Case Note & Summary
The case arises from a motor accident claim petition filed under Section 166 of the Motor Vehicles Act, 1988, by the legal representatives of the deceased (original claimants) against the owner, driver, and insurer of the offending motorcycle bearing registration No. GJ32N 4005. The Motor Accident Claims Tribunal (Aux), Rajkot at Dhoraji, in Claim Petition No. 33 of 2020, partly allowed the claim and awarded compensation of Rs.24,48,000/-. The appellant, ICICI Lombard General Insurance Company Limited, being aggrieved, filed the present appeal under Section 173 of the MV Act, primarily contending that the Tribunal erred in holding it liable because the driver of the motorcycle did not hold a valid and effective driving license at the time of the accident, which was a violation of the terms of the insurance policy. The claimants, represented by Mr. Nishit Bhalodi, opposed the appeal, arguing that the Tribunal correctly fastened liability jointly and severally on the Insurance Company as the policy covered third-party risks. They relied on Supreme Court judgments in Shamanna v. Oriental Insurance Co. Ltd. (2018) 9 SCC 650 and Shivraj v. Rajendra (2018) 10 SCC 432, which affirmed the principle of pay and recovery, and also on National Insurance Co. Ltd. v. Swaran Singh (2004) 3 SCC 297. The High Court, after hearing both sides, observed that the Tribunal had not erred in awarding just compensation of Rs.24,48,000/- and that the quantum was not seriously disputed. The court confined the appeal to the issue of pay and recovery. It held that the Insurance Company cannot be exonerated from liability to third-party claimants, but is entitled to recover the amount paid from the owner and driver of the offending vehicle. Accordingly, the appeal was dismissed, and the order of pay and recovery passed by the Tribunal was upheld.
Headnote
A) Motor Accident Compensation - Pay and Recovery - Violation of Policy Terms - Section 166, 173 Motor Vehicles Act, 1988 - The Insurance Company appealed against the award of compensation on the ground that the driver did not hold a valid license, violating policy terms. The High Court held that the Tribunal did not err in awarding compensation to third-party claimants and directed the Insurance Company to pay the awarded amount and recover the same from the owner and driver of the offending vehicle, following the principle of pay and recovery laid down in Shamanna v. Oriental Insurance Co. Ltd. and Shivraj v. Rajendra. (Paras 1-5)
Issue of Consideration
Whether the Insurance Company can be exonerated from liability to pay compensation to third-party claimants when the driver of the offending vehicle did not hold a valid driving license, or whether the Tribunal can pass an order of pay and recovery.
Final Decision
The High Court dismissed the appeal and upheld the order of pay and recovery passed by the Tribunal, directing the Insurance Company to pay the awarded compensation of Rs.24,48,000/- to the claimants and recover the same from the owner and driver of the offending vehicle.
Law Points
- Pay and recovery
- Third-party liability
- Motor accident compensation
- Insurance policy violation
- Valid driving license
