IMPORTANT POINT
Motor Insurance – Limits of liability – When there is a valid policy issued in name of vehicle involved in accident, claim under Section 163A of Motor Vehicles Act, 1988 covers every claim and is not restricted to a third party claim, without any requirement of establishing negligence, if death or permanent disability is caused by reason of motor accident.

ORDER :

1. The petitioner, a minor, was before the Motor Accident Claims Tribunal¹ [“the MACT for brevity”] Cuttack claiming compensation under Section 163A of the Motor Vehicles Act, 1988² [“the Act”] for the death of both her parents in a motor-vehicle accident. The unfortunate accident occurred when the vehicle dashed against a road side building, it having gone out of control due to a tyre burst, Four persons travelling in the vehicle, two of whom were the parents of the petitioner, died in the accident. The petitioner who was two years old then, was represented by her aunt in the claim petition. The MACT allowed the claim and awarded a compensation of Rs. 4,08,000/- for the death of the petitioner’s mother and Rs. 4,53,339/- for the death of the petitioner’s father. The owner of the vehicle was the petitioner’s father and before the Tribunal as also the High Court, he was shown as the first respondent with the clear recital that he was dead. The second respondent was the Insurance Company. The High Court found that a dead person cannot be made a defendant and hence, the claim petitions were not maintainable. However it was also categorically found that there was no dispute about the validity of the insurance policy and it has to be stated that the vehicle was driven by a person who held a valid licence.

2. Insofar as the ground on which the claim petitions were found to be not maintainable by the High Court, useful reference can be made to Section 155 of the Act. Section 155 provides that even if the insured dies after the happening of an event which gave rise to a claim, it shall not be a bar to the survival of any cause of action arising out of the said event, against the insurer. The event which gave rise to the claim is the accident and the death occurred after the event; albeit a direct result of the accident. A third party claim for compensation would definitely survive since, on the death of the insured it would lie against his estate, which the insurer has an obligation to indemnify. The insurer, hence, can defend any claim against the insured, which the insurer has the liability to indemnify in accordance with the policy issued. The ground stated by the High Court definitely is not tenable. However, herein the question arises as to whether the petitioner, who is the daughter of the owner of the vehicle has the right to claim compensation for the death of the owner of the vehicle, when the claim is raised under Section 163A of the Act, requiring no proof of negligence leading to the accident, resulting in the death or injury suffered.

3. The compelling contention of the Insurance Company is that the petitioner who is the sole heir of the owner, having succeeded to the estate of the owner of the vehicle who died in the accident cannot at the same time, be the person who has the liability and the recipient of the compensation. The liability to compensate on the death of the owner falls on his estate; which the claimant succeeds to and there cannot be any further compensation on the loss of dependency, is the argument.

4. We have already found that Section 155 enables the claim to be filed and prosecuted even after the death of the owner of the vehicle, if there is a valid insurance policy, which would put the insurer in the shoes of the owner who would be able to take all contentions available to the insured, to defend the claim; in addition to any dispute on the validity or enforceability of the policy. Insofar as the claim raised against the mother is concerned, we are clear in our minds that it has to be admitted and the award under Section 163A passed by the Tribunal has to be restored. What remains is the liability with respect to the death of the owner which we see from the insurance policy produced as Annexure P- 1, is limited for the owner-driver to Rs. 2 lakhs. Whether the liability of the insurer can be confined to that provided in the policy or it can be determined under Section 163A would also be an issue be