Rati Ram - Appellant Versus New India Assurance Co. & Anr. - Respondents

Core ratio / Key holding

Headnote

Motor Vehicles Act, 1988 — Lok-Adalat — Compromise — Validity — Driving Licence — Insurance Company Liability

Motor Vehicles Act, 1988 — Insurance Company — Liability — Recovery — Owner of Vehicle

Ratio decidendi

• A compromise recorded in Lok-Adalat between a claimant and an insurance company cannot be set aside on the ground of invalid driving licence, as the dispute regarding the validity of the driving licence is an inter-se matter between the owner of the vehicle and the insurance company, not affecting the claimant's eligibility to receive the compensation amount.
• An insurance company, after honouring a compromise with a claimant in a Motor Accident Claims case, is at liberty to proceed against the owner of the vehicle to realize the compensation amount if the insurance policy for the vehicle in question was not duly honoured by the owner, for instance, due to an invalid driving licence.

Important points

• Allowed. The resistance of the Insurance Company to honour the Lok-Adalat compromise with the claimant was unsustainable.
• Set Aside. The Tribunal's order setting aside the Lok-Adalat compromise was quashed.
• Directed. The Insurance Company was ordered to deposit Rs. 72,500/- with interest within two months before the Tribunal.
• Liberty Granted. The Insurance Company may proceed against the vehicle owner to recover the amount if the policy was not honoured.

Keywords