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PETITIONER: ORIENTAL INSURANCE CO. LTD.

       Vs.

RESPONDENT: SUNITA RATHI & ORS.

DATE OF JUDGMENT:       04/12/1997

BENCH: S.P. BHARUCHA, A.P. MISRA

ACT:

HEADNOTE:

JUDGMENT:                THE 4TH DAY OF DECEMBER, 1997 Present:                  Hon’ble the Chief Justice                  Hon’ble Mr. Justice S.P. Bharucha                  Hon’ble Mr. Justice A.P. Misra Jitender Sharma,  Sr. Adv.,  and B.K. Pal, Adv. with him for the appellant Ashok K. Mahajan, Adv. (NP) for the Respondents.                       J U D G M E N T      The following Judgment of the Court was delivered: Verma C.J.I      This appeal by the insurer involves for decision only a short point  relating to  its liability  under the policy of insurance issued  subsequent to  the accident even though it was issued some time later on the same day.  The Tribunal as well as the High Court have held against the insurer placing reliance on  a two-Judge Bench decision of this Court in New India assurance  Co. Ltd.  Vs. Ram Dayal & Ors. 1990 (2) SCR 570.   The  question  is  whether  that  decision  has  been correctly applied in the facts of the present case.      The motor  accident occurred  on 10th December, 1991 at 2.20 PM  It was only thereafter the same day at 2.55 PM that the insurance policy and the cover note were obtained by the insured,  owner   of  the  motor  vehicle  involved  in  the accident.   There is  express mention in the cover note that the effective date and time of commencement of the insurance for the  purpose of  the Act was 10th December, 1991 at 2.55 PM.   The applicability  of the decision in Ram Dayal’s case (supra) has to be considered on these facts.  In our opinion the decision  in Ram Dayal’s case (supra) is distinguishable and has no application to the facts of this case.  The facts of that  decision show  that the  time of  issuance  of  the policy  was   not  mentioned   therein  and   the  question, therefore, was  of  presumption  when  the  date  alone  was mentioned and  not the  time at  which the  insurance was to become effective  on that date.  In such a situation, it was held in  Ram Dayal’s case (supra) that in the absence of any specific time being mentioned, the logical inference to draw was that  the insurance  became effective  from the previous mid-night and,  therefore, for an accident, which took place

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on the date of the policy, the insurer became liable.  There is no  such difficulty  in the  present case  in view of the clear finding  based on  undisputed facts  that the accident occurred at  2.20 PM  and the  cover note  was obtained only thereafter at  2.55 PM  in which  it was expressly mentioned that the  effective date  and time  of commencement  of  the insurance for  the purpose of the Act was 10.12.1991 at 2.55 PM.   The reliance  on  Ram  Dayal’s  case  (supra)  by  the Tribunal and  the High  Court was, therefore, mis-placed, we find that  in a  similar situation,  the same  view which we have taken, was also the view in M/s. National Insurance Co. Ltd. vs.  Smt. Jikubhai  Nathuji Dabhi & Ors. 1996 (8) SCALE 695, wherein  Ram Dayal’s  case (supra) was distinguished on the same basis.      It follows  that the  insurer cannot  be held liable on the basis  of the  above policy  in the  present  case  and, therefore, the  liability has  to be  of the  owner  of  the vehicle.   However, we  find that  the High  Court,  without assigning any  reason, has  simply assumed that the owner of the vehicle  was not  liable and  that the insurer alone was liable in the present case.  This conclusion, reached by the High Court,  is clearly  erroneous.   The liability  of  the insurer arises  only when  the liability  of the insured has been upheld  for the  purpose of  indemnifying  the  insured under the  contract of  insurance.   There is, thus, a basic fallacy in  the conclusion reached by the High Court on this point.      The question  now s  of the  final order to make in the present case.  We find that the insurer has made the payment to the  claimants in tee present case in satisfaction of the entire claim  and it  has been  fairly stated by the insurer that this  appear was  filled only for getting a decision on this point  pertaining to  its case,  we deem  it fit to say that the amount already paid by the insurer to the claimants is not  required to  be refunded  by the  claimants  to  the insurer.      For the  aforesaid reasons, the appeal is allowed.  The judgment of  the High  Court and  Tribunal  are  set  aside. However,  as   indicated  earlier,  the  claimants  are  not required to  refund the  amount already  paid to them by the insurer.