The Supreme Court has ruled that insurance companies cannot deny accident compensation merely because a vehicle deviated from its permitted route, emphasizing that victims must be protected and insurers must fulfill their responsibility first.
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NEW DELHI: In a landmark ruling reinforcing the rights of accident victims, the Supreme Court of India has held that insurance companies cannot deny compensation merely because the vehicle involved in the accident had deviated from its permitted route or violated the permit conditions.
A bench comprising Justices Sanjay Karol and Prashant Kumar Mishra observed that the core purpose of motor insurance policies is to protect vehicle owners and ensure that victims or their dependents receive compensation in the event of an accident, irrespective of minor administrative violations.
Court’s Observation
“The purpose of an insurance policy in the present context is to shield the owner/operator from direct liability when such an unforeseen or unfortunate incident takes place,”
the bench stated.
The court further emphasized that denying compensation to the victim or dependents just because the vehicle was outside its permit area “would be offensive to the sense of justice,” as the victim was not at fault.
“Then, the insurance company most certainly ought to pay,”
the court added.
Background of the Case
The judgment arose from a 2014 road accident case where a motorcyclist was killed after being hit by a rashly driven vehicle. The Motor Accident Claims Tribunal (MACT) awarded a compensation of ₹18.86 lakh with interest to the victim’s family.
The vehicle owner appealed the decision before the Karnataka High Court, arguing that the compensation amount was incorrectly calculated. Meanwhile, New India Insurance Company Limited also challenged the award, claiming a violation of permit conditions since the vehicle was operating outside its authorized route.
The Karnataka High Court upheld the MACT’s decision and directed the insurance company to first pay the compensation and then recover the amount from the vehicle owner.
Both the insurer and the owner approached the Supreme Court, contesting the High Court’s ruling.
Supreme Court’s Verdict
The Supreme Court dismissed both appeals, affirming that the insurance company must compensate the victims first, regardless of route deviation or permit breach.
The bench clarified that such deviations do not absolve insurers from their obligation toward third-party victims under the Motor Vehicles Act, 1988. The insurer, however, retains the right to recover the payout from the vehicle owner if a policy violation is proven.
Case Title:
K. NAGENDRA Versus THE NEW INDIA INSURANCE CO. LTD. & ORS.
SLP (C) Nos. 7139-7140 of 2023
READ JUDGMENT
