Premium Paid Before Accident, Policy Issued Next Day: Chhattisgarh HC Holds Insurer Not Liable, Triples Compensation for Victims
The High Court of Chhattisgarh held that receipt of insurance premium does not automatically trigger cover; the contract of insurance commences only from the date and time of policy issuance. It dismissed appeals by the driver and owner of the offending vehicle, but substantially enhanced compensation across three linked motor accident claims.
A single judge of the High Court of Chhattisgarh at Bilaspur, Justice Sachin Singh Rajput, decided three connected motor accident appeals by a common order pronounced on 29 June 2026. The appeals arose from a single road accident on the night of 19 April 2019 in which a Tata Sumo struck a motorcycle carrying three persons near Mahasamund district. Two riders died on the spot or shortly after, and the third sustained above-knee amputation. The driver and owner of the Sumo challenged the Claims Tribunal's finding that their vehicle was uninsured on the date of the accident, arguing that the insurer had received the premium hours before the crash. Justice Rajput rejected that argument, held the insurer's liability was correctly excluded, but went on to find that the compensation awarded to all three claimants was inadequate and enhanced the total awards markedly.
The Accident and the Three Claim Cases
At about 10 p.m. on 19 April 2019, the Tata Sumo bearing registration No. CG 04 B 6827, driven by Gopi Sahni and owned by his brother Govind Sahni, collided with motorcycle No. CG 06 GL 1854. The motorcycle was carrying three persons: Panchram Bhunjiya, Bisnath Bhunjiya, and Ranjit Bhunjiya. Panchram Bhunjiya died at the scene. Bisnath Bhunjiya died on the way to Government Hospital, Mahasamund. Ranjit Bhunjiya, who survived with grievous injuries, was admitted to hospital and later underwent amputation above the knee near the thigh.
Three separate claim applications were filed under Section 166 of the Motor Vehicles Act, 1988 before the Claims Tribunal. Claim Case H-94 of 2019 was filed by Ranjit Bhunjiya for his injuries. Claim Case H-95 of 2019 was filed by Smt. Malti Bhunjiya for the death of Bisnath Bhunjiya. Claim Case H-96 of 2019 was filed by Smt. Malti Bhunjiya and others for the death of Panchram Bhunjiya.
The Claims Tribunal, by award dated 2 November 2021, decided the issues in favour of the claimants. It held that the vehicle was uninsured on the date of the accident and fastened liability on the driver and owner alone. It awarded Rs. 96,400 for Ranjit Bhunjiya's injuries, Rs. 2,18,200 for the death of Bisnath Bhunjiya, and Rs. 10,73,900 for the death of Panchram Bhunjiya. The driver and owner appealed those awards, which came before the High Court as MAC No. 213, 210, and 221 of 2022 respectively.
The Insurance Dispute: Premium Before Midnight, Policy the Next Morning
The central factual controversy was narrow. Owner Govind Sahni deposed that he paid Rs. 9,370 as premium to one Alok Shukla, who transferred the amount to the insurer's bank account at 16:35:15 hours on 19 April 2019 — about five and a half hours before the accident. The new policy, however, was issued with effect from 20 April 2019 at 12:00:01 a.m., the day after the accident. The earlier policy had expired on 16 April 2019 at 11:59:59 p.m. This meant that on the dates 17, 18, and 19 April 2019, the vehicle was admittedly uninsured.
The driver and owner argued that since the insurer had received the premium before the accident, it had assumed the risk and was liable to pay compensation. They relied on the Supreme Court decisions in Oriental Insurance Company Limited v. Dharam Chand and others, (2010) 15 SCC 141, and New India Assurance Company Limited v. Ram Dayal and others, (1990) 2 SCC 680. The insurer countered that Alok Shukla was not its authorised agent — a fact Shukla himself admitted in cross-examination — and that risk under a policy begins only from the date and time of issuance, not from deposit of premium.
Justice Rajput examined the evidence closely. He noted that the receipt number on the new policy (Ex. D10C) was generated on 19 April 2019, confirming receipt of premium on that date. But he held this did not settle the question of when the insurance contract came into force.
Why Receipt of Premium Did Not Bind the Insurer
The court applied the principle laid down by the Supreme Court in Life Insurance Corporation of India v. Raja Vasireddy Komalavalli Kamba and others, (1984) 2 SCC 719, which held that a contract of insurance is concluded only when the party to whom an offer is made accepts it unconditionally and communicates that acceptance. Mere filing of a proposal or depositing a premium does not create a binding contract.
Justice Rajput reasoned that the premium deposited by Alok Shukla could, at best, be treated as an offer by the owner. The insurer accepted that offer by issuing the policy commencing from 20 April 2019. The acceptance was communicated from 12:00:01 a.m. of 20 April 2019. The accident occurred approximately two hours before that point. The contract of insurance, in the court's view, only commenced from the date and time of policy issuance.
The court also placed reliance on the Supreme Court's decision in Reliance Life Insurance Company Limited and another v. Jaya Wadhwani, 2024 LiveLaw (SC) 19, which, drawing on Life Insurance Corporation of India and another v. Dharam Vir Anand, (1998) 7 SCC 348, and Life Insurance Corporation of India v. Mani Ram, (2005) 6 SCC 274, confirmed that the date of issuance of the policy is the relevant date for all purposes — not the date of the proposal or the date of receipt of premium.
The court further held that since Alok Shukla was not an authorised agent of the insurer, the insurer could not be held vicariously liable for his actions. The two Supreme Court decisions cited by the appellants were distinguished on the ground that in both those cases, a cover note had been issued before the accident. No cover note existed here.
Contributory Negligence Argument Rejected
The driver and owner also argued that the deceased motorcycle rider, Panchram Bhunjiya, had contributed to the accident because three persons were riding the motorcycle, a violation of the Motor Vehicles Act. Justice Rajput rejected this argument on three grounds.
First, an eyewitness, Alakhram Vishwakarma (AW-2), who was also a cited witness in the charge sheet against the Sumo driver, had categorically deposed that the Sumo driver was negligent. Second, the driver himself was never examined to suggest that the motorcycle rider contributed to the accident. Third, the court held that three persons riding a motorcycle does not ipso facto establish contributory negligence. Following the Supreme Court in Mohammed Siddique and another v. National Insurance Company Ltd. and others, AIR 2020 SC 520, the court held that there must be a causal connection between the statutory violation and either the occurrence of the accident or its impact on the victim before contributory negligence can be invoked.
Reassessment of Compensation Across Three Claims
The court then turned to the cross-objections filed by the claimants, finding that all three awards required enhancement.
MAC No. 213 of 2022 (Ranjit Bhunjiya — injury claim): The Claims Tribunal had assessed Ranjit Bhunjiya's age at 68 years based on his Aadhaar card and found 35% functional disability. Justice Rajput, following the Supreme Court in Saroj and others v. Iffco Tokio General Insurance Co. and others, 2024 INSC 816, held the Aadhaar card was not the appropriate document to determine age and fixed his age at 61–65 years. Monthly income was enhanced from Rs. 3,000 to Rs. 6,000, reflecting his occupation as a carpenter and the date of the accident.
On functional disability, the court applied the three-step framework from Raj Kumar v. Ajay Kumar and another, (2011) 1 SCC 343. The disability certificate showed 70% permanent disability to the leg. The treating doctor confirmed amputation above the knee and acknowledged he could not determine whole-body disability percentage. The court reasoned that carpentry requires frequent movement, physical strength, and skill. With loss of the right leg above the knee, the claimant's efficiency and skill would decrease substantially, even though he might manage some tasks. Functional disability was assessed at 60%. Applying a multiplier of 7, total compensation was recomputed at Rs. 3,90,800, against the tribunal's award of Rs. 96,400. The claimant was held entitled to an additional Rs. 2,94,400 with interest at 6% per annum from 9 February 2022.
MAC No. 210 of 2022 (death of Bisnath Bhunjiya): The Claims Tribunal had awarded Rs. 2,18,200 to the claimant, who was the daughter of the deceased. The deceased was a carpenter aged about 60 years. Taking guidance from the Supreme Court in National Insurance Company Ltd. v. Pranay Sethi, (2017) 16 SCC 680, Sarla Verma and others v. Delhi Transport Corporation and others, (2009) 6 SCC 121, and Magma General Insurance Co. Ltd. v. Nanu Ram @ Chuhru Ram and others, (2018) 18 SCC 130, Justice Rajput revised the monthly income to Rs. 6,000 with 10% future prospects, added parental consortium of Rs. 40,000 and standard heads of loss of estate (Rs. 15,000) and funeral expenses (Rs. 15,000), and applied a multiplier of 9. Total compensation came to Rs. 4,26,400. The additional amount payable was Rs. 2,08,200, also with 6% interest from 9 February 2022.
MAC No. 221 of 2022 (death of Panchram Bhunjiya): This was the largest claim. Panchram Bhunjiya was about 30 years old, worked as a mason, and left behind a young widow of 26 years, two minor children aged 8 and 7, and his parents — five dependants in all. The tribunal had put his monthly income at Rs. 4,500. The court raised this to Rs. 9,000 per month as notional income, noting the number of dependants, the date of the accident, and minimum wages prevailing. After adding 40% future prospects and applying the standard deductions and a multiplier of 17, the court awarded spousal consortium of Rs. 40,000 and parental and filial consortium totalling Rs. 1,60,000 (Rs. 40,000 each for four claimants). Total compensation was recomputed at Rs. 21,57,800 against the tribunal's award of Rs. 10,73,900. The additional sum payable was Rs. 10,83,900 with 6% interest from 9 February 2022.
Order
Justice Sachin Singh Rajput dismissed all three appeals filed by the driver and owner. The cross-objections filed by the claimants were partly allowed. The appellants were directed to deposit the enhanced compensation along with the interest awarded within 60 days of receipt of the order. Upon deposit, the Claims Tribunal was directed to pass appropriate orders for apportionment, investment, and disbursement among the claimants in accordance with the Supreme Court's directions in General Manager, Kerala State Road Transport Corporation, Trivandrum v. Susamma Thomas (Mrs.) and others, (1994) 2 SCC 176. The rest of the tribunal's awards were left intact subject to the modifications made in the High Court order. No costs were awarded.