Claims Under Personal Accident Cover Not Maintainable Before MACT, Must Be Decided As Per Insurance Contract: Delhi High Court

The Court clarified that while claims founded on third-party negligence are adjudicable by the MACT, disputes relating to contractual personal accident cover must be pursued before the appropriate forum in accordance with the insurance policy.

The Court dismissed an appeal challenging the rejection of a compensation claim filed by the mother of a deceased driver, who had borrowed his father's insured vehicle and died in a road accident involving an untraced truck.

The appellant had contended that since the vehicle was covered under a Comprehensive/Package Policy containing personal accident cover and occupant coverage, the insurer was liable to compensate the legal heirs before the MACT.

A Bench of Justice Anish Dayal observed: "What is quite clear to this Court is that in the facts of this case, deceased-son had taken the car from his father (respondent no.1) and was driving the vehicle which was involved in the accident. A claim made under Section 166 of the MV Act involves proof of negligence against driver of the vehicle, which, in this case, was the deceased himself and, therefore, liability could not have been placed on respondent no.1/owner, which would be then covered by respondent no.2/insurer."

The Court further observed: "On the other hand, the claim, if made under the personal accident cover of the insurance policy, would be tested on the terms and conditions of the insurance contract and, therefore, would not be within the remit of MACT... Expanding the jurisdiction of MACT to cover claims of this nature would be extending the motor accidents jurisprudence to an illogical extremity."

Advocate Varun Sarin represented the appellant, while Advocate Dushyant Kishan Kaul appeared on behalf of the respondents and Advocate Dr Amit George appeared as Amicus Curiae.

Background

The appeal arose from the dismissal of a claim petition by the Motor Accident Claims Tribunal. The deceased, son of the registered owner of an Innova car, was driving the vehicle when it was allegedly hit from behind by an unidentified truck. The impact caused the vehicle to collide with another car before crashing into a roadside wall. Since the offending truck could not be traced, the accident was treated as a hit-and-run case.

Instead of proceeding against the unknown offending vehicle, the deceased's mother instituted proceedings under Section 166 of the Motor Vehicles Act against the insurer of the Innova car, asserting that the deceased, though driving the vehicle, was an occupant and third party covered by the Comprehensive/Package Policy.

Before the High Court, the appellant argued that the policy extended beyond a mere Act Policy and included personal accident cover as well as occupant coverage. Relying upon National Insurance Co. Ltd. v. Balakrishnan (2013) and several High Court decisions, it was contended that payment of additional premium enlarged the insurer's liability and entitled the deceased to compensation before the MACT. It was also argued that the principle of a borrower stepping into the shoes of the owner applied only to claims under Section 163A and not to claims under Section 166 of the Motor Vehicles Act.

The insurer and the Amicus Curiae, on the other hand, maintained that the dispute concerned contractual liability arising under the insurance policy and therefore lay outside the jurisdiction of the MACT. They further submitted that since the offending vehicle remained untraced, negligence had not been established against any third party, and a claim under Section 166 could not be sustained merely by invoking the contractual terms of a Comprehensive/Package Policy.

Court's Observations

The Court commenced its analysis by explaining the two distinct situations in which compensation claims may arise under the Motor Vehicles Act. The first concerns claims against the owner or insurer of an offending vehicle on the basis of negligence or, in the case of Section 163A, upon proof of involvement of the offending vehicle without establishing negligence. The second concerns claims by occupants of a vehicle against its own owner or insurer where negligence is alleged against the driver of that very vehicle. In either case, liability under Section 166 is fundamentally rooted in proof of negligence.

Examining the facts before it, the Court found that the present claim suffered from an inherent legal difficulty. The offending truck had remained untraced and therefore negligence on its part could not be established. At the same time, the deceased himself had been driving the insured vehicle. Consequently, any negligence attributable to the accident would necessarily be that of the deceased himself.

The Bench observed: "Evidently, this being a claim under Section 166 of MV Act, emanating out of a plea of negligence, legal representatives of deceased-driver cannot claim that he himself was negligent and, therefore, they be entitled to compensation. This would result in an illogical absurdity and amount to somebody trying to lift themselves by their own bootstraps."

The Court further held that once the deceased had borrowed the vehicle from its owner and was driving it, there could be no severance between the driver's conduct and the owner's liability so as to create a third-party claim under Section 166. If another vehicle had been shown to be negligent, the claim would lie against that vehicle and its insurer. Conversely, if the deceased himself had been negligent, only third parties injured by his driving could invoke the statutory liability under Chapter XI of the Motor Vehicles Act.

The Bench emphasised that third-party insurance under Chapter XI is intended to indemnify the owner's legal liability towards others. An insurer's obligation arises only after legal liability is first fastened upon the insured.

Explaining this principle, the Court observed: "An insurance cover would be triggered only if there is a liability to pay by the insured to a third party... Insured has to be first held liable, which will be then covered by the insurer. However, if the liability does not arise, in the first place, insurer's duty to cover would also not be triggered."

The High Court then distinguished between statutory liability under Chapter XI of the Motor Vehicles Act and contractual liability arising from payment of additional premium. It held that while payment of additional premium may enlarge the insurer's contractual obligations, such contractual rights cannot themselves confer jurisdiction upon the MACT.

The Court observed: "However, the claim made under the insurance policy is not a claim arising out of negligence of a party, but merely a claim where the risk of bodily injury or death of owner-driver is covered by the Insurance Company. This takes the claim into a purely contractual arena, with insurance policy being the contractual document."

The Bench consequently held that disputes concerning enforcement of personal accident cover must be decided under the insurance contract before the competent forum rather than under the statutory jurisdiction of the MACT.

The Court then examined the authorities relied upon by the appellant to contend that a Comprehensive/Package Policy extends coverage to occupants of a private vehicle and that the insurer was therefore liable to satisfy the claim before the MACT.

Referring first to the Supreme Court's decision in National Insurance Co. Ltd. v. Balakrishnan (2013), the Court observed that the judgment recognised the wider coverage available under a Comprehensive/Package Policy as compared to an Act Policy. However, the issue before the Supreme Court was whether an occupant of a private car travelling in the insured vehicle was covered under the policy. The decision did not concern the maintainability of a claim by a borrower driving the vehicle or the jurisdiction of the MACT to adjudicate a purely contractual insurance claim. The Court therefore held that the decision did not advance the appellant's case.

The Bench similarly distinguished Shivawwa v. Branch Manager, National India Insurance Co. Ltd. (2018) and United India Insurance Co. Ltd. v. Manjusha (2024), observing that those decisions arose in materially different factual contexts and did not deal with a situation where the deceased himself was driving the borrowed vehicle or where the claim essentially sought enforcement of contractual benefits under the insurance policy. Likewise, the decision in Shanti Bopanna v. Oriental Insurance Co. Ltd. (2020) was held to be inapplicable as it turned upon the interpretation of the insurance policy in the context of consumer proceedings rather than the statutory jurisdiction of the MACT.

The Court also considered the Supreme Court's decisions in Oriental Insurance Co. Ltd. v. Meena Variyal (2007), Ningamma v. United India Insurance Co. Ltd. (2009) and Ramkhiladi v. United India Insurance Co. Ltd. (2020), all of which emphasised that liability under Section 166 of the Motor Vehicles Act is founded upon proof of negligence and that a borrower of a vehicle cannot simultaneously occupy the position of both the tortfeasor and a third-party claimant. The Bench found these decisions to be directly applicable to the controversy before it.

The Court further accepted the submissions of the Amicus Curiae that specialised statutory tribunals derive their jurisdiction solely from the statute creating them and cannot adjudicate disputes merely because they arise out of a motor accident. The mere existence of an insurance policy containing wider contractual coverage could not enlarge the statutory jurisdiction of the MACT.

Emphasising the distinction between statutory and contractual remedies, the Bench observed: "The remedy under the Motor Vehicles Act and the remedy under the insurance contract operate in different fields. Merely because the accident gives rise to both, it cannot result in conflating the two jurisdictions or permitting one forum to adjudicate matters falling exclusively within the domain of another."

The Court reiterated that a claim under Section 166 necessarily requires identification of a tortfeasor against whom negligence is established. Once negligence cannot be attributed to anyone other than the deceased himself, the statutory foundation of the claim disappears.

The Bench observed: "It is necessary for a claim made under Section 166 of MV Act to establish a tortfeasor in order to place liability. The tortfeasor, in this case, cannot claim liability as a 'third party'."

Turning to the appellant's alternative submission founded upon the personal accident cover under the insurance policy, the Court held that any such entitlement would depend entirely upon the terms and conditions of the contract between the insured and the insurer. Such a claim would require interpretation of the policy and adjudication of contractual rights, matters falling outside the jurisdiction conferred upon the MACT under the Motor Vehicles Act.

The Court observed: "Whether the benefit of insurance could extend to the death of a driver of the car, who was not the owner, but had borrowed the vehicle from the owner, would be an issue, which would then have to be addressed under the terms and conditions of the Insurance Policy and, therefore, it would be up to the claimants to approach the insurer and in case the claim is defeated, their remedies would be open before the consumer forum or any other competent forum."

The Bench concluded by cautioning against expanding the statutory jurisdiction of the Motor Accident Claims Tribunal beyond the limits contemplated by Parliament, observing: "Expanding the jurisdiction of MACT to cover claims of this nature would be extending the motor accidents jurisprudence to an illogical extremity."

Conclusion

Holding that the deceased, who had borrowed and was himself driving the insured vehicle, could not maintain a claim under Section 166 of the Motor Vehicles Act before the MACT, the High Court upheld the dismissal of the claim petition.

The Court clarified that while the claimants were free to invoke the personal accident cover available under the insurance policy, any such claim would have to be examined in accordance with the terms and conditions of the insurance contract before the insurer and, if necessary, before the consumer forum or any other competent forum having jurisdiction. Accordingly, the appeal was dismissed, leaving all contractual remedies open to the claimants.

Cause Title: Simbal Singh v. Amarjit Singh & Anr. (Neutral Citation: 2026:DHC:5185)

Appearances

Appellant: Varun Sarin and Parul Dutta, Advocates.

Respondents: Amit George, Amicus Curiae, with Dushyant Kishan Kaul, Advocate, Sameer Nandwani, Advocate.

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