Top Court sets aside Bombay High Court view, holds insurer not restricted to Section 149(2) MV Act defences when impleaded as respondent
The Supreme Court has held that an insurance company can raise all available grounds in a motor accident claim if the claimant impleads it as a respondent. In that situation, the insurer is not confined to the statutory defences under Section 149(2) of the Motor Vehicles Act, 1988. It can also challenge the quantum of compensation.
The ruling came in National Insurance Company Ltd. v. Gauri Gurudas Gaonkar, SLP (C) No. 11439 of 2023. A Bench of Justices Rajesh Bindal and Vijay Bishnoi delivered the judgment.
The case arose from a motor accident in which a speeding car hit and killed a 54-year-old pedestrian. His wife and children then filed a claim petition before the Motor Accident Claims Tribunal (MACT). They arrayed the driver, the owner, and the insurance company as respondents.
In 2015, the MACT awarded ₹52,33,440 as compensation, along with interest at 9% per annum. The insurer challenged that award before the Bombay High Court. However, the High Court dismissed the appeal as non-maintainable.
The central question before the Supreme Court was whether an insurance company, once impleaded as a party-respondent, could contest the claim on grounds beyond those listed in Section 149(2) of the Motor Vehicles Act.
Section 149(2) usually limits insurers to specific defences. These include breach of policy conditions and non-disclosure of material facts.
The Bench held that this restriction does not apply when the insurer is already a respondent in the claim proceedings.
The Court observed:
“The Insurance Company, when impleaded as a respondent in the claim petition, has the right to contest the claim on all available grounds, without any restriction to grounds available under Section 149(2) of the 1988 Act.”
The Court clarified that, in such a situation, the insurer can contest policy-related issues, negligence, and the quantum of compensation.
The Supreme Court allowed the appeal. It held that the Bombay High Court had erred in refusing to examine the insurer’s challenge to the compensation amount.
The Court then remitted the matter to the High Court for fresh consideration on the issue of compensation. It also requested expeditious disposal
