IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA RFA No. 126 of 2001 Date of decision: 02.06.2010 Smt. Bimla Negi … Appellant Versus New India Assurance Co. Ltd. & Anr. … Respondents Coram : The Hon’ble Mr. Justice V.K. Ahuja, Judge. Whether approved for reporting?1 Yes. For the appellants: Mr. J.S. Guleria, Assistant Advocate General. For the respondents: Mr. T.S. Chauhan vice Mr. R.L. Pathak, Advocate. V.K. Ahuja, J. (Oral): This Regular First Appeal has been filed by the appellant under Section 96 C.P.C. against the judgment and decree of the Court of learned Additional District Judge, Shimla, dated 12.1.2001, vide which the suit filed by the appellant for recovery of Rs.2,48,000/- was dismissed. 2. Briefly stated, the facts of the case are that the appellant here-in-after referred to as ‘the plaintiff’ filed a suit for recovery of the amount from the respondents here-in-after referred to as ‘the defendants’. It was alleged by the plaintiff that she got her saw-mill insured for a sum of Rupees Two Lacs with respondent No. 1 on 27.9.1988. Requisite papers were duly filled up signed by the plaintiff and respondent No. 2 1Whether reporters of Local Papers may be allowed to see the judgment? Yes. 2 received a sum of Rs.3340/- as premium vide receipt dated 27.9.1988 of insurance of the plaintiff’s saw mill. It was alleged that on 28.9.1988 due to heavy rains during night time, the saw-mill of the plaintiff was damaged which was insured with the defendants. The saw-mill was washed away totally. Hence, the suit filed by the plaintiff for recovery of the amount. The plaintiff allegedly reported the damage to the police and Panchayat and to the Manager, State bank of India, Kotkhai and made repeated requests to the defendants to pay the amount and settle the claim, but since they failed to do so, hence the suit filed for amount of insurance of the saw-mill. 3. The defendants denied the allegations and pleaded that the saw-mill had already been washed away in the flood on the night intervening 20th/21st September, 1988. The plaintiff by misrepresentation of facts tried to get the saw-mill insured on 27.9.1988. The signatures of the plaintiff were not there on the proposal form. It was admitted that the plaintiff has paid Rs.3340/- but neither any policy was issued nor any cover Note was issued in favour of the plaintiff. It was also pleaded that since the plaintiff wanted to get the property insured, which had already been damaged and, therefore, a telegram was sent to the plaintiff and proposal of the insurance was repudiated and the premium amount in question was also returned to the plaintiff. Hence, the respondents are not entitled to any amount. 3 4. On the pleadings of the parties, the following issue were settled by the learned trial Court:- 1. Whether the property of the plaintiff was insured on 27.9.1988 as claimed in the suit? If so whether the plaintiff sustained damages due to heavy rains on the following day? OPP 2. If issue No. 1 is decided in the affirmative, whether the plaintiff is entitled to recover the amount of damages as alleged? OPP 3. Whether the defendants had not accepted the risk in the policy of insurance based on proposal of insurance dated 27th Sept., 1988 as alleged? OPD 4. Whether the receipt of insurance premium by the defendants on 27th September, 1988 does not amount to acceptance of term of policy/risk involved as claimed? OPP 5. In case issue No. 4 is decided in the affirmative whether the contract of insurance was repudiated in between the parties on the same day for want of privity of contract in between them as alleged? OPP 6. Whether the plaintiff is guilty of fraud and mis- representation of facts. If so to what effect? OPP 7. To what interest and to what rate the plaintiff is entitled to recover the interest from the defendants? OPP 8. Whether the plaintiff is entitled to recover the suit amount or any other amount from the defendants? OPP 9. Relief. 5. Parties led their evidence and the learned trial Court vide its impugned judgment decided all the issues against the plaintiff and accordingly, dismissed the suit of the plaintiff in full. 4 6. I have heard the learned counsel for the parties and have gone through the record of the case. 7. The submissions made by the learned counsel for the appellant during the course of arguments were that premium in question had been deposited by the plaintiff and she had also submitted the proposal forms to the Insurance Company i.e. defendants and, therefore, the policy is deemed to have been issued in favour of the plaintiff from the date when the amount was deposited with the defendants. On the other hand, the plea set up by the learned counsel for the respondents was that the amount was tendered but no Cover Note or Insurance Policy was issued in favour of the plaintiff and as such, the plaintiff was not entitled to the amount since on verification they had also found that the saw-mill had already been destroyed in the flood prior to the alleged date of insurance on 27.9.1988 itself, the date when the amount was deposited. The defendants had issued a telegram followed by a letter informing that the proposal was not acceptable to them and as such, the plaintiff is not entitled to the amount in question. 8. Before I consider the question as to whether the saw-mill had already been damaged on 27.9.1988, the essential question for determination is as to whether the proposal was submitted or not by the plaintiff and the defendants had accepted the proposal by issuance of a Cover Note or Insurance Policy in favour of the plaintiff. There is nothing on record to show that any Insurance Policy was issued in favour of the plaintiff. On the other hand, there is no Cover note issued by the defendants No. 1 and 2 in favour of the plaintiff when the 5 amount was tendered on 27.9.1988. Until and unless, a Cover Note is issued in favour of the party, a contract in between the plaintiff and defendants never came into operation and was not effective from the mere tendering of the amount by the plaintiff. The fact that the amount tendered was not disputed, but what was disputed was that no Cover Note was issued followed by the policy in favour of the plaintiff. 9. The parties had led evidence before the learned trial Court in this regard that saw-mill had already been destroyed in flood prior to that date. However, that question is not material since the contract in question was not effective as no policy or Cover Note had been issued in favour of the plaintiff to hold that the Policy had been taken by him from the defendants for the insurance of the saw-mill. 10. Learned counsel for the respondents had placed reliance upon the decision of the Apex Court in Life Insurance Corporation of India Vs. Raja Vasiredddy Komalavalli Kamba and others, (1984) 2 Supreme Court Cases 719, wherein it was observed that what amounts to acceptance by the insurer of assured’s proposal for taking an insurance policy. Mere filing in proposal for insurance and depositing first premium with the LIC do not create a binding contract between the LIC and the proposer so as to enable the heirs of the proposer after his death to claim the amount covered by the proposed policy. The decision applies to the present facts on all fours and it is, therefore, clear that once no policy had been issued in favour of the plaintiff or any Cover Note, there was no contract between the plaintiff and the defendants and, therefore, the learned trial 6 Court had rightly concluded that the plaintiff was not entitled to claim any amount from the defendants 11. In view of the above discussion, I accordingly hold that there is no merit in the appeal filed by the appeal filed by the appellant, which is dismissed alongwith costs. ( V.K. Ahuja ), June 02, 2010 Judge (BSS)