The Motor Vehicles Act, 1988
150.
Rights of third parties against insurers on insolvency of the insured.
- Where
under any contract of insurance effected in accordance with
the provisions of this Chapter, a person is insured against
liabilities which he may incur to third parties, then--
- in the
event of the person becoming insolvent or making a composition or arrangement
with his creditors, or
- where the
insured person is a company, in the event of a winding up order being
made or a resolution for a voluntary winding up
being passed with respect to the company or of a
receiver or manager of the company's business or
undertaking being duly appointed, or of possession being taken
by or on behalf of the holders of any debentures
secured by a floating charge of any property comprised in or subject
to the charge, f, either before or after that event, any such liability is
incurred by the insured person, his rights against the insurer under
the contract in respect of the liability shall,
notwithstanding anything to the contrary in any provision of law, be
transferred to and vest in the third party to whom the
liability was so incurred.
- Where an
order for the administration of the estate of a deceased
debtor is made according to the law of insolvency, then, if
any debt provable in insolvency is owing by the deceased in respect of a
liability to a third party against which he was
insured under a contract of insurance in accordance with
the provisions of this Chapter, the deceased debtor's
rights against the insurer in respect of that liability shall,
notwithstanding anything to the contrary in any provision of law, be transferred
to and vest in the person to whom the debt is owing.
- Any
condition in a policy issued for the purposes of this Chapter
purporting either directly or indirectly to avoid the policy or to
alter the rights of the parties there under upon the happening to the insured
person of any of the events specified in clause (a) or clause
(b) of sub-section (1) or upon the making of an order for the
administration of the estate of a deceased debtor according to the law of
insolvency shall be of no effect.
- Upon a
transfer under sub-section (1) or sub-section (2), the insurer shall be under
the same liability to the third party as he would have been to the insured
person, but-
- if the
liability of the insurer to the insured person exceeds the
liability of the insured person to the third party, nothing in this
Chapter shall affect the rights of the insured person against the
insurer in respect of the excess, and
- if the
liability of the insurer to the insured person is less than the liability of the
insured person to the third party, nothing in this Chapter shall
affect the rights of the third party against the insured
person in respect of the balance.
Back