DEOKAR EXPORTS PVT. LTD. versus NEW INDIA ASSURANCE COMPANY LTD.

Citation: [2008] 14 S.C.R. 1 · Decided: 23-09-2008 · Supreme Court of India · Bench: R.V. RAVEENDRAN · Disposal: Dismissed
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Judgment (excerpt)

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[2008] 14 S.C.R. 1 
DEOKAR EXPORTS PVT. LTD. 
v. 
NEW INDIA ASSURANCE COMPANY LTD. 
(Civil Appeal No. 5103 of 2002) 
SEPTEMBER 23, 2008 
[R.V. RAVEENDRAN AND LOKESHWAR SINGH 
PANTA, JJ.] 
Insurance Act, 1938: 
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B 
S. 64 VB - Insurance contract - Effective date - Held.: c 
Insurer cannot assume risk unless and until premium is re- · ' 
ceived/guaranteedldeposited - A policy can assume the risk 
from a retrospective date provided such date is not earlier than 
the date on which premium was paid in cash or by cheque to 
insurer -
On facts, initial insurance policy expired on D 
12.3.1988 - Prf?mium amount for one year received by in-
surer only on 26. 8. 1988 - Under the terms of finance between 
the borrower and lender-MSFC, uninterrupted and continuous 
insurance cover was necessary during the period the machine 
was secured in favour of MSFC - In view of the bar contained 
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in s. 64 VB, insurw could not provide insurance cover with ret-
rospective effect from a date prior to 26. 8. 1988 - As the pre-
mium was for one year, policy was rightly issued assuming 
risk for the period 26. 8. 1988 to 25. 8. 1989·- Both, the borrower 
and MSFC were aware that the insurance cover under the policy 
was for the period 26. 8. 1988 to 25. 8. 1989 but neither of them 
F 
objected to it - Therefore, insurer cannot be made liable for 
the loss occurred on 10. 2. 1990 - Contract. [Para 9 - 1 OJ 
· CONTRACT 
Insurance contract - Held: In a contract of insurance, 
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rights and obligations are strictly governed by the policy of 
insurance - No exception or relaxation can be made on the 
ground of equity- A policy of insurance is a contract based on 
an offer (proposal) and an acceptance - In the instant case, 
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SUPREME COURT REPORTS 
[2008] 14 S.C.R. 
A 
the insured made a proposal - The insurer accepted the pro-
posal with a modification - Therefore, it was a counter-proposal 
and the insured could have refused to accept the same or could 
have either expressly or impliedly accepted it and in that event 
it would have resulted in a concluded contract in terms of the 
B counter proposal, or the insured could h.ave made a counter 
proposal to the counter-proposal of the insurer in which event 
there would have been no concluded contract unless the in-
surer agreed to such counter-counter-proposal- But the insured 
definitely did not have the fourth choice of propounding a con-
e eluded contract with a modification neither proposed nor agreed 
to by either party - If the insured did not agree to the policy 
covering the period 26. 8. 1988 to 25. 8. 1989 instead of the pe-
riod 12.3.1988 to 12.9.1989, the result would never create an 
insurance contract effective from 30. 6. 1989 or any other date -
D Insurance Act, 1938- S.64 VB - Equity [Para 11] 
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 5103 
of 2002 
From the final Judgment and Order dated 9.3.2001 of the 
High Court of Judicature at Bombay in First Appeal No. 102 of 
E 2000 
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Shekhar Nephade, Arun R. Pednekar and S.K. Nandy for 
the Appellant. 
· 
Pramod.Dayal and Nikunj Dayal for the Respondent. 
The Order of the Court was delivered by 
R. V. RAVEEN,DRAN J. 1. The appellant imported a De-
hydration Machine firtanced by Maharashtra State Finance Cor-
poration (for short 'MSFC'). The machine was insured by the 
G appellant with the respondent (also referred to as the 'Insurer') 
through MSFC, against the risk of fire for the period 12.9.1986 
to 12.3.1988. Long ~fter the expiry of the policy, on 25.8.1988, 
MSFC sent a c~eque for Rs.3, 135/- on behalf of the appellant 
for renewal of the policy. A formal stamped receipt was issued 
H by the insurer confirming the receipt of the cheque on 26.8.1988. 
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DEOKAR EXPORTS PVT. LTD. v. NEW INDIA 
3 
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ASSURANCE COMPANY LTD. [R. V. RAVEENDRAN J.] 
2. By letter dated 7.4.1989, the insurer informed the ap-
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pellant ti1at it had received the premium amount from MSFC, 
but as no proposal had been received from appellant, it was 
not in a position to issue the fire insurance policy. The insurer 
sent a standard proposal form to the appellant along with the 
said letter. The appellant filled and signed proposal form and 
B 
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delivered it to the insurer on 16.6.1989. In the said proposal, 
the appellant stated that insurance cover was required for the 
period 12.3.1988to12.9.1989. But the insurer issued an insur-
ance policy dated 30.6.1989 extending insurance cover for the 
period 26.8.1988 to 25.8.1989. The Insurer sen
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