If There Was No Valid Permit At The Time Of The Accident, The Insurer Must Compensate Claimants And Recover Money From The Vehicle Owner : Karnataka HC

Last Updated on October 9, 2024 by Arti Kumari

The Karnataka High Court has reaffirmed that the insurance company is responsible for paying the claimants’ compensation and collecting it from the car’s owner, even if the vehicle that caused the accident did not have a valid permit or fitness certificate at the time of the collision.

The claim made by Shriram General Insurance Company Limited that the vehicle in question was operating on the road at the time of the accident without a valid permission and fitness certificate was rejected by a single judge bench of Justice T G Shivashankare Gowda. The firm’s argument that the insurance company can evade its “liability completely” since a “fundamental breach” on the side of the vehicle owner has been “demonstrated” was rejected by the court. The owner is now responsible for compensating the claimant.

Additionally, the company asserted that the charge sheet was filed against the driver of the vehicle in accordance with Rule 52 (Renewal of certificate of registration) of the Central Motor Vehicles (CMV) Rules, Section 56 (Certificate of Fitness of transport vehicles), and Section 66 (Necessity for permits) of the Motor Vehicles Act.

Justice Gowda cited the rulings of the Supreme Court in National Insurance Co. Ltd., v. Swaran Singh and others (2004) and the full bench decision of the high court in New India Assurance Co. Ltd., Bijapur vs. Yallavva and Others (2020).

“The Hon’ble Apex Court and the entire bench of this Court have decided the law, which is binding in nature, hence this argument cannot be upheld. Even though this is a case of fundamental breach, the insurance company can avoid liability under the law established by Swaran Singh’s and Yallavva’s cases because the petitioners are third parties under the insurance contract, which requires the insurance company to pay the compensation and collect it from the vehicle’s owner. Therefore, the pay and recovery concept applies to the facts of this case.

As a result, it made the car’s owner accountable for paying the damages. In the same proceedings, it also instructed the insurance company to retrieve the money from the vehicle’s owner and deposit it within eight weeks.

The order was issued by the high court during the hearing of cross-appeals filed by the deceased’s wife, who wanted the compensation granted by the Motor Accident Claims Tribunal (MACT) to be increased, and the insurance company, which questioned the deceased’s cause of death and liability.

The deceased Nandishappa, who was riding a bicycle when he was struck by a goods vehicle on June 17, 2013, was treated at various hospitals and remained unconscious during the entire ordeal, the court noted. The argument that the deceased’s death was caused by cardiac arrest was also dismissed by the court. It stated: “The deceased was unconscious from June 17, 2013, to July 23, 2013, and despite multiple treatments, he did not recover.” He passed away within seven days after that. The way the deceased was treated and the medical records itself indicate that they were unconscious from the moment of their birth until their death.

“The postmortem report’s mere reference to cardiac respiratory arrest does not support the claim that the death was unrelated to the collision. According to medical evidence, the deceased died as a result of a head injury received in the accident, and the petitioners were able to show a connection between the injuries and the cause of death,” the statement continued.

The high court modified the tribunal order by partially allowing the claimants’ and insurance company’s appeals, ruling that the claimants are entitled to total compensation of Rs.13,44,209 instead of Rs.13,88,209, with interest at the rate of 6% per annum from the date of petition to the date of deposit.

Case Title : The Legal Manager Shriram General Insurance Company Limited And Nagamma & Others and Smt. Nagamma and Others And Sri P Penkatesh and others.