Insurance company cannot disown liability, even if vehicle is stolen, says High Court

When an accident is caused by a stolen vehicle and it is ascertained that the rider has no driving licence, can the insurance company disown liability? No, the Madras High Court has said.

The question came up before Justice R. Mala while deciding an appeal filed by an insurance company against the award of Rs.4.94 lakh by a Motor Accidents Claims Tribunal here to an accident victim’s family.

On July 2, 2001, Ramachandran was fatally knocked down by a motorcycle on MTH Road at Villivakkam here. R.Chinnammal and four others, legal heirs, moved the MACT, III Judge, Small Causes Court here, seeking compensation. At the MACT, New India Assurance Company Ltd. denied its liability and said that the motorcycle in question had been stolen on June 21 that year. The owner had even filed a complaint. Moreover, the vehicle number had also been changed. Hence, the insurance company was not liable to pay compensation.

However, the tribunal did not heed the argument and awarded a compensation of Rs. 4.94 lakh to the victim’s heirs. It was following this that the company appealed.

Dismissing the appeal, Ms. Justice Mala said the owner should establish that he was an innocent sufferer. It was for this reason that the legislature had made insurance, at least third party insurance, compulsory. In order to avoid liability it was not sufficient to show that the person driving the vehicle at the time of accident did not have a licence. The company should establish that the breach was on the part of the insured.

T. Aarumugham and V.S.Suresh, counsel for the legal heirs, submitted that as per a Kerala High Court judgment in the Sasidharan Nair case, the insurance company was liable to pay compensation and hence, sought dismissal of the appeal.

Ms. Justice Mala said that at the time of accident, the insurance policy was in force. Another person had subsequently purchased the vehicle. Citing a Supreme Court decision, the Judge said she was of the view that the insurance company should establish that there was a breach on the part of the insured. On the accident date, the vehicle was not in the owner’s custody, but insured.

More In: Chennai | News