Act, 1938 is totally misplaced.
12. Admittedly cheque was sent after expiry of the policy. No communication was made by the defendant to the plaintiff about the acceptance of the proposal. No policy was issued by defendant no.1. There was no concluded contract. Thus defendant no.1 is not liable to pay any amount towards the alleged loss sustained by the plaintiff.
13. In view of the foregoing discussions, the appeal is dismissed, since the same does not involve any substantial question of law. There shall be no order as to costs.
.............................
DR. A.K.RATH, J Orissa High Court, Cuttack.
Dated 10th April, 2019/PKS