If vehicle is registered in India, insurance company is liable to pay compensation without any extra premium for extra territorial coverage

Anil Kumar Vs. Roop Kumar Sharma and another
Punjab & Haryana High Court - Case No.152 of 2017

High Court of Punjab and Haryana held that -If vehicle is registered in India, insurance Company is liable to pay compensation without any extra premium for extraterritorial coverage.

Section 139 of the Motor Vehicle Act,1988 empowers the Government of India to make rules regarding the travelling of the vehicles registered in India to other countries.

Section 149 (3) makes the Insurance Company liable to satisfy the decree or award for the accidents occurring outside India, even if the same is passed by a foreign Court, but in certain cases there is conflict so as whether the insurance companies are liable to pay for the accident occurring outside India.

The landmark judgement passed by the single bench of HON’BLE JUSTICE RAJBIR SEHRAWAT in ANIL KUMAR V ROOP SHARMA & OTHERS (FAO No.152 of 2017) dealt with the issue mentioned above.

1. In this case the petitioner is the owner of vehicle which went on a tour with almost 54 pilgrims, due to some unfortunate events the vehicle met with an accident in Nepal and all the travelers died.

2. A case was filled the Motor Accident claim tribunals declared that since the accident took place outside the territory of India , the insurance company is not liable to pay the compensation for the damages , aggrieved by this decision the owner of the vehicle( present petitioner filed this petition.

3. The counsel for the petitioner submits that there was no limitation for use of the vehicle in terms of geographical area; as per the policy issued for this vehicle, the schedule of which is also produced on record along with the cover note .

4. The permit of the said bus, authorized it to travel to area of Nepal. It is further submitted that the issue, whether the claim petition can be filed in India;

5. if the accident occurred in Nepal, has already been considered by this Court in FAO No.429 of 1998 as Sona Devi versus Amit Kumar and others. Counsel for the appellant submits that in that case, the Tribunal held that the claim petition is not maintainable in India, if the accident had taken place out of India.

6. Counsel further submits that since there is no restriction in the policy regarding the use of the vehicle outside geographical territory of India, therefore, the Insurance Company is liable to make the payments.

7. The learned counsel for the state contended respondent-Insurance Company has submitted that since the policy produced on record is limited to cover the vehicle to be used only in the geographical area of India ,therefore, the Insurance Company is not liable for payment of compensation on account of any accident occurring outside India.

OBSERVATIONS & DECISION OF COURT

8. A bare perusal of Sections 146 and 147 of the Motor Vehicles Act, 1988 makes it clear that the insurance policy is attached to the 'vehicle' in question and not to Geographical expense of the area of operation of the vehicle in question. The only requirement for coming in operation of the policy liability is; the use of vehiclein any public place. Therefore, the Insurance Company cannot avoid its liability to pay the compensation only on the ground that the vehicle was used in any particular city, state or a particular geographical area. Once a vehicle is insured qua third party it is insured for all geographical areas as per the provisions of the Act.

9. Only plea the Insurance Company can take to avoid its liability qua third party can be; that the vehicle was not being plied in a particular geographical area in accordance with the provisions of the Act, if any, prescribed for that purpose. Every extent of liablity qua third party is covered by the consolidated amount of premium required to be paid for insurance qua third party only. Therefore to cover liability qua third party in any particular geographical area the insured cannot even be asked to pay any extra premium under the provisions of the Act. So the Insurance Company cannot even avoid its liability qua third party, on the ground that it can charge extra premium to cover any particular geographical area and that the insured has not paid that extra premium to cover that particular geographical area. Once insured, the vehicle is insured to cover all geographical areas; where the vehicle is authorised by the authorities to travel.

10. One can come across a thought that the Motor Vehicles Act extends only to 'whole of India' as per its section 1, so it does not cover the area outside India. However, this rational also does not exempt the Insurance Company from liability arising from the usage of the vehicle outside thegeographical area of the Union of India. This section also implies that the Act would be applicable to all the citizens and subjects of India qua all the Motor Vehicular aspects in India. It does not exclude the liablity of one citizen or entity of India qua the other citizen of India even if the same is incurred outside the geographical area of Union of India, particularly, when the liability is arising from the use of vehicle registered and insured in India. The extra-territorial jurisdiction of a sovereign nation state over its citizen and their rights and liabilities is well recognised concept of jurisprudence. The sovereign Nation State has plenary powers to make law regarding its citizens and subjects; irrespective of territorial limits, may be, for enforcement of such law in another country the reciprocity may be required. Extra-territorial jurisdiction of a nation state is, jurisprudentially valid on the basis of the 'causes and effects' qua the territory, citizens, subjects and objects of a nation state. Indian Parliament too has this power to legislate for extraterritorial causes and effects, as clarified by Article 245 of the Constitution of India. Hence the Motor Vehicles Act shall also govern the rights and liabilities of citizens and subjects of India; arising from the provisions of Motor Vehicles Act, irrespective of territorial limits.

11. The Hon’ble court analyzed the facts of the present case and the arguments of both the parties and opined that “Motor Vehicles Act has made elaborate provisions regarding compulsory insurance of vehicle qua damage to the third party in any accident involving the insured vehicle at any public place.

12. Likewise, the liability of the Insurance Company to indemnify the insured has also been made compulsory by the Act.

13. There is no provision mentioned in the insurance policy regarding the damage occurring outside the territory of India therefore the company is liable to pay the amount.

14. Hence, the appeal is allowed.

CONCLUSION

On reading of the provisions of Sections 139 and 149(3) of the Motor vehicles Act,1988 it is clear that Central Government has power to authorise a person to drive vehicle out side India or person temporarily proceedings outside India. Section 149(3) provides that judgment /decree of a foreign court will be payable by the insured registered under provisions of the Insurance Act, 1938. It means that the contention of the insurance company in above case is wrong any claim outside India will be payable in India.

DISCLAIMER: The case law presented here is only for sharing information with the readers. The views are personal ,shall not be taken as professional advice. In case of necessity do consult with insurance professionals.

SECTION 139 OF MVA 1988

Power of Central Government to make rules

(1) The Central Government may, by notification in the Official Gazette, make rules for all or any of the following purposes, namely:—

(a) the grant and authentication of travelling passes, certificates or authorizations to persons temporarily taking motor vehicles out of India to any place outside India or to persons temporarily proceeding out of India to any place outside India and desiring to drive a motor vehicle during their absence from India;

(b) prescribing the conditions subject to which motor vehicles brought temporarily into India from outside India by persons intending to make a temporary stay in India may be possessed and used in India; and

(c) prescribing the conditions subject to which persons entering India from any place outside India for a temporary stay in India may drive motor vehicles in India.

SECTION 149(3) OF THE MVA 1988

Where any such judgment as is referred to in sub-section (1) is obtained from a Court in a reciprocating country and in the case of a foreign judgment is, by virtue of the provisions of section 13 of the Code of Civil Procedure, 1908 (5 of 1908) conclusive as to any matter adjudicated upon by it, the insurer (being an insurer registered under the Insurance Act, 1938 (4 of 1938) and whether or not he is registered under the corresponding law of the reciprocating country) shall be liable to the person entitled to the benefit of the decree in the manner and to the extent specified in sub-section (1), as if the judgment were given by a Court in India:

Provided that no sum shall be payable by the insurer in respect of any such judgment unless, before the commencement of the proceedings in which the judgment is given, the insurer had notice through the Court concerned of the bringing of the proceedings and the insurer to whom notice is so given is entitled under the corresponding law of the reciprocating country, to be made a party to the proceedings and to defend the action on grounds similar to those specified in sub-section (2).