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CASE NO.: Appeal (civil)  1393 of 2001

PETITIONER: National Insurance Co. Ltd

RESPONDENT: Smt. Sobina Iakai & Ors

DATE OF JUDGMENT: 09/07/2007

BENCH: A. K. Mathur & Dalveer Bhandari

JUDGMENT: J U D G M E N T WITH CIVIL APPEAL NO. 1394 OF 2001 National Insurance Co. Ltd.                     .. Appellant                             Versus Smt. Kerolin P. Marak & Others          .. Respondents

Dalveer Bhandari, J. 1.      These appeals are directed against the judgment  dated 4.10.1999 passed by the Gauhati High Court in  MA (F) Nos. 3 (SH) and 4(SH) of 1998.

2.      The facts of both these appeals are identical,  therefore, these appeals are being disposed of by a  common judgment.  For the sake of convenience, the  facts of Civil Appeal No. 1394 of 2001 are recapitulated.  

3.      The question which falls for adjudication in these  appeals is whether the insurance company can be held  liable for payment of compensation for a period when the  insurance policy was not even in existence.     4.      The appellant, National Insurance Co. Ltd. originally  issued an insurance policy to the respondent bearing no.  201002/31/92/63/00057 on 22.6.1992 at 12.45 p.m.;    this policy expired on 21.6.1993.  This policy was  renewed after 9 days of its expiry on 30.6.1993 and the  said policy also expired on 29.6.1994.  After 21 days of  the expiry of the said insurance policy, the Bus bearing  registration number ML-04-2741 met with an accident at  about 9.15 a.m. on 20.7.1994 killing two persons.  One  died on the spot and another died after a few days in the  hospital.  Admittedly, in the present case, the insurance  policy was renewed on 20.7.1994 at 2.00 p.m. whereas  the accident had occurred at 9:15 a.m. on 20.7.1994.   The time is specifically mentioned in the document called  \021Motor Renewal Endorsement\022.  It is incorporated in this  document that the policy is renewed for twelve months  from 20.7.1994 (2.00 p.m.) to 19.7.1995.   Since the  entire controversy revolves around the time of the  renewal endorsement, therefore, we deem it appropriate  to fully set out the \021Motor Renewal Endorsement\022 as  under:

\023MOTOR RENEWAL ENDORSEMENT Endorsement No. E/94/00095 on Policy No.  201002/31/92/63/00057 Insured:     M.C.A.B. Martiang, A/c. Shri Eklensing Siangshai Address:   Ummulong, Jaintia Hills Distt.

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It is hereby declared and agreed that the insurance by this Policy is  renewed for a period of twelve months from 20-07-94 (2 p.m.) to 19- 07-95 at a premium of Rs.7641/-  as detailed below:

The Vehicles

Make & year  of  manufacture Registration  Mark & No. Type of  Body &  C.C. Seating  capacity  including  driver or  carrying  capacity Insured\022s  estimated value  including  accessories  (Indian Currency) Tata Bus,  1992 ML-2741 Bus body,  31.5 28+2 Rs.3,00,000/- Premium Computation: a.      Act/T.P.                         Own Damage \005\005\005\005..  Rs.   450.00 b,      Own damage              IEV\005\005\005\005\005\005\005\005\005..       Rs.3,450.00 c.                                                                              Rs.3,900.00 d.                                      28 passengers\005\005..                 Rs.3,080.00 e.                                      Act, D/C \005\005\005\005\005\005\005..     Rs.   68 0.00 f.                                                                              Rs.7,660.00                                         Less 5% S.D\005\005\005\005\005\005             Rs.    383.00                                                                                 Rs.7,277.00                                         Add 5% S.T\005\005\005\005\005\005\005          Rs.    363.85                                                                                 Rs.7,640.85                                          Net = Rs.7,641/-                                                                                                                                             Sd/-                                                  Divisional/Branch Manager\024

5.      In the aforementioned \021Motor Renewal  Endorsement\022, the time and date have been specifically  mentioned.  According to the appellant, in view of the  special nature of contract, the insurance policy came into  force only from 2.00 p.m. on 20.7.1994.     

6.      A claim petition for Rs.1,78,000/- plus interest @  12% per annum was filed in the Motor Accident Claims  Tribunal, Jowai.  The appellant company filed a written  statement wherein it was specifically pleaded that the  policy was not current at the time of accident.  The  relevant paragraph of the written statement reads as  under:

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       \023that the policy was not current at the  time of accident.  The vehicle was re-insured  after a lapse of about 3 weeks on 20.7.94 at  about 2.00 p.m. whereas the alleged accident  occurred on the same day at 9.15 a.m.  As  such the opposite party (Insurance Co.) is not  liable for any payment to claimant.  Copy of  insurance certificate is enclosed.\024

        7.      The Motor Accident Claims Tribunal allowed the  claim petition ignoring the specific terms of the insurance  policy and averments of the written statement filed by the  appellant company.  The Tribunal also ignored the settled  legal position as crystallized by a series of judgments of  this Court.  The Tribunal awarded the compensation of  Rs.1,06,000/- along with interest @ 12% per annum from  the execution of the claim petition and directed the  appellant company to pay the same within a period of  two months, failing which additional interest @ 15% shall  be paid till the final payment of the compensation is  given to the claimant.          8.      The appellant company, being aggrieved by the  order of the Tribunal, filed MA (F) No. 4 (SH) of 1998  before the Shillong Bench of the Gauhati High Court.   The High Court noticed the pleadings and referred to the  decided cases of this Court.  The High Court, after  discussing the various judgments of this Court, culled  out the following propositions of law: \023i)  If time is mentioned in the insurance  policy or cover note, the effectiveness of  the policy would start from that time and  date and not from an earlier point of  time;

ii)     If the accident takes place on that very  date before the time which is mentioned  in the insurance policy, the insurer will  not be liable to indemnify the insured;

iii)    If the time is not mentioned in the  insurance policy, it would commence  from the date which means midnight and  in case the accident occurred on the date  of taking the policy, the insurer will be  liable to meet the liability of the insured  under the award.\024

9.      The ratio culled out by the High Court of the  decided cases of this Court is correct but the High Court  has wrongly applied the ratio of these cases and  erroneously held that the insurance company is liable to  pay compensation for the reason that the Cashier and  the Development Officer have not been produced by the  appellant company.                10.     We have heard the learned counsel for the parties  and also perused the relevant documents carefully.  The  learned counsel appearing for the appellant submitted  that the controversy involved in the case is no longer res  integra.   In the instant case, though the High Court has  correctly enunciated the law, but has seriously erred in  not applying the ratio of the judgments of this Court

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correctly.  He further submitted that when the insurance  policy and the motor renewal endorsement were duly  filed and these documents were duly proved before the  Tribunal, in that event, the entire controversy ought to  have been decided on the basis of these two documents  and the production of Cashier and the Development  Officer was not at all necessary for deciding the  controversy in the case.  

11.     On the other hand, the learned counsel for the  respondents supported the judgments of the Tribunal  and the High Court.   

12.     Admittedly, at the time when the accident had  occurred at 9.15 a.m. on 20.7.1994, the respondent did  not have the insurance cover.  The insurance policy was  obtained at 2.00 p.m. on 20.7.1994, which is clearly  evident from the motor renewal endorsement set out in  the earlier part of the judgment.    

13.     The insurance policy and the motor renewal  endorsement were on record.  Both these documents  were produced and proved by the appellant company.   The Tribunal and the High Court have seriously erred in  ignoring these basic and vital documents and deciding  the case against the appellant company on the ground of  non-production of the Cashier and Development Officer.   This manifestly erroneous approach of the High Court  has led to serious miscarriage of justice.

14.     This Court had an occasion to examine the similar  controversy in the case of New India Insurance  Company v. Ram Dayal (1990) 2 SCR 570.  In this case,  this Court held that in absence of any specific time  mentioned in the policy, the contract would be operative  from the mid- night of the day by operations of the  provisions of the General Clauses Act but in view of the  special contract mentioned in the insurance policy, the  effectiveness of the policy would start from the time and  date indicated in the policy.

15.     A three-judge Bench of this Court in M/s National  Insurance Co. Ltd. v. Smt. Jikhubhai Nathuji Dabhi   (1997) 1 SCC 66 has held that in the absence of any  specific time mentioned in that behalf, the contract  would be operative from the mid-night of the day by  operation of provisions of the General Clauses Act. But in  view of the special contract mentioned in the insurance  policy, it would be operative from the time and date the  insurance policy was taken.  In that case, the insurance  policy was taken at 4.00 p.m. on 25.10.1983 and the  accident had occurred earlier thereto.  This Court held  that the insurance coverage would not enable the  claimant to seek recovery of the amount from the  appellant company.          

16.     Another three-Judge Bench of this Court in M/s  Oriental Insurance Co. Ltd. v. Sunita Rathi (1998) 1  SCC 365 dealt with similar facts.  In this case, the  accident occurred at 2.20 p.m. and the cover note was  obtained only thereafter at 2.55 p.m.  The Court observed  that the policy would be effective from the time and date  mentioned in the policy.

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17.     In New India Assurance Co. vs. Bhagwati Devi  [(1998 (6) SCC 534], this Court observed that, in absence  of any specific time and date, the insurance policy  becomes operative from the previous midnight.  But  when the specific time and date is mentioned, then the  insurance policy becomes effective from that point of  time.   This Court in New India Assurance Co. Ltd. v.  Sita Bai (1999) 7 SCC 575 and National Insurance Co.  Ltd. v. Chinto Devi (2000) 7 SCC 50 has taken the same  view.  

18.     In Kalaivani & Ors.  v. K. Sivashankar & Ors.  [(JT 2001 (10) SC 396], this Court has reiterated clear  enunciation of law.  The Court observed that it is the  obligation of the Court to look into the contract of  insurance to discern whether any particular time has  been specified for commencement or expiry of the policy.   A very large number of cases have come to our notice  where insurance policies are taken immediately after the  accidents to get compensation in a clandestine manner.

19.     In order to curb this widespread mischief of getting  insurance policies after the accidents, it is absolutely  imperative to clearly hold that the effectiveness of the  insurance policy would start from the time and date  specifically incorporated in the policy and not from an  earlier point of time.  20.     In view of our foregoing conclusion, these appeals  have to be allowed and we order accordingly.  Consequently, the impugned judgments of the High  Court are set aside. In the peculiar facts and  circumstances of the case, we direct the parties to bear  their own costs.