United India Insurance Co. vs Smt. Leela Yadav

Court
Punjab and Haryana High Court

FAO-3678-1999 (O&M) - 1-
FAO-3679-1999(O&M)


IN THE HIGH COURT OF PUNJAB & HARYANA
AT CHANDIGARH
108

Date of decision: 01.09.2026
1. FAO-3678-1999 (O&M)
UNITED INDIA INSURANCE COMPANY LIMITED
....Appellant
VERSUS
SMT. LEELA YADAV AND OTHERS
...Respondents
2. FAO-3679-1999(O&M)
UNITED INDIA INSURANCE COMPANY LIMITED
....Appellant
VERSUS
SMT. LEELA YADAV AND OTHERS
...Respondents
CORAM: HON'BLE MR. JUSTICE YASHVIR SINGH RATHOR
Present : Mr. D.P. Gupta, Advocate and
Mr. Shubham Gupta, Advocate for the appellant.
Mr. B.S. Mamli, Advocate
for respondent No.3 in FAO-3678-1999 and
for respondent No.5 in FAO-3679-1999.
Respondents No.1, 2 and 4 served through publication
service is complete vide order dated 20.01.2017 in FAO-3678-1999.
Respondents No.1 to 3, 4 and 6 served through publication
service is complete vide order dated 20.01.2017 in FAO-3679-1999.
Mr. Aditya Kochar, Advocate for
Mr. Rajneesh Malhotra, Advocate
for respondent No.5-Insurance Company in FAO-3678-1999 and
for respondent No.7-Insurance Company in FAO-3679-1999.

PRIYANKA THAKUR
2026.09.02 19:01
I attest to the accuracy and
integrity of this document

FAO-3678-1999 (O&M) - 2-
FAO-3679-1999(O&M)


YASHVIR SINGH RATHOR , J.
1. By this judgment, I shall dispose of the aforesaid two appeals as the
same have emanated out of the same accident.
2. The present appeals have been instituted by the Insurance Company
against the award dated 27.07.1999 vide which the Insurance Company has been
held liable to indemnify the insured while awarding compensation to the claimants
holding that the vehicle was duly insured on the date of accident.
3. Learned counsel for the Insurance Company/appellant argued that the
vehicle was got insured by the owner/insured on 26.12.1995 but there was a
specific stipulation in the policy that the period of insurance shall be from 00:00
hours on 27.12.1995 to midnight of 26.12.1996. However, the accident took place
on 26.12.1995 itself at about 9:30 a.m, whereas the policy was to come into force
with effect from 00:00 hours on the midnight of 26.12.1995 and 27.12.1995 and as
such, the vehicle in question was not insured as policy had not come into force at
the time of accident. However, learned Tribunal has ignored this aspect and has
held that since the premium had been paid on 26.12.1995 itself, it shall be deemed
that the policy had come into force and the Tribunal held the Insurance Company
liable to indemnify the insured but the findings of the Tribunal in this regard are
erroneous and cannot be sustained. Learned counsel prayed that appeal in hand be
accepted and Insurance Company be exonerated of its liability to indemnify the
insured in the absence of any contract of insurance being in force at the time of
accident. In support of his contentions, learned counsel has cited (2009) 15 SCC
Oriental Insurance Co. Ltd. v. Porselvi and Another.
116,
4. On the other hand, learned counsel for insured/owner argued that
PRIYANKA THAKUR
2026.09.02 19:01
I attest to the accuracy and
integrity of this document

FAO-3678-1999 (O&M) - 3-
FAO-3679-1999(O&M)


policy taken during any part of the day becomes operative from the
commencement of the day and since the premium was paid on 26.12.1995 itself, it
shall be deemed that the policy came into force with effect from 00:00 hours on
the intervening night of 25.12.1995 and 26.12.1995. In these circumstances, it
shall be deemed that the vehicle was insured at the time of accident and insurer
thus has been rightly held liable to indemnify the owner. In support of his
contentions, learned counsel has cited (1997) 1 SCC 66, M/s National Insurance
Company Ltd. Vs Smt. Jijubhai Nathuji Dabhi and (1990) 2 SCC 680, New
India Assurance Co. Ltd. Vs Ram Dayal and Others.
5 . After hearing learned counsel for the parties and on going through the
material on file, I am of the considered opinion that the appeal in hand deserves to
be accepted for the following reasons.
6. A perusal of Insurance Policy Ex.R7 shows that the vehicle was got
insured and cover note was issued on 26.12.1995 vide cover note No.567471.
However, there is a specific endorsement that period of insurance shall be 00.00
hours on 27.12.1995 to midnight of 26.12.1996, meaning thereby, the policy of
insurance will come into force during the midnight of 26.12.1995 and 27.12.1995
at 00.00 hours/12 a.m. The insurance policy was a contract between the insurer
and the insured and both are bound by the terms and conditions contained therein.
No doubt, in the absence of any time or date as to when the policy shall
commence, it will commence from the previous midnight as held in Smt. Jijubhai
Nathuji Dabhi’s case (supra) . However, in the instant case, the cover note was
issued on 26.12.1995 but it has been specifically mentioned that the policy will
commence from 00.00 hours on 27.12.1995 up to 26.12.1996 (midnight). In
PRIYANKA THAKUR
2026.09.02 19:01
I attest to the accuracy and
integrity of this document

FAO-3678-1999 (O&M) - 4-
FAO-3679-1999(O&M)


Oriental Insurance Company Vs. Porselvi’s case (supra), cited by learned
counsel for Insurance Company, Hon’ble Supreme Court in a similar case
observed as under:-
“4. Learned Counsel for the appellant brought to our notice the
cover note which clearly indicates that the policy was valid
from 29/5/1996 to 28/5/1997 though it was issued on
28/5/1996. A copy of the policy was brought on record.
Relevant portion thereof reads as follows:
Effective date of commencement of insurance for the
purpose of the Act, from o' clock on (date) 29.5.1996 to
midnight of 28.5.1997.
5. A three Judge Bench of this Court in New India Assurance Co.
Ltd Vs. Smt. Sita Bai and Ors, inter alia observed as follows:
6. The correctness and applicability of the judgment in New India
Assurance Co. Ltd. Vs. Ram Dayal and Others, came up for
consideration before this Court subsequently in a number of
cases. In New India Insurance Co. Vs. Bhagwati Devi and
Others, a three-Judge Bench of this Court relied upon the view
taken in M/s. National Insurance Co. Ltd. Vs. Smt. Jijubhai
Nathuji Dabhi and others, 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 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
PRIYANKA THAKUR
2026.09.02 19:01
I attest to the accuracy and
integrity of this document

FAO-3678-1999 (O&M) - 5-
FAO-3679-1999(O&M)


policy becomes effective from the time mentioned in the cover
note/the policy itself. The judgment in Jikubhai case has been
subsequently followed in Oriental Insurance Co. Ltd. Vs.
Sunita Rathi and Others, by a three-Judge Bench of this Court
also.
6. Since the effect of the aforesaid factual, position has not been
considered by the High Court we set aside the impugned
judgment and remit the matter for fresh consideration in
accordance with law.
7. The appeal is disposed of.”
7. To the same effect is the law laid down in (1999) 7 SCC 575, New
India Assurance Company Limited versus Smt. Sita Bai and Ors .
8. As such, the ratio as drawn from the aforesaid judgment is that in
case the policy or the cover note comes into existence bearing certain terms and
conditions, then the contract would be complete and will commence from the date
and time when it is sought to be commenced or become operative. Learned
Tribunal has thus not taken into consideration the fact that the contract of
insurance had not come into existence and policy had not come into force when
the accident took place on 26.12.1995 at 09.30 a.m. whereas the parties were
bound by the stipulations as contained in policy Ex.R7. In these circumstances, the
finding recorded by the learned Tribunal holding the Insurance Company liable to
indemnify the insured is not sustainable being erroneous and is liable to be
reversed.
9. Resultantly, the finding arrived by learned Tribunal on issue No.7 is
reversed and the appeals are allowed with costs and the Insurance Company stands
PRIYANKA THAKUR
2026.09.02 19:01
I attest to the accuracy and
integrity of this document

FAO-3678-1999 (O&M) - 6-
FAO-3679-1999(O&M)


exonerated from the liability as fastened by the Tribunal to indemnify the insured
and it is only the driver and owner who shall be liable to pay compensation to the
claimants jointly and severally.
10. Pending miscellaneous application(s), if any, shall also stand
disposed of.
11. A photocopy of this order be placed on the connected case file.
(YASHVIR SINGH RATHOR)
01.09.2026 JUDGE
Priyanka Thakur
Whether speaking/reasoned. : Yes/No
Whether Reportable. : Yes/No
PRIYANKA THAKUR
2026.09.02 19:01
I attest to the accuracy and
integrity of this document