Full Text
HIGH COURT OF DELHI
Date of Decision: 09th March 2026
UNITED INDIA INSURANCE CO LTD .....Appellant
Through: Ms. Shikha Sapra, Adv.
Through: Mr. Manish Maini, Adv. for R-1.
JUDGMENT
1. This appealhas been preferredassailingtheimpugned award passedby Motor Accidents Claims Tribunal [‘MACT’], East District, Karkardooma Courts, Delhi in Petition No. 611/2010 on 28th September 2013 awarding compensation to thetuneof Rs. 46,211/-, alongwithinterest at therateof[7].5% from the date of filing of petition to respondent no.1/claimant for injuries sustained by him.
2. The accident took place on 5th August 2010 at about 06:00 p.m when respondentno.1/claimant was goingtowards DhobhiGhatVivek Vihar on his bicycle. When he reached near Kasturba NagarChowkVivek Vihar, Delhi a Maruti car bearing no. DL-7CB-0560 (hereinafter, ‘offending vehicle’), which was being driven by respondent no.2/driver in a rash and negligent manner hit respondent no.1/claimant, as a result ofwhich he fell down on the road and sustained serious injuries. Thereafter, he was immediately taken to MAC.APP. 264/2014 2/10 Dr. Hedgewar Hospital.
3. Ms. Shikha Sapra, Counsel for appellant/Insurance Company submits that theonlyissuewhich needsdeterminationis, whether,theinsurancepolicy which commenced from 6th August 2010 at 00:00 hours would cover the accident which took place on 5th August 2010 at 06:00 p.m.
4. In this regard, MACT held that sincethe insurancepremium was paid at 02:51 p.m. on 05th August 2010, the insurance policy would have been in operation at the time of accident.
5. To support her contention, Ms. Sapra relies upon decision of the Supreme Court in National Insurance Company Ltd. v. Maya Devi & Ors. 2024 SCC OnLine SC 4086 where this issue has been considered in paragraphs 11 and 12. While dealing with this point of law, the Supreme Court, reiterated the view in National Insurance Co. Ltd. v. Sobina Iakai (2007)7 SCC786, statingthat “theeffectiveness oftheinsurancepolicywould start from the time and date specifically incorporated in the policy and not from an earlier point of time”.
6. Examiningthedecision in Sobina Iakai (supra), it is noticed that in the facts of that case, the insurance policy in question had expired on 29th June 1994 and after 21 days ofits expiry, thevehicle met with an accident on 20th July 1994 at 9:15 a.m. which resulted in two deaths. Insurance policy was renewed on 20th July 1994 at[2]:00 p.m., whiletheaccident had takenplaceon 20th July 1994 at 9:15 a.m. itself.
7. On this basis the Supreme Court considered earlier decision in New India Insurance Co. Ltd. v. Ram Dayal (1990) 2 SCC 680 where the Supreme Court had held that that in absence of any specific time mentioned in thepolicy, thecontract wouldbeoperativefromthemidnightoftheday by operation of the provisions of General Clauses Act, 1897. But in view of a MAC.APP. 264/2014 3/10 specialcontract,mentioned in theinsurancepolicy, theeffectivenessofpolicy would start from time and date indicated in the policy.
8. The Court also relied upon decision of a three-Judge Bench of the Supreme Court in National Insurance Co. Ltd. v. Jikubhai Nathuji Dabhi (1997)1 SCC 66;OrientalInsuranceCo. Ltd. v. Sunita Rathi (1998)1 SCC 365, New India Assurance Co. v. Bhagwati Devi (1998) 6 SCC 534 and J. Kalaivani v. K Sivashankar & Ors. (2007) 7 SCC 792. The Supreme Court in J. Kalaivani (supra) observed that there is an obligation on the Court to look into thecontract ofinsuranceto discern whetherany particular timehas been specified for commencement and expiry of the policy, since a large number of cases had come to notice where insurance policies were taken immediately after the accidents to get compensation.
9. Sobina Iakai (supra) was noticed by the Supreme Court in the recent decision of Maya Devi (supra). In Maya Devi (supra), the accident occurred on 11th April 2017 at about 1415 hours, whereas the insurance policy disclosed that insurancewas obtainedat 1554hours on thesameday.MACT, however foundthat insurancepremiumwaspaid priorto theaccident anddue to an internal procedure, insurance policy was issued the next day and coverage under insurance policy would begin from the day the payment i.e. the premium was received by insurance company.
10. SupremeCourtnoted theprevious decision in Oriental Insurance Co. Ltd. v. Dharam Chand (2010) 15 SCC 141 where the Supreme Court recorded a concession by the counsel for insurance company that it had received the premium cheque on 7th May 1998 at 4.00 pm and therefore, insurancecoverageoughtto havecommenced from thattimeandtheaccident which occurred four hours later, would be deemed to be covered.
11. On the facts of case in Maya Devi (supra) the Supreme Court MAC.APP. 264/2014 4/10 categorically stated that, since the date of commencement of risk was noted as 11th April2017, theyhad no hesitationto hold thatthevehiclewas insured when the accident took place. The Court reiterated the view taken in Sobina Iakai(supra). However, they noted thattheinsurancecompanyhad notbeen ableto provethatit had not received themoney/premiumpriorto theaccident and the only stand taken was that insurance had been obtained fraudulently. In this regard, the Court stated that if such a plea is raised by the insurance company, onusto provethesamewould lie on theinsurancecompanyitself.
12. It may be noted that the judgment in Maya Devi (supra) deliberates upon the issue of fraud since the Supreme Court had dealt with cases where insurance was obtained after the accident had occurred.
13. In the opinion of this Court, if, however, the insurance premium was paid prior to the accident, it would not be a question of fraud being perpetuated on theinsurancecompany, consideringthat theoffer ofobtaining insurance, which was ultimately accepted, would fructify the intent of the insured to procure an insurance policy for the vehicle.
14. Due to an internalprocedure, as noted by the SupremeCourt in Maya Devi (supra), if the insurance policy document is issued subsequently, and unfortunately duringthat periodof time an accident takes place, it cannotbe said that theinsuredhad staged theaccident in order to receive theinsurance amount. Thatreasoningwould bestretchingtheconceptofclaim offraudulent claim too far and much beyond any reasonable conception.
15. A CoordinateBench ofthis Courtin NanheLalv. SatenderGiri, 2024 SCC OnLineDel 9261 was hearingan appealfiled by the owner ofoffending vehicle, where the InsuranceCompany had been exoneratedfrom payingthe compensation awarded by the Tribunal, on the basis that there was no valid insurance policy at the time of accident. The accident took place on MAC.APP. 264/2014 5/10 02.06.2013 at about 12:00 noon, the previous Insurance Policy had expired on 30.05.2013 which was renewed before the accident, by paying the premiumon 31.05.2013. ThoughthePolicy was issuedon 31.05.2013, it was made effective from 02.06.2013 with effect from 02:32 a.m. Allowing the appeal filed by the owner, the Court observed as under:
16. Examining the principles of offer and acceptance in contract law may be paramount in order to appreciate when the contract of insurance commences.
17. Black’s Law Dictionary 1189 (9th ed. 2009) defines offer in contract law as “a promise to do or refrain from doing some specified thing in the future, conditioned on an act, forbearance, or return promise being given in exchangeforthe promise orits performance;a displayof willingnessto enter into a contracton specified terms, madein a waythatwould lead areasonable person to understand thatan acceptance, having been sought, will result in a binding contract.” Ontheother hand,acceptancehas beendefined by Black's MAC.APP. 264/2014 6/10 Law Dictionary 13 (9th ed. 2009) as, “an offeree's assent, either by express act or by implication from conduct, to the terms of an offer in a manner authorized or requested by the offeror, so that a binding contractis formed.”
18. Reckoning these definitions in the context of insurance law, reliance may be placed on the decision of Supreme Court in LIC v. Raja Vasireddy KomalavalliKamba, (1984)2 SCC 719 wheretheCourt observed as under: “15. Though in certain human relationships silence to a proposal might convey acceptance but in the case of insurance proposal, silence does not denote consent and no binding contract arises until the person to whom an offer is madesays or does something to signify his acceptance. Mere delay in giving an answer cannot be construed as an acceptance, as, prima facie, acceptance must be communicated to the offerer. The general rule is that the contract of insurance will be concluded only when the party to whom an offer has been made accepts it unconditionally and communicates his acceptance to the person making the offer. Whether the final acceptance is that of the assured or insurers, however, depends simply on the way in which negotiations for an insurance have progressed. See in this connection statement of law in MacGillivray & Parkington on Insurance Law, 7th Edn., p. 94, para 215.”
19. This concept has been clarified by theSupremeCourtin Bhumikaben
case [LIC v. Vasireddy Komalavalli Kamba, (1984) 2 SCC 719]. In short, the decision in D. Srinivas case [D. Srinivas v. SBI Life Insurance Co. Ltd., (2018) 3 SCC 653: (2018) 2 SCC (Civ) 604] would obligate us to consider whether the circumstances obtained in this case give rise to a very clear presumption of acceptance of the policy by the insurer instead of merely giving imprimatur to the impugned order [LIC v. Bhoomikaben M. Modi, 2010 SCC OnLine NCDRC 318]of Ncdrc on the ground thatit was rendered relying on the decision in Vasireddy Komalavalli Kamba MAC.APP. 264/2014 8/10 case [LIC v. Vasireddy Komalavalli Kamba, (1984) 2 SCC 719]. In this context, it is only apposite to note that though the orders were passed by the District Forum which was confirmed by the State Commission would reveal that the analysis and the consequential conclusion arrived at thereunder lie in conformity with the exercise expected to be undertaken based on the aforementioned exposition of law in D. Srinivas case [D. Srinivas v. SBI Life Insurance Co. Ltd., (2018) 3 SCC 653: (2018) 2 SCC (Civ) 604]. …
27. The photocopy of the acceptance-cum-first premium receipt is produced by the respondent along with its written submission as Annexure B. In fact, Annexure B would reveal the accuracy and correctness of whatis stated at page‘E’ of the synopsis of the captioned appeal. A perusal of the same would makeitclear thattheacceptanceof thepaymentwould place the Corporation to assumethe risk with effect from the date of the acceptance-cum-first premium receipt. True that in Annexure B, it is stated that it would be subject to the realisation of the amount in cash and the terms and conditionsofacceptanceprinted overleaf. Though thisCourt called upon therespondentto producethe original, thesame was not produced and what was produced was only a photocopy as Annexure B.”
20. The Supreme Court arrived at the conclusion that the acceptance of insurance coverage took place prior to the death of deceased and held as under: “36. There is no case for the respondentthatAnnexure B viz. the first premium receipt carrying the assurance, as mentioned earlier, was not issued. Annexure B would justify drawing of presumption of acceptance of the policy and not otherwise. We have also found that no material irregularity or illegality could be found in the conclusions drawn with regard to the acceptance of proposal by the District Forum which was confirmed by the State Commission with reasons. We are fortified in our view by the following further MAC.APP. 264/2014 9/10 reasons/circumstances.”
21. Therefore, to substantiate, an offer emanates from the insured who promises to pay premium, which, if accepted/received by the insurer would bind theInsuranceCompanyas per thetermsofcontract andwould therefore, account as acceptance on the part of Insurance Company. While the conclusion of the contract and the date of commencement of the same has been the bone of contention, in the opinion of this Court, an Insurance Company would be obliged to pay the insured for any risk covered from the datepremium has been deposited by theinsured, unlessit has chosen to reject the offer of payment of premium.
22. Moreover, in the present matter as per testimony of R3W[1], an officer from Insurance Company, which is on record, it was noted in his cross examination that, “it is correct that premium was paid on 05/8/2010 in cash and insurancepolicywasalso issued on the same day. Thecash was received atShahdaraBranch atabout[2].51 p.mon 05.08.2010,asmentioned in receipt Ex. R3W1/X.”
23. Accordingly, in view oftheabove, theappealofInsuranceCompanyis not sustainable.
24. Appeal is accordingly, dismissed.
25. This Court vide order dated 25th March, 2014 granted a stay on the execution ofthe impugned award andno directionsweregiven for deposit of the awarded amount.
26. Considering that the MACT award stands confirmed, appellant/InsuranceCompany shall deposittheentirecompensationwith upto-dateinterest, ifnot alreadydeposited, beforetheMACT withina periodof four weeks from today and the same shall be released to respondent MAC.APP. 264/2014 10/10 no.1/claimant thereafter, within three weeks.
27. Pending applications, if any, shall be rendered as infructuous.
28. Statutorydepositshallberefunded to appellant/Insurance Company.
29. Judgement be uploaded on the website of this Court.
ANISH DAYAL, J MARCH 9, 2026/sm/sp