A borrower-rider is not a third party entitled to compensation under Section 163-A.

On 19 July 2019, Pancham Minj was riding a motorcycle owned by respondent Parshu Khalkho when he was involved in an accident and died.

His legal heirs filed a claim under Section 163-A of the Motor Vehicles Act, 1988.

The Tribunal dismissed the claim, finding that Pancham was not a third party and that he was not covered by the policy’s Personal Accident (PA) cover because he was not the owner or an employed driver.

The claimants appealed, relying on the policy’s PA cover; the insurer opposed the appeal, citing Pancham’s lack of a valid driving licence.

Whether the deceased, while riding a motorcycle borrowed from its owner, could claim compensation under Section 163-A as a third party.

Whether the policy’s PA cover applied to the deceased, and whether his lack of a valid driving licence precluded recovery under that cover.

Section 163-A of the Motor Vehicles Act does not apply where the person involved in the accident is the vehicle’s owner; a borrower or rider who steps into the owner’s shoes is likewise not a third party for this purpose.

The Court relied on Ramkhiladi v. United India Insurance Co. Ltd., (2020) 2 SCC 550, applying the principle stated in Ningamma v. United India Insurance Co. Ltd., (2009) 13 SCC 710.

The policy’s driver clause required the person driving to hold an effective driving licence, subject to its stated learner’s-licence exception.

The Court treated driving without a valid and effective licence as a breach that defeated the PA claim under the policy.

Pancham was riding the motorcycle when the accident occurred and was its borrower, not a third party; applying Ramkhiladi and Ningamma, the Court held that his heirs could not recover under Section 163-A.

The policy provided compulsory PA cover for the owner-driver, but the Court found that Pancham did not satisfy the policy’s licensing condition.

The insurer’s evidence and the claimant’s admission in cross-examination established that he had no valid and effective driving licence at the time of the accident.

The Court therefore held that the policy did not cover the claim.

It held that the deceased was not a third party entitled to claim under Section 163-A and that the absence of a valid and effective driving licence barred recovery under the PA cover.

The appeal was dismissed, with no order as to costs.