- Bookmark
- Share
- CaseIQ
National Insurance Co. Ltd. v. Chinto Devi (Smt) And Others
Factual and Procedural Background
The Insurance Company appealed against a High Court order dated 27-3-1989 which had summarily dismissed its challenge to a Motor Accidents Claims Tribunal award holding the insurer liable for an accident that occurred on 23-2-1987 at 11:30 a.m. The pivotal factual dispute is whether the insurance policy covering the vehicle was issued at 10:00 a.m. (as asserted by the vehicle owner) or at 4:45 p.m. (as asserted by the insurer through a cover note). The Tribunal had ruled that because the policy bore the same date as the accident, the insurer was liable, and the High Court affirmed without detailed examination. The Supreme Court is now reviewing that determination.
Legal Issues Presented
- Whether an insurance policy issued on the same date as the accident but allegedly after the time of the accident nevertheless covers the insurer’s liability from the preceding midnight.
- Whether, in light of later Supreme Court precedent recognising the effect of a “special contract” specifying the time of issuance, the exact time of issuance must be adjudicated to determine liability.
Arguments of the Parties
Insurance Company's Arguments
- The cover note shows the policy was issued at 4:45 p.m. on 23-2-1987, after the 11:30 a.m. accident; therefore, liability is not covered.
- Under National Insurance Co. Ltd. v. Jikubhai Nathuji Dabhi (1997) 1 SCC 66 and New India Assurance Co. v. Bhagwati Devi (1998) 6 SCC 534, where the policy states a specific time, coverage begins only from that time.
- The policy itself cross-refers to the cover note number, so the time in the cover note governs.
Owner/Insured's Arguments
- The policy was obtained at 10:00 a.m.; no cover note was issued to him.
- The insurance document mentions only the date, not the time, so the insurer cannot rely on the cover note’s time to escape liability.
- His deposition supports the earlier time of issuance.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| New India Assurance Co. Ltd. v. Ram Dayal (1990) 2 SCC 680 | A policy issued on a given date covers liability from the preceding midnight unless a special contract indicates otherwise. | Supplied the general rule that same-date policies normally relate back to midnight. |
| National Insurance Co. Ltd. v. Jikubhai Nathuji Dabhi (1997) 1 SCC 66 | If the policy contains a “special contract” specifying the time of issue, coverage begins only from that specified time. | Cited to show an exception to Ram Dayal, prompting the need to know the exact issuance time. |
| New India Assurance Co. v. Bhagwati Devi (1998) 6 SCC 534 | Reaffirmed that when time is specified, liability starts from that time, not from midnight. | Used to reinforce the applicability of the “special contract” principle. |
Court's Reasoning and Analysis
The Supreme Court recognised that, after Jikubhai Nathuji Dabhi and Bhagwati Devi, the earlier blanket rule in Ram Dayal is qualified: if a policy expressly records the time of issuance, liability commences only from that time. Because the Tribunal and High Court never determined, as a matter of fact, the exact time the policy in question was issued, the legal outcome cannot be settled without that factual finding. Consequently, the Court deemed it essential to remand the matter for a specific adjudication of the issuance time. Pending that determination, equity required that the claimant not be left uncompensated; therefore, both the insurer and the owner were directed to deposit 50 % each of the award amount with the Tribunal within four weeks, reserving ultimate recovery rights depending on the remand outcome.
Holding and Implications
Order Set Aside in Part and Matter Remanded. The Supreme Court set aside the High Court’s order insofar as it fixed liability on the insurer and remanded the case to the Tribunal to record a finding on the time of issuance of the policy and to determine consequent liability. Both insurer and owner must deposit half of the decretal amount immediately for the claimant’s benefit. The decision does not establish new substantive precedent but reinforces the need to apply the “special contract” exception, making factual determination of issuance time pivotal in similar cases.
Order
1. The present appeal by the Insurance Company is directed against the order dated 27-3-1989 by the High Court dismissing in limine the appeal filed by the appellant against the order of the Tribunal holding the Insurance Company liable under the policy. The question raised in this appeal is, whether the Insurance Company is liable on a policy taken at a time, which is after the time of the accident though admittedly it being of the same date. According to the appellant the policy was taken on 23-2-1987 at 4.45 p.m for which reliance is placed on the cover note. On the other hand according to the respondent owner the insurance was taken at 10.00 a.m in the morning and not in the evening. It is not in dispute that the accident had taken place at 11.30 a.m The question which was considered and decided by the Tribunal was that when the policy is of the same date of accident, notwithstanding the same being issued at 4.30 p.m, i.e, after the accident, would it still cover the liability of the insurer, from the previous midnight of the same date? Accordingly, it held the appellant liable for the same. This was the principle based on the principle decided by this Court in the case of Ram Dayal (1990) 2 SCC 680 stated hereunder.
2. Learned Senior Counsel appearing for the Insurance Company submits that since after the decision in New India Assurance Co. Ltd. v. Ram Dayal (1990) 2 SCC 680 where this Court held, when the policy is of any date, it would cover the liability of the insurer from the previous midnight preceding the same date hence even where accident, in point of time is earlier than the time when the insurance policy was issued, the insurance company would be liable. A change in this principle is brought through decision of this Court which holds, if there is any special contract mentioned in the policy, it would be operative in terms of that contract hence where time is mentioned when it was issued then the liability would cover only from the time it was issued. Reference is made in National Insurance Co. Ltd. v. Jikubhai Nathuji Dabhi (1997) 1 SCC 66. This was a case where the policy was taken at 4.00 p.m while the accident took place at 11.00 a.m This Court held in view of the special contract mentioned in the policy viz. the time of its issue, it would be operative from that time and not from the previous midnight. This decision has taken note of the aforesaid Ram Dayal case (1990) 2 SCC 680. A similar principle is also decided in New India Assurance Co. v. Bhagwati Devi (1998) 6 SCC 534.
3. Relying on the said two decisions submission is, on the facts of this case the policy would only be effective from 4.45 p.m of 23-2-1987 and since the accident took place at 11.30 a.m, the appellant would not be liable to pay to the insured.
4. However, there is dispute of time as to when this insurance policy was issued. According to the insured the policy was taken out at 10.00 a.m and not 4.45 p.m Reliance is placed on his deposition and that insurance policy does not refer to any time though the date is there. Further submission is that no cover note was issued to the insured. On the other hand submission on behalf of the appellant is that the cover note clearly indicates date and time of the insurance policy and thus non-mentioning of time in the insurance policy would be of no consequence as it can only follow the cover note. Further the insurance policy refers to the number of cover note correlating to the same number as that referred in the cover note. Therefore submission is that the time recorded in the cover note is correct. The insured seriously disputes the time of issuance of the insurance policy.
5. It is not necessary for us to enter into this controversy in this appeal regarding the correctness of time of the issuance of the insurance policy as this is a question of fact and this point has not been adjudicated by the Tribunal or taken note of by the High Court. But now in view of the decision by this Court, in the aforesaid two cases, the adjudication of time becomes necessary for which it would be necessary that now adjudication be made by the Tribunal as to what was the time of the issuance of the policy itself. In view of this, we set aside the impugned order of the High Court qua the liability of the Insurance Company and remand the case back to the Tribunal for deciding the aforesaid limited question regarding the time when the insurance policy was issued and then decide consequential liability if any, on the Insurance Company. Since this point was not in issue then, we grant opportunity to both the parties to lead any further evidence if they are so advised before the Tribunal to the extent it affects the appellant.
6. There is nothing on the record to show, whether the claimant has received any sum decreed for an accident which took place in the year 1987. It is appropriate on the facts and circumstances of this case that both the Insurance Company and the insured viz. the owner, who are both represented today before us, to pay half and half of the decretal amount and this payment should be deposited by them before the Tribunal within four weeks from today. The amount so deposited may be withdrawn by the claimant without any security. The Tribunal shall intimate to the claimant about the amount being deposited so that they may come to receive the said amount without any security.
7. Normally the liability would either be on the Insurance Company or the insured. After the matter is adjudicated by the Tribunal, the person succeeding will have right to recover the balance amount to the extent of success from the other person. Accordingly, the appeal is allowed to the extent it affects the appellant. Cost on the parties.
Alert