Motor Accident | Insurer To Compensate Third Party Even If Driver Was Not Having Valid License, May Recover From Owner: Andhra Pradesh High Court

The Andhra Pradesh High Court has reiterated that an Insurance Company is liable to satisfy the third-party claim in a motor vehicle accident even if the driver of insured vehicle had breached policy terms and conditions. The Insurance company can later recover the award amount from the driver of the offending vehicle, it said.

In this case, the claim petitioners being wife and children of the deceased filed the petition under Section 166 of Motor Vehicles Act, 1988 claiming compensation of Rs. 16,00,000/-. The brief facts of the case were that while crossing the road, the deceased was dashed by a motor cyclist who was driving in a rash and negligent manner. The owner and insurance company of the motor cycle both were made as respondents.

The respondents filed counter pleading that the accident occurred due to non-observance of traffic rules by the deceased. The Insurance company further contended that the rider of the motor cycle was not having valid driving license at the time of accident which amounts to violation of policy conditions.

At culmination of enquiry, the Tribunal came to the conclusion that the accident occurred due to rash and negligent driving of the rider of offending motor cycle and allowed compensation with funeral and transportation expenses, loss of consortium, costs towards love and affection, with interest.

Aggrieved by the said order, the Insurance company preferred the appeal on the ground that the Tribunal failed to see that rider of the offending motor vehicle was not holding a valid driving license at the time of accident which is a gross violation of conditions of the policy.

It was observed by the court that the insurance policy was in force at the time of accident and policy covers the risk of a third party. But from evidence on record, it is clear that the rider of the motor cycle did not have a valid license to ride the motor cycle.

However, Justice V. Gopala Krishna Rao relied on Supreme Court judgment in National Insurance Co. Ltd. v. Swaran Singh & Ors. (2004) in which it was held that even in case of proof of absence, fake or invalid license or disqualification of driver for driving, the Insurance company is still liable to satisfy the award in favour of third party at the first instance and later recover the award amount from the owner of offending vehicle.

Applying the same ratio, it was held that the Insurance company is liable to deposit the compensation amount and later recover the same from owner of offending motor vehicle by filing an execution petition and without filing an independent suit.

M/S New India Assurance Co Ltd., Kadapa Versus Rose Mary Kalavathi

Click Here To Read/Download Judgment