Case Title: BASAVARAJA BEERAPPA KAMBALI v. THE CHOLAMANDALAM MS GENERAL INSURANCE COMPANY LTD & others
Summary
The Karnataka High Court has reaffirmed that an insurance company is obligated to compensate a third party and seek reimbursement from the insured if a violation of a policy condition under Section 149(2) of the Motor Vehicles Act occurs. The court partially granted an appeal by claimant Basavaraja Beerappa Kambali, instructing Cholamandalam MS General Insurance Company to remit compensation and interest within six weeks and seek reimbursement from the insured.
The insurer was placed in liability, and the claimant was ordered to provide the necessary compensation. The court cited rulings in Raja Lingaiah v. Sri Manju @ Manja & Anr. and Oriental Insurance Company Limited v. Smt. Savithri Hudge & Anr., which established that insurance companies must indemnify the claimant and recover the same amount from the insured.
About the case
The Karnataka High Court has reaffirmed that the insurer remains obligated to compensate the third party and seek reimbursement from the insured in the event that the court determines that a violation of a policy condition acknowledged under Section 149(2) of the Motor Vehicles Act has occurred. An appeal filed by claimant Basavaraja Beerappa Kambali was partially granted by a single judge bench of Justice HP Sandesh.
The bench also modified the Tribunal’s order by instructing Cholamandalam MS General Insurance Company (respondent No.1) to remit the compensation amount along with interest within a period of six weeks, and to seek reimbursement from the insured. In place of the insurer, the tribunal placed the liability on the insured. “The insurance company must indemnify the claimant and recover the same amount from the insured,” the bench reversed. The claimant suffered injuries in 2013 as a result of respondent No. 1’s negligent and rash operation of the motor vehicle involved in the collision. In addition to interest accruing at a rate of 7% annually, the Motor Accident Claims Tribunal granted compensation amounting to Rs. 2,88,000.
The Tribunal, in its judgment and award dated 20.04.2013, absolved the Insurance Company of liability and ordered the private respondents (the owner and driver of the offending vehicle) to provide the necessary compensation. The directive was issued subsequent to the determination that the vehicle involved in the incident was unregistered and had its temporary registration terminated on the day of the collision. The bench noted that while it is true that the claimant is a third party, the Tata Ace driver negligently and rashly operated the vehicle, colliding with the claimant.
It cited the ruling in Raja Lingaiah v. Sri Manju @ Manja & Anr., in which it was determined that an insurance company that has been paid premiums for a period of one year cannot deny liability for compensation, especially when the claim is brought forth by a third party. It also cited the case of Oriental Insurance Company Limited v. Smt. Savithri Hudge & Anr., in which it was determined that the insurance company is obligated to recover the claimant’s indemnification from the insured. “The Insurance Company is obligated to indemnify the claimant and recover the same amount from the insured,” the court ruled.
