Case Note & Summary
The appellant, owner of a tipper lorry, appealed against the judgment and award dated 03.10.2018 passed by the Additional Senior Civil Judge and Member, Motor Accident Claims Tribunal, Haveri, in MVC No.218/2015, which awarded compensation of Rs.5,90,000/- with interest at 6% p.a. to the claimants (respondents 1-3) for the death of a person in a motor accident. The Tribunal held the owner liable to pay the compensation and exonerated the insurer (respondent 4) on the ground that the driver did not possess a valid driving license at the time of the accident, constituting a breach of policy conditions. The owner contended that the insurer should be liable to pay compensation to third parties and then recover from the owner. The High Court, relying on the settled legal position under Section 149 of the Motor Vehicles Act, 1988, held that the insurer is liable to pay compensation to third parties even if there is a breach of policy conditions, but the insurer has the right to recover the amount from the insured. The court allowed the appeal, set aside the Tribunal's award insofar as it exonerated the insurer, and directed the insurer to pay the compensation amount to the claimants with interest and costs, and then recover the same from the owner in accordance with law.
Headnote
A) Motor Accident Claims - Insurer's Liability - Breach of Policy Conditions - Section 149 Motor Vehicles Act, 1988 - The insurer is liable to pay compensation to third parties even if there is a breach of policy conditions, but the insurer has the right to recover the amount from the insured. The court held that the Tribunal erred in directing the owner to pay compensation and exonerating the insurer. The insurer must pay and then recover from the owner. (Paras 1-10) B) Motor Accident Claims - Right of Recovery - Section 149(4) Motor Vehicles Act, 1988 - The insurer's right to recover the compensation amount from the insured is available even after payment to the third party. The court directed the insurer to pay the awarded amount to the claimants and recover the same from the owner. (Paras 8-10)
Issue of Consideration
Whether the insurer can avoid liability to third parties on the ground of breach of policy conditions by the insured, and whether the owner is entitled to recover the compensation amount from the insurer.
Final Decision
Appeal allowed. The judgment and award of the Tribunal dated 03.10.2018 in MVC No.218/2015 is modified. The insurer (respondent 4) is directed to pay the compensation amount of Rs.5,90,000/- with interest at 6% p.a. from the date of petition till realization to the claimants (respondents 1-3) within six weeks. The insurer is entitled to recover the said amount from the owner (appellant) in accordance with law.
Law Points
- Insurer's liability to third parties
- breach of policy conditions
- right of recovery
- owner's liability
- Motor Vehicles Act
- 1988 Section 149
