The Motor Vehicles Act, 1988
149. Duty
of insurers to satisfy judgments and awards against persons insured in respect
of third party risks.
- If,
after a certificate of insurance has been issued under sub-section (3) of
section 147 in favour of the person by whom a policy has been effected,
judgment or award in respect of any such liability as is required to be
covered by a policy under clause (b) of sub-section (1) of section 147 (being a
liability covered by the terms of the policy) is obtained against any
person insured by the policy, then, notwithstanding that the insurer may be
entitled to avoid or cancel or may have avoided or cancelled the policy, the
insurer shall, subject to the provisions of this section, pay to the person
entitled to the benefit of the decree any sum not exceeding the sum assured
payable thereunder, as if he were the judgment debtor, in respect of the
liability, together with any amount payable in respect of costs and any sum
payable in respect of interest on that sum by virtue of any enactment relating
to interest on judgments.
- No sum
shall be payable by an insurer under sub-section (1) in respect of any
judgment or award unless, before the commencement of the proceedings in
which the judgment or award is given the insurer had notice
through the Court or, as the case may be, the
Claims Tribunal of the bringing of the proceedings, or
in respect of such judgment or award so long as execution is
stayed thereon pending an appeal; and an insurer to whom
notice of the bringing of any such proceedings is so given
shall be entitled to be made a party thereto and to defend the action on any of
the following grounds, namely:--
- That there has
been a breach of a specified condition of the policy, being one of the following
conditions, namely:--
- a condition
excluding the use of the vehicle--
- For hire or
reward, where the vehicle is on the date of the contract of insurance a vehicle
not covered by a permit to ply for hire or reward, or
- For organised
racing and speed testing, or
- For a
purpose not allowed by the permit under which the vehicle is used, where the
vehicle is a Transport
vehicle, or
- Without
side-car being attached where the vehicle is a motor cycle; or
- a
condition excluding driving by a named person or persons or by any person who is
not duly licensed, or by any person who has been disqualified for holding or
obtaining a driving licence during the period of disqualification; or
- A
condition excluding liability for injury caused or contributed to by conditions
of war, civil war, riot or Civil
commotion; or
- that the
policy is void on the ground that it was
obtained by the non-disclosure of a material fact
or by a representation of fact which
was false in some material particular.
- Where any
such judgment as is referred to in sub-section (1) is obtained from a Court in a
reciprocating country and in the case of a foreign judgment is, by virtue of
the provisions of section 13 of the Code of Civil Procedure, 1908 (5 of
1908.) conclusive as to any matter adjudicated upon by it, the insurer
(being an insurer registered under the Insurance Act, 1938 (4 of 1938.) and
whether or Not he is
registered under the corresponding law of the reciprocating country) shall be
liable to the person entitled to the benefit of the decree in the manner and to
the extent specified in sub-section (1),as if the judgment were given by a Court
in
India:
Provided that
no sum shall be payable by the insurer in respect of any such judgment
unless, before the commencement of the proceedings in which the judgment
is given, the insurer had notice through the Court concerned of the
bringing of the proceedings and the insurer to whom notice is so given is
entitled under the corresponding law of the reciprocating
country, to be made a party to the
proceedings and to defend the action on grounds similar
to those specified in sub-section (2).
- Where a
certificate of insurance has been issued under sub- section (3) of
section 147 to the person by whom a policy has been
effected, so much of the policy as purports to restrict the insurance
of the persons insured thereby by reference to any conditions
other than those in clause (b) of sub-section (2) shall, as
respects such liabilities as are required to be covered by a policy under clause
(b) of sub-section (1) of section 147 be of no effect:
Provided that
any sum paid by the insurer in or towards the discharge of any liability
of any person which is covered by the policy by virtue only of this
sub-section shall be recoverable by the insurer from that person.
- If the amount
which an insurer becomes liable under this section to pay in respect of a
liability incurred by a person insured by a policy exceeds the amount for which
the insurer would apart from the provisions of this section be liable under the
policy in respect of that liability, the insurer shall be entitled to recover
the excess from that person.
- In this
section the expressions "material fact" and "material particular" means,
respectively a fact or particular of such a nature as to influence the
judgment of a prudent insurer in determining whether he
will take the risk and, if so at what premium and on what conditions and
the expression "liability covered by the terms of the policy" means
a liability which is covered by the policy or which
would be so covered but for the fact that the insurer is entitled to
avoid or cancel or has avoided or cancelled the policy.
- No
insurer to whom the notice referred to in sub-section (2) or sub-section
(3) has been given shall be entitled to avoid his
liability to any person entitled to the benefit of any such judgment
or award as is referred to in sub-section (1) or in such judgment as
is referred to in sub-section (3) otherwise than
in the manner provided for in sub-section (2) or
in the corresponding law of the reciprocating country, as the case may be.
Explanation.--For the purpose of this section, "Claims Tribunal" means a Claims
Tribunal constituted under section 165 and "award" means an award made by that
Tribunal under section 168. Rights of third parties against insurers on
insolvency of the insured.
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