Madhya Pradesh High Court
Hdfc Ergo Genral Insurance Company ... vs Kapuri Bai on 11 May, 2026
Author: Hirdesh
Bench: Hirdesh
NEUTRAL CITATION NO. 2026:MPHC-GWL:15560
1 MA-2074-2022
IN THE HIGH COURT OF MADHYA PRADESH
AT GWALIOR
BEFORE
HON'BLE SHRI JUSTICE HIRDESH
ON THE 11th OF MAY, 2026
MISC. APPEAL No. 2074 of 2022
HDFC ERGO GENRAL INSURANCE COMPANY LIMITED
REGISTERED OFFICE 1ST FLOOR 165166 BACKBAY
RECLAMATION H.
Versus
KAPURI BAI AND OTHERS
Appearance:
Shri Nirendra Singh Tomar - Advocate for the appellant/Insurance
Company.
Shri Purushottam Lal Sharma-Advocate for respondent No.4.
Shri Bhagwan Das Verma-Advocate for respondent Nos. 1 and 2.
ORDER
This Miscellaneous Appeal under Section 173(1) of the Motor Vehicles Act, 1988 has been preferred by the appellant/Insurance Company by taking exception to the Award dated 26/02/2022 passed by the Fourth Additional Motor Accident Claims Tribunal, Gwalior in Claim Case No.500108/2015, whereby the Claims Tribunal awarded compensation in favour of the claimants by imposing liability upon the Insurance Company.
2. The date of accident and negligence are not in dispute. However, the findings recorded by the Claims Tribunal in this regard are not under challenge.
3. Learned counsel for the appellant/Insurance Company submitted Signature Not Verified Signed by: PRACHI MISHRA Signing time: 5/12/2026 3:24:36 PM NEUTRAL CITATION NO. 2026:MPHC-GWL:15560 2 MA-2074-2022 that the impugned award passed by the Claims Tribunal is erroneous and contrary to the facts, evidence and material available on record. It is submitted that the Claims Tribunal failed to properly appreciate the evidence of Anand Shrivastava (DW-2), which clearly establishes that the subject motorcycle bearing registration No. MP 07 MT 9688 was not insured with the appellant Company on the date of accident, i.e., 19/04/2015, but was insured for the period from 21/04/2015 to 20/04/2016 under a "Two Wheeler Liability Only" policy. It is further submitted that the Claims Tribunal committed an error in holding that the appellant/Insurance Company had received the premium on 16/04/2015 through fund transfer by Rajaram Sahu, as reflected in the policy document. Learned counsel submits that the appellant/Insurance Company, by adducing cogent oral and documentary evidence, proved that agent Rajaram Sahu had deposited an advance amount with the Company and whenever any insurance policy was issued, the premium amount was deducted from the said advance deposit. According to the appellant, the date 16/04/2015 mentioned in Ex.D/2 pertains to the advance deposit made by Rajaram Sahu and not to the payment of premium by the insured. It is also contended that the premium amount was actually paid on 20/04/2015, whereafter the policy was issued and made effective from 21/04/2015. It is further argued that the Claims Tribunal failed to properly appreciate Ex.D/3, which is a computer-generated entry relating to the fund transfer. From the said document, it is evident that agent Rajaram Sahu had an advance deposit of Rs.15,000/- with the Company, whereas the premium amount of the subject vehicle was only Rs.548/-. It is submitted Signature Not Verified Signed by: PRACHI MISHRA Signing time: 5/12/2026 3:24:36 PM NEUTRAL CITATION NO. 2026:MPHC-GWL:15560 3 MA-2074-2022 that the fund transfer dated 16/04/2015 mentioned in the policy related to the advance deposit of Rajaram Sahu and not to the premium deposited by the insured. Therefore, according to the appellant, the Claims Tribunal erred in fastening liability upon the Insurance Company. It is further submitted that insurance is contractual in nature between the insurer and the insured. Since, as per Ex.D/2, the policy commenced from 21/04/2015 and the accident occurred on 19/04/2015, the offending vehicle was not insured on the date of accident and, therefore, the appellant/Insurance Company cannot be held liable to pay compensation. . Reliance has been placed upon the judgments in Deokar Exports PVt. Ltd Vs New India Assurance Company Ltd, 2009 ACJ 133, Oriental Insurance Company Ltd VS. Sunita Rathi and others, 1998 (1) ACJ 121, Oriental Insurance Company Ltd Vs. Poreselvi and another 2009 (5) SCC (civil) 926, National Insurance Co. Ltd Vs Jijubhai Nathuji Dabhi and Ors., Manu/SC/0525/1997, New India Assurance Co. Ltd VS Sita Bai, 1999 (2) JLJ 415 (SC) and M/s National Insurance Company Ltd Vs Smt. Jijubhai Nathuji Dabhi and others, 1997 AIR (SC) 2147 .. Hence, it is prayed that the impugned award be modified and the Insurance Company be exonerated from its liability to pay compensation to the claimants.
4. On the other hand, learned counsel for the respondents supported the impugned award and submitted that the Insurance Company received the premium on 16/04/2015. Therefore, it was the duty of the Insurance Company to explain why and in what manner the insurance policy commenced from 21/04/2015 to 20/04/2016. It is further submitted that the Insurance Company failed to adduce the evidence of agent Rajaram Sahu, Signature Not Verified Signed by: PRACHI MISHRA Signing time: 5/12/2026 3:24:36 PM NEUTRAL CITATION NO. 2026:MPHC-GWL:15560 4 MA-2074-2022 who received the premium for insurance from the owner of the offending vehicle on 16/04/2015 and deposited the same with the Insurance Company, which is reflected from Ex.D/2, wherein the payment details and Fund Transfer No. QP150478018 dated 16/04/2015 are clearly mentioned. The same is also reflected in Ex.D/3. Hence, prayer has been made for dismissal of the appeal.
5. Heard learned counsel for both the parties and perused the record of the Claims Tribunal.
6.It is undisputed that the accident occurred on 19/04/2015. As per the insurance policy (Ex.D/2), the offending vehicle was insured for the period from 21/04/2015 to 20/04/2016 from midnight. The policy was issued on 20/04/2015. Thus, technically, the insurance policy was not in existence on the date of accident, i.e., 19/04/2015.
7. The contention of learned counsel for the appellant is that the premium amount was paid to agent Rajaram Sahu on 20/04/2015 and, therefore, the policy was issued on the same date with effect from 21/04/2015. However, the Insurance Company failed to examine Rajaram Sahu, who was the best witness to establish that the premium amount was received on 20/04/2015 and not on 16/04/2015. In absence of such material evidence, the Insurance Company failed to prove its contention regarding receipt of premium on 20/04/2015.
8. The further contention of the appellant that Rajaram Sahu had deposited an advance amount of Rs.15,000/- with the Insurance Company on 16/04/2015 and that the premium amount of Rs.548/- was deducted Signature Not Verified Signed by: PRACHI MISHRA Signing time: 5/12/2026 3:24:36 PM NEUTRAL CITATION NO. 2026:MPHC-GWL:15560 5 MA-2074-2022 therefrom on 20/04/2015 also remains unproved due to non-examination of the said agent. Rajaram Sahu was the best witness to explain the nature of the transaction reflected in Ex.D/2 and Ex.D/3. Therefore, adverse inference is liable to be drawn against the appellant/Insurance Company.
9. From Ex.D/2, it is evident that payment of premium was made through Fund Transfer No. QP150478018 dated 16/04/2015. Therefore, it clearly appears that the premium amount had been tendered to the Insurance Company/its agent on 16/04/2015 itself. In such circumstances, it was for the Insurance Company to explain why the policy was not made effective from the said date. Since the Insurance Company failed to examine Rajaram Sahu, an adverse inference is liable to be drawn against it that the premium amount had indeed been received on 16/04/2015.
10. According to Section 64-VB(2) of the Insurance Act, 1938:-
"For the purposes of this section, in the case of risks for which premium can be ascertained in advance, the risk may be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the insurer.
Explanation.--Where the premium is tendered by postal money order or cheque sent by post, the risk may be assumed on the date on which the money order is booked or the cheque is posted, as the case may be."
11. The judgments relied upon by the appellant are distinguishable on facts, as in those cases the date of receipt of premium was not in dispute. Therefore, the said judgments do not render any assistance to the appellant.
12. In Oriental Insurance Company Ltd. Vs. Sheela Bai and others, 2007 ACJ 798 a Coordinate Bench of this Court held that where the premium amount had been received prior to issuance of the policy, the Insurance Signature Not Verified Signed by: PRACHI MISHRA Signing time: 5/12/2026 3:24:36 PM NEUTRAL CITATION NO. 2026:MPHC-GWL:15560 6 MA-2074-2022 Company would be liable to pay compensation in view of Section 64-VB(2) of the Insurance Act, 1938.
13. In the case of National Insurance Company Ltd Vs Sudhakaran and others 2019 ACJ 1162 in para No.23 it is held as under :-
When once it is admitted that the premium had been received at a particular date and time, from that oment onwards wherever an interpretation is required to consider the question of assumption of risk especially rising out of a motor vehicle accident the provision which is relevant is one given under section 64-VB of the Insurance Act. In such circumstances, the statutory provision under section 64-VB could not be made inapplicable simply by referring to and relying on the commencement of the insurance coverage going by the conditions in policy document concerned. If such a construction is not given, it would invariably make the provisions under section 64-VB of the Insurance Act annihilative to the purpose and intention of section 146 of the Motor Vehicles Act. The learned counsel appearing for the insurance company attempted to canvass the position that it only prohibits the insurance company to assume risk from any anterior date than the date on which premium was received or guaranteed or deposited and, therefore, it is permissible to postpone the date to assume the risk even after the receipt of premium. Acceptance of such a contention would adversely affect not only the insured, but would affect the third party as well, in respect of a claim for compensation arising out of a motor accident. The sum and substance of the discussions is that by virtue of the Insurance Act, in the light of section 146 of the MV Act, section 64-VB, though the section is couched in a negative manner, would not and could not be understood to give the liberty to the insurer to postpone the date of assumption of risk by virtue of statutory operation of the provision under section 64-VB even after receiving the premium in cash or when it is guaranteed or deposited. In short, in such circumstances, an insurer of a motor vehicle involved in an accident during the currency of its policy of insurance, cannot decline to assume the risk arising out of that accident merely because going by the policy document its coverage commenced not from the date of receipt of premium. On the other hand, the insurer is bound to assume the risk from the date and time of receipt of premium by virtue of section 64-VB of the Insurance Act. Even in such circumstances, a party who is playing fraud on the insurer cannot be permitted to take advantage of the said position emerging from section 64-VB in respect of a vehicle which is involved in an accident prior to the actual time of the payment of premium. There may be cases where after the involvement of the vehicle in an accident a person may, concealing the factum of the involvement of the vehicle on the Signature Not Verified Signed by: PRACHI MISHRA Signing time: 5/12/2026 3:24:36 PM NEUTRAL CITATION NO. 2026:MPHC-GWL:15560 7 MA-2074-2022 accident, attempt to get it insured solely for the purpose of making the insurer to assume risk. There can be little doubt with respect to the position that fraud would vitiate everything and, therefore, such a person shall not be permitted to get the fruit of his own fraud. The mere fact that premium was paid in cash immediately after the accident would not and could not fasten the statutory liability by virtue of section 64-VB on the insurer if the premium was paid subsequent to the accident merely because it was paid or guaranteed or deposited on the same day of the accident. Needless to say that the question of considering liability to assume risk needs to be considered only if any one of the party takes up the contention that the premium was paid after the accident. In the absence of any such contentions, certainly, the question of liability has to be decided solely based on the terms of the contract regarding commencement and termination of the policy conditions.
14. In the present case, it is clearly found that premium has been received at the particular date from that moment onwards wherever an interpretation is required to consider the question of assumption of risk especially arising out of a motor vehicle accident the provision which is relevant is one given under Section 64-VB of the Insurance Act and it is clearly found that premium was taken by appellant/Insurance Company on 16/04/2015. Therefore, Insurance Company is liable to pay compensation to the claimants as awarded by the Claims Tribunal.
15. As a consequence, the appeal filed by Insurance Company, fails and is hereby dismissed.
(HIRDESH) JUDGE Prachi Signature Not Verified Signed by: PRACHI MISHRA Signing time: 5/12/2026 3:24:36 PM