Insurance Company Has No Contractual Or Other Relationship With Transferee Of Offending Vehicle: Delhi High Court

The Delhi High Court has observed that an Insurance Company has no contractual or other relationship with transferee of the offending vehicle in a road accident.

“The registered owner cannot absolve himself of the liability by contending that he had transferred the offending vehicle to a third person prior to the date of the accident,” Justice Navin Chawla said.

The court observed that Insurance Company merely steps in as an indemnifier of the compensation which the registered owner of the Offending Vehicle, as being a primary person liable, has to pay to the victims of the road accident.

“Neither the victims of the road accident nor the Insurance Company can run after such persons whom the registered owner claims to have transferred the offending vehicle, and cannot be burdened with following a trail of successive transfers, which are not registered with the Registering Authority,” the court said.

It added: “If the registered owner of the offending vehicle is to seek any benefit of such contract in form of indemnifying himself against the liability, such registered owner is also liable to reimburse the compensation that may be paid by the Insurance Company to the victims of the road accident, if the Insurance Company is otherwise entitled to the same”

The court made the observations while dealing with two appeals filed by the registered owner of a motorcycle and a boy who was driving it, which hit a woman who later succumbed to the injuries.

They challenged an order passed by the Motor Accident Claims Tribunal vide which compensation of Rs.15,49,324 was granted in favour of the claimants and the Insurance Company, National Insurance Company Limited, was directed to pay the same at the first instance.

The tribunal also granted a right to the Insurance Company to recover the compensation amount from the registered owner of motorcycle and the boy was driving it at the time of the accident.

Noting that the motorcycle was being driven by a minor at the time of the accident, Justice Chawla said that the registered owner of the vehicle cannot absolve himself of his responsibility merely by contending that he had sold the bike prior to that date, when he took no further steps to get the fact of such sale registered with the Registration Authority or intimate it to the Registration Authority and the Insurance Company.

“If such registered owner has allowed a third person, may be under a contract of sale, to use the vehicle, he remains responsible for his action. If such third person further allows a minor or a person not holding a valid driving license to drive the vehicle, vicariously, the registered owner becomes responsible for such action of the third party,” the court said.

Accordingly, the court dismissed the appeal filed by the registered owner of the motorcycle. It set aside the Impugned Award allowing the Insurance Company to seek reimbursement of the claim amount from the minor boy.

“The statutory amount deposited by the appellant, Sh.Rohit Rana, along with interest accrued thereon, be released in favour of the appellant,” the court said.

Title: INDIWAR PARIJAT v. NATIONAL INSURANCE COMPANY LTD & ORS and other connected matter

Citation: 2023 LiveLaw (Del) 1300

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