The New India Assurance Co. Ltd. and others vs M/s. Haryana Roadways, Sonepat

In this revision petition a prayer has been made to quash the order dated 21-5-1992 of the Additional District Judge, Sonepat vide which order of the learned Sub Judge First Class, Sonepat, dated 25-3-1992 has been set aside.

Briefly stated the facts are that respondent-plaintiff Haryana Roadways, Sonepat through its General Manager (hereinafter called as "the plaintiff") filed a suit for permanent injunction against the New India Assurance Company Limited through its Branch Manager, Sonepat, petitioner-defendant (hereinafter called as "the defendant") alleging that the plaintiff had been running a transport service under the Transport Department of the State Government of Haryana which plies buses for the facility and convenience of the general public. The defendant is an Insurance Company which is a subsidiary body of the General Insurance. Corporation of India and is engaged in the business of insurance. It is pleaded by the plaintiff that there was a contract of insurance between the plaintiff and the defendant on 30-1-1992 regarding 215 buses and to that effect defendant had received the premium amounting to Rs. 12,00,709.75 on the same date i.e. 30-1-1992 through bank draft. Buses were insured according to the plaintiff, w.e.f. 30-1-1992 to 29-1-1993 and thereafter the defendant had issued policy numbers regarding the said buses and the contract was complete. It was then pleaded that as the provisions of Motor Vehicles Act, 1988, it was mandatory that registered motor vehicles must get 3rd party insurance. It was further pleaded that on 26-2-1992, defendant came to the plaintiff and informed that the aforesaid contract wa,s cancelled and he even offered to return the premium. The said act of cancellation of insurance of buses was pleaded to be illegal and there was no ground to cancel the insurance. After several requests having been made by the plaintiff to the defendant to desist from the illegal activities, the defendant failed to do the needful. Consequently the suit had to be instituted.

2A. Along with the suit, an application under Order 39, Rr. 1 and 2 read with Section 151, CPC praying therein that defendant be restrained from cancelling the insurance policies of the vehicles except in due course of law till 6-3-1992 was also moved.

Notice of the suit was given to the defendant who filed the written statement. Preliminary objections inter alia of maintainability, jurisdiction and cause of action etc. were taken. On merits, it was pleaded in the written statement that there was no concluded contract of insurance between the plaintiff and the defendant on 30-1-1992 regarding 215 buses. It was further asserted thai vide covering letter dated 30-1-1992, plaintiff had made a proposal for getting insured their 215 buses against 3rd party risk for a period of one year and to that effect, plaintiff had made the payment of Rs. 12,00,709.75 to the defendant but the said amount was accepted with the condition "premium is accepted subject to approval by D.R.C. or G.I.C.". As such the said acceptance was conditional. G.I.C. of India vide its letter dated 12-2-1992, addressed to General Manager, N.I.A. Co. Limited Bombay advised that in cases "3rd party cover for the State Road Transport Corporation, Haryana, no cover be granted to them without theratcs being approved by TAC on the basis of past years experience." It was further stated in the written statement that plaintiff was conscious about it and when no approval was received from the head office, the premium was returned through bankdraft number 606592, dated 26-2-1952 drawn on the New Bank of India, Sonepat. It was further slated that since the contract had not been fulfilled so the defendant was at liberty to return the amount in question in the absence of sanction from the head office.

The learned trial Court, after hearing the counsel for the Parties, dismissed the application of the plaintiff for grant of ad-interim injunction vide order dated 25-3-1992 by holding that no prima facie case was made out in favour of the plaintiff as the qualified contract between the plaintiff and the defendant never became a valid and concluded contract and furthermore vide notice dated 26-2-1992, defendant had refunded the premium to the plaintiff. It was then held by the trial Court that balance of convenience also did not lie in favour of the plaintiff and the plaintiff would not suffer an irreparable loss if the ad-interim injunction was nolgranted inhis favour.

The plaintiff filed an appeal against the order dated 25-3-1992 of the learned Sub Judge 1st Class, Sonepat. In the appeal, learned Additional District Judge, Sonepat vide his order dated 21 -5-1992 set aside the order of the learned Sub Judge dated 25-3-1992 and restrained the defendant Assurance Company from cancelling the contract entered into by it with the General Manager, Haryana Roadways, Sonepat Depot and the defendant was further directed to issue the insurance policies for insuring the 3rd party risk liability to all 215 buses. It is against this judgment of the learned Additional District Judge dated 21-5-92, the present revision petition was preferred. While admitting the revision petition, learned Judge of this Court vide his order dated 26-8-1992, stayed the operation of the order of the lower appellate Court dated 21-5-1992.

This is how this revision petition has come up for regular hearing before me.

Learned counsel for the petitionercontends that the order of the learned Additional District Judge dated 21-5-1992 is illegal, erroneous and is based on conjectures and surmises and is, thus, liable to be set aside. He has further contended that the plaintiff M/s. Haryana Roadways had only made an offer to the defendant Assurance Company to insure qua third party risks its 215 buses and tendered the premium amounting to Rs. 12,00,709.75 vide letter dated 30-1-1992. Learned counsel further contended that the learned first appellate Court has erred in law and on facts in holding that there was a complete contract between the Parties. In fact, the plaintiff had just sent a proposal and it could not be termed as a contract until and unless that proposal was accepted by the other side. He, thus, urges that the order of the learned first appellate Court allowing the application of the plaintiff under Order 39 Rules 1 & 2 read with S. 151, CPC be set aside and the order of the learned lower Court in refusing the interim injunction to the plaintiff be restored.

On the other hand, learned counsel for the respondent submits that there was a complete contract between the parties and the defendant could not he allowed to resile from the contract entered into between the Parties and, thus, the interim injunction issued by the first appellate Court is valid and legal.

I have heard the learned counsel for the Parties and have gone through the pleadings with their assistance.

As staled above, the learned Sub Judge First Class, Sonepat had dismissed the application of Ihc plaintiff for grant of ad-interim injunction by holding that no prima facie, case was made out in favour of the plaintiff as the qualified contract between the plaintiff and the defendant never became a valid and concluded contract and, thus, there was no balance of convenience in favour of the plaintiff and in that event it would not suffer an irreparable loss. The learned first appellate Court set aside the order of the trial Court mainly on the ground that there was a complete, concluded effective and legal contract of insurance between the parties and thus, there was a prima facie case in favour of the plaintiff for restrainrng the defendant from not complying with the terms of the contract entered into by them. To reach at conclusion that there was a concluded contract between the plaintiff M/s. Haryana Roadways, Sonepat and the defendant-New India Assurance Co. Limited, learned first appellate Court relied on the following factors which may be reproduced as under:

In para No. 11 of its order the first appellate Court has observed as under :

"In the case in hand, a proposal for insurance of the buses for 3rd party risk liability was made by the General Manager, Haryana Roadways to Branch Manager, New India Assurance Company Sonepat and that was absolutely accepted by the tatter and when it was unconditionally accepted it became a contract."

In para No. 12, it is further observed by the learned first appellate Court as under :

"Thus a proposal was made by the General Manager, Haryana Roadways which was accepted by the Manager, New India Assurance Company Limited on receipt of bank draft under his signatures on 30-1-1992 and this bank draft was got encashed. So as soon as the consideration is passed on, it is accepted and the contract was fulfilled."

It is further observed in para No. 14 of the order by the first appellate Court which is as under :

"The mere plea of the defendant-respondent insurance company that T.A.C. has not yet been able to decide the tarrif amount or insurance premium for the third party risk liability and till it is finalised no such vehicle for third party risk liability is insured. This matter is inter se between the Insurance Company and the State Government of Haryana. About this fact the defendant-respondent was fully aware of this fact, in that situation the Branch Manager, Insurance Company, Sonepat would not have accepted the proposal of the General Manager Haryana Roadways, Sonepat and shouldhave not accepted the consideration and should have not entered into the contract. Once it has entered into the contract, the Insurance Company is duty bound to continue the insurance for a period of one year for which it entered into the contract."

In my considered opinion, the whole approach of the first appellate Court in holding that the contract of insurance with the defendant-New India Assurance Company on 30-1-1992 regarding 215 buses covering 3rd party risk is complete. Whether the contract between the parties is valid and concluded is to be decided in the main suit. For the purpose of granting or refusing the temporary injunction it has only to be prima facie seen from the pleadings of the parties and the available evidence on record as to whether a case for temporary injunction was made out in favour of the plaintiff or not.

It is borne out from the record that the plaintiff M/s Haryana Roadways, Sonepat had made a proposal for getting insured their 215 buses against 3rd party risk for a period of one year and to that effect the plaintff had made the payment of Rs. 12,00,709.75 to the defendant-New India Assurance Company but the said amount was accepted with the condition "premium is accepted subject to approval by DRC or GIC." It prima facie shows that the said proposal was not accepted without acondition by the defendant and thereafter the said proposal was sent to the higher authorities by the defendant who had declined to accept the same. Thereafter, the defendant vide its letter dated 26-2-1992 returned the aforesaid amount of Rs. 12,00.709.75 to the plaintiff and which amount was duly received by the plaintiff. Thus, it is shown prima facie that there was not a concluded contract between the parties.

The learned Additional District Judge has illegally and erroneously ignored the receipt dated 30-1-1992 issued by the Assurance Company which showed that the amount was accepted with the condition that premium was accepted subject to approval by the DRC or GIC on flimsy grounds. It has been ignored merely on the ground that had this receipt been executed on 30-1-1992, the Branch Manager, New India Assurance Company, Sonepal must have obtained the signatures of any officer, either General Manager, Haryana Roadways, Sonepat, Works Manager, Haryana Roadways Sonepat or Accounts Officer. This receipt, according to the learned first appellate Court was subsequently concocted and manufactured by the Branch Manager of the New India Assurance Company, Sonepat to save his own skin from facing action from the head office. Second ground for rejecting this receipt was that if the receipt had been in existence in those circumstances when letter dated 26-2-1992 was written by Rajiv Arora, Branch Manager, New India Assurance Company he must have made a mention of the receipt in this letter which was addressed to the General Manager, Haryana Roadways, Sonepat. These grounds for rejection of the above said receipt are without any basis.

Nothing has been said in the pleadings that the receipt dated 30-1-1992 issued by the petitioner-Insurance Company was subsequently concocted ormanufactured. Even otherwise, there is no material on the record which could point towards the fact that the receipt was manufactured or concocted later on. It is the plaintiff''s case as per the averments in the plaintiff that the receipt dated 30-1-1992 was a concocted or a manufactured document. The plaintiff had rather produced a copy of the receipt dated 30-1-1992 in support of its case along with the plaint. Para No. 3 of the plaint reads as under :

"That there was acontractof insurance between the plaintiff and the defendant on 30-1-1992 regarding 215 buses as per details given in the Annexure. A attached with the plaint, and as per the said contract the above referred buses which were owned by the plaintiff were got insured by the defendant and the defendant received the premium amount of Rs. 12,00,709.75 on 30-1-1992 through a bank draft with No. BN/30170024 (SBI, Sonepat) dated 30-1-1992. A photo copy of receipt No. 069280 dated 30-1-1992 issued by the defendant is filed herewith."

In fact, it was plaintiff''s own case in the plaint that it paid the premium amounting to Rs. 12,00,709.75 on 30-1-1992 and against that the petitioner-Assurance Company issued the above said receipt No. 069280 dated 30-1-1992. It is again not disputed that the said amount of Rs. 12,00,709.75 was kept by the defendant Assurance Company in suspense account anddid not utilise the same for themselves. Moreover, this was not the stage for the first appellate Court to conclude without any evidence being adduced for or against the genuineness of the receipt that the receipt dated 30-1-1992 was not a valid one but was a manufactured or a concocted document. The learned first appellate Court was not going to decide the case completely on merits. It had rather to be seen prima facie as to whether on the basis of the available record on the file a prima facie case was made out in favour of the plaintiff for granting temporary injunction or not.

In view of the discussion made above, it cannot be held at this stage that the contract of insurance between the plaintiff-Haryana Roadways Sonepat and the defendant New India Assurance Company dated 30-1-1992 regarding 215 buses was complete and concluded, and no prima facie case is made out in favour of the plaintiff-petitioner for grant of temporary injunction.

Consequently, this revision petition is accepted, order dated 21-5-1992 of the first appellate Court is set aside and the order dated 25-3-1992 of the trial Court is restored and the application of the plantiff for grant of temporary injunction under Order 39 Rule 1 & 2 read with S. 151, CPC is declined.

Revision allowed.