Heirs of a deceased owner-driver cannot claim under Section 163-A, but contractual owner-driver coverage remains payable.

Mohan Kurmi was the registered owner of Tractor No. M.P.-15-AA-436 and was driving it on 23 March 2008 when it overturned due to his rash and negligent driving, resulting in his death.

His legal representatives filed a claim under Section 163-A of the Motor Vehicles Act, 1988, before the Motor Accident Claims Tribunal, Sagar.

The Tribunal awarded compensation of ₹2,00,000 with interest at 6% per annum and directed the appellant-insurer to pay the amount.

The Insurance Company challenged the award under Section 173(1) of the Act, contending that the deceased was himself the owner and driver of the vehicle.

The claimants relied on the insurance policy, under which an additional premium of ₹125 had been paid to cover the risk of the owner-cum-driver up to ₹2,00,000.

Whether the legal representatives of a deceased owner-driver can maintain a claim for compensation under Section 163-A of the Motor Vehicles Act, 1988, when the deceased himself was driving the insured vehicle at the time of the accident?

Whether the insurer remains contractually liable to pay compensation under the insurance policy where an additional premium was paid to cover the risk of the owner-cum-driver?

Section 163-A of the Motor Vehicles Act, 1988 provides compensation under a structured-formula scheme but does not apply where the deceased was himself the owner and driver of the offending vehicle.

The owner, driver, and their legal representatives cannot claim compensation under Section 163-A in such circumstances because the owner cannot simultaneously be treated as the claimant and the person liable to pay compensation.

The Court relied on Ramkhiladi v. United India Insurance Company, (2020) 2 SCC 550, which held that, in the case of an owner’s death, the parties must rely on the contractual terms of the insurance policy rather than Section 163-A.

However, where the policy expressly covers the risk of the owner-cum-driver upon payment of an additional premium, the insurer may be contractually liable to pay the stipulated amount.

The Court held that the claim was not maintainable under Section 163-A because the deceased was both the registered owner and the driver of the tractor.

Applying Ramkhiladi, it reasoned that the statutory liability under Section 163-A could not be invoked against the owner in favour of the owner’s legal representatives.

Nevertheless, the insurance policy showed that an additional premium of ₹125 had been paid for coverage of the owner-cum-driver, with risk covered up to ₹2,00,000.

The Tribunal had already considered this contractual coverage and directed payment of the same amount.

Since the insurer’s liability arose from the insurance contract, and requiring the claimants to initiate separate proceedings would cause another round of litigation, the Court upheld the payment direction in the interests of justice.

However, because the insurance policy expressly covered the owner-cum-driver and an additional premium had been paid, the Insurance Company was contractually obligated to pay ₹2,00,000.

The appeal was accordingly disposed of with a direction to the appellant-insurer to pay the awarded amount in accordance with the insurance policy and the Tribunal’s award.