Case Note & Summary
The case arises from a motor accident claim petition filed by the respondents 1 to 3 (claimants) seeking compensation of Rs.30,00,000/- for the death of Rahamathulla in a road accident on 11.11.2020. The deceased was a pillion rider on a two-wheeler driven by his friend Ramprasath (fourth respondent), which hit a reflector board, causing both to fall. Rahamathulla succumbed to injuries. The two-wheeler was owned by the fifth respondent and insured by the appellant insurance company under a policy described as 'Bundled Policy' but contended by the insurance company to be an 'Act Only Policy'. The Tribunal held that there was a violation of policy condition and directed the insurance company to pay compensation and recover the same from the owner. Aggrieved, the insurance company appealed, arguing that the pillion rider is not covered under an 'Act Only Policy' and thus the insurance company is not liable. The High Court considered the submissions and perused the materials. The court noted that the insurance policy was a 'Bundled Policy' which, as per IRDA circulars, is equivalent to a 'Standard Motor Package Policy' or 'Comprehensive Policy' and covers pillion riders. The court distinguished the Supreme Court judgment in National Insurance Company Ltd. vs. Balakrishnan and Another, which dealt with a different policy. The court held that the insurance company cannot avoid liability by merely labeling the policy as 'Act Only Policy' when it is actually a 'Bundled Policy' that provides wider coverage. The court dismissed the appeal, upholding the Tribunal's order of pay and recovery.
Headnote
A) Motor Insurance - Act Only Policy vs. Bundled Policy - Coverage of Pillion Rider - Motor Vehicles Act, 1988, Section 147 - The court considered whether a pillion rider is covered under an 'Act Only Policy' which is also termed as 'Bundled Policy'. The insurance company argued that the policy was an 'Act Only Policy' and pillion riders are not third parties. However, the court noted that the policy was a 'Bundled Policy' which includes personal accident cover for the owner-driver and also covers pillion riders as per IRDA circulars. The court held that the insurance company cannot avoid liability by merely labeling the policy as 'Act Only Policy' when it is actually a 'Bundled Policy' that provides wider coverage. (Paras 5-7) B) Motor Insurance - Pay and Recovery - Violation of Policy Condition - Motor Vehicles Act, 1988, Section 149 - The Tribunal had directed the insurance company to pay compensation and recover from the owner due to violation of policy condition. The insurance company appealed against this direction. The High Court upheld the Tribunal's order, holding that even if there is a violation, the insurance company is liable to pay and recover from the owner, as per the settled position of law. (Paras 2.3, 7)
Issue of Consideration
Whether a pillion rider is covered under an 'Act Only Policy' (also called 'Bundled Policy') issued for a two-wheeler, and whether the insurance company is liable to pay compensation for the death of a pillion rider.
Final Decision
The High Court dismissed the appeal, upholding the Tribunal's order directing the insurance company to pay the compensation and recover the same from the owner of the vehicle.
Law Points
- Motor insurance
- Act Only Policy
- Bundled Policy
- pillion rider
- third party
- pay and recovery
- IRDA circular
- Standard Motor Package Policy
