Motor Accident | Insurance Company Liable To Pay Compensation Even Upon Exoneration, May Recover From Owner Later: Telangana High Court

The Telangana High Court recently ruled that in case of violation of insurance policy conditions, the insurer is still liable to pay the compensation to the claimant and it may recover the same from the owner of the offending vehicle later. It relied upon the principle of "pay and recover" as laid down by the Apex Court in Manuara Khatun v. Rajesh Kr. Singh, 2017. Facts in brief The claimant filed a petition under Section 166 of the Motor Vehicles Act claiming compensation of Rs. 1,50,000/- for the injuries sustained by him in a motor vehicle accident. The claimant along with others was travelling in Innova Car and the driver of the said vehicle drove in a rash and negligent manner with high speed and dashed to a bus-stand building. As a consequence, the inmates of the car sustained grievous injuries. The claimant filed claim petition against respondent 1 being the owner and respondent 2 being the insurer of the car. The 1st respondent/owner of the car remained ex parte. One of the contentions of the 2nd respondent/insurer was that as per the police record, the crime vehicle was used for hire purpose at the time of the accident and the insurance policy was issued for private use, as such the owner of the car has violated the terms and conditions of the policy and the owner alone is liable to pay the compensation and not the insurance company. The Motor Accident Tribunal awarded compensation of Rs. 26,707/- with proportionate cost and interest at 7.5% per annum from the date of petition till realization. It held that since the claimant has travelled in a hire vehicle, it is against the terms and conditions of the insurance policy and therefore, the insurance company is not liable to pay compensation and the owner alone is liable to pay the compensation. Aggrieved by the said order, the appeal was filed by the claimant. During pendency of appeal, the claimant died and his legal heirs were impleaded as legal representatives. It was contended by the counsel for claimant that in case of violation of policy conditions, the insurer is still liable to pay the compensation to the claimant and shall recover the same from the owner of the vehicle later relying upon the Supreme Court decision in Manuara Khatun v. Rajesh Kumar, 2017. Furthermore, the compensation granted by the Tribunal was on the lower side and was not adequate. Court 's Ruling Justice G. Sridevi directed the insurer of the offending vehicle to first pay the awarded sum to the claimants and then recover the paid awarded sum from the owner of the offending vehicle in execution proceedings. The court held as under: "For the aforesaid discussion and in view of the benevolence object of the Motor Vehicles Act, even though the liability of Insurance Company is exonerated, still the Insurance Company is liable to pay the compensation to the claimant at the first instance and then recover the same from the owner of the offending vehicle by invoking the principle "pay and recover" as laid down by the Apex Court in Manuara Khatun v. Rajesh Kr. Singh". In respect of inadequate compensation, the Court held that since the injured/claimant has died during pendency of the appeal, the appeal for enhancement of claim would abate on death of the claimant and would not survive to his legal representatives. Justice G. Sridevi placed relied on many High Court judgments including Sukhdev Singh v. Ramesh Kumar, 2019 in which it was ruled that the cause of action does not survive to legal heirs when the injured/claimant die during pendency of appeal. Accordingly, the appeal was party allowed directing the insurance company to deposit the amount with costs as awarded by the Tribunal and then recover the said amount from the owner.Related Reads:Insurer Liable To Indemnify Compensation To Third Party In Case Of Breach Of Policy Conditions, May Recover From Insured Later: Rajasthan High CourtInsurance Company Not Liable To Indemnify Award When Driver Of Offending Vehicle Did Not Have Valid License : Gujarat High Court Cause Title: D. JANARDHAN REDDY v. K. MURALI and ANRCitation: 2022 LiveLaw (Tel) 9 Click Here To Read/Download Order

Motor Accident | Insurance Company Liable To Pay Compensation Even Upon Exoneration, May Recover From Owner Later: Telangana High Court

Jagriti Sanghi

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