Motor Accident Claim | Third Party Insurance Policy Effective From Date & Time Specified In Policy Document : Supreme Court

While dismissing an insurance company's appeal against a motor accident compensation award, the Supreme Court recently reiterated that merely alleging fraud as regards obtaining of an insurance policy is not enough. Rather, it has to be proved by the insurance company by adducing evidence. The Court further observed that policy coverage commences from the time and date specified in the policy document."The Insurance Company has not been able to prove that it had not received the money/premium prior to the accident and the only stand taken was that the insurance was fraudulently obtained. The law is very clear – fraud vitiates everything, but merely alleging fraud does not amount to proving it. For, it has to be proven in accordance with law by adducing evidence etcetera, the onus of which would also lie on the person alleging fraud", stated a bench of Justices Sudhanshu Dhulia and Ahsanuddin Amanullah.To summarize facts of the case, one Om Prakash and his wife Asha Rani expired in a tragic road accident in 2017. When respondent No.1 (mother of Om Prakash) and 2 (daughter of the deceased) filed for compensation, the Motor Accidents Claim Tribunal awarded compensation to the tune of Rs.67,50,000/- and Rs.8,70,000/- with interest @9% per annum. The petitioner-Insurance Company was held liable to pay the said amount to the claimants. In appeal, Punjab and Haryana High Court upheld the MACT's award. Aggrieved, the Insurance Company approached the Supreme Court.One of the questions that arose before the Court was as to whether the subject vehicle could be deemed to be covered by the insurance policy at the relevant time. The incident had occurred on 11.04.2017 at 02:15 pm, whereas the insurance policy disclosed that insurance was obtained at 03:54 pm on 11.04.2017. The MACT found that the premium was paid prior to the accident and due to internal procedure, policy was issued the next day. Therefore, it held that the policy coverage began from the day the premium was received by the Insurance company.The Insurance company's defense was that the policy was obtained fraudulently. From the insurance certificate, the Supreme Court noted that date of commencement of risk was recorded as 11.04.2017 (that is, date of incident). As such, the court reiterated the view taken in earlier cases 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."The bench of Justices Dhulia and Amanullah was referred to the decision in Oriental Insurance Co. Ltd. v Dharam Chand, where the concerned Insurance company took the stand that insurance must be deemed to have commenced from the time premium was received by the company. In this case, the accident for which policy cover was sought took place 4 hours after the payment of premium to the insurance company.As the petitioner-insurance company in the instant case failed to show that it had not received premium prior to the accident, the Court ruled in the claimants' favor. Further, it was held that the onus to prove fraud (in obtaining of the policy) was upon the insurance company, but it failed to discharge it. Accordingly, the appeal was dismissed.Case Title: NATIONAL INSURANCE COMPANY LTD. VERSUS MAYA DEVI AND OTHERS, CIVIL APPEAL NOs. 15016-15017 OF 2024Citation : 2025 LiveLaw (SC) 58Click here to read the order

Motor Accident Claim | Third Party Insurance Policy Effective From Date & Time Specified In Policy Document : Supreme Court

Debby Jain

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