Case Note & Summary
The case arises from a motor accident that occurred on an unspecified date, involving a vehicle owned by Shrihari s/o Kalyanrao Parkale (respondent No.1) and insured with New India Assurance Co. Ltd. (respondent No.2). Two claim petitions were filed by the appellants (original claimants) before the Motor Accident Claims Tribunal, seeking compensation for injuries/death caused by the accident. The Tribunal, by judgment and award dated 26/03/2010, allowed the claims against the owner (respondent No.1) and dismissed the claims against the insurance company (respondent No.2), directing the owner to pay Rs.1,50,000/- in each petition with 8% interest per annum from the date of petition. The claimants appealed, arguing that the insurance company should be jointly liable or at least directed to pay and recover from the owner. The High Court, hearing both appeals together, noted that the facts and law were identical. The court observed that the Tribunal had exonerated the insurance company on the ground that the vehicle was used in breach of permit conditions. However, relying on the settled legal position under Section 149 of the Motor Vehicles Act, 1988, the court held that the insurance company is liable to pay compensation to third parties even if there is a breach of policy conditions, and thereafter it can recover the amount from the owner. The court set aside the Tribunal's order to the extent it exonerated the insurance company and directed the insurance company to pay the award amount to the claimants within eight weeks, with liberty to recover the same from the owner in accordance with law. The appeals were allowed.
Headnote
A) Motor Vehicles Act - Insurance - Third Party Liability - Section 149 of the Motor Vehicles Act, 1988 - The court considered whether an insurance company can avoid liability to third parties when the insured vehicle was used in violation of permit conditions. Held that the insurance company is liable to pay compensation to third parties and then recover from the owner, as the breach of permit conditions does not absolve the insurer of liability to third parties. (Paras 5-8) B) Motor Vehicles Act - Pay and Recover - Breach of Policy Conditions - Section 149 of the Motor Vehicles Act, 1988 - The court held that even if there is a breach of policy conditions, the insurance company must pay the award amount to the claimants and then recover the same from the owner of the vehicle. The Tribunal's order directing only the owner to pay was set aside. (Paras 7-8)
Issue of Consideration
Whether the Insurance Company can be exonerated from liability to third parties when the insured vehicle was used in breach of permit conditions, and whether the Tribunal erred in directing the owner alone to pay compensation.
Final Decision
Appeals allowed. The impugned judgment and award dated 26/03/2010 passed by the Motor Accident Claims Tribunal in M.A.C.P. No.100/2008 and M.A.C.P. No.101/2008 is set aside to the extent it exonerates the Insurance Company. The Insurance Company is directed to pay the award amount to the claimants within eight weeks, with liberty to recover the same from the owner in accordance with law.
Law Points
- Insurance company liability
- breach of policy conditions
- pay and recover
- third party risk
- permit violation
- Section 149 Motor Vehicles Act
- 1988
