The High Court of Chhattisgarh, recently held that if the deceased comes in the category of a third party, then despite the violation of policy conditions, the pay and recover order can be passed in suitable cases.
This decision was made while partly allowing an appeal filed under Section 173 of the Motor Vehicles Act, 1988, challenging the award dated 10.01.2017 passed by the Additional Motor Accident Claims Tribunal, which had exonerated the appellant/Insurance Company from liability due to a breach of policy conditions.
Brief Facts:
The deceased Vishwanath was traveling in a Tempo. A Pickup came there, which was driven rashly and negligently by respondent No.4. Therefore, the rope broke as a result of which the cement mixture machine turned turtle and collided with Tempo. In that accident, Vishwanath sustained injuries and succumbed to the same. The Claims Tribunal exonerated the Insurance Company from the payment of compensation because the owner/driver was using the offending vehicle in violation of the policy conditions. But, since the deceased was a ‘third party’, it was directed that the appellant/Insurance Company shall pay the compensation to the claimants and the same shall be recovered from respondent No.4/Dilip Kumar. Being aggrieved from the aforesaid order the Insurance Company has filed the present appeal.
Contentions of the Appellant:
The Learned Counsel for the Appellant submitted that it is a clear-cut case of violation of policy conditions, therefore, the order of the Tribunal in respect of ‘pay and recover’ is illegal, hence, the same is not sustainable.
Contentions of the Respondent:
The Learned Counsel for the Respondent submitted that the said offending vehicle was insured with the appellant/Insurance Company and Respondent No.4 also had an effective driving license. He argued that the Tribunal ought not to have held that the offending vehicle was being driven violating policy conditions, and therefore, complete liability ought to have been fastened upon the appellant/Insurance Company.
Observations of the court:
The court noted that Section 146 provides the necessity for insurance of a vehicle in respect of a ‘third party’, as such, no person can use a motor vehicle in a public place unless the same is insured under the policy of insurance complying with the requirements of chapter XI of the MV Act.
The Court observed that when any motor vehicle is used in a public place, then it ought to have been insured to cover third-party risk. The Insurance Company is duty-bound to satisfy the judgment and award against the person insured in respect of third-party risk. If the offending vehicle is found to be violating policy conditions, then such fact is between the insurer and the insured. Such fact, i.e. violation of policy conditions, does not affect the interest of the third party as soon as the vehicle is insured, the interest of ‘third party’ is protected under Section 146 of the MV Act and violation of terms of policy comes thereafter, which is an issue between the insurer and insured. Therefore, if the deceased comes in the category of a third party, then despite the violation of policy conditions, the pay and recover order can be passed in suitable cases.
The decision of the Court:
The Chhattisgarh High Court, partly allowing the appeal, held that the claimants are entitled to get interest @ 7% per annum on the amount of award, which shall be payable to them from the date of filing of the claim petition, till its final realization.
Case Title: The New India Insurance Company Limited vs. Mankunwar Ravi & Ors.
Coram: Hon’ble Justice Naresh Kumar Chandravanshi
Case No.: MAC No. 506 of 2017
Advocate for the Appellant: Mr. B. N. Nande
Advocate for the Respondent: Mr. D. N. Prajapati
