Punjab HC: Insurer Liable even if Indian Vehicle Meets Accident Abroad

December 05, 2017

Anil Kumar v. Roop Kumar Sharma & Anr.

Date of Judgment: November 13, 2017

In this recent case, the High Court of Punjab and Haryana has made a noteworthy judgment pertaining to Insurance claim for Indian vehicles which have met with an accident beyond the territorial limits of India. The Court in the case has categorically stated that once insured, the vehicle is insured to cover all geographical areas where the vehicle is authorised by the authorities to travel.

Background

In this appeal, the appellant challenged Award passed by Motor Accidents Claims Tribunal, Kurukshetra (Tribunal), in so far as it absolved the Insurance Company from the liability of payment of the compensation in the case.

In the case in 1995,  54 pilgrims from Krukshetra started their journey by Bus. While the pilgrims were travelling, the bus met with an accident and fell in Trishuli River. Due to the accident, all  54 pilgrims died in the accident. On account of death of these persons, several claim petitions were filed and the present petition was filed by the Respondent on account of death of one Kamal Sharma.

In the case, the owner of the bus produced in evidence, the cover note of the insurance of the vehicle in question along with the schedule of the policy. The Insurance Company also produced the alleged copy of insurance policy and after hearing the parties, the Tribunal determined the quantum of compensation to be Rs.4,34,500/-. However, the Tribunal absolved the Insurance Company from making the payment of the compensation on the ground that the policy did not cover the operation of the bus in Nepal.

Aggrieved by the Tribunal’s order, the Appellant approached the High Court of Punjab & Haryana and contended that there was no limitation for use of the vehicle in terms of geographical area as per the policy issued for the impugned vehicle and moreover the permit of the bus authorised the bus to travel to area of Nepal.

Insurance Company- The respondent-Insurance Company stated that since the policy was limited to cover the vehicle to be used only in the geographical area of India, therefore, the Insurance Company was not liable for payment of compensation on account of any accident occurring outside India.

Hence the seminal issue that arose in the case was whether the claim petition can be filed in India, if the accident occurred in Nepal (or any place outside India)?

Bench’s Verdict

The High Court of Punjab & Haryana set aside the Tribunal’s order in the case and made the following observations:

Extent of liability of the Insurance Company– That the Motor Vehicles Act, 1988 has made elaborate provisions regarding compulsory insurance of vehicle qua[i] damage to the third party in any accident involving the insured vehicle at any public place. Likewise, the liability of the Insurance Company to indemnify the insured has also been made compulsory by the Act. Section 146 of the Act makes the provision for necessity of insurance of vehicle before taking it out on road. Section 147 of the Act determines the extent of liability of the Insurance Company. A perusal of Section 147 of the Act  clarifies the limits of liability of Insurance Company and the requirements of policy of insurance. A bare perusal of Sections 146 and 147 of the Act  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.

That the only requirement for coming in operation of the policy liability is the use of vehicle in 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.

That once a vehicle is insured qua third party it is insured for all geographical areas as per the provisions of the Act.

That the 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.

That every extent of liability 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.

Motor Vehicle Act does not exempt the Insurance Company from liability arising from the usage of the vehicle outside the geographical area of the Union of India– That once insured, the vehicle is insured to cover all geographical areas, where the vehicle is authorised by the authorities to travel. That Section 1 of the Motor Vehicle Act does not exempt the Insurance Company from liability arising from the usage of the vehicle outside the geographical 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 liability 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.

Motor Vehicle Act applies irrespective of territorial limits– That the Motor Vehicle 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. That Section 139 of the Act gives powers to the Government of India to make rules regarding the travelling of the vehicles registered in India to other countries. Further Section 149 (3) of the Act  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 according to provision of Section 149.

That if the award of a foreign Court passed as per provisions of Section 149 of the Act is enforceable against an Insurance Company in India, then there is no question of the liability of Insurance Company being excluded in Courts in India on the ground that accident occurred outside India.

Take Away

The instant judgment by the High Court of Punjab & Haryana is an essential one as it elucidates on the extent of liability an Insurance Policy covers. The Court’s judgment strengthens the position of Insured and eliminates the possibility of claim rejection on the grounds of any geographical or territorial limitation.

[i] In the capacity of

About the Author

Shilpi Sharan

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Shilpi Sharan is the Editor at Vakilno1.com – an Advocate with extensive knowledge in myriad fields of Law. She has a flair of writing and has legal publications in national and international law magazines to her credit. She focuses on legal research and aims at raising public awareness of laws in India.