14. According to the learned counsel for the plaintiff-appellant, the policy in this case was effected on the 30th of July, 1956 when the proposal was accepted by the Insurance Company and in any case not later than 4th of August. 1956 when the payment of the first premium was received by the Company's Bombay Office. On the other hand, the learned counsel for the defendant-Corporation contends that the policy must be taken to have been effected on 22-10-1956 when the document of policy was issued by the Indian Mercantile Insurance Company Limited (Ex. P. 16). We have been referred first to the words in Section 45 itself which relate the word 'effected' to the word 'policy'. It is stated that the word 'policy' used in Section 45 means a document of policy issued formally as in Ex. P16 and since such policy in the present case has been issued on 22-10-1956 that must be taken to bethe date on which the policy has been effected. Secondly, we were referred to Section 66, Sub-section (b) of the Stamp Act which uses the words 'makes, executes or delivers out any policy which is not duly stamped.' We are unable to read in Section 45 of the Insurance Act that the word 'effected' means the date on which a formal policy in cold prints is issued. In order to make a contract there is a proposal and an acceptance. As soon as the proposal is accepted by the other contracting party, the contract is complete and that is the basis of the right of one party and the liability of other. The liability does not for the first time arise on the formal document of policy. It is only a formal expression of a contract which has already taken place. The date, therefore, material is the date of the acceptance and it is from that date that the rights and liabilities will accrue. Whenever a formal policy is made it has to be duly stamped in accordance with the provisions of the Stamp Act then prevailing and Section 66 of the Stamp Act makes the act of not duly stamping the policy punishable. That does not however, mean that the policy becomes effective only from the date the formal document is executed or issued. In our opinion, the phraseology used in Section 45 of the Insurance Act relates to a date from which the policy of insurance, that is, a contract of insurance, becomes effective and such date would be the date of the acceptance of the proposal from which the risk on the life of the proposer is covered.
15. We were referred to Life Insurance Corporation of India v. Bibi Padmavati In this case two life insurance policies were taken, one on September 8, 1944 and the other on November 12, 1944. The first policy lapsed in March 1947 and the second in May, 1947. The insured applied for revival of these policies in November 1948 and they were revived sometime thereafter. The insured died in April, 1949. The question arose whether the policies could be avoided under the first part of Section 45 or only under the second part. It is not clear from the judgment as to whether the dates on which the policies were taken related to the dates of the acceptance of the proposal, that is, the dates from which the risks on the life of the insured were covered or whether they represented the dates of the formal documents of policies. Even if those dates could be taken to be the dates of the formal documents of policies, it would always be subsequent to the date of the acceptance or the coverage of the risk. There was no repudiation till the death of the insured which occurred more than 2 years after the aforesaid dates. Thequestion, therefore, as to when the policies can be said to have been effected within the meaning of Section 45 of the Insurance Act was not for consideration in the said case.
16. Surajmull Nagoremull v. Triton Insurance Co. was a case of marine insurance and under the Indian Stamp Act No. II of 1899, Section 7 provided that no contract for sea insurance shall be valid unless the same is expressed in a sea-policy. On the law then applicable to marine insurance, their Lordships held that no Court can enforce as valid that which competent enactments have declared shall not be valid. This decision has thus no application.
17. Reliance was then placed on Mithoolal Nayak v. Life Insurance Corporation of India : AIR1962SC814 . In this case the document of policy was issued on March 13, 1945 and it was to come into effect from January 15, 1945. The claim was repudiated by the insurer by letter dated October 10, 1947 and from these facts it was expressed that the two years had expired from the date on which the policy was effected. It will be seen that the date of this repudiation by the insurer is more than 2 years after March 13, 1945 when the policy was issued as well as 15th of January, 1945 when the policy came into effect. There is no decision in this case as to when the policy can be said to have been effected. This decision, therefore, is also of not much help in the present case.
18. It may be noted that in the instant case by its letter dated 30th of July, 1956 the insurer conveyed to the insured that the proposal has been accepted. This letter further stated that until the first premium was paid and accepted as such by the company no liability attaches to the Company which reserves the right to cancel the acceptance. The first premium is paid on 3rd of August 1956 at the Nagpur Office and received by the Bombay Office on 4th of August, 1956. Then there is a letter from the insurer dated 4th August, 1956 (Exhibit D-5) which is styled as interim policy receipt which acknowledges the payment of the first premium and it says that the acceptance of this premium places the company on the risk covered by the insurance. Both the terms and conditions of the acceptance letter have been complied with. This has reference to the letter dated 30th July, 1956. This receipt also gives the policy No. as R. 36348. It would thus be seen that the risk on the life of the insured has been covered as from 4th August, 1956 and it was irrespective of a formal document of policy. If after the date of the acceptance and before the issue of a formal document of policy, death of the insured had occurred, the insurer-company was certainly liable for the claim of insurance and it would have been no answer to say that a formal document of policy had not been issued by that time. This would, therefore, show that the policy, that is, the contract of insurance between the parties has become effective since the date of the acceptance of the proposal from which date the risk is covered. It is in this sense that the words 'policy of life insurance effected' have been used in Section 45 of the Insurance Act. Even the formal policy issued in this case also refers to the date 4-8-1956 from which the risk of insurance is covered. The policy further mentions the date of last payment as 4-8-1980 and the date of maturity as 4-8-1981. It further gives the same number of the policy as was given in the letter dated 4th August, 1956 which would show that the policy became effective or in other words, the policy was effected on 4-8-1956. We have therefore, no hesitation in holding that the policy must be taken to have been effected on 4-8-1956 under the original proposal for Rs. 40,000/-.
19. Appeal dismissed.