Insurance liability exists when the policy is assumed to be in force during the event of loss, regardless of prior rulings if liability was not previously established.

1. A few facts -
Sometime in August, 1986, the Appellant imported Onion Dehydration Machinery. This was financed by Maharashtra State Finance Corporation (MSFC). MSFC arranged for Marine - cum - Erection Policy for 18 months period from 12-9-1988. The said policy expired on 12-3-1988. On 25-8-1988, MSFC requested the respondent for renewal of the said policy by letter dated 25-8-1988. Cheque for premium of Rs. 3135/- was also sent. By the said letter, the respondent was asked (i) to renew the policy and (ii) to issue stamped receipt for the premium paid. This was received by the respondent on 26-8-1988. The respondent on 26-8-1988 issued a stamped receipt recording receipt of the premium. On 7-4-1989, the respondent wrote a letter to the appellant pointing out that MSFC, Nasik has deposited on amount of Rs. 3135/- towards the premium for fire policy covering the machinery. A standard form for the fire insurance came to be sent. This was received by the appellant on 16-6-1989. The appellant filled the same and sent it back to the respondent. It specifically mentions in para 11 that the period of insurance is from 12-3-1988 to 12-9-1989. This was received by the respondent and the fire policy came to be issued on 30-6-1989 covering the risk of fire from 26-8-1988 to 25-8-1989. The policy was sent to MSFC as it was acting on behalf of the appellant.

2. Fire took place on 10-2-1990 and the machinery was damaged. The appellant orally informed this to the respondent and intimated in writing to the respondent on 17-2-1990. By letter dated 18-4-1990, the respondent declined to make payment on the ground that the insurance cover was from 26-8-1988 to 25-8-1989. On the date of the fire, there was no insurance in existence and hence it was not liable.

3. The appellant sent the legal notice to the respondent on 8-1-1991, but there was no reply. The appellant then approached National Consumer Disputes Redressal Commission (for short NCDRC) on 20-8-1991 under the Consumer Protection Act, 1986. However, on 23-9-1992, the said Commission held that there was no deficiency in service on the part of the respondent as according to the respondent on 10-2-1992 the insurance policy was not in force. Therefore, it was dismissed with liberty to the appellant to resort to any other remedy that may be available.
Thereafter the appellant filed an appeal against the said order before the Supreme Court but the Supreme Court declined to interfere by order dated 29-1-1993.

4. The appellant then filed civil suit on 29-4-1993 claiming damages for the loss suffered by the appellant. It was averred that the fire policy was for one year. It was actually issued by the respondent on 30-6-1989. Hence, the contract of insurance came into existence on that day and was valid for one year thereafter. Hence, it was in force from 30-6-1989 to 29-6-1990. The fire had taken place causing damage on 10-2-1990. Therefore, the respondent was liable.

5. On behalf of the respondent, it was contended that the policy has come to an end already. It was in force from 26-8-1988 to 25-8-1989. It was not in force on 10-2-1990. Therefore, there was no liability on the part of the respondent. It was also contended that the suit was barred by limitation and it was bad for misjoinder of necessary parties. It was also contended that the suit was barred by the principles of res judicata.

6. The suit came to be heard by the learned Civil Judge, Senior Division, Nasik. He held that the said insurance policy was