K. Sreedhar Rao, J.

One Govinda Reddy a passenger in a BTS bus killed in an accident on 13.7.1994 at 11.15 a.m. on account of the collision between BTS bus and the lorry. The wife and children of the deceased filed a petition seeking compensation and have filed an appeal seeking enhancement of compensation.

2. The insurer has filed an appeal seeking avoidance of liability on the ground that there was no coverage of policy on the date of the accident. The policy issued is marked at Ex.R.2 w.e.f. zero hours of 14.7.1994 to mid night of 13.7.1995. The insured had paid the premium amount of Rs.1307/- on 13.7.1994. The Ex.R.1-receipt is issued by the insurer to that effect. The tribunal has awarded compensation of Rs.312948/-with interest at 6% p.a. and directed the owner and insurer of the lorry to pay compensation. The occurrence of the accident and negligence of the lorry is not in dispute.

3. In the context of the pleadings and evidence of the insurer, the precise question that arise for consideration would be:

i) Whether the risk of the insurer would commence from the time of the acceptance of premium or whether it commences from the time of issue of the policy/cover note?

4. Sri. B.C. Seetharam Rao counsel for the insurer placed reliance upon the decision of the Supreme Court in Deokar Exports Pvt. Ltd., Vs. New India Assurance Co., Ltd., 2009 SAR(Civil) 85. In para 9 and 11 and 12, it is held thus:

"9. In this case the proposal sent by the appellant was received by the insurer on 16.6.1989. It required that the period of insurance cover should be for the period 12.3.1988 to 12.9.1989. The reason why the respondent wanted the insurance cover retrospectively from 12.3.1988 is obvious. The initial insurance policy expired on 12.3.1988. Under the terms of finance between MSFC and the appellant, apparently it was necessary to have an uninterrupted and continuous insurance cover during the period the machine was secured in favour of MSFC. Therefore, the appellant wanted the insurance cover to be continued by way of renewal for the period 12.3.1988 to 12.9.1989. But the premium amount for one year was received by the insurer only on 26.8.1988. Having regard to the bar contained in Section 64-VB of the Act, the insurer could not accept the request of the appellant to grant insurance cover with retrospective effect from a date prior to 26.8.1988 when it received the premium. Therefore, the insurer adopted the standard, logical and obvious course of issuing the insurance policy with effect from the date on which it received the premium amount by cheque that is with effect from 26.8.1988. As the premium paid was for one year and the standard term of the fire policy was one year, the policy was issued assuming risk for the period 26.8.1988 to 25.8.1989. Non-issue of the policy for the period commencing from 12.3.1988 required by the appellant, was for a good and valid reason. There was also nothing illogical or arbitrary about the insurance of a policy specifying the period of insurance cover as one year effective from the date of receipt of the premium, that is from 26.8.1988 to 25.8.1989. If the appellant wanted insurance cover prospectively it should have so specified in the proposal. Having failed to do so and having sought retrospective cover, the appellant cannot make a grievance when the insurance cover is issued retrospectively from the date of receipt of the premium.

11. A policy of Insurance is a contract based on an offer (proposal) and an acceptance. The Appellant made a proposal. The respondent accepted the proposal with a modification. Therefore, it was a counter proposal. The appellant had three choices. The first was to refuse to accept the counter-proposal, in which event there would have been no contract. The second was to accept either expressly or impliedly, the counterproposal of the respondent (that is respondent's acceptance with modification) which would result in a concluded contract in terms of the c