1. Motor accident — Insurance claim — Appeal against compensation award — Validity of insurance policy at accident time. (Para 1 , 2 )
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2026 Supreme(Online)(Del) 5345
IN THE HIGH COURT OF DELHI AT NEW DELHI
Anish Dayal, J
UNITED INDIA INSURANCE CO LTD – Appellant
Versus
SHAKIL AHMED & ORS – Respondent
MAC.APP.-264/2014
Advocates:
For the Appellants/Petitioners: Shikha Sapra
For the Respondents: Manish Maini
For the Appellants/Petitioners: Shikha Sapra
For the Respondents: Manish Maini
Insurance coverage commences upon the insurer's acceptance and receipt of the premium, as this completes the contract of insurance. Administrative delays in issuing policy documents with a later effective date do not exempt the insurer from liability if the premium was paid prior to the accident.
Headnote:(A) Insurance Law - Commencement of policy - Whether insurance coverage begins from the date and time specifically incorporated in the policy or from the moment premium is paid - If premium is received prior to an accident, the insurance company is obliged to pay for the risk covered from the date premium was deposited, unless the offer of payment was rejected (Paras 13, 21).
(B) Contract Law - Offer and Acceptance - For insurance contracts, the offer emanates from the insured through the payment of the premium, and the receipt of such payment by the insurer constitutes acceptance, thereby binding the insurance company as per the terms of the contract (Paras 17, 21).
(C) General Clauses Act, 1897 - Operative time of contracts - In the absence of a specific time mentioned in a policy, the contract operates from the midnight of the day, but a special contract specifying a time takes precedence (Para 7).
Facts of the case:
An accident occurred at 6:00 p.m. involving a bicycle and a motor vehicle. The insurance premium for the offending vehicle was paid in cash at 2:51 p.m. on the same day. However, the insurance policy document indicated that the coverage commenced from 00:00 hours of the following day. The insurance company contended that the accident was not covered as it occurred before the policy's specified commencement time.
Findings of Court:
The appeal of the insurance company was found to be unsustainable as the premium had been received prior to the accident, signifying an acceptance of the risk.
Issues: Whether the insurance policy covers an accident that took place after the premium was paid but before the effective commencement date and time mentioned in the policy document.
Ratio Decidendi: The court ruled that insurance coverage commences from the date the premium is deposited, as the payment of the premium is an offer and its receipt is the acceptance. Internal administrative procedures causing the policy document to be issued with a later commencement date do not void the coverage if the premium was paid before the accident and no fraud is proven.
Result: Appeal dismissed.
Legal Category Hierarchy
- tort
- contract law
- practice and procedure
Table of Contents
2. Insurer argued policy effective from midnight, claimant asserted coverage from premium payment preceding accident. (Para 3 , 4 )
3. Insurance company bound from premium receipt unless offer rejected; internal delay irrelevant if premium paid before accident. (Para 13 , 14 , 21 , 22 , 23 )
4. Once premium is paid and received, insurance coverage commences from that time unless contract specifies otherwise. (Para 21 , 22 , 23 )
5. Appeal dismissed; insurer directed to deposit compensation with interest and release to claimant. (Para 24 , 26 )
6. When does a motor insurance policy become effective if premium is paid before an accident?
Coverage begins from the time premium is paid and received by the insurer, unless the policy expressly specifies a later start time. (Para 13 , 14 , 21 , 22 , 23 )
7. Can an insurer avoid liability by claiming the policy was issued after the accident despite receiving premium before it?
No, if premium is paid before the accident, the insurer cannot avoid liability merely due to internal delays in policy issuance. (Para 13 , 14 , 21 )
8. What is the effect of the Supreme Court's decision in Maya Devi on this issue?
The Supreme Court held that if the premium is paid before the accident, the vehicle is deemed insured at the time of the accident. (Para 10 , 11 )
9. What is the relevance of offer and acceptance in insurance contracts regarding coverage commencement?
A binding contract is formed when the insurer accepts the premium; acceptance may be inferred from receipt of payment. (Para 17 , 19 , 20 , 21 )
$~13 * IN THE HIGH COURT OF DELHI AT NEW DELHI Date of decision: 09th March 2026 + MAC.APP. 264/2014 UNITED INDIA INSURANCE CO LTD .....Appellant Through: Ms. Shikha Sapra, Adv.
versus SHAKIL AHMED & ORS .....Respondents Through: Mr. Manish Maini, Adv. for R-1.
CORAM:
HON'BLE MR. JUSTICE ANISH DAYAL
JUDGMENT
ANISH DAYAL, J: (ORAL)
1. This appeal has been preferred assailing the impugned award passed by Motor Accidents Claims Tribunal [‘MACT’], East District, Karkardooma Courts, Delhi in Petition No. 611/2010 on 28th September 2013 awarding compensation to the tune of Rs. 46,211/-, alongwith interest at the rate of 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 respondent no.1/claimant was going towards Dhobhi Ghat Vivek Vihar on his bicycle. When he reached near Kasturba Nagar Chowk Vivek 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 of which he fell down on the road and sustained serious injuries. Thereafter, he was immediately taken to Dr. Hedgewar Hospital.
3. Ms. Shikha Sapra, Counsel for appellant/Insurance Company submits that the only issue which needs determination is, whether, the insurance policy 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 since the insurance premium 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 SCC 786, stating that “the effectiveness of the insurance policy would start from the time and date specifically incorporated in the policy and not from an earlier point of time”.
6. Examining the decision 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 of its expiry, the vehicle 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., while the accident had taken place on
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 the policy, the contract would be operative from the midnight of the day by operation of the provisions of General Clauses Act, 1897. But in view of a special contract, mentioned in the insurance policy, the effectiveness of policy 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; Oriental Insurance Co. 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 the contract of insurance to discern whether any particular time has 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
