Can 3rd Party Insurance Be Claimed When Accident Took Place On The Same Day The Policy Was Taken But The Coverage Starts Only From The Next Day?SC To Examine

The Supreme Court on Tuesday stayed the operation of a Jharkhand High Court's order which allowed the claim in the case of a motor accident, that occurred a day prior to the coverage of the insurance period, but in which the insurance premium was paid on the very day of the accident.

The Bench of Justice Sanjay Kishan Kaul and Justice M. M. Sundresh was hearing an appeal filed by the Royal Sundaram Alliance Insurance Co. Ltd. against the Jharkhand High Court order dismissing its appeal against the Award passed by Presiding Officer, Motor Vehicles Accident Claims Tribunal (MVACT), Ranchi.

The case in brief

The matter relates to claimants, Savitri Devi and Shiv Shankar Munda were awarded compensation (by MVACT, Ranchi) to the tune of 6,99,200/-, out of which 30% had been deducted as contributory negligence, as such, the claimants were held to be entitled to compensation to the tune of Rs. 4,89,440/- along with interest @ 7.5% per annum.

This award was challenged before the Jharkhand High Court on the ground that the policy was valid from March 15, 2015, to March 14, 2016, but the accident took place a day prior to coverage of the insurance period (on March 14, 2015).

As such, in view of Section 147(3) of the Motor Vehicles Act, it was argued, the Insurance Company was not liable to compensate or indemnify the award.

Upholding the award of the Tribunal, the Jharkhand High Court had observed thus:

"Under the aforesaid circumstances, since the written statement has not been filed by the Insurance Company and the policy was signed on 14.03.2015, for an accident of evening of 14.03.2015, this Court holds that the finding recorded the learned Tribunal does not require any interference as premium must have been taken during the office hour of 14.03.2015 at Chennai and the accident took place only in the evening."

The matter before the Supreme Court

Filing an appeal against the order and Judgment of the Jharkhand High Court, the Insurance company raised the same argument that the policy was taken out on March 14, 2015, and the accident occurred the same evening and since, as per the insurance policy cover, it was to operate for period of one year from March 15, 2015, thus, the policy was not operative on March 14, 2015 when the accident occurred.

In view of this, the Supreme Court has issued the notice to the respondent and in the meantime, has put a stay on the operation of the impugned order.

Click here To Download Order