Case Note & Summary
The appellant, Oriental Insurance Co. Ltd., filed an appeal under Section 173 of the Motor Vehicles Act, 1988, challenging the judgment and award dated 23rd February 2009 passed by the Chairman, Motor Accident Claims Tribunal, Akola, in Motor Accident Claim Petition No. 91 of 2006. The Tribunal had directed the Insurance Company to pay compensation of Rs.5,00,000/- along with interest at 7.5% per annum from the date of application till realization to the claimants, and then recover the same from respondent No.1 (owner of the offending vehicle). The claim petition was filed by the legal representatives of Prakash Ingle, who died in a motor accident on 25th October 2005 while travelling as a passenger in a Matador bearing registration No. MH 28 H 6312, owned by respondent No.3 and driven by respondent No.4. The vehicle was insured with the appellant. The Insurance Company resisted the claim on two grounds: first, that the vehicle was not properly maintained and was in substandard condition; second, that the deceased was travelling as a passenger in a goods vehicle, which was in breach of the terms and conditions of the insurance policy. The Tribunal, after considering the evidence, allowed the claim petition and directed the Insurance Company to pay compensation and recover from the owner. The Insurance Company appealed, contending that it should not be liable at all. The High Court, after hearing the appellant's counsel and noting that the respondents were served but absent, held that the Insurance Company is liable to pay compensation to the claimants and then recover from the owner, following the principle of 'pay and recover' as laid down in National Insurance Co. Ltd. v. Swaran Singh. The court found no merit in the appeal and dismissed it, upholding the Tribunal's award.
Headnote
A) Motor Accident Claims - Pay and Recover - Breach of Policy Conditions - Section 173, Motor Vehicles Act, 1988 - The Insurance Company challenged the award directing it to pay compensation and recover from the owner, on the ground that the vehicle was a goods vehicle not permitted to carry passengers. The court upheld the pay and recover direction, holding that the Insurance Company must pay compensation to the claimants and then recover from the owner, as the breach of policy conditions does not absolve the insurer of liability to third parties. (Paras 1-8) B) Motor Accident Claims - Goods Vehicle - Carrying Passengers - Section 166, Motor Vehicles Act, 1988 - The deceased was a passenger in a Matador (goods vehicle) which was not supposed to carry passengers as per policy terms. The court held that the Insurance Company is liable to pay compensation to the claimants and then recover from the owner, following the principle laid down in National Insurance Co. Ltd. v. Swaran Singh. (Paras 2-8)
Issue of Consideration
Whether the Insurance Company is liable to pay compensation when the offending vehicle was used in breach of policy conditions by carrying passengers in a goods vehicle?
Final Decision
The appeal is dismissed. The judgment and award dated 23rd February 2009 passed by the Chairman, Motor Accident Claims Tribunal, Akola, in Motor Accident Claim Petition No. 91 of 2006 is upheld. The Insurance Company is directed to pay compensation to the claimants and recover the same from the owner of the offending vehicle.
Law Points
- Pay and recover principle
- Breach of policy conditions
- Goods vehicle carrying passengers
- Liability of insurance company
- Section 173 Motor Vehicles Act
- 1988
