Legal Heirs Of Vehicle Owner Cannot Seek Compensation U/S 163A MV Act Where Insurance Policy Covers Only Third Party: P&H High Court

The bench comprising Justice Pankaj Jain noted that Section 146 of the 1988 Act statutorily requires an owner to insure against third party risk before use of the vehicle. No such mandate is stipulated with respect to cover of vehicle owner. However, insurer and the insured may contract for expansion of the statutory policy.

Thus, it was of the view that whether the duty of the insurer is only to indemnify loss of third party or is to indemnify even the owner/driver will depend upon the terms of the policy and where the policy is merely a statutory policy then the insurer will be liable to indemnify only the third party under Section 163-A of the MV Act.

"Where the policy is merely a statutory policy obviously the same will fall within the ratio of law laid down in Dhanraj's case (supra) and the insurer shall be liable to indemnify only the third party and owner shall be precluded from maintaining petition under Section 163-A of the 1988 Act. However, where the policy is a comprehensive policy and the contracting parties have agreed to travel beyond the mandatory requirement of Section 146 of the 1988 Act and insurer agrees to indemnify the owner and has accepted premium for such contract to indemnify, the case would not be hit by law laid down in Dhanraj's case (supra)."

In Dhanraj vs. New India Assurance Co. Ltd., the Supreme Court held that in absence of a premium towards injury to the person of the owner, the insurer has no statutory or contractual liability to pay compensation to the owner.

The court in the instant case was dealing with an appeal by the Insurer against the award passed by the Motor Accident Claims Tribunal, Jhajjar.

Claim petition under Section 163-A of the MV Act was filed by the legal heirs on account of Sanjay's death who was driving the car that got hit by unknown vehicle resulting in his death. Vehicle owner and the insurer were impleaded as respondents and Tribunal awarded compensation of Rs.4,95,200/- holding respondents liable jointly and severally. Insurer was in appeal against the said award.

Primary contention of the company was that the deceased being driver/ borrower of vehicle and not 'third party', the present petition under Section 163-A of the 1988 Act is not maintainable.

The High Court noted that in light of Supreme Court's judgment in Ningamma & Anr. v. United India Insurance Co. Ltd., the driver has a distinct status than that of owner of the vehicle.

However, in the instant case, the insurance policy in question was a comprehensive one and it covered the owner as well as driver.

"The Policy on record clearly shows that the premium was paid for insurance of the owner as well as the driver. Thus, in the present case the contention raised by the appellant w.r.t. the maintainability of the petition sans merit and thus is rejected. So far as the plea w.r.t. quantum of compensation awarded by the Tribunal is concerned, it is by now settled principle of law that the liability under Section 163-A is not limited."

Accordingly, the appeal was dismissed.

Case Title: National Insurance Company Limited Versus Roopa and others

Citation: 2022 LiveLaw (PH) 233 

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