MACT: Insurer liable to pay third party even when driver is drunk

Cause Title : Muhammed Rashid @ Rashid vs Girivasan E. K., MACA NO. 616 OF 2018, Kerala High Court

Date of Judgment/Order : 24.01.2023

Corum : The Honourable Mrs. Justice Sophy Thomas

Citied: 

1. Ramachandrappa v. Manager, Royal Sundaram Alliance Insurance Company Limited [AIR 2011 SC 2951]
2. New India Assurance Co. v. Kamala & Others [(2001) 4 SCC 342]
3. Oriental Insurance Company Limited v. Nanjappan [(2004) 13 SCC 224]
4. Bajaj Allianz General Insurance Co.Ltd., rep by its Deputy Manager (Legal) vs. Manju Devi and Others [2014 SCC OnLine AP 232]

Background

The appellant, while travelling in an autorickshaw. A car driven by the 1st respondent, in a rash and negligent manner, dashed against the autorickshaw and he was thrown out to the road, and he sustained serious injuries. Though he approached the Tribunal claiming compensation of Rs.4,00,000/-, the Tribunal awarded only Rs.2,40,000/-, against which he has preferred this appeal.

In this matter, the insurance company (3rd Respondent) while admitting the fact that the offending vehicle was duly insured with them as on the date of accident claimed that they are not liable to indemnify the insured as the 1st respondent, at the time of accident, was driving the vehicle under the influence of alcohol.

The learned Tribunal directed the 3rd respondent Insurance Company to pay the compensation amount to the appellant and permitted the Insurance Company to recover the same from respondents 1 and 2, the driver and owner of the offending vehicle.

This raised an interesting issue of the liability of the insurer when terms of the policy has been violated.

Judgment

The High Court observed that it has been held by the Supreme Court in New India Assurance (supra) & Oriental Insurance Company (supra) and by the Andhra High Court in Bajaj Allianz (supra) , that when a valid Insurance Policy has been issued in respect of a vehicle as evidenced by a Certificate of Insurance, the burden is on the insurer to pay the third parties, whether or not there has been any breach or violation of the Policy conditions. But the amount so paid by the insurer to third parties can be allowed to be recovered from the insured, if as per the Policy conditions the insurer had no liability to pay such sum to the insured.

Even if, there is a condition in the Policy Certificate that driving of a vehicle in an intoxicated condition is violation of the terms and conditions of the Policy, still the Insurance Company is liable for payment of compensation. Undoubtedly, when the driver is in an inebriated state, certainly, his consciousness and senses will be impaired so as to render him unfit to drive a vehicle. But the liability under the Policy is statutory in nature and so the Company is not liable to be exonerated from payment of compensation to the victim. Insurance Company cannot avoid its liability totally on account of drunken driving of the driver, as it is not a ground to exonerate the Insurance Company from payment of compensation as far as third parties are concerned; as the policy is statutory in nature.