Court :
Karnataka High Court
Brief :
Statutory Right of third party to be compensated U/S 149 MV Act, evenif vehicle owner contests Claim.
Citation :
Case No.: M.F.A.No.4945/2014
A Banu Prakash Vs Thimma Setty & Others
Case No.: M.F.A.No.4945/2014
Dated: 22nd October, 2022
Statutory Right of third party to be compensated U/S 149 MV Act, evenif vehicle owner contests Claim.
According to the Karnataka High Court, when dealing with the principle of pay and recovery, the consideration should be protecting the statutory rights of the third-party persons who are victims of the motor accidents, and it is immaterial whether the owner has preferred an appeal or challenged the claim.
Duty of insurers to satisfy judgments and awards against persons insured in respect of third-party risks. -
(1) If, after a certificate of insurance has been issued under sub-section (3) of section 147 in favour of the person by whom a policy has been effected, judgment or award in respect of any such liability as is required to be covered by a policy under clause (b) of sub-section (l) of section 147 (being a liability covered by the terms of the policy) or under the provisions of section 163A is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments.
(2) No sum shall be payable by an insurer under sub-section (1) in respect of any judgment or award unless, before the commencement of the proceedings in which the judgment or award is given the insurer had notice through the Court or, as the case may be, the Claims Tribunal of the bringing of the proceedings, or in respect of such judgment or award so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such proceedings is so given shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely:-
(a) that there has been a breach of a specified condition of the policy, being one of the following conditions, namely: -
(i) a condition excluding the use of the vehicle-
(a) for hire or reward, where the vehicle is on the date of the contract of insurance a vehicle not covered by a permit to ply for hire or reward, or
(b) for organised racing and speed testing, or
(c) for a purpose not allowed by the permit under which the vehicle is used, where the vehicle is a transport vehicle, or
(d) without sidecar being attached where the vehicle is a motorcycle; or
(ii) a condition excluding driving by a named person or persons or by any person who is not duly licensed, or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification; or
(iii) a condition excluding liability for injury caused or contributed to by conditions of war, civil war, riot or civil commotion; or
(b) that the policy is void on the ground that it was obtained by the non- disclosure of a material fact or by a representation of fact which was false in some material particular.
(3) Where any such judgment as is referred to in sub-section (1) is obtained from a Court in a reciprocating country and in the case of a foreign judgment is, by virtue of the provisions of section 13 of the Code of Civil Procedure, 1908 (5 of 1908) conclusive as to any matter adjudicated upon by it, the insurer (being an insurer registered under the Insurance Act, 1938 (4 of 1938) and whether or not he is registered under the corresponding law of the reciprocating country) shall be liable to the person entitled to the benefit of the decree in the manner and to the extent specified in sub-section (1), as if the judgment were given by a Court in India: Provided that no sum shall be payable by the insurer in respect of any such judgment unless, before the commencement of the proceedings in which the judgment is given, the insurer had notice through the Court concerned of the bringing of the proceedings and the insurer to whom notice is so given is entitled under the corresponding law of the reciprocating country, to be made a party to the proceedings and to defend the action on grounds similar to those specified in sub-section (2).
(4) Where a certificate of insurance has been issued under sub-section (3) of section 147 to the person by whom a policy has been effected, so much of the policy as purports to restrict the insurance of the persons insured thereby by reference to any condition other than those in clause (b) of sub-section (2) shall, as respects such liabilities as are required to be covered by a policy under clause (b) of sub-section (1) of section 147, be of no effect: Provided that any sum paid by the insurer in or towards the discharge of any liability of any person which is covered by the policy by virtue only of this sub-section shall be recoverable by the insurer from that person.
(5) If the amount which an insurer becomes liable under this section to pay in respect of a liability incurred by a person insured by a policy exceeds the amount for which the insurer would apart from the provisions of this section be liable under the policy in respect of that liability, the insurer shall be entitled to recover the excess from that person.
(6) In this section the expression “material fact” and “material particular” means, respectively a fact or particular of such a nature as to influence the judgment of a prudent insurer in determining whether he will take the risk and, if so, at what premium and on what conditions, and the expression “liability covered by the terms of the policy” means a liability which is covered by the policy or which would be so covered but for the fact that the insurer is entitled to avoid or cancel or has avoided or cancelled the policy.
(7) No insurer to whom the notice referred to in sub-section (2) or sub-section (3) has been given shall be entitled to avoid his liability to any person entitled to the benefit of any such judgment or award as is referred to in sub-section (1) or in such judgment as is referred to in sub-section (3) otherwise than in the manner provided for in sub-section (2) or in the corresponding law of the reciprocating country, as the case may be.
Explanation. - For the purposes of this section, “Claims Tribunal” means a Claims Tribunal constituted under section 165 and “award” means an award made by that Tribunal under section 168.
Appeals. -
(1) Subject to the provisions of sub-section (2) any person aggrieved by an award of a Claims Tribunal may, within ninety days from the date of the award, prefer an appeal to the High Court:
Provided that no appeal by the person who is required to pay any amount in terms of such award shall be entertained by the High Court unless he has deposited with it twenty-five thousand rupees or fifty per cent. of the amount so awarded, whichever is less, in the manner directed by the High Court:
Provided further that the High Court may entertain the appeal after the expiry of the said period of ninety days, if it is satisfied that the appellant was prevented by sufficient cause from preferring the appeal in time.
(2) No appeal shall lie against any award of a Claims Tribunal if the amount in dispute in the appeal is less than ten thousand rupees.
i) In this case, an appeal was filed under Section 173(1) of the Motor Vehicles Act, challenging the order of the Tribunal directing the respondents to pay compensation.
ii) The primary contention of the claimant was that he had suffered injuries due to an accident cause by the rash and negligent driving of his driver, respondent number 1.
iii) The medical expenses caused due to the accident were 30,000 and the claimant was unable to attend work for around 45 days and this resulted in loss of income for the claimant.
iv) The owner contended that the Tribunal had imposed liability on him on the ground that he failed to prove that the driver had a valid license on the day of occasion. However, the driver did have a license, and this was not considered by the Tribunal.
v) The insurance company contended that the Tribunal had correctly placed the liability on the owner. The vehicle was a private vehicle, and the claimant was a passenger. Hence, the insurance company cannot be held liable.
vi) It was contended by the claimant that as per Section 149(1), the insurance company can be held liable to pay compensation. To this, the insurance company contended that since the owner of the vehicle had challenged the order and denied the claim, the company cannot be held liable.
vii) Whether the third parties are entitled to claim under Section 149 where the claim is contested by the owner?
viii) The Court primarily noted that the vehicle was used for hire/commercial purposes and therefore the Tribunal was correct in holding the owner liable and exonerating the insurance company.
ix) However, the Court held that the right of the third parties, in cases of motor accident, are provided Statutory Protectionand cannot be affected by the owner's conduct.
x) The Motor Vehicles Act as well as the principle of pay and recovery are beneficial provisions. The Court applied the principle of pay and recovery to protect the statutory rights of the victim.
Since some provisions of Motor Vehicle Act, 1988 have been inserted to give relief to the third-party victim in motor accident cases. The right of a third-party victim to claim compensation under provisions of Section 149 of the MVA,1988 has been protected and it is statutory right. In case owner of the vehicle contested the claim in court of law, then in these cases also, it is duty of insurance company to pay compensation to the victim or his heirs and recover the same from the owner of the vehicle. According to the High Court, if the insurance company was right in claiming the defence, then it should first pay the victim and then claim the amount from the owner of the vehicle. The Court thus directed the insurance company to pay the concerned amount as determined by the Tribunal to the third-party victim.
DISCLAIMER: the case law presented here is only for sharing information with readers. In case of necessity do consult with professionals.
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