Insurance company

The insurance company is not responsible if the motor vehicle at the time of the accident violated the “purpose of use” according to the policy: Telangana High Court

The Telangana High Court recently ruled that the insurance company is not liable to pay compensation under the Motor Vehicles Act if the vehicle at the time of the accident breached the terms and purpose of the insurance policy.

Brief facts of the case

A deceased Padma worked as a laborer for the owner of the Tractor and Trailor. One day, while the deceased and other workers were moving in the tractor and trailer from one village to another, the tractor fell into a ditch by the roadside due to which one of the workers was died on the spot.

The insurance company stated that the vehicle in question was a freight vehicle and that at the time of the accident it was transporting a wedding with nearly 25 people and therefore the owner of the vehicle violated the terms of the policy and therefore was not responsible for indemnifying the owner. This fact was also corroborated by the police file. The insurance policy was only covered during loading and unloading operations for five coolies.

The commissioner concluded that the deceased was returning from work with other workers and therefore the accident occurred in the course of employment. In addition, the premium by the insurance company was collected to cover the risk of five workers under the policy. Consequently, the owner and the insurer were jointly and severally liable to indemnify the heirs of the deceased worker.

M/s United India Insurance Company Limited, which is the Appellant, filed the appeal aggrieved by the Order of 07.12.2006 issued by the Commissioner of Labor for Workmen’s Compensation.

Question of law

Was the commissioner justified in awarding compensation even if the plaintiffs did not establish an employee-employer relationship between the deceased and the opposing party and when the accident did not take place during and during employment?

Was the Commissioner correct in applying the provisions of the Motor Vehicle Act to a claim under the Workmen Compensation Act?

Court observation

Judge P. Sree Sudha, on reading the indictment, he found that the dead and injured were workmen, but that they did not work with the owner of the tractor and trailer and that there was no relationship of employer and employee between them and that the accident did not occur in the course of employment since the deceased and injured persons were returning from attending work in a tractor with a wedding party and then they encountered an accident.

Therefore, this amounted to a violation of the terms and conditions of the policy and the insurance company was not liable to pay the indemnity.

The insurance company’s appeal was therefore allowed.


Click here to read/download the order