1. Motor accident claim — Insurance liability under Section 92-A, Motor Vehicles Act — Dispute over policy commencement time relative to accident occurrence. (Para 2 , 3 )
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1999 Supreme(SC) 1007
1999(7) Supreme 637
Supreme Court of India
(From Madhya Pradesh High Court)
Dr. A.S. Anand, CJI., M. Srinivasan & R.C. Lahoti, JJ.
New India Assurance Co. Ltd. -Appellant
versus
Smt. Sita Bai & Ors. -Respondents
Civil Appeal No. 5005 of 1999
(Arising out of Special Leave Petition (C) No. 12511 of 1991)
Decided on 10-9-1999
Counsel for the Parties :
For the Appearing Parties : S.K. Paul, (Salil Paul) Advocate for M/s. Janendra Lal & Co., P.K. Seth, Ms. Sheetal Sharma, Somnath Chakrabarty, Sudhir Kumar Gupta, Ms. K. Sarada Devi, Pramod Swarup, Ms. Pareena Swarup, Praveen Swarup, Advocates.
Important Points
Important Point
In cases where there is a mention of the specific time for the purchase of the policy, then a special contract comes into being and the policy becomes effective from the time mentioned in the cover note/the policy itself, and for any acceded accident prior to that time insurer cannot be made liable.
In cases where there is a mention of the specific time for the purchase of the policy, then a special contract comes into being and the policy becomes effective from the time mentioned in the cover note/the policy itself, and for any acceded accident prior to that time insurer cannot be made liable.
Subject
Insurance Law - Motor Vehicle Insurance
Act Referred
Headnote
Motor Vehicles Act - Section 92A - Liability of Insurance Company-Commencement of policy as stated in cover note and policy was 2100 hours on 16.4.1987-Accident occurred at 1000 hours on 16.4.1987 - High Court holding that policy covered period of accident because policy would be deemed to have commenced at midnight of 15.4.1987 and 16.4.1987 and, therefore, insurer was liable-Not tenable-In cases where there is a mention of specific time for purpose of policy then a special contract comes into being and policy becomes effective from the time mentioned in cover note/ policy itself-Insurer not liable.
Legal Category Hierarchy
Table of Contents
2. Whether an insurance policy bought during the day commences from the previous midnight or from the specific time mentioned in the policy. (Para 4 )
3. The court distinguished between policies with no specified start time and those with a specific time, noting the latter constitutes a special contract. (Para 5 )
4. Where an insurance policy specifies a particular time of commencement, it becomes effective from that time rather than the previous midnight. (Para 5 )
5. Appeal allowed — Impugned order set aside — Insurance company held not liable for the accident. (Para 6 )
6. When does an insurance policy become operative if no specific time of commencement is mentioned?
In the absence of a contract to the contrary, an insurance policy bought during the day is deemed to become operative from the previous midnight. (Para 5 )
7. What is the effect of specifying a particular time of commencement in an insurance policy?
If a special contract mentions the specific time when the policy was bought, the insurance policy becomes operative from that mentioned time and not from the previous midnight. (Para 5 )
8. Is an insurance company liable for an accident that occurs before the specific commencement time stated in the policy?
No, if the policy specifies a commencement time and the accident occurs before that time, the insurance company is not liable under the Motor Vehicles Act. (Para 6 )
Order
S.L.P.(C) No. 12511/91
Leave granted.
2. Respondent 1 to 4 filed a claim petition before the Motor Accident Claims Tribunal, Khandwa against respondents 5, 6 and the appellant herein - New India Assurance Co. Ltd. The claim petition arose out of an accident which took place at 10.00 AM on 16.4.1987. Bus No. CPO-9104, owned by respondent No. 5 and driven by respondent No. 6 was involved in that accident in which one Smt. Salta Bai suffered fatal injuries. The Motor Accident Claims Tribunal vide order dated 22.9.1990 opined that the bus in question was insured with the appellant-Insurance Company for the period 16.4.1987 to 15.4.1988 (both days inclusive) and, thus, the owner (respondent No. 5) as well as the Insurance Company (appellant herein) were liable under the provisions of Section 92-A of the Motor Vehicles Act (hereinafter the Act). An amount of Rs. 15,000/- was accordingly directed to be paid as ad-interim compensation to respondents 1 to 4 under Section 92-A of the Act. The order of the Motor Accident Claims Tribunal was put in issue and a first appeal was filed in the High Court of M.P. at Jabalpur. On 11th March, 1991, a learned Single Judge of the High Court relying upon the law laid down by this Court in New India Assurance Co. Ltd. v. Ram Dayal and Ors.1, held that the appeal had no merits and dismissed the same summarily. Aggrieved, the appellant-Insurance Company is before us by special leave.
3. A brief notice of some of the admitted facts would be advantageous at this stage.
The proposal for insuring the vehicle in question was made by the owner of the vehicle on 16.4.1987 at 2100 hours. The cover note was issued by the appellant in respect of that vehicle, being No. P/703802 on 16.4.1987 at 2100 hours. The Insurance Policy (Exh. P/5) was later on issued in which also the date of commencement of the insurance policy was recorded as 16.4.1987 (2100 hours). The accident, in question, in which Smt. Salta Bai received fatal injuries had admittedly occurred at 10.00 A.M. on 16.4.1987, i.e., much before the commencement of the insurance policy.
4. The High Court opined that the insurance policy dated 16.4.1987 covered the period of the accident also because the policy would be deemed to have commenced at midnight of 15.4.1987 and 16.4.1987. The High Court in taking this view relied upon the judgment in Ram Dayal’s case (supra).
5. The correctness and applicability of the judgment in Ram Dayal’s case (supra) came up for consideration before this Court subsequently in a number of cases. In New India Assurance Co. Ltd. v. Bhagwati Devi and Ors.2, a three-Judge Bench of this Court relied upon the view taken in National Insurance Co. Ltd. v. Jikubhai Nathuji Dabhi (Smt.) and Ors.3, wherein it had been held that if there is a special contract, mentioning in the policy the time when it was bought, the insurance policy would be operative from that time and not from the previous midnight as was the case in Ram Dayal’s case, where no time from which the insurance policy was to become effective had been mentioned. It was held that should there be no contract to the contrary, an insurance policy becomes operative from the previous midnight, when bought during the day following, but, in cases where there is a mention of the specific time for the purchase of the policy, then a special contract comes into being and the policy becomes effective from the time mentioned in the cover note/the policy itself. The judgment in Jikubhai’s case (supra) has been subsequently followed in Oriental Insurance Co. Ltd. v. Sunita Rathi & Ors.4, by a three-Judge Bench of this Court also.
6. In the fact situation of this case since the commencement of the policy at 2100 hours on 16.4.1987 was after the accident which had occurred at 1000 hours on 16.4.1987, the Tribunal as well as the High Court were wrong in burdening the appellant-Insurance Company, with any liability under Section 92-A of the Motor Vehicles Act by applying the law laid
