Indra Chand Samsukha vs New India Assurance Co. Ltd.

P.G. Agarwal, J.—This appeal is directed against the judgment and decree passed on 21.4.93 by the learned Assistant District Judge, Dhubri in Money Suit No. 14/90.

The case of the Plaintiff is that he is the owner of a building situated at Bilasipara Ward No. 2 wherein a jute balling press has been installed and the building is used for the purpose of storage of jute. The Plaintiff had an insurance cover for the building and the press with the Defendant New India Assurance Co. Ltd. (hereinafter referred to as the ''Insurer'') vide Policy No. 1314005427. There was an incident of fire in the said building in between the night of 28th and 29th December, 1986 as a result of which the building, the press and the goods stored therein were damaged. So far the goods are concerned, there was a separate insurance for the same and in this case we are not concerned with that. The Plaintiff informed the matter to the insurer and lodged a claim whereupon assessors were appointed and the loss was accessed at Rs. 1,23,188/-for the building and Rs. 15,000/- for the balling press, total at Rs. 1.38,188/-. Several correspondences were made between the Plaintiff and the insurer but no payment was made whereupon the Plaintiff instituted the aforesaid money suit.

The suit was contested by the insurer by filing written statement. The case of the insurer is that on 26.12.86 a proposal for insurance of the building and the press signed by one B.S. Baid was received by the Insurance Company. The said proposal was accepted on 29.12.86 i.e., after the incident of fire. Thus, there was no valid contract of insurance in between the parties and notwithstanding the appointment of assessors by the insurer, the Plaintiff is not entitled to any compensation for the damages. The Trial Court framed the following issues:

Whether the suit is maintainable in the present form and manner?

Whether the suit is time barred?

Whether the Plaintiff has any cause of action for the suit?

Whether this Court has jurisdiction to try this suit?

Whether the suit building was insured with the Defendant at the relevant time of fire accident?

During the trial, the Plaintiff examined two witnesses. The Defendant-insurer did not adduce any evidence. The Trial Court decided Issue Nos. 1, 2, 3 and 4 in favour of the Plaintiff. However, Issue Nos. 5 and 6 were decided against the Plaintiff and accordingly the suit was dismissed without costs. Hence, the present appeal.

In this case the Issue Nos. 5 and 6 are the relevant issues and the learned Counsel for both the parties have fairly submitted that the present appeal may be disposed of on the basis of the decision in the above issues. Both these issues are, therefore, decided as follows:

The case of the Plaintiff is that on 26.12.86 he paid a premium of Rs. 1,658/-and a receipt in the form of Exhibit-2 was issued to him by the Collective Cashier. The receipt number and date is mentioned in Exhibit-2. The insurer also issued exhibit-3 which reads as follows:

M/s Indra Chand Shyamsukha,

P.O. Bilasipara,

Dist. Dhubri.

Assam.

Date: 26.12.1986

Dear Sir,

Re: Policy No. 1314005427

Covering risks on Building & Jute Balling Press Machine of the Insured at P.O. Bilasipara, Dist. Dhubri, Assam belonging to M/s Indra Chand Shyamsukha.

In consideration of payment of premium for Rs. 1,658/- (Rupees one thousand six hundred fifty eight only) (Net of discount) against Receipt No. 069143 Dt. 26.12.1986. The above interest is held covered under Policy No. 1314005427 for Rs. 1,40,000/- & Rs. 30,000/- for Building and Machine respectively for the period from 26.12.1986 to 26.12.1987 against the risks of Fire/RSR/MD. Subject to conditions exclusions endorsements of the said Policy. The said Policy is in course of preparation and will be sent to you in an early course.

Thanking you and assuring you of our best services at all times.

Yours faithfully, For the New India Assurance Company Ltd. Sd/- illegible Senior Divisional Manager.

The learned Trial Court did not rely on Exhibit-3 on the ground that the description of the building is not mentioned in Exhibit-3. Moreover, the responsibility of stating the details of the building etc., was on the insurer and not on the insured. Further, it seems that the learned Trial Court was much influenced by the averments of the insurer in their written statement that the policy was issued by them on 29.12.86 i.e., after the incident of fire. There is absolutely no evidence or material before us to show that the policy was issued on 29.12.86. From Exhibit 2 and 3 we find that the policy number has been categorically mentioned along with the period for which risk was covered i.e. 26.12.86 to 26.12.87. It is not the case of the insurer that Exhibit-2 and 3 are not genuine or that the policy number mentioned in Exhibit-3 is not correct. The policy was available with them and they could have produced the same. There is Anr. aspect of the matter also. Even if we accept for argument''s sake the Trial Court''s conclusion that the policy was issued on 29.12.86, does it also use the insurer from the liability arising out of the insurance for which payment was received by them on 26.12.86 itself.

In the case of National Insurance Co. Ltd. Vs. Seema Malhotra and Others, the Apex Court while considering the liability of the insurer observed as follows:

It is in the aforesaid context that we have to consider the impact of Section 64-VB of the Insurance Act. As Sub-sections (1) and (2) of the said section alone are material for the purpose we extract them herein.

(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 purpose 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.

The Apex Court further observed that even in case of bouncing of cheques, if the premium is made good before the date of accident, the Insurance Company shall be liable. Thus, the law is well settled that liability of the Insurance Company arises from the moment premium is received by the insurer. In these days of instant insurance for air journey, transit insurance etc. no body can be expected to wait for receipt of the policy documents to cover his risk. The insurance is taken at the counter of the airports and by the time the head office issues the policy the journey will be completed or the period of risk will be over. In National Insurance Co. Ltd. (supra) the Apex Court considered this aspect of the matter also. In this case, the insurer has not come up with the plea that the insurance policy was taken or purchased after the incident of fire. The premium was also not shown to be paid on a back date. Receipt of the amount on 26.12.86 and occurrence of fire taking place on 28.12.96 is nowhere disputed. It is also not the case of the insurer that the amount was returned back to the insured before the date of accident. As a matter of fact, the insurer is using the said premium for the last 15 years and still refusing to settle the claim or pay the compensation for the damages.

In view of the above, it is held that the finding of the learned Trial Court in the above suit is not correct and in accordance with the provisions of law.

At this stage, the learned Counsel for the Respondent submitted that as the proposal was not signed by the Plaintiff, he is not entitled to any compensation. The Plaintiff in his written statement submitted that he had asked his nephew B.S. Baid to sign the proposal and accordingly, Sri B.S. Baid signed the proposal and deposited the amount. This part of the evidence remains unchallenged. The proposal was ultimately accepted by the Insurance Company and, as such, the technical hindrances, if any cannot affect the claim of the Plaintiff. In the matters of filing of plaint Civil Courts are allowing the appropriate persons to make verification at a later stage and the plaint is not thrown out on that count. Moreover, the insurance scenario has changed a lot in recent times. We have been making Endowment policies wherein beneficiaries even may not be knocking about the person who had paid the premium for the insurance. It is not the case where it can be said that Sri B.S. Baid was not authorised to sign the proposed form.

Accordingly the Issue Nos. 5 and 6 are answered in favour of the Plaintiff and against the Respondent Defendant.

In view of the decision in Issue Nos. 5 and 6, the Plaintiff is entitled to compensation. The Plaintiff is entitled to decree for the amount of total compensation which was arrested by the assessor i.e. Rs. 1,38,188/-. The Plaintiff is also entitled to interest on the above amount at the rate of 9% from the date of filing of the suit till payment thereof together with costs throughout.