New India Assurance Co. Ltd. vs Sushilabai and Others

K.U. Chandiwal, J.—Heard. Admit. The matter is finally disposed of at admission stage.

The appellant insurance company questions the legality of the award dated 8.6.2006 recorded by the learned District

Judge and Chairman, M.A.C.T.. Nanded in M.A.C.P. No. 419 of 1997.

On hearing Mr. Upadhye, following points arise for my consideration:

Whether the cash for insurance cover remitted on 3.5.97, Saturday, a holiday, and the cover note showing effective date as 5.5.1997, would exonerate the insurance company, if the accident has taken place in the intervening period of 4.5.1997?

My answer to the above point is against the insurance company. I hold, since the payment is accepted on 3.5.1997, it being a special contract, the insurance/risk will be applicable from that date.

Development Officer of the appellant insurance company Pradipkumar Mehta has confirmed that the cover note was issued by him on 3.5.1997. He did not dispute the recitals in the cover note. He received Rs. 1,308 towards premium from the owner of the truck in cash at his house and issued the cover note. The accident has taken place on 4.5.1997. According to appellant insurance company, the applicability of the insurance was from 5.5.1997 and hence, it could not be fastened with the liability. This is virtually negatived by the Development Officer, as he informs the court, he did not communicate in writing to the truck owner about the policy to be effective from 5.5.1997.

The learned counsel representing the claimants has taken recourse to the judgment in the matter of Balbir Kaur and Others Vs. New India Assurance Company Ltd. and Others, . Their Lordships of the Apex Court in para 11 of the said judgment have observed as under:

(11) For the purpose of this case, we would assume that an insurance policy, in law, could be issued from a future date. A policy, however, which is issued from a future date must be with the consent of the holder of the policy. The insurance company cannot issue a policy unilaterally from a future date without the consent of the holder of a policy. Even the said circular letter had not been produced and/or no material was placed as to why the policy was issued from a later date. It is, however, not necessary for us to delve deep into the matter in view of the limited notice issued by this court. Respondent No. 3, the owner of the vehicle, however, has not questioned that part of the order passed by the High Court. He, therefore, accepted the judgment of the High Court. Accordingly, liability to pay the awarded amount by him is not in question.

The contract for insurance company naturally will be applicable from the date of payment received in cash on 3.5.1997 by the insurance company. Even if it was a Saturday, it will not obliterate the effect of enforcement of the policy and consequently indemnification. Any incorporation unilaterally made in the cover note as to its effective date will not have adverse impact on the contract of insurance effective between the insured and the insurance company.

It is a matter of record, at Exh. 79, there is earlier policy between the truck owner and the insurance company for the period from 16.4.1996 to 15.4.1997. This indicates that reasonably the owner of the truck approached the Development Officer on 3.5.1997. He could not apprehend and contemplate that there could be an accident on 4.5.1997. The precaution taken in advance has turned as a boon for the truck owner, it need not be doubted as tried to be canvassed.

Mr. Upadhye has placed reliance on the following judgments:

New India Assurance Co. Ltd. Vs. Ram Dayal and Others, ; Oriental Insurance Co. Ltd. Vs. Sunita Rathi and Others, ; M/s. National Insurance Co. Ltd. Vs. Smt. Jijubhai Nathuji Dabhi and others, ; and V. Ravi Vs. M/s. New India Assurance Company Ltd. and others, .

In the matter of Oriental Insurance Co. Ltd. Vs. Sunita Rathi and Others, , cover note was obtained by the insured after the accident. But on the same day, the cover note contained express mentioning effective date and time of commencement of insurance as 2.55 p.m. on the date of accident. The Supreme Court held that since the cover note gave effective time as 2.55 p.m., the accident having already taken place, the insurance company is not liable.

In the matter of New India Assurance Co. Ltd. Vs. Ram Dayal and Others, , policy was obtained on the date of accident. The insurance company repudiated its liability on the ground that policy had been taken after the accident. The Apex Court observed: "When the policy is taken during any part of the day, it becomes operative from the commencement of that day".

In the matter of V. Ravi Vs. M/s. New India Assurance Company Ltd. and others, , Calcutta High Court observed that the commencement of the policy would come into force from the date of payment. In the said case, premium was paid on 18.2.1992. The accident has taken place between 6-7 p.m. The insurance company disputed its liability on the ground that the premium was received on 19.2.1992 and stated that risk commences from that date and not as per the date of certificate of insurance which was inadvertently typed. The Division Bench of Calcutta High Court held that if the certificate was wrongly granted either by reason of any mistake or fraud, remedy for the insurance company would be to initiate a separate proceeding against the owner for recovery of amount paid. But, third party should not suffer for any dispute between the owner and the insurance company.

In the matter of M/s. National Insurance Co. Ltd. Vs. Smt. Jijubhai Nathuji Dabhi and others, , the Apex Court has observed that in view of special contract mentioned in the insurance policy, namely, it would be operative from 4 p.m. on 25.10.1983 and the accident had occurred earlier thereto, insurance coverage would not enable the claimant to seek recovery of the amount from the appellant insurance company. No such situation has emerged in the present case. The insurance company received the amount well in advance prior to the accident. There is no case of fraud by the insured with the insurance company. Amount having been accepted on 3.5.1997, naturally the contract to indemnify would operate with immediate effect.

I do not find that the above referred judgments could be accelerated for the purpose of insurance company, in the fact situation, narrated hereinabove.

In the result, the first appeal is sans merit, it is dismissed with C.A. No. 8306 of 2006. Ad interim stay vacated. C.A. No. 2265 of 2008 disposed of as above.