Case Name: Oriental Insurance Company Ltd. v. Smti. Lakhimai Teronpi & 7 Ors.
Summary
The Gauhati High Court has overturned an order of the Motor Accident Claim Tribunal, which had ordered the Oriental Insurance Company to provide compensation to the claimant and seek reimbursement from the owner of the negligent vehicle. The court ruled that the contested insurance policy was a Private Car Act Policy, which excluded coverage for occupant risks. The insurance company could not be held liable for compensating any occupant in the event of death while driving.
The incident involved a vehicle collision with a tree, resulting in the death of the claimant’s spouse and severe bodily injuries. The Insurance Company argued that the policy issued for the accident vehicle was for a private car and did not provide coverage for passengers transported in the private car. The court partially overturned the Tribunal’s directive by referencing the Supreme Court’s decision in National Insurance Company Ltd. v. Balakrishnan & Anr. (2013) 1 SCC 731, stating that a “Act policy” is distinct from a “comprehensive/package policy” that indemnifies the insurer for the cost of compensating a car occupant.
About the case
In a case involving the fatality of an insured vehicle occupant caused by reckless and negligent driving, the Gauhati High Court has reversed an order of the Motor Accident Claim Tribunal. The tribunal had previously ordered the Oriental Insurance Company (“appellant”) to provide compensation to the claimant and subsequently seek reimbursement from the owner of the negligent vehicle. The order was overturned by a single bench of Justice Mitali Thakuria on the grounds that the contested insurance policy was a Private Car Act Policy, which excluded coverage for occupant risks. As a result, the insurance company could not be held liable for compensating any occupant in the event of death while driving. The Bench observed the following: “…the Insurance Company cannot be held accountable for fulfilling the award of compensation for the death of any occupant when it is an established fact that the vehicle was insured under a Private Car Act Policy.”
The concise details of the incident are as follows: the claimant and her spouse were traveling from Bhaloghat to their residence in the disputed vehicle on January 23, 2013, at approximately 6:00 a.m. Upon reaching Tarabasa, the vehicle collided with a tree due to the reckless and negligent driving of the driver. As a result, the spouse passed away instantly, and the spouse suffered severe bodily injuries. In response to the demise of her spouse, the plaintiff subsequently petitioned the Motor Accident Claims Tribunal No. 2, Kamrup (Tribunal) for restitution. The appeal was filed by the Insurance Company, which contended that the policy issued for the accident vehicle was for a private car and therefore did not provide coverage for the passengers transported in the private car. In rejecting the appellant company’s arguments, the Tribunal issued the impugned judgment and order dated January 20, 2015. In doing so, it awarded the claimant Rs. 12,17,800 plus interest of 6 percent from the date the claim petition was filed until its actualization. The appellant insurance company was ordered to remit the award to the claimant within 90 days from the date of the impugned order.
The Insurance Company, dissatisfied with the Tribunal’s decision, elected to file this appeal with the High Court. The Insurance Company’s Counsel argued that the Insurance Company bears no liability for compensating the passengers transported in the private vehicle, as the risk associated with such passengers was not covered by the insurance policy. Conversely, the claimant’s (respondent) counsel argued that the Tribunal’s order was justified under the doctrine of pay and recovery because the insured policy was in effect at the time the incident occurred. After carefully considering the arguments, the Court observed that while the policy in question did not provide coverage for the occupants of the vehicle, the insurance company (appellant) was ordered to compensate the claimant because the policy was in effect at the time of the incident and the offending vehicle was duly insured by the insurance company.
The Court partially overturned the Tribunal’s directive by referencing the Supreme Court’s decision in National Insurance Company Ltd. v. Balakrishnan & Anr. (2013) 1 SCC 731. In that case, the Court determined that an “Act policy” is distinct from a “comprehensive/package policy” that indemnifies the insurer for the cost of compensating a car occupant. “…it is apparent that the policy in question was a Private Car Act Policy, which does not provide coverage for occupant risks. As such, the insurance company cannot be held liable to fulfill the award of compensation for any occupant’s death, given that it is an established fact that the policy was a Private Car Act Policy,” the court stated. As a result, a portion of the challenged order that instructed the insurance company to compensate the claimant and recoup the expenses from the vehicle owner was overturned by the court. In its place, the court ordered the owner/insurer to fulfill the tribunal’s award and compensate the claimant by submitting the awarded amount for reimbursement to the tribunal within three months.
