When does an electric short circuit occur?

An electric short circuit occurs when the live and neutral wires come in contact with each other.

Explanation

When the plastic insulation of live and neutral wires gets torn somehow and touches each other, then due to this direct touching (connection) of the two wires an electric short circuit occurs. 

As the name implies, a short circuit refers to a specific condition in which electricity strays outside the established pathway of an electrical circuit and completes its circuit journey via a shorter distance.