The central legal point established in the judgment is the importance of evidence and agreement in determining the creation of a contract of insurance, particularly regarding the mode of premium payment and the authority of insurance agents.

Mr. Justice M.A.A. Khan, President—Complainant-respondent Sri Anoop Kumar Goyal, a minor, made a proposal through his father Sri Radha Krishan Goyal, to the appellant Insurance Corporation (the ‘Corporation’) on 28.3.1996 for purchase of an insurance policy on his life for Rs. 50,000/-. He had duly paid the first premium of Rs. 3,052/- to Sri K.K. Sharma (respondent No. 2), the Agent of the appellant. In token of having received the aforesaid amount of Rs. 3,052/- the appellant issued to him a duly stamped receipt on 30.3.1996. This receipt informed the insured that his proposal had been accepted and that his Policy Number was 191214198. It required him to make payment of the next yearly instalment of the premium on 28.8.1997. By his letters dated 28.8.1997 and 8.9.1997 the insured had allegedly requested the appellant to deliver the policy in question to him but such requests produced no result. He, therefore, filed a complaint under Section 12 of the C.P. Act, 1986 (the ‘Act’) before the District Forum at Bharatpur.

2. The appellant resisted the complaint of the respondent on the ground that the insured had paid the first premium to appellant’s agent, who was not authorised to receive such payments, through a cheque which was dishonoured by respondent’s Bank for “insufficient of funds”, whereupon the first premium receipt and the policy issued to the respondent were cancelled and he was duly informed of such fact. The District Forum, however, did not accept such version of the appellants and directed them to deliver the policy in question to him after his making payment of the yearly instalments, which fell due after the issue of first premium receipt, within a period of seven days of appellant’s informing him of the details of the payable amount. Aggrieved by such order in Complaint Case No. 205/1998, the appellants has filed this appeal.

3. We heard the learned Counsel for the parties at sufficient length and carefully went through the decision of the Hon’ble Supreme Court in the case of Harshad J. Shah & Anr. v. L.I.C. of India & Ors., AIR 1997 SC 2459, relied upon by the learned Counsel for the appellant.

4. The main argument advanced before us on behalf of the appellant was that since the respondent had made payment of the first premium of Rs. 3,052/- through a cheque and the acceptance of respondent’s proposal and issuance of the first premium receipt in respect thereto was subject to the collection of the cheque but such cheque was dishonoured by respondent’s banker for “insufficient of funds”, no contract of insurance was created between the parties. In support of such argument, reliance has been placed on the language of the letter of acceptance, as contained in the first premium receipt dated 30.3.1996 (F.P.R.) and on the photo-stat copy of the Office Copy dated 14.6.1996, allegedly sent by the appellants to the respondent through Registered A.D. Post. On the other hand the case of the respondent is that the amount of the first premium was paid to appellant’s agent in cash and not through cheque.

5. On careful consideration of the merits of the arguments advanced before us and the documentary evidence pressed into service in support thereof we entertain no doubt that the version of the case, as per appellant, was not at all acceptable in the facts and circumstances of the instant case, and has rightly been rejected by the Forum.

6. In the absence of any entry made to the contrary by the appellant in the space provided in the proposal form for official use, it is beyond any challenge that this proposal was made on 28.3.1990. This proposal form makes no reference to the fact as to whether the amount of the first premium was received by Sri K.K. Sharma, agent of the appellant, in cash or through any cheque. The language written on the right side of the F.P.R. (Ex. 1) informs us that the proposal made by the respondent was accepted in the following manner :

“Dear Sir/Madam,

Your proposal of Assurance as per particulars n