MV Act: For Breach Of Policy Insurance, Company Is Liable To Pay Third Party And Recover From Insured- Karnataka HC

The Karnataka High Court has held that even if the breach of any policy condition under section 149 of the Motor Vehicles Act is fundamental, the insurer is liable to compensate the third party and recover the same from the insured.

The bench of Justice H.P. Sandesh observed that "the Insurance Company has to indemnify the claimant and recover the same from the insured." and further directed the Insurance Company to pay the compensation amount with interest within six weeks and recover the same from the insured.

In this case, the appeal was preferred against the judgment and award passed by Additional Senior Civil Judge, MACT-V (the Tribunal for short) wherein the Tribunal awarded a compensation of Rs. 2,88,000/- with an interest rate of 7% per annum and exonerated the liability of the Insurance Company and directed the private respondents to pay the compensation.

Advocate V.B. Siddaramahiah appeared on behalf of the appellant and submitted that the Tribunal has committed an error in exonerating the liability of the Insurance company on the ground that the offending vehicle was not registered and that the temporary registration was also expired on the date of the accident.

Advocate O. Mahesh appeared on behalf of the respondents and submitted that on the date of the accident the temporary registration was expired and thus, the question of shifting the liability would not arise and the Insurance Company would not be liable to pay the compensation.

The issue dealt with was-

• Whether the Tribunal has committed an error in fastening the liability on the insured instead of the insurer as contended in the appeal?
  

The Court relied on the decision of Sri Raja Lingaiah v. Sri Manju @ Manja And Another 2014 SCC Online KAR 7099, wherein it was held that "the Insurance Company having received the premium for one year cannot contend that it is not liable to pay the compensation, more particularly when the claim is made by a third party."

The Court referred to the decision of Oriental Insurance Company Limited v. Smt. Savithri Hudge And Another 2014 SCC Online KAR 12505 wherein it was held that "the insurer is liable to indemnify the award and thereafter recover the same from the owner, if there is breach or violation of terms and conditions of the policy, in accordance with law."

Accordingly, the appeal was allowed in part and the order of the Tribunal was modified by directing the Insurance Company to pay the compensation to the tune of Rs. 4,88,000/- to the claimant.

Cause Title- Sri Basavaraja Beerappa Kambali v. The Cholamandalam MS General Insurance Company Ltd.

Click here to read/download the Judgment