- July 13, 2022
- Posted by: IRA Coaching
- Category: Blogs
Compensation claims in motor vehicle accident cases
Recently, the Supreme Court issued a notice on a plea recommending that an insurance company, if impleaded as a party respondent under the Motor Vehicles Act, can question the quantum of compensation as a person against whom a claim is made.1 For insurance companies already grappling with an ever increasing exposure to third-party claims, this notice comes as a huge relief.
Section 170, Motor Vehicles Act (MVA), 1988
According to the Section 170 of the MVA, when a person involved in an accident files a case for compensation and the vehicle of the person against whom the claim is made is insured, the insurance company can be impeded if the motor accident claims tribunal is satisfied that following two conditions were met:
There is collusion between the person making the claim and the person against whom the claim is made, or
The person against whom the claim is made has failed to contest the claim, it may, for reasons to be recorded in writing, direct that the insurer who may be liable in respect of such claim, shall be impleaded as a party to the proceeding and the insurer so impleaded shall thereupon have, without prejudice to the provisions contained in sub-section (2) of section 149, the right to contest the claim on all or any of the grounds that are available to the person against whom the claim has been made.
Section 149(2) of the MVA spells out the situations where insurance companies can contest claims made against them in the motor accident claims tribunals. These situations include driving the vehicle without permit, violating the conditions of the permit, etc. Section 149(2) limited the options for insurance companies to contest compensation claims. The recent Supreme Court notice, however, changes it.
The bench of Justices S. K. Kaul and M. M. Sundresh was hearing the SLP against a March decision of the Bombay High Court at Goa and noted that, “Learned counsel for the petitioner contends that the legal position was settled in United India Insurance Co. Ltd. v. Shila Datta & Ors. – (2011) 10 SCC 509 in para 14 to the effect that when an insurer is impleaded as a party respondent to the claim petition, as contrasted from merely being a notice under Section 149 (2) of the Motor Vehicles Act, 1 988 the significance is different. If he is the party respondent, he can not only raise grounds which are available under Section 149(2) but also other grounds that are available to a person against whom a claim is made.”
