The Judgment of the Court was delivered by
Varadarajan, J.:— This Letters Patent Appeal has been filed against the judgment of Maharajan, J., in C.M.A No. 289 of 1971 by the sixth respondent before the learned Judge, which was the second respondent before the Motor Accidents Claims Tribunal, Madras, in O.P No. 482 of 1969.
2. The petition before the Tribunal was filed by respondents 2 to 6 in this appeal against the first respondent, the owner of the lorry MDH 4934, and the appellant, the Co-operative General Insurance Society Ltd., the insurer, claiming compensation of Rs. 20,000/-. The allegation made in the claim petition was that Venkatachala Iyer, whose widow, sons and daughters are respondents 2 to 6 in this appeal, while riding on a cycle along Kathivakkam High Road opposite to the Indian Oil Company depot at about 8.00 a.m on 6-6-1969, was knocked down by the said lorry MDH 4934 belonging to the first respondent and insured with the appellant and that the accident was caused as a result of the rash and negligent driving of the lorry by the first respondent's driver. The first respondent contended that the deceased Venkatachala Iyer was solely responsible for the accident and that the accident was not caused by any rash and negligent driving of the lorry by the first respondent's driver. The first respondent further contended that the compensation claimed was, in any event, excessive. The appellant also raised a similar contention in his counter-affidavit and contended further that the lorry was not insured with the appellant at the time of the accident.
3. The Tribunal found that the accident, resulting in the instantaneous death of Venkatachala Iyer, was due to rash and negligent driving of the lorry on the part of the first respondent's driver and he fixed the quantum of compensation payable to respondents 2 to 6 herein at Rs. 15,300/-.
4. The prior insurance of the lorry with the appellant came to an end on 31-5-1969. The evidence of R.W 2, the son of the first respondent, was that he paid the premium amount to a clerk of the appellant in the evening of 5-6-1969 itself and that he was not aware of the accident when the policy was actually handed over to him at about 11.00 a.m on 6-6-1969. The appellant's Accountant, examined as R.W 3, had denied that the premium had been handed over by R.W 2 on 5-9-1969 itself, and stated that it was tendered only on 6-6-1969 in his office at about 11.00 a.m The Tribunal rejected the evidence of R.W 2 that he went to the appellant's office on 5-6-1969 and handed over the premium amount to a cleric of the appellant, and found that the premium was paid only after the office of the appellant commenced working at about 10.00 a.m on 6-6-1969, when the policy came to be issued. The Tribunal further found that the case that the premium had been paid on 5-6-1969 itself had been falsely set up with a view to get over the fact that the lorry had met with an accident at 8.00 a.m on 6-6-1969 itself, and that R.W 2 had effected the insurance by fraudulent suppression of a fact material to the appellant. Therefore, though the Claims Tribunal found that the policy, which provides the period of insurance-as from 6-6-1969 to 5-6-1970, both days inclusive, should be deemed to have commenced from 00.01 am, immediately after the midnight of 5/6-6-1969, the appellant was not liable on the ground that the policy had been procured by fraud by suppressing a material fact of the lorry having been involved in an accident before the policy was actually obtained. In this view, the Tribunal granted the decree for the said sum of Rs. 15,300/- only against the first respondent and dismissed it as against the appellant.
5. In the appeal filed by the first respondent herein, Maharajan, J., agreed with the Tribunal that the accident was caused as a result of the rash or negligent driving on the part of the first respondent's driver, as also with the quantum of compensation fixed by the Tribunal at Rs. 15,300/-. But the learned Judge rightly disagreed with the Tribunal that the policy is vitiated by fraud, having regard to the fact that the appellant had not contended in the counter-affidavit that the owner of the vehicle was aware of the accident when he obtained the policy on 6-6-1969 and that the contract of insurance had become void by reason of any fraud or material misrepresentation. The learned Judge found that since the appellant had undertaken to cover any risk for the entirety of the year beginning from and inclusive of 6-6-1969 and ending with and inclusive of 5-6-1970, it was liable, even though the accident had taken place at 8.00 a.m on 6-6-1969 before the policy was issued after the appellant's office commenced business at about 10.00 a.m on that date. The learned Judge accordingly dismissed the appeal holding that the appellant-insurance company also was liable to pay the compensation of Rs. 15,300/- to respondents 2 to 6 herein, by the terms of its own contract of insurance.
6. The concurrent findings on the question of the accident having been due to rash and negligent driving of the lorry by the first respondent's driver and on the question of the quantum of compensation payable to respondents 2 to 6, are on questions of fact which could not be and were not challenged before us by the learned counsel for the appellant. The learned counsel for the appellant did not contend before us, rightly, that the first respondent or his son, R.W 2 who paid the premium for the policy on 6-6-1969, was aware of the accident having taken place earlier on that day at 8.00 a.m and that there was any fraud or misrepresentation in the matter of obtaining the policy of insurance in this case. But what was contended by the learned counsel for the appellant was that the risk under the policy must be held to have commenced only when it was actually issued at about 11.00 a.m on 6-6-1969 and that the appellant should not be made liable, as the accident had taken place earlier at 8.00 a.m itself on that day. Reliance was placed for this connection on the decision of a Bench of the Calcutta High Court in Ram Singh…Plaintiff v. Century Insurance Co. Ltd.…Defendants . I.L.R LX Cal. 332.. That decision arose out of the dismissal of the suit filed on the Original Side of the Calcutta High Court claiming a sum of Rs. 20,000/- upon an insurance policy issued against the risk of fire in respect of certain premises of the plaintiff. The policy had been issued originally on 3-11-1927 and the terms of the policy relevant for the purpose of the present case were as follows:
“The company hereby agrees with the insured that if, after payment of the premium, the property above described or any part thereof, shall be destroyed or damaged by fire or lightning at any time between the 3rd November, 1927, and four o'clock in the afternoon of the 3rd November, 1928, or during any subsequent period for which the insured shall pay to the company, and the company shall accept the sum required for the renewal of this policy the company will pay or make good all such loss or damage.”
7. On 27th October, the insurance company issued a reminder asking for the renewal premium, and on 31st October it wrote to the party asking him to send the premium less 15 per cent discount saying that the necessary renewal receipt will be issued on payment of the amount. Some correspondence appears to have passed between the insurance company and the insured and the company pointed out to the latter that as the policy had already expired, the company had wired him accepting his terms as to discount. On 14th November the company wrote to the insured saying that the policy had already expired on the 3rd November and that he was not covered in the meantime, and that if he desired to take out a fresh policy at any later date, he may let the company know when they should hold the risk ‘Covered’. On the 18th November the insured sent a cheque in payment of the renewal premium and asked for the renewal receipt. But that letter, together with the cheque for the premium, was received by the insurance company at Calcutta only on 20th November. In the meanwhile a fire occurred on 20th November and the insured wrote to the company on 22nd November saying that the fire had occurred and making a claim. This letter was received by the company at Calcutta only on the 28th November and the company immediately repudiated the liability and withdrew the acceptance of the premium. The question in that case was whether, in those circumstances, the insured was or was not covered. Buckland, J., who tried the suit, held that the renewal of the policy was a fresh contract dating back to the date of the original contract, that there is no question in that case of mistake in the technical sense but the ‘commensense of the matter’ must be that the company would not have accepted the premium had they known that the loss had already occurred. In this view, the learned Judge held that the insured was not entitled to claim any amount on the basis of the policy. That decision was confirmed by Rankin, C.J, and Ghose, J. in the appeal. The learned Judges have observed in their judgment thus:
“The plaintiff might quite well have stipulated for a reduction in his premium of a few rupees or he might quite well have stipulated that the year should be reckoned to run from the 26th. He did nothing of the sort. He asked for the policy to be renewed. He did not, in any way, put himself to the trouble of taking care that he lost no sum of money, however trivial. That does not mean that the company, when it accepted the premium on the 26th, had undertaken to insure a building which might or might not have been consumed by fire at the time.”
8. The learned counsel for the contesting respondents 2 to 6 relied upon the decision of Chagla C.J, and Dixit, J. in The Indian Trade and General Insurance Co., Ltd. v. Bhailal Maneklal Desai where the decision of the Bench of the Calcutta High Court in the said Ram Singh…Plaintiff v. Century Insurance Co. Ltd.…Defendants . I.L.R LX Cal. 332., was referred to and distinguished, the learned Judges observing:
“The learned Chief Justice does not say that a stipulation with regard to past risk is void or illegal. He merely considers it to be out of the ordinary. Then the learned Chief Justice is at pains to construe the clause in the original policy and he points out that the clause in the original policy was intended clearly for future risk and not for past risk, and therefore, when the policy was renewed subsequently, he imports into that renewal the same intention that was there when the original policy was effected, and he comes to the conclusion that at the time of the renewal the parties did not intend and could not have intended to cover a past risk.
…Now, in the Calcutta case it was because of the peculiar facts to which attention has been drawn that the Court refused to attach importance to the fact that the policy was renewed as from November 3. There was already a policy which had expired and the acceptance of the premium resulted in a renewal of that policy. In the case before us, we are dealing with a new contract and there is no background to it which has got to be considered in order to decide what the intention of the parties was.
Therefore, in our opinion, the decision of the Calcutta High Court does not lay down that when you have a cover note which expressly attaches risk from a date earlier than the date on which the insurance was effected, the intention of the parties is not to effect the insurance retrospectively.
Mr. Seervai also relied on section 20, Indian Contract Act. The section provides that where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void. If, as we have held, it was the intention of the parties to effect a retrospective insurance, it is difficult to understand as to what was the mistake as to a matter of fact under which both the parties were. This section would only have application if on June 18 when the goods were insured the policy had been made prospective and it was found that the goods had already been destroyed. Then section 20 would have given effect to the well known principle of insurance law that you cannot insure goods prospectively when you have no insurable interest at the date of the insurance. But if the parties intended that risk should attach in the past, and if the parties were ignorant whether goods were in existence or destroyed, no question of a mistake arises which would attract the application of section 20 of the Contract Act.
It may also be pointed out, as has been explained by the authorities, that it is not necessary expressly to state in a fire insurance policy that the goods are insured, loss or no loss, or whether they are in existence or not in existence. Even in the absence of such words, if the Court comes to the conclusion that the parties clearly intended that the insurance should be retrospective and that risk was to attach prior to the date of the insurance, the Court would hold the insurance company liable notwithstanding the absence of the words to which reference has just been made.”
9. With respect, we would prefer to rest our decision in this case on the above decision of the Bench of the Bombay High Court. In the present case it has been found by the Tribunal as well as by Maharajan, J., that the first respondent, the owner of the lorry, was not aware of the accident when the insurance policy was taken at about 11.00 a.m on 6-6-1969. The policy, in the present case, has been issued for one year, namely commencing from 6-6-1969 to 5-6-1970, both days inclusive. The accident had taken place at 8-00 a.m on 6-6-1969 hours after the day 6-6-1969 commenced. We are, therefore of the opinion that the appellant-insurance company is liable under the contract of insurance and that it is not possible to accept the contention that the risk in this case has commenced only from the time of issue of the policy of insurance. In the result we hold that no interference with the judgment of Maharajan, J., is called for and we dismiss the Letters Patent Appeal with costs of the contesting respondents 2 to 6.