CHAPTER 3

LECTURE 3.1 The Motor Vehicles

Act, 1988: Nature and scope,

What is Third Party Insurance?

There are two quite different kinds of insurance involved in the damages system. One is Third
Party liability insurance, which is just called liability insurance by insurance companies and the
other one is first party insurance.
A third-party insurance policy is a policy under which the insurance company agrees to
indemnify the insured person, if he is sued or held legally liable for injuries or damage done to
a third party. The insured is one party, the insurance company is the second party, and the
person you (the insured) injure who claims damages against you is the third party.
Section 145(g) "third party" includes the Government. National Insurance Co. Ltd. v. Fakir
Chand, “third party” should include everyone (other than the contracting parties to the
insurance policy), be it a person traveling in another vehicle, one walking on the road or a
passenger in the vehicle itself which is the subject matter of insurance policy.
According to Section 24 of Motor Vehicles Act, “No person shall use or allow any other person
to use a motor vehicle in a public place, unless the vehicle is covered by a policy of Insurance.”
Here the term insurance is to be referred as “Third Party Insurance.”

Motor Vehicle Insurance

In property insurance First party is the owner of property (Motor Vehicle), Second party is the
Insurer and the Third party is said person on street. Normally in insurance loss or damage to
the property of insured is covered. If your car gets damaged, its repair and replacement is
covered. This is commonly called First party insurance.
Third-party insurance is compulsory for all vehicle-owners as per the Motor Vehicles Act. It
covers only your legal liability for the damage you may cause to a third party - bodily injury,
death and damage to third party property - while using your vehicle.
Recently, pursuant to the Supreme Court decision, IRDAI has mandated all General Insurance
Companies, to make it compulsory to provide long term third-party motor covers to curb the
number of uninsured vehicles plying on the road.
The top court, in a July 20, 2018 order, said that in the case of new vehicles third party
insurance i.e., cars should at least be covered for three years and two-wheelers for five years,
either as a separate insurance policy or as part of the comprehensive cover. The order will be
effective from September 1. The court also asked the regulator to work with the police and
online channels to push sale and renewal of the accident cover.
The decision came after a Supreme Court-appointed committee on road safety found that only
one in every three vehicles—among 18 crores plying on Indian roads—is insured. This leads to
accident victims or their kin not getting any compensation. On the same lines, IRDAI has now
recently mandated Insurance Companies to enhance the Compulsory Accident Cover from the
existing `1,00,000 to at least not less than `15,00,000/- with the purpose of adding solace to the
victims of road accidents, who are the owners of the vehicles.
Definition
Motor insurance policy is a contract between the insured and the insurer in which the insurer
promises to indemnify the financial liability in event of loss to the insured.
Motor third-party insurance or third-party liability cover, which is sometimes also referred to
as the 'act only' cover, is a statutory requirement under the Motor Vehicles Act. It is referred to
as a 'third-party' cover since the beneficiary of the policy is someone other than the two parties
involved in the contract i.e. the insured and the insurance company. The policy does not
provide any benefit to the insured; however, it covers the insured's legal liability for
death/disability of third-party loss or damage to third party property.

Basic Principles of Motor Insurance

Motor insurance being a contract like any other contract has to fulfil the requirements of a valid
contract as laid down in the Indian Contract Act 1872.
In addition, it has certain special features common to other insurance contracts.
They are:
 Utmost good faith
 Insurable interest 
 Indemnity
 Subrogation and contribution
 Proximate cause

Utmost good faith

The principle of Utmost good faith casts an obligation on the insured to disclose all the
material facts. These material facts must be disclosed to the insurer at the time of
entering into the contract. All the information given in the proposal form should be true
and complete. E.g. the driving history, physical health of the driver, type of vehicle etc.
If any of the mentioned material facts declared by the insured in the proposal form are
found inappropriate by the insurer at the time of claim it may result in the claim being
repudiated.

Insurable Interest
In a valid insurance contract, it is necessary on the part of the insured to have an
insurable interest in the subject matter of insurance. The presence of insurable interest
in the subject matter of insurance gives the person the right to insure. The interest
should be pecuniary and must be present at inception and throughout the term of the
policy. Thus, the insured must be either benefited by the safety of the property or must
suffer a loss on account of damage to it.

Indemnity
Insurance contracts are contracts of indemnity. Indemnity means making good of the
loss by reimbursing the exact monetary loss. It aims at keeping the insured in the same
position he was before the loss occurred and thus prevent him from making profit from
insurance policy.

Subrogation and Contribution

 Subrogation refers to transfer of insured's right of action against a third party who
caused the loss to the insurer. Thus, the insurer who pays the loss can take up the
assureds’ place and sue the party that caused the loss in order to minimise his loss for
which he has already indemnified the assured.
Subrogation comes in the picture only in case of damage or loss due to a third party.
The insurer derives this right only after the payment of damages to the insured.
Contribution ensures that the indemnity provided is proportionately borne by other
insurers in case of double insurance. Another such instance is the Insurer paying claims
in case of “Lost Vehicle” and subsequently the vehicle is recovered. In such cases, due
to subrogation rights, the Insurer becomes the owner of such vehicle and steps in the
shoes of the Insured.
The Motor Vehicles Act, 1988 which came into force on 1st July, 1988 and which is divided
into XIV Chapters, 217 Sections and two schedules, makes it compulsory for every motor
vehicle to be insured. Chapters XXI and XII of the 1988 Act deals with compensation
provisions. Sections 140 to 144 (Ch.X) deal with liability without fault in certain cases.
Chapter XI (Section 145 to 164) deal with insurance of motor vehicles against third party
risks.

Historical Background of third-Party Insurance

Chapter VIII of the 1939 Act and Chapter XI of the 1988 Act have been enacted on the pattern
of several English statutes which is evident from the report of Motor Vehicles Insurance
Committee, 1936-1937.

In order to find out the real intention for enacting Section 96 of the 1939 Act which
corresponds to Section 149 of the 1988 Act, it is relevant to trace the historical development of
the law for compulsory third party insurance in England. Prior to 1930, there was no law of
compulsory insurance in respect of third-party rights in England. As and when an accident took
place an injured used to bring action against the motorist for recovery of damages.

But in many cases it was found that the owner of the offending vehicle had no means to pay to
the injured or the dependant of the deceased and in such a situation the claimants were unable
to recover damages. It is under such circumstances that various legislation were enacted. To
meet the situation, it is for the first time the Third Parties Rights Against Insurance Act, 1930'
was enacted in England.

The provision of this Act found place in Section 97 of the 1939 Act which gave to the third
party a right to sue insurer directly. Subsequently, ‘the road traffic Act, 1930' was enacted
which provided for compulsory insurance for Motor Vehicles.

The provisions of this Act were engrafted in Section 95 of the 1939 Act and Section 146 of the
1988 Act. It is relevant that under Section 38 of the English Act of 1930, certain conditions of
insurance policy were made ineffective so far as third parties were concerned .The object
behind the provision was that the third party should not suffer on account of failure of the
insured to comply with those terms of the insurance policy.

Subsequently in 1934, the second Road Traffic Act was enacted. The object of this legislation
was to satisfy the liability of the insured.

Under this enactment three actions were

provided:
 i. The first was to satisfy the award passed against the insured.
ii. The second was that, in case the insurer did not discharge its liability the claimant had
the right to execute decree against the insurer. However, in certain events, namely, what
was provided in section 96(2) (a) which corresponds to section 149 (2)(a) of the 1988
Act, the insurer could defend his liability.

iii. The third action provided for was contained in Section 10(3) of the Road Traffic Act.
Under this provision, the insurer could defend his liability to satisfy decree on the
ground that insurance policy was obtained due to misrepresentation or fraud.

This provision also found place in Section 149 (2)(b) of the 1988 Act. While enacting the 1939
Act and the 1988 Act, all the three actions were engrafted in Section 96 of the 1939 Act and
Section 149 of the 1988 Act.

However neither the 1939 Act, nor the 1988 Act conferred greater rights on the insurer than
what had been conferred in English Law. Thus, in common law, an insurer was not permitted
to contest a claim of a claimant on merits, i.e. offending vehicle was not negligent or there was
contributory negligence. The insurer could contest the claim only on statutory defences
specified for in the statute.

Thus while enacting Chapter VIII of the 1939 Act or Chapter XI of the 1988 Act, the intention
of the legislature was to protect third party rights and not the insurers even though they may be
nationalized companies.

Prohibition on use of motor vehicles without statutory insurance policy: object of is to enable
the third party suffering injuries from use of the motor vehicle to get damages irrespective of
the financial capacity or solvency of the driver or the owner.

Relevant Provisions of Motor Vehicles Act, 1988

Chapter 11 (Section 145 to 164) provides for compulsory third party insurance, which is
required to be taken by every vehicle owner. It has been specified in Section 146(1) that no
person shall use or allow using a motor vehicle in public place unless there is in force a policy
of insurance complying with the requirement of this chapter.[3] Contravention of the
provisions of section 146 is an offence and is punishable with imprisonment which may extend
to three months or with fine which may extend to one thousand rupees or with both (section
196).

Section 147 provides for the requirement of policy and limit of liability. Every vehicle owner is
required to take a policy covering against any liability which may be incurred by him in respect
of death or bodily injury including owner of goods or his authorized representative carried in
the vehicle or damage to the property of third party and also death or bodily injury to any
passenger of a public service vehicle. According to this section the policy not require covering
the liability of death or injuries arising to the employees in the course of employment except to
the extent of liability under Workmen Compensation Act.

Under Section 149 the insurer have been statutorily liable to satisfy the judgment and award
against the person insured in respect of third party risk.

Insurance Companies have been allowed no other defence

except the following:
1. Use of vehicle for hire and reward not permit to ply such vehicle.
2. For organizing racing and speed testing;
 3. Use of transport vehicle not allowed by permit.
4. Driver not holding valid driving license or have been disqualified for holding such
license.
5. Policy taken is void as the same is obtained by non-disclosure of material fact.

Section 152 Settlement between insurers and insured

persons:
1. No settlement made by an insurer in respect of any claim which might be made by a
third party in respect of any liability of the nature referred to in clause (b) of sub-section
(1) of section 147 shall be valid unless such third party is a party to the settlement.

2. Where a person who is insured under a policy issued for the purposes of this Chapter
has become insolvent, or where, if such insured person is a company, a winding up
order has been made or a resolution for a voluntary winding up has been passed with
respect to the company, no agreement made between the insurer and the insured person
after the liability has been incurred to a third party and after the commencement of the
insolvency or winding up, as the case may be, nor any waiver, assignment or other
disposition made by or payment made to the insured person after the commencement
aforesaid shall be effective to defeat the rights transferred to the third party under this
Chapter, but those rights shall be the same as if no such agreement, waiver, assignment
or disposition or payment has been made.

Legal defence available to the Insurance Companies

towards third party:
The Insurance Company cannot avoid the liability except on the grounds and not any other
ground, which have been provided in Section 149(2). In recent time, Supreme Court while
dealing with the provisions of Motor Vehicle Act has held that even if the defence has been
pleaded and proved by the Insurance Company, they are not absolve from liability to make
payment to the third party but can receive such amount from the owner insured.

The courts one after one have held that the burden of proving availability of defence is on
Insurance Company and Insurance Company has not only to lead evidence as to breach of
condition of policy or violation of provisions of Section 149(2) but has to prove also that such
act happens with the connivance or knowledge of the owner. If knowledge or connivance has
not been proved, the Insurance Company shall remain liable even if defence is available.

Driving Licence:
Earlier not holding a valid driving license was a good defence to the Insurance Company to
avoid liability. It was been held by the Supreme Court that the Insurance Company is not liable
for claim if driver is not holding effective & valid driving licence. It has also been held that the
learner's licence absolves the insurance Company from liability, but later Supreme Court in
order to give purposeful meaning to the Act have made this defence very difficult.

In Sohan Lal Passi's v. P. Sesh Reddy  it has been held for the first time by the Supreme Court
that the breach of condition should be with the knowledge of the owner. If owner's knowledge
with reference to fake driving licence held by driver is not proved by the Insurance Company,
such defence, which was otherwise available, cannot absolve insurer from the liability.
Recently in a dynamic judgment in case of Swaran Singh Case.
The Supreme Court has almost taken away the said right
by holding:
i. Proving breach of condition or not holding driving licence or holding fake licence or
carrying gratuitous passenger would not absolve the Insurance Company until it is
proved that the said breach was with the knowledge of owner.

ii. Learner's licence is a licence and will not absolve Insurance Company from liability.

iii. The breach of the conditions of the policy even within the scope of Section 149(2)
should be material one which must have been effect cause of accident and thereby
absolving requirement of driving licence to those accidents with standing vehicle, fire
or murder during the course of use of vehicle.

This judgment has created a landmark history and is a message to the Government to remove
such defence from the legislation as the victim has to be given compensation.

Nature and Extent of Insurer's Liability (section 147)

According to the provisions of this section the policy of insurance must be issued by an
authorized insurer. It must be as per requirements as specified in subsection (2). It must insure
against liability in respect of death or bodily injury or damage to property of a third party.
Third-party includes owner of the goods or his authorized representative carried in the vehicle
and any passenger of a public service vehicle.

The policy of insurance must cover:

1. Liability under the Workmen's compensation Act, 1923 in respect of death or bodily injury
to any such employee.
a. Engaged in driving the vehicle, or
b. The conductor or ticket examiner if it is a public service vehicle or

2. Any contractual liability.

Section 147 has to be given wider, effective and practical meaning so that it may benefit
various categories of persons entitling them to claim compensation from the insurer or the
insured or both. Insurer's liability commences as soon as the contract of insurance comes into
force. The liability remains in existence during the operation of the policy. If the existing
policy is renewed the risk is covered from the moment the renewal of the policy comes into
force.

If the accident occurs before the renewal comes into existence, the insurer cannot be made
liable. It is the primary duty of the vehicle owner to prove that his vehicle was insured with a
particular company. If he fails to comply with it he will have to pay the entire amount of
compensation in the case. In case where there is a dispute in respect of the vehicle having been
insured by an assurance company, the tribunal must give its finding in the matter, it is its duty
to do so.

After a certificate of insurance is issued it does not lie in the mouth of the insurer to deny his
liability. If the insurer has been a victim of fraud he can recover the amount from the insured
by a separate action against him.

Oriental Insurance Co. v. Inderjit Kaur

If the insurer has issued a policy to cover the bus without receiving the premium therefore, he
has to indemnify third parties in respect of the liability covered by the policy. He cannot avoid
the liability arguing that he was entitled to avoid or cancel the contract.
Liability for injury to certain persons or class of persons (other than gratuitous
passengers and pillion riders)
The policy under the Act covers only third party risks.Insurer is not liable for any harm
suffered by a passenger traveling in a private car neither for hire nor for reward. Similar is the
position of a pillion rider on a scooter.

K. Gopal Krishnan v. Sankara Narayanan

In this case Madras High Court observed that a scooter-owner is not bound to take out a third-
party risk policy to cover the claim of the pillion rider that is carried gratuitously. If he is
injured, the insurance company would not be liable unless policy covering such risk is obtained
by the scooter-owner. A private carrier registered as such with R.T.O. and also in insurance
policy, cannot be used for carrying any passenger or goods for hire or reward. However, if it is
so used and the employees of a party hiring the private vehicle belonging to the insured are
injured in an accident the insurance company will not be liable.

Insurer's liability to Vehicle-owner

A contract of insurance is a personal contract between the insurer and the insured. It is for the
purpose of indemnifying the insured for damage caused due to accident by the vehicle, to a
third party. To make the insurer liable the policy of insurance must be in the name of the owner
of the vehicle. Owner of the vehicle as defined in Section 2(30) is a person in whose name the
motor vehicle stands registered.

A person in possession of a vehicle under a hire-purchase agreement or an agreement of lease

or hypothecation is also covered by the definition, no matter he has exercised his option to
purchase the vehicle or not.

Section 157(1) makes it clear that when the owner of a vehicle transfers the ownership of the
vehicle, the policy of insurance and the certificate of insurance shall be deemed to have been
transferred in favour of the purchaser of the vehicle with effect from the date of its transfer.
This deemed transfer shall include transfer of rights and liabilities of the said certificate of
insurance and policy of insurance.

According to sub-section (2) the transferee has to apply within 14 days from the date of
transfer to the insurer for effecting necessary changes in the certificate and in the policy of
insurance.
If the certificate of insurance and the policy are not transferred, the insurer could not be made
liable even though the vehicle is transferred. It is to be remembered that an insurance policy is
a personal contract between the parties for indemnifying the insured in case of an accident
covered under the policy.

If the vehicle is transferred by an insured to another person, the insurance policy lapses upon
the transfer. In such a case the benefit of the policy is not available to the transferee, without an
express agreement with the insurance company. When the insurance policy lapses it would not
be available to cover the liability of the purchaser of the vehicle.

S.Sudhakaran v. A.K.Francis
There was an agreement for sale of a vehicle. The owner did not comply with the statutory
provisions regarding transfer of a vehicle. He, however, allowed the vehicle to be used by the
transferee. The owner had retained the insurance policy with him.
Held: The insurance company was not liable to indemnify the owner.

Liability in respect of damage to property (Section

147(2))
For damage to property of a third party under 1939 Act the limit of liability is Rs 6000 in all,
irrespective of the class of the vehicle. Under 1988 Act the position as laid down by section
147 (2) in regard to liability is as under:

i. For death or personal injury to a third party, the liability of the insurer is the amount of
liability incurred, i.e. for the whole amount of liability.
ii. For damage to property of a third party the liability of the insurer is limited to Rs. 6000
as was under the 1939 Act.

Liability of Insurer beyond the limits mentioned in

the Act
Section 147 lays down the limits of liability of the insurer. However, there is no bar for the
insurer undertaking a higher liability i.e. liability for a greater amount than that mentioned in
the Act. Thus, the insured and the insurer can contract and can provide for a higher liability.

Rights of Third Party

Right to receive information– Insured or any person against whom a claim is made in
relation to liabilities incurred to any other person by insured or, as the case may be, any other
person shall not refuse to provide the information to person claiming. He will not refuse to state
whether he is insured or was insured or would have been insured (if insurer had not avoided or
cancelled the policy) with respect to the liability by any policy issued to him. He (Third Party)
may also require the information to ascertain whether any rights transferred to and vested in
him under section 150 or whether there exists any contract of insurance which
directly or indirectly affects his rights.

Right to remain unaffected –This right arises in following cases. First, where any
judgment or award has been passed against insured person and secondly, when policy
unlawfully restricts the liability of insurer and thirdly, in case of settlement between insurer and
insured person.

Motor Vehicle Act, 1988 prescribes an insurer to pay third party any amount not exceeding
sum assured or any amount payable in respect of costs or any sum payable in respect of interest
on that sum, in relation to a liability, if insurer has obtained any judgment or award in his
favour against insured person. Thus, the claim of third party cannot be fallen down due to any
judgment or award passed against insured person. The above right is not absolute and
therefore, the said right cannot be exercised until or unless insured person was not notified by
court regarding proceeding.

After grant of certificate of insurance, if it is found that the policy unlawfully restricts the
liability clause of insurer, such clauses are of no effect. Moreover, every settlement made in
respect of claim will not be valid unless third party is a party to that settlement. And death of
an insured person shall not create a bar to any cause of action against his estate or against
insurer with respect to any cause of action arising out of event mentioned under Chapter XI.
Also, if insurer asks insured person to repay the sum paid to third-party as amount of
compensation, insured person has to do it for the reason that he had not all reasonable steps to
safeguard occurrence of loss or damage. In this condition, third party will remain unaffected. 

Transfer of right of insured, against insurer, to third party–Generally, the liability raised
against insurer by third party in relation to an event which is secured by way of insurance
policy by insurer will be fulfilled by insurer. However, in case of insolvency of insured person,
his rights against insurer under the policy shall be transferred to and vest in the third party to
whom liability was so incurred. Any condition in insurance policy which directly or indirectly
alters the right to transfer shall be of no effect. Upon transfer of rights, insurer will be in same
position to fulfil the liability incurred to third party as he would have been to insured person. In
case where the liability raised is more than the liability of insured person to third party, insured
party has to pay the balance to third party.

Liability of Insurer towards Third Party– As per section 147(2) of Motor Vehicle Act,
policies shall cover any liability in respect of any accident up to the limit of amount of liability
incurred and a limit of rupees six thousand, in case of damage to any property of third party.
In Bhoopathy v. Vijayalakshmi the Madras High Court is of opinion that no bar is to be
imposed as to when the liability of insurer ceases to exist i.e. it is void. It was the case of
fracture of wrist, caused due to motor accident in which plaintiff was dashed against and
injuries were sustained. Event took place on 4th December 1958, where car originally belonged
to second defendant, which was sold to first defendant on 11 August 1958. The insurance
policy of second defendant covered him till 12 September 1958. Thereupon the first defendant
applies to another policy and starts paying premiums. The Court held that when the vehicle was
transferred, insurance policy collapsed. And insurance company of second defendant was not
liable for paying the damages. In National Insurance Co. Ltd. v. Swaran Singh, The Apex
Court observed:

"The liability of insurer is statutory one. The liability of insurer to satisfy the decree passed in
favour of third party is also statutory. The insurance company cannot shake off its liability
to pay compensation only by saying that at the relevant point of time the vehicle was
driven by a person having no licence."

Hit and Run Motor Accident – Insurer, for the time being carrying business of general
insurance in India, shall compensate for death or grievous hurt resulting from hit and run motor
accidents. In case of death, a fixed sum of twenty-five thousand rupees and in case of grievous
hurt, a fixed sum of twelve thousand and five hundred rupees. But if the said compensation
amount is been already paid to legal heirs or person injured under any other provision of act
then such compensation amount will be refunded back to insurer.

No need to establish death or permanent disablement–The claimant is entitled to get

compensation amount for death or permanent disablement due to accident as per second
schedule, to person or his legal heirs and he is not required to plead or establish death or
permanent disablement arisen due to any wrongful act or neglect or default.

Duties of Third party

In claiming a sum from insurer in event of a road accident, a person (third party) has to face a
complex claim process. The process starts with filing of a FIR and obtaining charge-sheet
against the insured person or as the case may be against the offender.  Next step is to approach
Claims tribunal. The case will be evaluated on the basis of evidences by tribunal and third party
is entitled to claim its amount of compensation after the court adjudicates the matter in his
favour. In addition, it is not always other parties who have all liabilities with respect to an event
causing injury or death to person or property of third party.

Liability to payback  – In occurrence of an event, causing death or injury to person or

property of third party which is falling under chapter xi of the said Act, if insurer has paid the
third-party excess amount than the amount in relation to which liability was incurred, the third-
party is liable to payback the excess amount to insurer or, as the case may be, to insured
person. Also, if the compensation amount is been already paid to legal heirs or person injured,
such compensation amount will be refunded back to insurer.

Duty to provide information – As per Motor Vehicle Act, it is a duty of both insured and third
party to furnish details of accident or event to concerned authority or person. In case where
surveyor needs some information regarding the incident from third party, he cannot refuse to
provide surveyor the needed information. As per section 160 of Motor Vehicle Act, 1988, there
exist duty of third party to furnish particulars of vehicle involved in accident to concerned
authority. As per section 134(b), if third party is a driver of vehicle by means of which any
accident took place, it is his liability to report the incident to police station.

Duty to carry valid documents–It is a duty of third person in motor insurance contract to
make compliance to all requirements of chapter xi of the act otherwise a company is in good
position to drop his/her claim. Therefore, insurance companies are entitled to drop a claim if
the vehicle was used for hire or reward (when on date of accident it did not had permit for hire
and reward), for organised racing and speed testing, where a vehicle is a transport vehicle and
did not had permit to transport the goods on date of accident, without side-car being attached
where the vehicle is a motor cycle. Insurance company, by an express clause, exclude by name,
any person is disqualified for holding or obtaining licence or does not have licence, for the
period of disqualification. Insurance Company can also exclude its liability for injury caused or
contributed to by conditions of war, civil war, riot or civil commotion.

In, Zamindar Motor Transport Co. P. Ltd. v. New India Assurance Co. &Ors, it was held
that insurance company does not have any right to recover the amount of compensation from
the appellant in respect of the compensation paid by it to the claimants. In this case, insurance
company pleaded that the driver of the bus had produced a licence dated 30.04.1995 which was
valid on the date of the accident than the driving licence purported to be seized by the police in
the criminal case. The Appellant was satisfied about the genuineness of the licence and,
therefore, it did not commit any breach of the condition of the policy under Section 149(2)(a)
(ii) of the Motor Vehicles Act, 1988 (the Act).As per Section 14(2)(a)(ii) of the Act, a driving
licence issued to drive a transport vehicle is effective for a period of three years and thus, the
licence issued on 30.04.1995 would be valid till 29.04.1998. Issue involved in the case was;
The Appellant Zamindar Motor Transport Company Private Limited impugns the award dated
22.01.2005 passed by the Motor Accident Claims Tribunal (the Tribunal) whereby a
compensation of Rs. 6,24,000/- was awarded in favour of the Respondents. While granting the
compensation, the Tribunal observed that since the driving licence held by Narender Kumar
was fake, there was breach of the policy conditions and thus the Respondent i.e. New India
Assurance Company Limited shall be entitled to recover the awarded compensation from the
owner of the offending bus.

Duty to Compensate – In the event when claims are made, losses should be minimised. These
includes segregation of damaged property from rest of the property, obtaining competitive
quotes for the repairs/ replacements that may be required etc. If third party is found guilty of
losses/ damages, then should be held responsible so that rights of recovery are protected.