Summary of this article
The Chhattisgarh High Court ruled that insurance coverage begins from the date and time mentioned on the insurance policy, not from the date of premium receipt.
It rejected Aadhaar as the sole proof of age, saying it is not a reliable age-proof.
It dismissed the appeal and directed the car owner to pay compensation along with interest.
In a recent ruling, the Chhattishgarh High Court affirmed that an insurance company is not liable to pay compensation in a motor insurance claim just because the premium on a new policy has been paid mere hours before the accident occurred. The matter highlighted the moment when a policy takes effect. The court ruled that simply depositing a premium does not create an instantaneous safety net, but it takes effect from the date and time mentioned on the policy, and not from the date of receipt of the premium.
The Gopi Sahni v. Ranjit Bhunjia matter belonged to the accident that happened on April 19 2019, at around 10:00 pm, when a Tata Sumo owned by Govind Sahni collided with a motorcycle. The motorcycle was carrying three individuals (Panchram, Bisnath, and Ranjit Bhunjia). One of them (Panchram) died on the spot, while the other (Bisnath) passed away on the way to the hospital. The third rider (Ranjit) survived, but he sustained serious injuries that led to the amputation of his right leg.
The Sumo owner, Sahni, contended that he paid the premium of Rs 9,370 to an agent at 4:00 pm on the same day (day of the accident), seeking compensation from the insurance company for the accident.
His bank records showed that the funds were transferred to the insurance company by 4:35 pm, and subsequently, the policy was issued with details of the date and time when it would be effective. Per the policy document, the coverage period began at 12:00:01 am on April 20, 2019, which was roughly two hours after the accident occurred.
Arguments
The owner and driver argued that the insurance company acted in bad faith by setting the policy start date from the following day of the premium paid date. They maintained that the receipt of funds should automatically trigger coverage and stressed that the insurance company is liable to pay compensation. The owner also contended his liability should be reduced, alleging contributory negligence, pointing out that three people were riding on a single motorcycle.
On the other hand, the New India Insurance Company argued that the vehicle was uninsured at 10:00 pm on April 19. It further argued that the insurance agent was not an authorised agent and that the contract of insurance only begins at the specific time and date mentioned on the policy document.
Court Observation
Presiding Judge Sachin Singh Rajput rejected the contributory negligence argument, saying that carrying three riders does not ipso facto prove negligence unless a direct link that caused the accident is demonstrated.
On the insurance issue, the court noted that an insurance contract is complete only when the insurer accepts the offer unconditionally. The court referred to the Supreme Court precedents and noted that the date of policy issuance is the relevant date for legal purposes, and not the date of premium receipt.
It also observed that the lower tribunal wrongly relied on the Aadhaar card for age determination, whereas medical evidence provided a different and more accurate assessment. The Tribunal determined the claimant’s age as 68 years, whereas, as per claimant, his age was 58 years at the time of the accident. Based on the medical documents, the High Court determined his age to be between 61 and 65, and thus, increased his monthly income for compensation calculation.
Court Judgment
Considering all the arguments, the High Court dismissed the appeals filed by the owner and the driver. It ruled that they are personally liable for the damages as the vehicle was not insured at the time of the accident. The court increased the compensation for Panchram's death from Rs 10,73,900 to Rs 21,57,800. For the surviving Ranjit Bhunjia's injury, the court increased the award to Rs 3,90,800 and directed the appellant (Sumo owner) to deposit these enhanced amounts with 6 per cent interest within 60 days.
