Private Car Act Policy | Gauhati High Court Sets Aside MACT Order Directing Insurance Company To Pay Compensation For Death Of Car Occupant

The Gauhati High Court has set aside an order of the Motor Accident Claim Tribunal, in a case involving the death of an occupant of an insured vehicle due to rash and negligent driving, wherein the tribunal had directed the Oriental Insurance Company ("appellant") to pay compensation to the claimant and subsequently recover the same from the owner of the offending vehicle.

A single bench of Justice Mitali Thakuria set aside the order on the ground that the insurance policy in question was a Private Car Act Policy that did not cover the risk of the occupants and accordingly, the Insurance Company could not be made liable to pay compensation for the death of any occupant in the vehicle.

The Bench noted that:

“…..the Insurance Company cannot be made liable to satisfy the award of compensation for death of any occupant when it is an admitted position that the policy under which the vehicle was insured was a Private Car Act Policy.”

The brief facts of the case are that on January 23, 2013, at about 6 a.m., the claimant and her husband were going from Bhaloghat towards their residence by the vehicle in question, and when they reached Tarabasa, due to rash and negligent driving of the driver, the vehicle hit a tree, leading to the claimant sustaining grievous injuries on her person and her husband dying on the spot.

The claimant subsequently filed a petition before the Motor Accident Claims Tribunal No. 2, Kamrup (Tribunal) for compensation due to the death of her husband. The Insurance Company (appellant) contested the case by arguing that the policy issued in respect of the accident vehicle was a private car policy and did not cover the occupants being carried in the private car.

The Tribunal, negating the arguments of the appellant company, passed the impugned judgment and order dated January 20, 2015 and awarded a sum of Rs. 12,17,800/- with interest at the rate of 6 percent from the date of filing the claim petition till its realization and directed the Insurance Company (appellant) to pay the same to the claimant within a period of 90 days from the date of the impugned order.

Aggrieved by the order of the Tribunal, the Insurance Company preferred the present appeal before the High Court.

The Counsel appearing for the Insurance Company submitted that the Insurance Company is not at all liable to pay compensation for the occupants carried in the private car since the insurance policy did not cover the risk of the occupants traveling in the private car.

On the other hand, the Counsel appearing for the claimant (respondent) submitted that the Tribunal had rightly passed the order under the doctrine of pay and recovery as there was a valid insurance policy at the relevant time of the incident.

Upon hearing the arguments, the Court noted that although the concerned policy did not cover the risk of the vehicle occupants, the Insurance Company had been directed to pay the claimant since the policy was valid at the time of the incident and considering the fact that the offending vehicle was duly insured by the Insurance Company (appellant).

In partly setting aside the direction of the Tribunal, the Court relied upon the judgment of the Supreme Court in National Insurance Company Ltd. v. Balakrishnan & Anr. (2013) 1 SCC 731 in which it was held that an ‘Act policy’ stands on a different footing from a ‘comprehensive/package policy’ which would cover the liability of the insurer for payment of compensation for the occupant in a car.

“……it is seen that there is no dispute that the policy in question was Private Car Act Policy which does not cover the risk of the occupants and accordingly the Insurance Company cannot be made liable to satisfy the award of compensation for death of any occupant when it is an admitted position that the policy under which the vehicle was insured was a Private Car Act Policy,” the Court said.

Accordingly, the Court set aside part of the impugned order which directed the Insurance Company to pay the claimant and thereafter recover the costs from the vehicle owner and instead directed that the owner/insurer was liable to satisfy the Tribunal's award and pay compensation to the Claimant by depositing the awarded amount before the Tribunal within a period of 3 months.

Citation: 2023 LiveLaw (Gau) 99

Case Name: Oriental Insurance Company Ltd. v. Smti. Lakhimai Teronpi & 7 Ors.

Case No.: MAC App./153/2015

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