Introduction
The Madhya Pradesh High Court, in the case of Shivam Chaudary v Verendra Kumar Mishra (MA-448-2008), has stated that the insurance company shall not be liable to compensate for accidents involving undeclared usage of the vehicle.
The court said that insurance can be claimed only when an accident takes place while the insured vehicle is used for the purpose it was meant to be used, as mentioned in the insurance application.
The court also stated that the insurance company is not liable to pay for compensation to the injured persons.
Background
Two pedestrians, Shivram and Shukhlal, were walking towards their village, Lohroura and were hit by a tractor, and very severely injured. They filed a complaint stating that they were part of the baratis for a wedding, and while they were walking, they were hit by a tractor which was carrying passengers or baratis for the wedding. The Additional Motor Accidents Tribunal had held the insurance company liable to compensate the injured parties. It directed the Insurance company to pay 30,000 INR to Shivram and 10,000 INR to Shukhlal. The Insurance company contended this order before the Madhya Pradesh High Court, stating that the vehicle, which was insured for agricultural practices, was used for an unapproved form of usage under the insurance agreement and therefore they are not liable to compensate the injured parties.
Key Points
Not a mere legal formality: The court emphasised that the insurance contract is a legal document governed by trust, responsibility and lawful use. The court recognised the fact that the vehicle was insured for agricultural purposes and had clearly violated its primary purpose by getting involved in activities it was not meant it take part in. This misuse of the vehicle for its unintended purpose by the owner of the tractor is a violation of the policy conditions. Since the owner of the vehicle has not acted responsibly and used the vehicle for its intended purpose, it relieves the insurance company from being liable. The court cited the case of Balu Krishna Chavan v Reliance General Insurance Co. Ltd., and reiterated that every motor insurance policy defines specific uses for the vehicle and they are to be abided to.
Not to be used as a security: The court also took into note the increasing motor vehicle accidents in India. It stated that the courts holding the insurance company liable to compensate have failed to instil responsibility and fear of consequence into the minds of the people, and they are not made to feel the pain of doing unlawful activity. It is necessary to sometimes make the offender pay the compensation himself so as to bring awareness and responsibility in society and ensure that there is compliance with traffic rules and regulations.
Only in certain minor cases, which fall under Section 149(1) of the Motor Vehicle Act, do the courts make the offender pay first and then claim it from the insurance company. But it’s not very widely practiced. The insurance is a security given to the people, but it should not be considered as a mere security which covers all incidents. It is necessary to make sure that the insurance company is held liable only when the insured has not acted in bad faith, has not breached the insurance policy, and has been responsible.
Conclusion
The court in this case looked into the nature of insurance policies and stated that they are legally made and are governed under trust, responsibility and legal use. There is a necessity for the insured and insurer to perform in good faith and not breach the insurance policy. The court also stated that it is necessary to bring in some sort of responsibility on the offenders by holding them liable and making them pay for the accident. The court in this case held that the insurance company is not liable to compensate.
“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal falls into the category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”
WRITTEN BY: I Sharan
