CHAPTER IX
INSURANCE OF MOTOR VEHICLES AGAINST THIRD PARTY RISKS
145. Definitions,- In this Chapter,-
(a)
“authorized insurer” means an insurer for the time being carrying on general
insurance business in India under the General Insurance Business(Nationalization)
Act, 1972 ( 57 of 1972), and any Government insurance fund authorized to do
general insurance business under that Act;
(b)
“certificate of insurance” means a certificate issued by an authorized insurer,
in pursuance of sub-section (3) of section 174 and includes a cover note complying
with such requirements as may be prescribed, and where more than one
certificate has been issued in connection with a policy, or where a copy of a
certificate has been issued, all those certificates or that copy as the case
may be;
© “liability”
wherever used in relation to death of or bodily injury to any person, includes
liability in respect thereof under section 140;
(d) “policy of
insurance” includes certificate of insurance
(e) “property” includes goods
carried in the motor vehicle, roads, bridges, culverts, causeways,
trees, posts and milestones;
(f)
“third party” includes the Government.
146. Necessity for insurance against third party risk, - (1) No
person shall use, except as a passenger, or cause or allow any other person to
use, a motor vehicle in public place, unless there is in force in relation to
the use of the vehicle by that person or that other person, as the case may be,
a policy of insurance complying to the requirements of this chapter:
Provided that in
the case of a vehicle carrying or meant to carry, dangerous or hazardous goods,
there shall also be a policy of insurance under the Public Liability Insurance
Act, 1991.
Explanation:- A person driving a motor vehicle merely as a paid
employee, while there is in force in relation to the use of the vehicle no such policy as is required by this
sub-section, shall not be deemed to act in contravention of the sub-section unless
he knows or has reason to believe that
there is no such policy in force.
(2) Sub-section (1) shall not apply to any vehicle owned by Central
Government or a State Government and used for Government purposes unconnected
with any commercial enterprise.
(3) The appropriate Government may, by order, exempt from the operation
of sub-clause (1) any vehicle owned by any of the following authorities,
namely,-
(a)
the Central Government or a State Government, if the vehicle is used for
Government purposes connected with any commercial enterprise:
(b)
any local authority;
©
any State transport undertaking;
Provided
that no such order shall be made in relation to any such authority unless a
fund has been established and is maintained by that authority in accordance
with the rules made in that behalf under this Act for meeting any liability
arising out of the use of any vehicle of that authority which that authority or
any person in its employment may incur in third parties.
Explantaion:-For the purpose of this
section, “appropriate Government” means the Central Government or a State
Government, as the case may be, and,-
(a)
In relation to any corporation or company owned
by the Central Government or any State Government means the Central Government
or that State Government;
(b)
In relation to any corporation or company owned
by the Central Government and one or more State Governments , means the Central
Government”
(c)
In relation to any other State transport
undertaking or any local authority, means that Government which has control
over that undertaking or authority.
147. Requirements of policies and limits of liability, - (1) In
order to comply with the requirements of this Chapter, a policy of insurance
must be a policy which-
(a)
is issued by a person who is an
authorized insurer; and
(b)
insures the person or classes or persons specified in the policy to the extent
specified in sub-
section (2);
(i)
against any liability which may be incurred by
him in respect of the death of or bodily injury to any person, including owner
of the goods or his authorized representative carried in the vehicle or damage
to any property of a third party caused by or arising out of the use of the
vehicle in a public place;
(ii)
against the death or bodily injury to any
passenger of public service vehicle caused
by or arising out of the use
of the vehicle in a public place:
Provided that a
policy may not be required-
(i)
to convert the liability in respect of the
death, arising out and in the course of his employment, of the employee of a
person insured by the policy or in respect of bodily injuries sustained by such
an employee arising out of and in the course of his employment other than a
liability arising under the Workmen’s Compensation Act, 1923 (8 of 1923) in
respect of the death of, or bodily injury to , any such employee-
(a)
engaged in the driving of the vehicle, or
(b)
if it is a public service vehicle engaged as a
conductor of the vehicle or in examining the tickets on the vehicle, or
(c)
if it is a goods carriage being carried in the
vehicle, or
(i)
to cover the contractual liability.
Explanation:-For the removal of doubts, it is hereby declared that
the death or bodily injury to any person or damages to any property of a third
party shall be deemed to have been caused by or arisen out of, the vehicle in a
public place notwithstanding that the person who is dead or injured or the
property which has been damaged was not in a public place at the time of the
accident, if the act or omission which lead to the accident occurred in a
public place.
(2) Subject to the provisions of sub-section (2), a policy of insurance
referred to in sub-section (1), shall cover any liability incurred in respect
of any accident, up to the following
limits, namely,-
(a)
save as provided in clause (b), the amount of liability incurred;
(b) in respect of damage to any
property of a third party, a limit of rupees six thousand:
Provided that
any policy of insurance issued with any limited liability and in force,
immediately before the commencement of this Act, shall continue to be effective
for a period of four months after such commencement or till the date of expiry
of such policy whichever is earlier.
(3) A policy shall be of no effect for the
purposes in this chapter, unless and until there is issued by the insurer in
favor of the person by whom the policy is effected a certificate of insurance
in the prescribed form and containing the prescribed particulars of any
condition subject to which the policy is issued and of any other prescribed
matters, and different forms particulars and matters may be prescribed in
different cases.
(4)
Where a cover note issued by the insurer under the provision of this
Chapter or the rules made thereunder is not followed by a policy of insurance
within the prescribed time, the insurer shall, within seven days of the expiry
of the period of validity of the cover note, notify the fact to the registering
authority in whose records the vehicle to which the cover note relates has been
registered or to such other authority as the State Government may prescribe.
(5) Notwithstanding anything contained in any
law for the time being in force, an insurer issuing a policy of insurance under
this section shall be liable to indemnify the person or classes of persons
specified in the policy in respect of any liability which the policy purports
to cover in the case of that person or those classes of persons.
148.
Validity of policies of insurance issued in reciprocating countries,- Where,
in pursuance of an agreement between India and any reciprocating country, any
motor vehicle registered in the reciprocating country operated on any route or
within the area common to the two countries and there is in force in relation
to the use of the vehicle in the reciprocating country a policy of insurance
complying to the requirements of the law of insurance in force in that country,
then not withstanding anything contained in section 147, but subject to the
rules which may be made under section 164, such policy insurance shall be
effective throughout the route or area in respect of which, the arrangement has
been made as if the policy of insurance has complied with the requirements of
this chapter.
149. Duty of insurers to satisfy judgments and awards against persons insured
in respect of third party risks,- (1) If, after a certificate of insurance
has been issued under sub-section (3) of section 147 in favor 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)
or under the provisions of section 163 A 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 the interest on that sum by virtue if any enactment relating to
interest on judgments.
(2) 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
insurance has 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 the execution is stayed thereon pending an appeal, and an
insurer to him notice of the bringing of any such proceedings is so given shall
be entitled to made a party thereto and to defend the action on any of the
following grounds namely,-
(a) that
there has been a breach of a specified condition of the policy, being one of
the following conditions namely,-
(i)
a condition excluding the use of the vehicle-
(a) for
hire or reward, where the vehicle is on the date of the contract of the
insurance a vehicle not covered by a permit to ply for hire or reward, or
(b) for
organized racing or speed testing, or
(c) for
a purpose not allowed by the permit under which the vehicle is used, where the
vehicle is a transport vehicle, or
(d) without
side-car being attached where the vehicle is a motor cycle; or
(ii)
a
condition excluding driving by a named
person or persons or any persons who is not duly licensed, or by any person who
has been disqualified for holding or obtaining a driving license during the
period of disqualification; or
(iii)
in a condition excluding liability for injury
caused or contributed by conditions of war, civil war, or riot or civil
commotion; or
(b) A
policy is void on the ground that it was obtained by the non-disclosure of a
material fact or by a representation of a fact which was false in some material
particular.
(3) Where any such judgment as is
referred in sub-section (1) in 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 of any matter adjudicated upon by
it, the insurer ( being an insurer registered under the Insurance Act, 1938 (5 of
1938) and whether or not registered under the corresponding law of the
reciprocating country shall be liable to the person entitled to the benefit of
the decree in the matter and to the extent specified in sub-section (1) as if
the judgment were given by a court of 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
brining of the proceedings and the insurer to
him notice 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 of grounds similar to those specified in sub-section (2).
(4) Where a certificate of
insurance has been issued under sub section (3) of section 147 to the person by
whom a policy has been affected, so much of the policy as it purports to
restrict the insurance of the person 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.
(5) 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
(6) In this section the expression
‘material fact’ and material particular’, means irrespective of a fact or a
particular of such a nature so 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 cancelled or avoided the policy.
(7) No insurer to him 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 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 the Tribunal under section 168.
150.
Right of third parties against insurers in insolvency of the insured,- (1)
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-
(a)
In the event of the person becoming insolvent or
making a composition or arrangement with his creditors; or
(b)
When the insured person is a company, in the event
of winding or order being made or a
resolution for the winding up being passed with respect to the company or of a receiver or a 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.
If, either before or after that event,
any such liability is incurred by the insured person, his rights against the insurer
under this 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.
(2) 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 owning
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 debtors rights against the insurer in respect of that
liability, shall, notwithstanding anything to the contrary in any provisions of
law, be transferred to and vest in the person whom the debt is owing.
(3) Any condition in a policy issued for the
purpose of this Chapter purporting either directly or indirectly to avoid the
policy or to alter the rights of the parties thereunder 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.
(4) 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-
(a) if the liability of the insurer to the insured person exceeds the liability
of the insurer 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
(b) if the liability of the insurer to the insured person is less than the
liability of 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.
151. Duty to give information as to the insurance,- (1) No person against whom a claim is made in
respect of any liability referred to in clause (b) of sub-section (1) of
section 174 shall on demand by or on behalf of the person making the claim
refuses to state whether or not he was insured in respect of that liability by any opolicy issued under the provisions of
this Chapter, or would have been so insured, to give such particulars with respect
to that policy as were specified in the certificate of insurance issued in respect
thereof.
(2) In the event of any person becoming insolvent or making a
composition or arrangement with his creditors or in the event of an order being
made for the administration of the estate of the deceased person according to
the law of insolvency, or in the event of a winding up order being made or a resolution
for voluntary winding up being passed with respect to any company or a receiver
or manager of the company’s business or undertaking being duly appointed or of
possession being take by or on behalf of the holders of any debentures secured
by a floating charge on any property
comprised in or subject to the charge, it shall be the duty of the insolvent debtor,
personal representative of the deceased debtor or company, as the case may be,
or the official assignee or receiver in insolvency, trustee, liquidator, receiver
or manager or person in possession of the property to give at the request of
any person claiming that the insolvent debtor,
deceased debtor or company is under such liability to him as is covered by the
provisions of this Chapter, such information may as reasonably be required by
him for the purpose of ascertaining whether any rights have been transferred to
and vested in him by section 150, and for the purpose of enforcing such rights,
if any, and any such contract of insurance as purports whether directly
indirectly to avoid the contract or to alter the rights of the parties
thereunder upon the giving of such information in the events aforesaid, or
otherwise to prohibit or prevent the giving thereof in the said events, shall
be of no effect.
(3) If, from the information given to person
in pursuance of sub-section (2) or otherwise, he has reasonable ground for
supporting that there have or may have been transferred to him under this
Chapter rights against any particular insurer, that insurer shall be subject to
the same duty as is imposed by the said sub-section on the persons therein
mentioned.
(4) The duty to give the information imposed
by this section shall include a duty to allow all contracts of insurance,
receipt for premiums, and other relevant documents in the possession or power
of the person on whom the duty is so imposed to be inspected and copies thereof
to be taken.
