Rajasthan HC Orders Compensation For Death Of Borrower Of Vehicle In Accident, Says He Stepped Into Owner's Shoes & Was Covered By Insurance

Faced with conflicting Supreme Court decisions, Rajasthan High Court granted compensation to the claimants of a deceased affirming that in cases where the deceased was driving/ riding a borrowed vehicle, he/she steps into the shoes of the owner and thus shall be entitled for compensation towards personal accident cover as per contract of insurance in case premium was charged from the owner for personal accident cover.

The bench of Justice Nupur Bhati was hearing an appeal filed by the claimants of a deceased against the judgment of the Motor Accidents Claims Tribunal (“Tribunal”) wherein the claim petition filed by the appellants claiming compensation under Section 163-A of the Motor Vehicles Act (“the Act”) was rejected.

Section 163-A of the Act provides for liability of owner of a motor vehicle for paying compensation to the victim in case of death or permanent disablement due to accident arising out of the use of the motor vehicle.

The claim petition was rejected by the Tribunal on the grounds that the deceased had taken the vehicle from its owner in the capacity of the borrower, hence, he did not fall within the category of third party under Section 163-A. Furthermore, there was no evidence of the deceased being employed as driver of the owner such that he was driving the vehicle in the capacity of the owner's employee.

On the contrary, the counsel for the appellants relied on the Supreme Court case of Ram Khiladi v the United India Insurance Company (“Ram Khiladi Case”) in which the Apex Court had awarded Rs. 1 Lakh to the deceased/ borrower of the vehicle on account of premium charged towards the personal accident cover of the owner.

The Apex Court had observed that the deceased had stepped into the shoes of the owner and thus the liability of the insurance company was determined in accordance with the contract of insurance while considering him to be the owner for which premium was charged.

The Court perused the records and highlighted the facts of the deceased being the borrower of the vehicle and not being the employee of the owner, and made a reference to another Supreme Court case of Ningamma Anr. v United India Insurance Co. Ltd. (“Ningamma Case”) in which the Supreme Court held,

“…borrower steps into the shoes of the owner, when borrows his vehicle and that, he virtually becomes the owner at the time of driving the vehicle, thus, the owner cannot be a recipient of the compensation as the liability to pay the same is upon him.”

Based on this analysis, the Court observed that in light of the Ningamma case the Tribunal had rightly dismissed the claim of the appellants. However, it was held that the Court also found merit in the arguments presented by the appellants in the form of reliance on the Ram Khiladi Case.

In this background, the Court perused the insurance policy in question and highlighted that it included a compulsory personal accident cover for which the owner was charged.

Taking into account the observations made in the Ram Khiladi case and the insurance policy in the current matter, the Court ruled that it deemed it fit to award Rs. 1 lakh as compensation to the appellants observing that the borrower had stepped into the shoes of the owner.

Accordingly, the appeal was decided.

Title: Smt. Abida & Ors. v Ayub Khan & Ors.

Citation: 2024 LiveLaw (Raj) 356

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