Insurers are liable for third-party claims if the policy premium covers both the tractor and attached trailer.

On October 10, 2004, deceased Rajkumar was traveling in a Maruti car when it collided with the rear of a tractor-trolley (HR-02-L-2967) that had suddenly applied brakes without signaling.

Rajkumar succumbed to his injuries on October 17, 2004.

The claimants filed a petition under Section 166 of the Motor Vehicles Act, 1988.

The Motor Accident Claims Tribunal (MACT) awarded Rs. 18,18,872/- with 9% interest, but fastened the liability solely upon the owner and driver (appellants).

The Tribunal reasoned that while the tractor was insured, the attached trolley was neither registered nor insured at the time of the accident.

The appellants challenged this, seeking to shift liability to the insurance company.

1. Whether the accident occurred due to the rash and negligent driving of the tractor-trolley driver?

2. Whether the Insurance Company is liable to indemnify the owner, given the tractor was insured but the trolley’s insurance status was disputed?

The court primarily applied Section 149 of the Motor Vehicles Act, 1988, which mandates that an insurer must satisfy awards passed in favor of third parties if a valid policy covers the risk.

The court also relied on the principle of "admission of liability," wherein a party’s own unequivocal acknowledgment of facts (via supplementary affidavit) modifies the evidentiary burden and the resulting legal obligations.

The Court upheld the Tribunal's finding of negligence against the tractor-trolley driver, as the sudden braking without signals caused the collision.

Regarding liability, the Court noted a significant shift in evidence: during the appeal, the Insurance Company filed a supplementary affidavit admitting that the policy premium received covered third-party liability for both the tractor and the trailer attached to it.

This admission "eroded" the Tribunal’s original basis for absolving the insurer—which was the perceived lack of insurance for the trolley.

Since the insurer admitted to receiving a premium for the trailer's third-party risk, the Court determined that the insurance coverage was valid and subsisting for the entire offending unit (tractor and trolley) at the time of the accident.

The Court set aside the liability fastened upon the owner and driver and ordered the return of the Rs. 25,000 statutory deposit to the appellants.

The Insurance Company was directed to deposit the total award of Rs. 18,18,872/- plus interest with the Tribunal within two months.