Pay first, recover later: HC to insurance firm

Saurabh Malik

Tribune News Service

Chandigarh, February 22

Coming to the rescue of a 27-year-old fatal accident victim’s kin, the Punjab and Haryana High Court has asked the insurer to pay compensation to the claimants before recovering the amount from the owner of the offending vehicle, whose driver had invalid licence.

The judgment is significant as the High Court has made it clear that the insurance company is not liable to pay compensation.

But instead of leaving the claimants to fight another battle for recovery of compensation from the owner, the Bench set a precedent by asking the insurer to pay first and recover later without going through the legal rigmarole of filing a suit.

“I am of the considered view that it will be difficult for the claimants to secure the presence of the vehicle owner and they will have to face another round of litigation,” Justice Daya Chaudhary ruled for mitigating their plight.

The ruling came on an appeal by ICICI Lombard General Insurance Company Limited against Ramwati and other respondents. It had challenged the award dated February 18, 2015, by Palwal Motor Accident Claims Tribunal.

The court was told that the victim, Sukhbir, was riding a motorcycle when a truck coming from the Hodal side rammed into it in May 2013. A claim petition was subsequently filed by the victim’s mother and brother.

The company argued the tribunal, while awarding Rs 5.7 lakh as compensation, did not taken into consideration that the driver was not holding a valid and effective driving licence.

Justice Chaudhary asserted: “Evidently, there was breach of condition of contract of insurance. The tribunal did not consider this issue correctly. It is held that the driver of the offending vehicle was not holding valid driving licence and as such, the insurance company has no liability to pay compensation to the claimants.”

Justice Chaudhary ruled that the insurer would pay relief fixed by the tribunal, but would be entitled to recover it from the owner.

It would not be required to file a suit and could initiate proceedings in the executing court in case of a dispute with the owner. Before releasing the amount, the owner would be issued a notice to furnish security for the entire sum to be paid to the claimants.

The offending vehicle would also be attached as part of the security. If necessary, the executing court would take Regional Transport Authority’s assistance.

“In case there is any default, it shall be open to the executing court to direct realisation by disposal of the securities to be furnished or from any other property of the owner of the vehicle, the insured. Accordingly, the appeal is allowed with the direction to have recovery rights from the owner of the offending vehicle,” the High Court ruled.