A borrower-driver who steps into the owner’s shoes cannot claim Section 163-A compensation absent personal accident cover.

On 6 November 2022, Vikas Sahu was travelling in vehicle No. CG-07-AW-2035 towards Raipur with his friend. Near Belasonda railway crossing on NH-53, the vehicle collided with a bush after the deceased allegedly lost control, resulting in fatal injuries; he was declared brought dead at the Government Hospital, Mahasamund

The vehicle was owned by Omprakash Sahu, the deceased’s father, and was being driven by the deceased at the time of the accident

The claimant filed a petition under Section 163-A of the Motor Vehicles Act, 1988, claiming ₹37,40,000. The Motor Accidents Claims Tribunal, Mahasamund, awarded ₹15,36,640 against the National Insurance Company Limited by award dated 8 May 2024

The insurer challenged the award under Section 173 of the Motor Vehicles Act.

1. Whether the legal representative of a person who was driving a vehicle owned by his father could maintain a claim under Section 163-A of the Motor Vehicles Act against the owner and insurer of that vehicle, when the deceased had stepped into the shoes of the owner?

2. Whether the insurer was contractually liable to pay compensation under the policy in the absence of a personal accident cover for the owner-driver, merely because ₹50 had been paid under the “WC for Driver” clause?

3. Whether the Tribunal was justified in awarding ₹15,36,640 under Section 163-A despite the insurer’s objections concerning the statutory income limit and the amended Schedule II ceiling?

Section 163-A of the Motor Vehicles Act provides a structured compensation remedy for victims of motor accidents, but it does not apply where the deceased was himself the owner of the vehicle or had stepped into the owner’s shoes.

Relying on Ningamma v. United India Insurance Co. Ltd., (2009) 13 SCC 710, and Ramkhiladi v. United India Insurance Co. Ltd., (2020) 2 SCC 550, the Court applied the rule that an owner-driver, or a borrower driving the vehicle, cannot claim compensation against the same vehicle’s insurer as a “third party” under Section 163-A

The Court further held that, in the absence of a specific personal accident cover and payment of the requisite premium, no contractual liability arises for compensation to the owner-driver under the general motor insurance policy

The ₹50 premium collected under the “WC for Driver” clause was held to provide limited coverage under the Employees’ Compensation Act, 1923, and not full compensation under Section 163-A

The deceased was driving his father’s vehicle when the accident occurred and, for purposes of the claim, occupied the legal position of the vehicle’s owner rather than that of a third party

Applying Ningamma and Ramkhiladi, the Court held that a Section 163-A claim against the owner and insurer of the same vehicle was not maintainable, irrespective of whether the accident resulted from the deceased’s loss of control

The policy did not contain personal accident coverage for the owner-driver, and no separate premium had been paid for such coverage

The additional ₹50 paid under the “WC for Driver” clause could extend only to the limited statutory liability contemplated under the Employees’ Compensation Act, 1923; it could not support the Tribunal’s award of ₹15,36,640 under Section 163-A

Consequently, the Tribunal materially erred in fastening the entire award upon the insurer. The Court resolved the appeal on maintainability and contractual coverage grounds.

The award dated 8 May 2024 was set aside to the extent that it fastened liability for ₹15,36,640 upon the National Insurance Company under Section 163-A of the Motor Vehicles Act

The claimant was granted liberty to pursue appropriate proceedings under the Employees’ Compensation Act, 1923, if legally permissible, to the limited extent covered by the ₹50 “WC for Driver” premium

Any statutory amount deposited by the insurer was directed to be refunded with accrued interest