Borrower Driving Insured Vehicle Steps Into Owner’s Shoes; No Compensation U/S 163A: Gujarat High Court
Deceased not a ‘third-party’; structured formula claim dismissed in absence of other offending vehicle’s owner or insurer
The Gujarat High Court has affirmed that a person who borrows a vehicle from its owner and meets with an accident while driving it is not entitled to compensation under Section 163A of the Motor Vehicles Act, 1988.
The Bench held that such a borrower "steps into the shoes of the owner" and cannot be treated as a "third party" for the purposes of statutory liability. Consequently, a claim petition under the structured formula of Section 163A against the insurer of the borrowed vehicle is fundamentally non-maintainable.
The Court clarified that while Section 163A provides for "no-fault" liability to expedite compensation for victims, it does not create an absolute liability for insurers to compensate a driver for their own negligence or for accidents where they represent the owner. The judgment emphasises that in the absence of the driver, owner, or insurer of another unknown offending vehicle being joined as a party, the borrower's representatives cannot seek indemnity from the borrower’s own insurer under this specific provision.
Justice Nisha M. Thakore while referring to the ratio held in Ningamma & Anr v. United India Insurance Co.Ltd 2009 (13) SCC 710 and Ramkhiladi v. The United India Insurance Company 2020 (2) SCC 550, it noted “…in a case of such a nature where the deceased himself had stepped into the shoes of the owner of the vehicle, have not been held entitled to compensation under Section 163A of the Act. For the foregoing reasons, I conclude that the appellants-original claimants shall not be entitled to seek compensation in a claim petition preferred under Section 163A of the Act of 1988, in absence of the driver, owner or the Insurance Company of the other unknown offending vehicle being joined as party to the proceedings”.
“…in peculiar facts of the present case, in absence of any other vehicle / offending vehicle involved, the deceased, who himself was driving the insured vehicle, cannot be treated as third party / any person. Thus, the insurance company cannot be statutorily held liable to compensate for the death of the driver of the insured vehicle under section 163A of the Act, 1988”, the Bench observed.
Advocate Nishit A Bhalodi appeared for the appellant and Advocate Vibhuti Nanavati appeared for the respondent.
For the background, on 27-10-2009, Shantilal Kalabhai Garasia, a Police Inspector, was driving an Esteem car borrowed from his friend, Sirajbhai Imamuddin Luhar. An unknown vehicle coming from the opposite side in a rash manner dashed into the car, causing it to hit a tree, where Shantilal sustained fatal injuries and succumbed during treatment.
Subsequent to which a complaint was registered against the unknown driver of the unknown vehicle. The legal heirs initially filed a claim under Section 166 for ₹80 Lakhs but later converted it to a petition under Section 163A.
The Motor Accident Claims Tribunal (MACT), Dahod, dismissed the petition on 28-10-2020, holding it non-maintainable as the deceased had stepped into the owner's shoes. The claimants appealed this dismissal before the High Court.
The Court said that under Section 163A, the term "any person" refers to a third party, since the deceased borrowed the car, he was not a "third party" but was effectively the "owner" in the eyes of the law.
Furthermore, the Court examined the insurance policy and found that the "owner-driver" personal accident cover was strictly restricted to the registered owner. As the deceased was neither a paid driver nor the registered owner, neither statutory nor contractual liability could be extended to the insurer for this claim.
Accordingly, the Court found no error in the Tribunal’s judgment and, therefore, the appeal was dismissed, and the original order dated 28-10-2020, passed by MACT was upheld.
Cause Title: Manjuben Alias Manjulaben Shantilal Garasia & Ors. v. Sirajbhai Imamuddin Luhar & Anr. [Neutral Citation: 2026:GUJHC:13229]
Appearances:
Appellant: Nishit A Bhalodi, Advocate.
Respondent: Vibhuti Nanavati, Advocate.