A covert channel is a channel that

A covert channel is defined as a method of transferring information through a channel that operates outside the bounds of the established security policy, exploiting mechanisms not intended for communication - such as shared resources, timing, or storage. Because it bypasses policy controls, it can be used to leak sensitive data without detection by conventional security mechanisms.

A channel that operates within the security policy is a legitimate, authorized communication path, which is the opposite of a covert channel by definition.

This choice describes a generic communication path and omits the critical element that a covert channel specifically violates or circumvents security policy.

Encryption describes a method of protecting data confidentiality on any channel; an encrypted channel can still be fully authorized and within policy, so encryption alone does not define a covert channel.