Even If Driver Is Drunk, Insurer Liable To Third Party: Kerala High Court

The Kerala High Court on Monday held that Insurance Company would be liable to initially compensate a motor accident victim, even if the condition in policy against driving of vehicle in an intoxicated state is violated by the driver.

The Single Judge Bench of Justice Sophy Thomas observed,

"Undoubtedly, when the driver is in an inebriated state, certainly, his consciousness and senses will be impaired so as to render him unfit to drive a vehicle. But the liability under the Policy is statutory in nature and so the Company is not liable to be exonerated from payment of compensation to the victim". 

The Court took note of the Andhra Pradesh High Court's decision in Bajaj Allianz General Insurance Co.Ltd., rep by its Deputy Manager (Legal) v. Manju Devi & Ors. (2014), wherein it was held that the Insurance Company cannot avoid its liability totally on account of drunken driving of the driver, as it is not a ground to exonerate the Insurance Company from payment of compensation as far as third parties are concerned.

It thus went on to hold that in the present case, while the Insurance Company would have to compensate the appellant/claimant initially, it could recover the same from the owner and driver of the vehicle who are the first two respondents in the present case. 

"As far as a third party is concerned, the Insurance Policy with regard to liability to pay compensation is enforceable, as he is not supposed to know about the intoxicated state of the driver. Therefore, the violation of Policy conditions will not exonerate the Insurance Company from payment of compensation to third parties, though the car was driven by the driver in a drunken state. As already found, respondents 1 and 2, the driver and owner of the offending vehicle, remained ex parte throughout. Exts.B2 and B3 clearly show that the 1st respondent drove the car in a drunken state and he was chargesheeted for drunken driving. The 2nd respondent owner permitted the 1st respondent driver to drive the vehicle in a drunken state and so, he is also vicariously liable for the act of the 1st respondent. So ultimately the liability is of respondents 1 and 2, though the 3rd respondent-Insurance Company has to make the payment initially", it held. 

The Case:

As per the factual matrix, the appellant who was a driver by profession, while travelling in an autorickshaw, met with an accident from the car driven by the 1st respondent in a rash and negligent manner. The appellant was admitted to a hospital and treated for seven days; even after discharge, he had to take rest for six months. He accordingly claimed a compensation of Rs.4,00,000/- from the Motor Accidents Claims Tribunal.

The Tribunal awarded only Rs.2,40,000/-. by fixing his notional income @ Rs.7,500/-, loss of earning was assessed for six months only. Appellant claimed that he earned a monthly income of Rs. 12,000/- and it is in this context that the appeal was preferred. 

The Court noted that the appellant had not produced any disability certificate before the Tribunal.

"If he had actually suffered any disability due to the injuries he has suffered in the accident, definitely he would have produced the Disability Certificate. Even then, the learned Tribunal awarded Rs.40,000/- towards permanent disability/loss of amenities, even without ascertaining whether there was any disability or loss of amenities", it was observed. 

However, the Court took the view that since the appellant had been hospitalized for seven days and incurred medical expenses to the tune of Rs.1,14,596/-, it would ascertain that he had sustained severe injuries for which extensive treatment was required.  "So, towards pain and suffering, this Court is inclined to award Rs.20,000/- more." 

The Court additionally awarded Rs.10,000/- towards bystander expenses, for 20 days more at the rate of Rs.500/- per day.

It took the view that since the compensation under the other heads seemed reasonable, no interference was required.  "In the result, the appellant is entitled to get enhanced compensation of Rs.39,000/- (9000 + 20000+ 10000)", the Court directed the Insurance Company.

"The 3rd respondent can recover the amount so deposited from respondents 1 and 2 and their assets", it further clarified. 

The appellant in this case was represented by Advocates T.G. Rajendran, Ann Susan George, T.R. Tarin, and V.A. Vinod. The Standing Counsel for the National Insurance Company Advocate M.A. George and Advocate Abhijett Lessli appeared on behalf of the respondents. 

Case Title: Muhammed Rashid @ Rashid v. Girivasan E.K. & Ors. 

Citation: 2023 LiveLaw (Ker) 52

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