Insurer can recover amount paid to claimant from the owner of insured vehicle if terms of insurance are violated: High Court of Jammu and Kashmir

In a motor accident, if the owner of the offending vehicle has violated the terms and conditions of the insurance policy, the insurer of the offending vehicle can recover the amount paid to the claimant from the owner of the vehicle. This was held in the judgement passed by Justice Vinod Chatterji Koul of the High Court of Jammu and Kashmir High Court in the case of United India Insurance Company Limited v Mst. Shameema and others [CMAM no. 182/2014] pronounced on 22nd June 2021.

The appellant, United India Insurance Limited was directed by the Motor Accidents Claims Tribunal, Srinagar to pay a compensation of Rs. 1,50,000 along with 6% interest per annum from date of institution of claim to the respondent, Mst. Shameema. In the case of Mst. Shameema v. United India Insurance Co. ltd, the present respondent filed a claim petition before the tribunal as she was injured in an accident which took place on 11th September 2003 on the National Highway due to rash and negligent driving of another vehicle which was insured by United India Insurance. The appellant pleaded before the court that the owner of the offending vehicle wilfully violated terms and conditions of the insurance policy by allowing his son, respondent no: 2 to drive the vehicle, which lead to the accident. Respondent no: 2 held a learner’s licence to drive light motor vehicle and two wheelers and the appellant contended that the vehicle he was rashly driving was a Tata Sumo which should not be classified as a light motor vehicle. The appellant also added that a learner’s licence was issued so that the person can learn to drive and so he should not be permitted to drive a vehicle carrying passengers.

The Motor Accidents Claims Tribunal, Srinagar had thoroughly discussed the validity and effectiveness of the learner’s licence held by respondent no: 2. The tribunal cited the case of New India Assurance Co. Ltd. v Latha Jayraj (II) [1999 ACC 303], where it was held that a learner’s licence would still be considered valid in case of an accident and for insurance purposes. However it was pointed out that in that case the offending vehicle had been a light motor vehicle unlike in the present case. The High Court noted that the case cited by the tribunal would not be appropriate since the vehicle in the present case belonged to a different weight category. The High Court cited the case of Pappu and others v Vinod Kumar Lamba [(2018) 3 SCC 208], where it was established by the Supreme Court that if the insurer succeeded in establishing their defence, the court would direct the insurer to pay the claimant and then allow the insurer to recover the same from the owner of the insured vehicle.

Justice Vinod Chatterji Koul concluded that “For the foregoing reasons, the Appeal on hand is partly allowed and the Award dated 10.06.2014, passed by Motor Accident Claims Tribunal, Srinagar, on a Claim Petition, bearing File no.120/2004 titled Mst. Shameemav. United India Insurance Co.Ltd. and others, to the extent it holds that driver of offending vehicle was having valid driving licence to drive offending vehicle at the time of accident, is set-aside. Appellant Insurance Company shall pay, if not already paid, award amount along with interest as given by the Tribunal, to claimants/respondents. However, appellant Insurance Company shall have a right to recover the same from owner of offending vehicle.”

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