(1) 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)1[or under the provisions of section 163A] 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.
(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 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:—
(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 insurance a vehicle not covered by a permit to ply for hire or reward, or
(b) for organised racing and 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 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
(iii) a condition excluding liability for injury caused or contributed to by conditions of war, civil war, riot or civil commotion; or
(b) 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.
(3) 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).
(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 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.
(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 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.
(7) 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.
Simplified Explanation
Section 149 of the Motor Vehicles Act in India outlines the obligations of insurers to satisfy judgments and awards issued against individuals insured under policies that cover third-party risks. This section is a key legal framework ensuring that victims of motor vehicle accidents receive compensation from insurers, following court or tribunal judgments against the insured drivers.
Overview of Section 149
This section mandates that upon a judgment or award being passed against any person insured under the Act in respect of third-party liabilities, the insurer is required to pay out the compensation awarded, provided certain conditions are met. This provision ensures that victims of accidents involving insured vehicles are not left without compensation due to the inability of the insured to pay.
Key Elements of Section 149
- Mandatory Payment by Insurers:
- The insurer is compelled to satisfy any judgment or award against the insured person concerning third-party risks, which can include injury, death, or property damage, as long as the insurance policy was active at the accident time and covers the event.
- Conditions for Insurer Liability:
- The insurer’s obligation to pay is contingent upon the conditions of the policy being fulfilled and the claim falling within the scope of the policy coverage.
- The insurer is not liable if the insured has breached policy terms such as driving without a valid license, under the influence of alcohol or drugs, or other exclusions specified in the policy.
- Notice of Proceedings:
- Insurers must be notified of any legal proceedings related to such claims. They have the right to participate in and defend the action. If they fail to do so, they cannot later contest the validity of the judgment, provided the proceedings were properly conducted.
- Limits of Insurer’s Liability:
- The insurer’s liability is generally limited to the amounts specified under the policy for third-party risks. Any amount above this cap may need to be paid by the insured.
- Right of Recovery from the Insured:
- If the insurer pays out a claim for which the insured was actually not covered due to a violation of policy terms (e.g., driving under the influence), the insurer may recover the amount paid from the insured.
Practical Implications
- Protection for Victims: Ensures that individuals injured by insured vehicles have a direct and enforceable claim against an insurer, making it more likely they receive timely compensation.
- Legal Assurance for Insurers: Insurers are required to pay only up to the limits set forth in the policy and only if the insured has adhered to the policy terms, protecting insurers from unexpected liabilities.
- Incentive for Policy Compliance: This section encourages drivers to comply with their policy terms and traffic laws, as any non-compliance could lead to financial repercussions directly from them rather than their insurers.
Conclusion
Section 149 of the Motor Vehicles Act plays a crucial role in the motor insurance landscape of India by aligning the interests of third-party victims, insured drivers, and insurers. It provides a clear legal pathway for compensation following motor vehicle accidents, ensuring that insurers fulfill their obligations and that victims receive due compensation under the terms of applicable insurance policies.
