Case Note & Summary
The case involves three first appeals filed by United India Insurance Company Limited against the judgment and award of the Motor Accident Claims Tribunal. The common question was whether the insurer can be directed to pay compensation despite a fundamental breach of the policy conditions. The court noted that the issue is no longer res integra and is covered by the decision of the Apex Court in National Insurance Co. Ltd. v. Swaran Singh and others. The court held that the insurer is liable to pay the compensation to third parties but has the right to recover the same from the owner of the vehicle. Accordingly, the appeals were disposed of with a direction that the appellant-insurer shall pay the award amount to the claimants and then recover it from the owner in execution proceedings.
Headnote
A) Motor Vehicle Insurance - Fundamental Breach of Policy - Pay and Recover - Insurer can be directed to pay compensation to third parties even if there is a fundamental breach of policy conditions, but has the right to recover the amount from the owner of the vehicle - The court held that the insurer must pay the award amount to the claimants and then recover it from the owner in execution proceedings (Paras 1-5).
Issue of Consideration
Whether insurer can be directed to pay compensation amount determined by the Motor Accident Claims Tribunal, though legally not liable to pay due to fundamental breach of the policy and, thereafter, recover the same from the owner of the vehicle.
Final Decision
Appeals disposed of with direction that appellant-insurer shall pay the award amount to the claimants and then recover the same from the owner of the vehicle in execution proceedings.
Law Points
- Insurer's liability to third parties
- fundamental breach of policy conditions
- right of recovery
- pay and recover principle
Case Details
2017 LawText (BOM) (09) 226
First Appeal No.386 of 2008 with First Appeal No.387 of 2008 with First Appeal No.388 of 2008
Shri D.N. Kukday for Appellant, Shri Shashikant Borkar for Respondent No.2, None for Respondent No.1
United India Insurance Company Limited
Ramchandra s/o Dhondu Bawanthade and Hiralal s/o Rajaram Shahu (in FA 386/2008); Devidas @ Devilal s/o Ramchandra Bawanthade and Hiralal s/o Rajaram Shahu (in FA 387/2008 and FA 388/2008)
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Nature of Litigation
First appeals against judgment and award of Motor Accident Claims Tribunal
Remedy Sought
Insurer sought to avoid liability to pay compensation due to fundamental breach of policy conditions
Filing Reason
Insurer challenged the Tribunal's direction to pay compensation despite alleged breach of policy
Previous Decisions
Motor Accident Claims Tribunal directed insurer to pay compensation
Issues
Whether insurer can be directed to pay compensation despite fundamental breach of policy conditions and then recover from owner
Submissions/Arguments
Insurer argued that due to fundamental breach of policy, it is not liable to pay compensation
Ratio Decidendi
Insurer can be directed to pay compensation to third parties even if there is a fundamental breach of policy conditions, but has the right to recover the amount from the owner of the vehicle.
Judgment Excerpts
A short common question involved in all these appeals is, whether insurer can be directed to pay compensation amount determined by the Motor Accident Claims Tribunal, though legally not liable to pay due to fundamental breach of the policy and, thereafter, recover the same from the owner of the vehicle.
The issue is no more res integra and is covered by the decision of the Apex Court in the case of National Insurance Co. Ltd. v. Swaran Singh and others.
In view of above, these appeals are disposed of with a direction that appellant-insurer shall pay the award amount to the claimants and then recover the same from the owner of the vehicle in execution proceedings.
Procedural History
Motor Accident Claims Tribunal passed award directing insurer to pay compensation. Insurer filed three first appeals before the High Court challenging the award on the ground of fundamental breach of policy conditions.
Acts & Sections
- Motor Vehicles Act, 1988:
