Case Note & Summary
The appellant, Sri P. Yadava Rao, filed a claim petition under the Motor Vehicles Act, 1988, seeking compensation for injuries sustained in a motor vehicle accident involving a lorry bearing registration No. AP-04/V-5190. The Tribunal, by judgment and award dated 28.08.2010 in MVC No.6/2009, awarded compensation but exonerated the Insurance Company (respondent No.3) on the ground that the vehicle was used in violation of the terms of permit, fastening liability solely on the owner (respondent No.2). The claimant appealed against this part of the award. The High Court considered the issue of whether the Insurance Company could be exonerated on the ground of breach of permit conditions. The court noted that the vehicle was used within the State of Andhra Pradesh, and the alleged violation was not a fundamental breach of the policy. Relying on the principle of 'pay and recover', the court held that the insurer is liable to pay compensation to the third party claimant and may recover the same from the owner. The appeal was allowed, modifying the award to hold the Insurance Company liable to pay the compensation, with liberty to recover from the owner.
Headnote
A) Motor Vehicle Act - Third Party Liability - Breach of Policy Conditions - Section 147, 149 Motor Vehicles Act, 1988 - The appeal challenged the Tribunal's award exonerating the Insurance Company on the ground that the vehicle was used beyond the permitted route. The High Court held that the use of the vehicle within the State of Andhra Pradesh, though not strictly in accordance with the permit, did not constitute a fundamental breach of policy conditions so as to exonerate the insurer. The insurer was directed to pay the compensation and recover from the owner. (Paras 1-10) B) Motor Vehicle Act - Vicarious Liability - Owner's Liability - Section 166 Motor Vehicles Act, 1988 - The claimant, a third party, was not required to prove the terms of permit. The insurer's liability to third parties is statutory and cannot be avoided on technical grounds of permit violation unless it is a fundamental breach. The court relied on the principle that the insurer must pay and recover from the owner in case of breach. (Paras 5-10)
Issue of Consideration
Whether the Insurance Company can be exonerated from liability on the ground that the vehicle was used in violation of the terms of permit, and whether the Tribunal was justified in fastening liability on the owner alone.
Final Decision
The appeal is allowed. The judgment and award dated 28.08.2010 in MVC No.6/2009 passed by the Fast Track Court-I MACT-IX, Bellary, is modified. The Insurance Company (respondent No.3) is held liable to pay the compensation amount to the claimant. The Insurance Company is at liberty to recover the amount from the owner (respondent No.2) in accordance with law.
Law Points
- Motor Vehicle Act
- 1988
- Section 173(1)
- Section 147
- Section 149
- Vicarious Liability
- Breach of Policy Conditions
- Use of Vehicle in Violation of Permit
- Third Party Risk
- Pay and Recover
