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Staff driving company car may not get accident claim

The Supreme Court (SC) has ruled that unless there is a specific contract, an insurance company is not under obligation to pay compensation to a person or an employee who dies in a road accident while driving the vehicle of his employer.

Apnaloan.com Research Bureau

10 Aug 2007

The Supreme Court (SC) has ruled that unless there is a specific contract, an insurance company is not under obligation to pay compensation to a person or an employee who dies in a road accident while driving the vehicle of his employer.

Such a liability would also arise only if the claim was made under Section 163A of the Act and not under Section 166 of the Motor Vehicle Act (MVA), said a bench of Justices CK Thakker and PK Balasubramanyan while upholding an appeal filed by Oriental insurance Company.

The bench passed the ruling on an appeal filed by the insurance company challenging an Uttarakhand High Court order, which had directed the insurer to pay compensation to the claimants of an employee who died while driving the car of his employer. According to the insurance company, deceased Chandra Variyal, regional manager of a company, was driving the car of his employer when he died in a road accident.

However, the family disputed the contention and claimed that Variyal was merely seated in the vehicle and the car was being driven by the company's driver Mahmood Hasan who drove the vehicle in a rash and negligent manner resulting in the death.

The family filed a claim under Section 166 of the Act and sought compensation for the death on the ground that it occurred due to the negligent driving of the driver.

However, the Motor Accident Claims Tribunal held that the vehicle was being driven by Variyal and hence, the insurance company was not liable to pay the compensation.

But on an appeal from the claimants, the High Court held that the insurer was under obligation to pay the compensation to the deceased's family, following which the insurance company approached the apex court. On perusal of the documents, the apex court said that there was no finding to prove the family's claim that the driver was driving the vehicle in a negligent manner resulting in the accident.

The court noted that it was the deceased regional manager who was driving the vehicle and hence without any specific contract, the insurance company was not under any obligation to pay the compensation.

Moreover, the claim under Section 166 made by the family could not be entertained as the onus rested on the claimants to prove that the death occurred due to the negligence of the driver.

The court said that only when a claim is made under Section 163, a person is not required to establish the charge of negligence. Accordingly, the court reversed the decision of the High Court and ruled that the insurance company was not under an obligation to pay the compensation.  

Courtesy: Economic Times