MP HC Declines Accident Compensation To Wedding Party Travelling In Tractor, Says Use Of Vehicle Contrary To Insured Purpose Is Violation

The Madhya Pradesh High Court has set aside an order by the Additional Motor Accidents Tribunal directing the insurance company to pay the claimants who were injured in an accident, observing that the driver and owner insured the vehicle (tractor) for agricultural purposes but used it to carry baratis.

In doing so, the court emphasized that if the vehicle is used for any purpose other than the insured one, then the individual breaks their solemn promise under the insurance contract and thus, absolves the insurance company of its liability.

The bench of Justice Himanshu Joshi observed;

"A vehicle is more than a machine. It is a responsibility that moves with it users. Along with the convenience and power, it imposes certain duties; a duty to use it wisely, lawfully, and within the bounds for which it is insured. When one insures his/her vehicle, he/she enters into a solemn contract, not just with the insurer, but with the law and society... If the vehicle is used in a manner inconsistent with its insurance coverage, this is not just a technical breach, but a fundamental violation. In such cases, the insurance company stands absolved of its liability".

The court emphasised that the primary accidents of road accidents in the country is due to non-compliance with road and traffic safety rules, noting that the circumstance would improve only in cases where the wrongdoer bears the cost of his actions.

"People must understand their responsibility to follow the rules in the interest of saving the life of the general public, and as long as the insurance company is held responsible for paying compensation in motor accident claims, even when the driver and owner are at fault, this situation would be difficult to improve. The wrongdoer only has to bear the cost for his fault".

The court was hearing three appeals arising from the same truck accident. Two appeals were filed by the insurance company challenging the amount granted to claimants, and the third was filed by one of the claimants seeking enhancement of the compensation amount.

The accident occurred on May 20, 2004, at around 9 PM when the claimants were walking towards village Lohroura from Satna, a tractor dashed them recklessly and in a negligent manner, resulting in several injuries. However, the driver and owner of the tractor denied involvement of their vehicle in the accident.

After examining the evidence, the Tribunal granted claimant Shivram compensation of ₹30,000/- and claimant Shukhlal ₹10,000/-, along with interest.

Before the High Court, the insurance company argued that the offending vehicle was insured for agricultural purposes, but was used to carry Baratis on the date of the accident and therefore was in complete violation of the terms and conditions of the policy.

In fact, the court concurred that the tractor was carrying baratis, including the claimants. The court further noted that the key issue for consideration was "Whether if an accident occurs while the vehicle is being used for a purpose other than that of, for which it is insured, is the insurance company liable to pay compensation? If not, consequently, order of 'pay and recover' can be passed against the insurer".

"On perusal of impugned award, it reveals that the learned Tribunal itself has found that on the date of accident, the tractor was carrying Baratis and the claimants were members thereof. The tractor got turtuled wherein the claimants sustained injuries. The FIR to that effect has been lodged by claimant- Shivram himself," the high court said.

Relying on the case of Balu Krishna Chavan v Reliance General, the bench reiterated that every motor insurance policy defines specific uses for the insured vehicle and if the vehicle is used in breach of those terms, it is called a violation of policy conditions. It was emphasized that under such circumstances, the company is not liable to compensate for accidents that occur when the vehicle is used in violation of policy terms. However, in certain cases, the court may still direct the insurer to pay the third-party victim and recover the amount from the owner.

The vehicle should be used in accordance with the purpose for which it is insured, only then can the journey remain safe not just on the road, but in law and conscience. "Let the law be your compass, and prudence your guide; for only those, who follow the rules arrive with peace at every ride."

In the case at hand, the court noted that the vehicle was being used in gross violation of the insurance policy by carrying baratis. The use of a tractor to carry baratis can never be justified by the owner or the driver.

Therefore, in view of the above discussion, the court exonerated the insurance company from liability to pay the amount of compensation, even setting aside the condition imposed by the tribunal regarding 'pay and recover'.

Regarding the claimant seeking enhanced compensation, the court noted that he was hospitalised for 10 days and underwent surgery for a fractured hand. Thus, the court enhanced the compensation to the tune of ₹50,000 in a lump sum instead of ₹30,000

The appeals were disposed of.

Case Title: Shivram Chaudhary v Verendra Kumar Mishra [MA-448-2008]

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