Motor Vehicle Act. Insurance policy commences from the time of making payment and not from issuance of policy. In the absence of contract fixing time, policy commences from 00.00 hours midnight (next day). Karnataka High Court.

Sudharshan vs Subash and another. Miscellaneous First Appeal 31894/2012 decided on 2 December 2020.

Judgment Link: http://judgmenthck.kar.nic.in/judgmentsdsp/bitstream/123456789/350758/1/MFA31894-12-02-12-2020.pdf

Relevant Paragraphs: 25. Therefore, as per Section 64VB of the Act above stated, the provision is very clear that soon after the receipt of the payment of premium by the owner and received by the Insurance Company then the contract of insurance begins between them. Issuance of policy is consequent effect after receipt of premium. If there is a specific contract is made between the insurer and the insured that the risk is to be covered from that point of time itself is concerned, then that shall be specifically stated in the Insurance Policy and it is a specific contract between the insurer and insured so far as time of commencement of risk. If there is no specific contract stating to cover the risk from that particular point of time then generally in the Insurance Policy it is stated that the Insurance Policy commences from 00.00 hours by  mentioning  the  next  day  date  commencing  from 00.00 hours (mid night) on next date. Therefore, where there is no specific contract of mentioning time between insurer and insured regarding mentioning of time so as to cover the risk then generally the policy commences from 00.00 hours (mid night) by mentioning the date of the next day. In absence of mentioning specific time of commencement of covering risk, therefore upon considering this and applying the  same in  the  present facts and circumstances and by following the legal provision enshrined under Section 64VB of the Act it can be safely held that from the time of making payment of premium itself covering risk starts.

Cases referred: Yellamma vs.  Bhy Sukhadev Singh  and another [2006 (3)  KCCR 1842], Oriental Insurance Co.Ltd., v. Dharam Chand and others [2011 Kant, M.A.C.138 (SC)], National Insurance Co.Ltd., v. Smt.Bhadramma  and  others [ILR 2009 KAR 3332], Sunita Rati’s case  [AIR  1998  SC  257], New India Insurance Company v. Bhagwati Devi and others [(1998) 6 Supreme Court Cases 534], National Insurance Co. Ltd. v. Jikubkai Nathuji Dabhi, [(1997) 1 SCC 66], National Insurance Co.Ltd., v. Sobina Iakai and others [2007 (3) T.A.C.  19 (S.C)], New India Assurance Co.Ltd., v. Harshadbhai Amrutbhai Modhiya and another [(2006) 5 Supreme Court Cases  192], New India Assurance Co.Ltd., vs. C.M.Jaya and others [AIR 2002 SC 651]

Compiled by S. Basavaraj, Advocate, Daksha Legal.