The Supreme Court has ruled that insurance companies are liable to pay
compensation to claimants even if ownership of the vehicle in question
changes.
“The liability to pay compensation is based on a statutory provision.
Compulsory insurance of the vehicle is meant for the benefit of the
third parties. The liability of the owner to have compulsory insurance
is only in regard to third party and not to the property.
Once the vehicle is insured, the owner as well as any other person can
use the vehicle with the consent of the owner. Section 146 of the Act
(Motor Vehicles Act,1988) does not provide that any person who uses
the vehicle independently, a separate insurance policy should be
taken. The purpose of compulsory insurance in the Act has been enacted
with an object to advance social justice,” the apex court said.
The court allowed a bunch of appeals filed by the Uttar Pradesh State
Road Transport Corporation (UPSRTC) challenging the award passed by
Motor Accident Claims Tribunal, Barabanki. It had fastened the
liability on the the appellant corporation and the owner of the
vehicle to pay compensation to the claimants.
The issue before the court was if an insured vehicle was plying under
an agreement of contract with the corporation whether the insurance
company would be liable to pay compensation or would it be the
responsibility of the corporation or the owner of such vehicle in case
of an accident?
It was a vexed question with no unanimity in the judgments of various
high courts and it has not been considered directly so far by the apex
court, pointed out justice Verma writing the verdict for the bench.
“If the Corporation had become the owner... and the vehicle having
been insured at the instance of original owner, it will be deemed that
the vehicle was transferred along with the insurance policy in
existence to the Corporation and thus insurance company would not be
able to escape its liability to pay the amount of compensation,” said
a bench comprising Justice Dalveer Bhandari and Justice Deepak Verma
in its judgement on Monday.
In one such case, the owner of a mini bus had entered into an
agreement with the UPSRTC for plying the vehicle as per the permit
issued in favour of the Corporation. On account of the amendment in
the Motor Vehicles Act 1988 the Corporation hired the vehicle and used
the same on the routes as per the permit granted to it.
The mini bus met with an accident and the claimants of the deceased
moved the tribunal.
It allowed all such five claim petitions fastening the liability of
payment on the Corporation saying at the time of the accident, the
offending vehicle was being run by it under the contract.
The National Insurance Company which admittedly had insured the
vehicle for the relevant period was exonerated from the payment of the
compensation.
It was challenged by the Corporation before the apex court. The
insurer had also came to the apex court opposing the plea of the
Corporation. The court dismissed the plea of the insurer.
compensation to claimants even if ownership of the vehicle in question
changes.
“The liability to pay compensation is based on a statutory provision.
Compulsory insurance of the vehicle is meant for the benefit of the
third parties. The liability of the owner to have compulsory insurance
is only in regard to third party and not to the property.
Once the vehicle is insured, the owner as well as any other person can
use the vehicle with the consent of the owner. Section 146 of the Act
(Motor Vehicles Act,1988) does not provide that any person who uses
the vehicle independently, a separate insurance policy should be
taken. The purpose of compulsory insurance in the Act has been enacted
with an object to advance social justice,” the apex court said.
The court allowed a bunch of appeals filed by the Uttar Pradesh State
Road Transport Corporation (UPSRTC) challenging the award passed by
Motor Accident Claims Tribunal, Barabanki. It had fastened the
liability on the the appellant corporation and the owner of the
vehicle to pay compensation to the claimants.
The issue before the court was if an insured vehicle was plying under
an agreement of contract with the corporation whether the insurance
company would be liable to pay compensation or would it be the
responsibility of the corporation or the owner of such vehicle in case
of an accident?
It was a vexed question with no unanimity in the judgments of various
high courts and it has not been considered directly so far by the apex
court, pointed out justice Verma writing the verdict for the bench.
“If the Corporation had become the owner... and the vehicle having
been insured at the instance of original owner, it will be deemed that
the vehicle was transferred along with the insurance policy in
existence to the Corporation and thus insurance company would not be
able to escape its liability to pay the amount of compensation,” said
a bench comprising Justice Dalveer Bhandari and Justice Deepak Verma
in its judgement on Monday.
In one such case, the owner of a mini bus had entered into an
agreement with the UPSRTC for plying the vehicle as per the permit
issued in favour of the Corporation. On account of the amendment in
the Motor Vehicles Act 1988 the Corporation hired the vehicle and used
the same on the routes as per the permit granted to it.
The mini bus met with an accident and the claimants of the deceased
moved the tribunal.
It allowed all such five claim petitions fastening the liability of
payment on the Corporation saying at the time of the accident, the
offending vehicle was being run by it under the contract.
The National Insurance Company which admittedly had insured the
vehicle for the relevant period was exonerated from the payment of the
compensation.
It was challenged by the Corporation before the apex court. The
insurer had also came to the apex court opposing the plea of the
Corporation. The court dismissed the plea of the insurer.
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