United India Insurance Co Ltd vs Shakil Ahmed & Ors

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* IN THE HIGH COURT OF DELHI AT NEW DELHI
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Date of decision: 09 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
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Courts, Delhi in Petition No. 611/2010 on 28 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.
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2. The accident took place on 5 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
Signature Not Verified
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By:MANISH KUMAR
Signing Date:18.03.2026
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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
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which commenced from 6 August 2010 at 00:00 hours would cover the
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accident which took place on 5 August 2010 at 06:00 p.m.
4. In this regard, MACT held that since the insurance premium was paid
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at 02:51 p.m. on 05 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
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facts of that case, the insurance policy in question had expired on 29 June
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1994 and after 21 days of its expiry, the vehicle met with an accident on 20
July 1994 at 9:15 a.m. which resulted in two deaths. Insurance policy was
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renewed on 20 July 1994 at 2:00 p.m., while the accident had taken place on
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20 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
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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 accident occurred
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on 11 April 2017 at about 1415 hours, whereas the insurance policy
disclosed that insurance was obtained at 1554 hours on the same day. MACT,
however found that insurance premium was paid prior to the accident and due
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. Supreme Court noted the previous 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
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received the premium cheque on 7 May 1998 at 4.00 pm and therefore,
insurance coverage ought to have commenced from that time and the accident
which occurred four hours later, would be deemed to be covered.
11. On the facts of case in Maya Devi ( supra ) the Supreme Court
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categorically stated that, since the date of commencement of risk was noted
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as 11 April 2017, they had no hesitation to hold that the vehicle was insured
when the accident took place. The Court reiterated the view taken in Sobina
Iakai ( supra ). However, they noted that the insurance company had not been
able to prove that it had not received the money/premium prior to the accident
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, onus to prove the same would lie on the insurance company itself.
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 the insurance company, considering that the offer of obtaining
insurance, which was ultimately accepted, would fructify the intent of the
insured to procure an insurance policy for the vehicle.
14. Due to an internal procedure, as noted by the Supreme Court in Maya
Devi ( supra ), if the insurance policy document is issued subsequently, and
unfortunately during that period of time an accident takes place, it cannot be
said that the insured had staged the accident in order to receive the insurance
amount. That reasoning would be stretching the concept of claim of fraudulent
claim too far and much beyond any reasonable conception.
15. A Coordinate Bench of this Court in Nanhe Lal v. Satender Giri , 2024
SCC OnLine Del 9261 was hearing an appeal filed by the owner of offending
vehicle, where the Insurance Company had been exonerated from paying the
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
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Signing Date:18.03.2026
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MAC.APP. 264/2014 4/10

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
premium on 31.05.2013. Though the Policy was issued on 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:
“ 17. It is pertinent to note that admittedly the premium for
renewal of Insurance Policy had been received on
31.05.2013 i.e. almost two days prior to the date of the
accident which occurred on 02.06.2013 at about 12 noon.
The appellant-owner had taken the requisite steps and even
paid the premium in cash, which was admittedly received by
the Insurance Company.
18 . Since there was admittedly a valid insurance Cover
Note/Insurance Policy issued in the name of the Appellant
two days prior to the accident, the Insurance Company could
not have avoided to pay the compensation when it has not
been able to show that there was any fraud or manipulation
on the part of the owner or that the accident had been faked
only for the purpose of claiming insurance. Its own Circular
provides that genuine Claims must be considered.”
(emphasis added)

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
exchange for the promise or its performance; a display of willingness to enter
into a contract on specified terms, made in a way that would lead a reasonable
person to understand that an acceptance, having been sought, will result in a
binding contract.” On the other hand, acceptance has been defined by Black's
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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 contract is 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
Komalavalli Kamba , (1984) 2 SCC 719 where the Court 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
made says 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.”
(emphasis added)

19. This concept has been clarified by the Supreme Court in Bhumikaben
N. Modi v. LIC , (2024) 6 SCC 385 which was an appeal filed against the
decision of National Consumer Disputes Redressal Commission (‘ NCDRC ’)
wherein it was held that a valid contract of insurance did not exist at the time
of accident. In the facts of the case, Life Insurance Corporation (‘ LIC ’) denied
the life insurance claim to the legal heirs of deceased Shri Narender Kumar
Kantilal Modi , on account that the insurance proposal was not accepted before
the policyholder's death, thereby rendering the insurance contract as void.
While the claim filed by legal heirs was allowed by District Commission and
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State Commission, same was set aside by the NCDRC by placing reliance on
Raja Vasireddy (supra) . The Supreme Court, on appeal, set aside the decision
of NCDRC and while distinguishing with Raja Vasireddy ( supra ) on facts,
the Supreme Court observed as under:
“21. In the decision in D. Srinivas case [D. Srinivas v. SBI
Life Insurance Co. Ltd., (2018) 3 SCC 653 : (2018) 2 SCC
(Civ) 604] , this Court held thus : (D. Srinivas case [D.
Srinivas v. SBI Life Insurance Co. Ltd., (2018) 3 SCC 653 :
(2018) 2 SCC (Civ) 604] , SCC p. 657, para 12)
“12. Although we do not have any quarrel with the
proposition laid therein, it should be noted that
aforesaid judgments only laid down a flexible formula
for the Court to see as to whether there was clear
indication of acceptance of the insurance. It is to be
noted that the impugned majority order merely cites the
aforesaid judgment, without appreciating the
circumstances which give rise to a very clear
presumption of acceptance of the policy by the insurer
in this case at hand. The insurance contract being a
contract of utmost good faith, is a two-way door. The
standards of conduct as expected under the utmost good
faith obligation should be met by either party to such
contract.”
22. Para 11 of the decision in D. Srinivas case [D.
Srinivas v. SBI Life Insurance Co. Ltd., (2018) 3 SCC 653 :
(2018) 2 SCC (Civ) 604] would reveal that the aforequoted
recital was made thereunder after considering the decision
in Vasireddy Komalavalli Kamba 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 that it was rendered relying on
the decision in Vasireddy Komalavalli Kamba
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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 what is stated at page ‘E’ of
the synopsis of the captioned appeal. A perusal of the same
would make it clear that the acceptance of the payment would
place the Corporation to assume the 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
conditions of acceptance printed overleaf. Though this Court
called upon the respondent to produce the original, the same
was not produced and what was produced was only a
photocopy as Annexure B.”
(emphasis added)

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 respondent that Annexure 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
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reasons/circumstances.”
(emphasis added)

21. Therefore, to substantiate, an offer emanates from the insured who
promises to pay premium, which, if accepted/received by the insurer would
bind the Insurance Company as per the terms of contract and would 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
date premium has been deposited by the insured, unless it has chosen to reject
the offer of payment of premium.
22. Moreover, in the present matter as per testimony of R3W1 , 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 insurance policy was also issued on the same day. The cash was received
at Shahdara Branch at about 2.51 p.m on 05.08.2010, as mentioned in receipt
Ex. R3W1/X .”
23. Accordingly, in view of the above, the appeal of Insurance Company is
not sustainable.
24. Appeal is accordingly, dismissed.
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25. This Court vide order dated 25 March, 2014 granted a stay on the
execution of the impugned award and no directions were given for deposit of
the awarded amount.
26. Considering that the MACT award stands confirmed,
appellant/Insurance Company shall deposit the entire compensation with up-
to-date interest, if not already deposited, before the MACT within a period of
four weeks from today and the same shall be released to respondent
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no.1/claimant thereafter, within three weeks.
27. Pending applications, if any, shall be rendered as infructuous.
28. Statutory deposit shall be refunded to appellant/Insurance Company.
29. Judgement be uploaded on the website of this Court.


ANISH DAYAL, J
MARCH 9, 2026/sm/ sp
Signature Not Verified
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By:MANISH KUMAR
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