Borrower of a car cannot claim compensation from insurance company in case of absence of Personal Accident Coverage

The New India Insurance Co. Ltd. v. Rajeswari & Ors.
MACA NO. 2724 OF 2014

Sub: A borrower of a car cannot claim compensation from insurance company in case of absence of Personal Accident Coverage.

The Hon’ble Kerala High Court held that - compensation could not be awarded to the heirs of the deceased, who 'stepped into the shoes of the owner', brought about is own death. "Since he himself was the tortfeasor, his legal heirs cannot maintain a claim against himself who stepped into the shoes of the owner".

BRIEF FACTS

The death of Sri Sanilkumar in the road traffic accident occurred on 19.02.2007 is not in dispute. Respondents 1 to 4/claimants are the legal heirs of deceased Sanilkumar also is admitted. The 5th respondent is the owner of the motorcycle in which the deceased was travelling. Ext.A5 final report is to the effect that, the deceased was riding the motorcycle and on seeing a bus coming from opposite direction, he swerved the motorcycle and it capsized resulting in the accident. No other vehicle was involved in the accident.

The legal heirs of deceased Sanilkumar approached the Tribunal claiming compensation under Section 163A of the Motor Vehicles Amendment Act, 1994 read with Rule 371 of the Kerala Motor Vehicles Rules, 1989. The

Tribunal awarded compensation of Rs.3,41,802/- and directed the appellant herein to deposit the award amount with interest.

The case of the appellant is that, the deceased stepped into the shoes of the owner of the vehicle, and since the accident occurred due to the negligence of the deceased himself, his legal heirs are not entitled to get compensation under Section 163A of the M.V Act. Though they have pleaded that fact in their written statement, learned Tribunal, ignoring that contention, awarded compensation which is per se illegal.

Appeal before Hon’ble Kerala High Court

Learned counsel for the appellant (Insurance Company) contended that, since the deceased stepped into the shoes of the insured, the claim under Section 163A of the M.V Act is not maintainable. The deceased himself was the tortfeasor and he borrowed the motorcycle from the 5th respondent/owner. Since he stepped into the shoes of the owner, he cannot be considered as a third party.

Learned Tribunal did not consider maintainability of the claim put forward by the legal heirs of deceased Sanilkumar in spite of the contentions taken up by the appellant. Learned Tribunal found that, the accident occurred due to the rash and negligent driving of the motorcycle by the deceased. Even then the Tribunal directed the owner and insurer of that motorcycle to pay compensation to the legal heirs of the victim.

In Ramkhiladi and another vs. United India Insurance Company and another (2020 ACJ 627) the Apex Court held that, Section 163A of the Act has to be interpreted in keeping with the intention of the legislature and the social perspective it seeks to achieve. It is a provision which is beneficial in nature and it has been enacted as a measure of social security. The owner of the vehicle or his legal representative or the borrower of the vehicle cannot raise a claim for compensation from the insurer of that vehicle as he is not a third party

Section 163A in The Motor Vehicles Act, 1988

Special provisions as to payment of compensation on structured formula basis.-

(1) Notwithstanding anything contained in this Act or in any other law for the time being in force or instrument having the force of law, the owner of the motor vehicle or the authorised insurer shall be liable to pay in the case of death or permanent disablement due to accident arising out of the use of motor vehicle, compensation, as indicated in the Second Schedule, to the legal heirs or the victim, as the case may be.

Explanation.- For the purposes of this sub-section, "permanent disability" shall have the same meaning and extent as in the Workmen’s Compensation Act, 1923 (8 of 1923).

(2) In any claim for compensation under sub-section (1), the claimant shall not be required to plead or establish that the death or permanent disablement in respect of which the claim has been made was due to any wrongful act or neglect or default of the owner of the vehicle or vehicles concerned or of any other person.

(3) The Central Government may, keeping in view the cost of living by notification in the Official Gazette, from time to time amend the Second Schedule.

RULE 371 of the Kerala Motor Vehicles Rules 2019

Application for compensation.‐

(1) Every application for payment of compensation shall be made in Form "Comp. A" and shall be accompanied by the fee prescribed therefor in subrule (1) of Rule 397.

(2) Any application which is found defective on scrutiny may be returned by the Claims Tribunal for being submitted after curing the defects within a specified time not exceeding two weeks.

(3) An application for compensation shall be numbered as an Original Petition (Motor Vehicles).

The learned Tribunal even after finding that the accident occurred due to the rash and negligent riding of the motorcycle by the deceased himself, awarded compensation to the legal heirs of the deceased directing the owner and insurer of that vehicle to compensate them.

The owner and insurer are privy to the contract of insurance between them. If the contract of insurance specifically provides for personal accident cover of the owner, the insurer is liable as per the terms of the insurance policy.

In the case on hand, though the Insurance Company admitted existence of valid policy as on the date of accident, it is not specified whether it was having personal accident coverage for the owner.

If the insurance policy had personal coverage for the owner of the offending vehicle, the Company is liable to the extent of that coverage. But, since the appellant or the respondents failed to produce the insurance policy of the offending motorcycle, this Court is unable to fix the compensation, if any, payable to the legal heirs of the deceased who stepped into the shoes of the owner.

Anyway, the claim put forward by respondents 1 to 4 under Section 163A of the M.V Act was not maintainable as the deceased stepped into the shoes of the owner, and the accident occurred due to his own rash and negligent riding of the motorcycle. Since he himself was the tortfeasor, his legal heirs cannot maintain a claim against himself who stepped into the shoes of the owner. So, the impugned award is liable to be set aside.

CONCLUSION

From above decision it is clear that for insurance claim under MVA,1988 in case of driver of a borrowed motor vehicle personal insurance is necessary. A person driving a motor vehicle of his /her friend enters into shoes of the owner of the vehicle and his/her heirs or legal representatives cannot claim compensation in absence of a Personal Accident Insurance Policy.

DISCLAIMER: The above case law presented here is only for sharing information with readers. The views are personal. In case of necessity do consult with insurance professionals.