The Oriental Insurance Co. Ltd. vs Smt. Rakesh And Others
2022 Latest Caselaw 7730 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

RESERVED ON 07.04.2022
 
DELIVERED ON 22.7.2022
 
Court No. - 5
 

 
Case :- FIRST APPEAL FROM ORDER No. - 297 of 2003
 

 
Appellant :- The Oriental Insurance Co. Ltd.
 
Respondent :- Smt. Rakesh And Others
 
Counsel for Appellant :- Anand Kumar Sinha
 
Counsel for Respondent :- Smt. Archana Tyagi,J.P.S. Chauhan,P.K. Tyagi,R.K. Saini
 

 
Hon'ble Salil Kumar Rai,J.

The present First Appeal From Order has been filed by the Insurance Company under Section 30 of the Workmen's Compensation Act, 1923 against the judgment and award dated 20.12.2002 passed by the Workmen's Compensation Commissioner in Workmen's Compensation Case No. 39 of 1999 (Smt. Rakesh & Ors. vs Yashpal & Ors.).

Workmen's Compensation Case No. 39 of 1999 was filed by the claimants, i.e., Opposite Party Nos. 1 to 4 alleging that Rohtash (hereinafter referred to as, ''the deceased') was employed as co-driver with the opposite party no. 5 in Bus No. New Tata - 1312 TC with Engine No. 79 F-62 108750 and died in an accident which arose out of and in the course of his employment. The accident took place on 7.10.1997 at 2:30 a.m.

The employer and the Insurance Company contested the claim petition and filed their written statements denying their liability. Two issues were framed by the Commissioner in the aforesaid case. Issue No. 1 was as to whether, on the date of accident, the vehicle was insured with the Insurance Company / appellant and whether the insurance cover was operative at the time of accident. Issue No. 2 was as to whether, the deceased was employed with opposite party no. 5 and died while he was in employment of Opposite Party No. 5. The Commissioner decided Issue No. 2 in favour of the claimants and against the owner of the vehicle. Issue No. 1 was decided in favour of the owner of the vehicle and against the Insurance Company. It was held by the Commissioner that at the time of accident, the vehicle was insured with the appellant - Insurance Company and the Insurance Company was liable to indemnify the employer. Consequently, the Commissioner vide his award dated 20.12.2002 awarded a compensation of Rs.1,94,640/- along with 9 percent simple interest to the claimants.

The records of the case do not indicate that any substantial question of law was framed while admitting the appeal.

It was argued by the counsel for the appellant that the policy document specifically provided that the risk cover started from 10:00 a.m. on 7.10.1997 and because the accident admittedly took place at 02:30 a.m. on 7.10.1997, therefore, the Insurance Company - appellant was not liable to pay compensation or indemnify the employer.

The insurance cover note issued to the employer shows that premium was paid on 6.10.1997 at 07:00 p.m. and on the same date, a cover note was issued which indicated that the policy was operative from 7.10.1997 to 6.10.1998.

In light of the aforesaid argument and facts, the following substantial questions of law arises in the present case : -

"Whether in light of the fact that the policy document provided that the policy was operative from 10:00 a.m. on 7.10.1997 to 6.10.1998, the Insurance Company was liable to indemnify the employer for compensation due to the accident which took place at 02:30 a.m. on 7.10.1997 because the employer had paid the premium on 6.10.1997?"

The two admitted facts of the case are that the premium was paid by the employer on 6.10.1997 and the cover note was issued at 07:00 p.m. on 6.10.1997 itself and the accident took place at 02:30 a.m. on 7.10.1997. Column - 3 of the cover note indicates that the time of commencement of insurance was 10:00 a.m. However, in Column - 3, the date of the commencement of insurance has not been specified. Column - 4 of the cover note shows that the insurance cover was operative from 7.10.1997 to 6.10.1998. However, the proposal form and the policy document specifically indicate that the policy was operative from 10:00 a.m. on 7.10.1997.

The Tribunal has decided Issue No. 1 against the appellant - Insurance Company relying on a Division Bench judgment of this Court reported in (2002) ACJ 1185 (United India Insurance Company Ltd. vs Shadma Begum & Ors.) wherein it was held that the liability of the Insurance Company starts from the date the premium was received and the cover note was issued. A reading of the aforesaid judgment does not show that in the aforesaid case, the insurance policy or the cover note had specifically indicated the time from which the risk cover would start. In case, where the contract of insurance specifies the time from which the policy starts, the risk cover would start from the date and time specified in the policy. At this stage, it would be relevant to refer to the observations of the Supreme Court in Paragraphs 2 and 3 of Oriental Insurance Company Ltd. vs Sunita Rathi & Ors. (1998) ACJ 121 : -

"2. The motor accident had occurred on 10.12.1991 at 2.20 p.m. It was only thereafter the same day at 2.55 p.m. that the insurance policy and the cover note were obtained by the insured, owner of the motor vehicle involved in the accident. There is express mention in the cover note that the effective date and time of commencement of the insurance for the purpose of the Act was 10.12.1991 at 2.55 p.m. The applicability of the decision in Ram Dayal's case, 1990 ACJ 545 (SC), has to be considered on these facts. In our opinion, the decision in Ram Dayal's case (supra) is distinguishable and has no application to the facts of this case. The facts of that decision show that the time of issuance of the policy was not mentioned therein and the question, therefore, was of presumption when the date alone was mentioned and not the time at which the insurance was to become effective on that date. In such a situation, it was held in Ram Dayal's case (supra) that in the absence of any specific time being mentioned, the logical inference to draw was that the insurance became effective from the previous midnight and, therefore, for an accident, which took place on the date of the policy, the insurer became liable. There is no such difficulty in the present case in view of the clear finding based on undisputed facts that the accident occurred at 2.20 p.m. and the cover note was obtained only thereafter at 2.55 p.m. in which it was expressly mentioned that the effective date and time of commencement of the insurance for the purpose of the Act was 10.12.1991 at 2.55 p.m. The reliance on Ram Dayal's case (supra) by the Tribunal and the High Court was, therefore, mis-placed. We find that in a similar situation, the same view which we have taken, was also the view in National Insurance Co. Ltd. vs. Jikubhai Nathuji Dabhi 1997 ACJ 351 (SC), wherein Ram Dayal's case (supra) was distinguished on the same basis.

3. It follows that the insurer cannot be held liable on the basis of the above policy in the present case and, therefore, the liability has to be of the owner of the vehicle. However, we find that the High Court, without assigning any reason, has simply assumed that the owner of the vehicle was not liable and that the insurer alone was liable in the present case. This conclusion, reached by the High Court, is clearly erroneous. The liability of the insurer arises only when the liability of the insured has been upheld for the purpose of indemnifying the insured under the contract of insurance. There is, thus, a basic fallacy in the conclusion reached by the High Court on this point."

A similar observation was made by the Supreme Court in New India Insurance Company vs Bhagwati Devi & Ors. 1998 (6) SCC 534. The observations of the Supreme Court in Paragraph 2 of the aforesaid judgment is reproduced below : -

"2. The facts giving rise to the appeal are minimal. The appellant-insurance company sold a policy at about 4 p.m. on 17-2-1989. Undeniably, it had been bought at a time when an accident pertaining to the vehicle insured had already taken place at about 9 a.m. the same day. The fatal accident occurring thereby gave rise to a claim for damages before the Motor Accident Claims Tribunal. The same was allowed on the strength of the decision of this Court aforementioned, correctness of which has been challenged. The said decision proceeded on the legal fiction that when a policy is taken on a particular date, its effectiveness would start from the commencement of that date which is from the previous midnight. The accident taking place at any time during the day would be covered by the policy. Later a three-member Bench of this Court in National Insurance Co. Ltd. v. Jikubkai Nathuji Dabhi has taken the view that when there is a special contract mentioning in the policy the time when it was bought, it would be operative from that time and not fictionally from the previous midnight. In the said case, the policy had been bought at about 4 p.m. on the day of the accident and, thus, was not allowed to be operative from midnight; the accident having occurred around 11 a.m. on that date. The principle deduced is thus clear that should there be no contract to the contrary, an insurance policy becomes operative from the previous midnight, when bought during the day following. However, in case there is mention of a specific time for its purchase then a special contract to the contrary comes into being and the policy would be effective from the mentioned time. The law on this aspect has been put to rest by this Court. There is, thus, nothing further for us to deliberate upon."

(emphasis added)

In the present case, the proposal form and the policy indicate that the policy was operative from 10:00 am at 7.10.1997.

In light of the aforesaid, it is held that the Insurance Company was not liable to indemnify the employer, i.e., opposite party no. 5. In light of the aforesaid findings, the award of the Tribunal so far as it holds the Insurance Company - appellant liable is liable to be set-aside.

However, as the judgment is not being set-aside on the findings of the Tribunal on Issue No. 2, therefore, the Insurance Company shall not be entitled to recover the compensation from the claimants and may take recourse to any available legal proceedings for recovery from the employer.

With the aforesaid observations, the appeal is allowed and the award dated 20.12.2002 passed by the Workmen's Compensation Commissioner in Workmen's Compensation Case No. 39 of 1999 is modified to the extent stated above. The sureties deposited by the claimants are discharged.

Order Date :- 22.7.2022

Satyam