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Section 66: Penalty for not making out policy, or making one not duly stamped

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Act 1899
Section 65 All 78 Sections Schedule I (Arts 1–65) Section 67

Legal Commentary & Landmark Judgments: Section 66

Section 66 imposes criminal penal liability upon insurance companies, underwriters, and managing agents who accept insurance premiums but fail to execute and issue duly stamped formal policies within one month, or who issue unstamped policies.

  • Statutory Obligation on Insurers: Imposes a strict statutory duty on insurers, underwriters, and brokers who receive or take credit for premiums to make out, execute, and issue a duly stamped policy of insurance within one month.
  • Offence of Issuing Unstamped or Under-Stamped Policy: Penalizes the issuance, delivery, or authorization of any policy of insurance that is not duly stamped in accordance with Schedule I Article 47.
  • Penal Liability on Corporate Officers: Directors, general managers, and underwriting officers authorizing the issuance of unstamped policies are individually and vicariously liable to a criminal fine extending to two hundred rupees per policy.
  • Protection of Policyholder Rights: Criminal prosecution under Section 66 operates independently of civil coverage; failure to stamp the policy does not exonerate the insurer from its contractual liability to pay insurance claims.
Key Landmark Precedents:
  • General Assurance Society Ltd. v. Chandmull Jain, AIR 1966 SC 1644: A Constitution Bench of the Supreme Court discussed the legal architecture of insurance contracts, holding that while cover notes create temporary interim protection, Section 66 mandates the formal execution and stamping of the final policy within one month.
  • United India Insurance Co. Ltd. v. Pushpa, 2005 (1) CTC 122: The Madras High Court emphasized that insurance companies cannot rely on their own failure to affix stamp duty under Section 66 to defeat the claims of motor accident victims or third-party beneficiaries.
  • Oriental Insurance Co. Ltd. v. Sunita Rathi, (1998) 1 SCC 365: The Supreme Court noted that cover notes and policies issued by insurers carry statutory responsibilities, and non-compliance with fiscal formalities exposes the company to statutory penalties.
Courtroom Practice & Strategic Litigation Guidance:

In insurance coverage litigation, if the insurer attempts to repudiate liability on the ground that the policy schedule or digital cover note was unstamped, counter by demonstrating that under Section 66, the sole statutory obligation to stamp the policy rests on the insurer. The insurer cannot plead its own criminal default under Section 66 to escape policy indemnification obligations.

Section 65 All 78 Sections Schedule I (Arts 1–65) Section 67