Insurance company

Car accident | Insurance company liable to pay compensation even if waived, may recover from owner later: Telangana High Court

The Telangana High Court recently ruled that in the event of a breach of the terms of the insurance policy, the insurer is still liable to pay the compensation to the claimant and can later recover it from the owner of the offending vehicle. .

It was based on the principle ofpay and collect“as found by the Apex Court in Manuara Khatun v. Rajesh Kr. Singh, 2017.

Quick Facts

The plaintiff filed a claim under Section 166 of the Motor Vehicles Act seeking compensation of Rs. 1,50,000/- for the injuries he suffered in a car accident. The claimant and others were traveling in Innova Car and the driver of said vehicle drove recklessly and carelessly at high speed and rushed towards a bus stop building. As a result, the occupants of the car were seriously injured.

Plaintiff filed a claim against Respondent 1 being the owner and Respondent 2 being the insurer of the car.

1st the respondent/owner of the car stayed ex parte. One of the arguments of 2n/a respondent/insurer was that, according to the criminal record, the crime vehicle was being used for rental purposes at the time of the accident and that the insurance policy was issued for private use, so that the owner of the car has violated the terms and conditions of the policy and the owner is solely responsible for paying the compensation and not the insurance company.

The Motor Accident Tribunal awarded compensation of Rs. 26,707/- with prorated cost and interest at 7.5% per annum from the date of the claim until the realization. He held that since the plaintiff traveled in a rental vehicle, this is contrary to the terms and conditions of the insurance policy and therefore the insurance company is not liable to pay compensation and the owner is solely responsible for paying the indemnity.

Injured by the said order, the appeal was filed by the plaintiff. While awaiting the appeal, the plaintiff died and his legal heirs were implicated as legal representatives. It was argued by plaintiff’s counsel that in the event of a breach of the terms of the policy, the insurer is still liable to pay the indemnity to the plaintiff and must recover the same from the owner of the vehicle on the basis later on the Supreme Court’s decision in Manuara Khatun v. Rajesh Kumar2017. In addition, the compensation awarded by the Tribunal was lower and not adequate.

Court decision

Judge G. Sridevi ordered the insurer of the offending vehicle to first pay the award sum to the plaintiffs and then to recover the award amount paid from the owner of the offending vehicle in enforcement proceedings. The court ruled as follows:

For the above discussion and in view of the benevolent purpose of motor vehicle law, even if the liability of the insurance company is exonerated, the insurance company is still liable to pay the indemnity to the plaintiff in first instance, then to recover it from the owner of the offending vehicle by invoking the “pay and recover” principle as set out by the Apex court in Manuara Khatun vs. Rajesh Kr. Singh“.

With respect to insufficient compensation, the Court held that since the aggrieved/plaintiff died while awaiting appeal, the appeal for claim improvement would stop upon the death of the plaintiff and would not survive. not to its legal representatives.

Judge G. Sridevi placed relied on numerous High Court judgments including Sukhdev Singh v. Ramesh Kumar2019 in which it was determined that the cause of action does not survive the legal heirs when the injured/plaintiff dies while awaiting appeal.

Accordingly, the appeal was allowed in part, ordering the insurance company to deposit the amount with costs awarded by the Court, and then to recover said amount from the owner.

Related readings:

Insurer liable to indemnify third party for breach of policy conditions, may recover from insured later : High Court of Rajasthan

The insurance company is not obliged to compensate the price when the driver of the offending vehicle did not have a valid license: Gujarat High Court

Pattern title: D. JANARDHAN REDDY c. K. MURALI and ANR

Citation: 2022 LiveLaw (Tel.) 9

Click here to read/download the order