The Madurai Bench of the Madras High Court has exonerated an insurance agent from liability and fixed the liability on the insurance company to pay the compensation awarded by a tribunal in an accident case.
The court was hearing the civil miscellaneous appeal preferred by the Arasu Autos of Thanjavur district, an agent of the New India Assurance Company. In a 2016 accident case, the Motor Accident Claims Tribunal in Thanjavur awarded a compensation of ₹5.63 lakh to the family of the deceased who was hit by a two wheeler while crossing the road.
The Tribunal arrived at a conclusion that the accident happened due to the rash and negligent driving on the part of the rider of the two wheeler. Further, the Tribunal arrived at a finding that the vehicle owner paid the renewal premium amount to the insurance agent on January 19, 2016 and a receipt was also issued. However, the insurance agent had credited the amount to the insurance company only on January 31, 2016. The policy for the vehicle was issued only with effect from February 1, 2016. The Tribunal mulcted the entire liability upon the insurance agent.
Justice R. Vijayakumar observed that Section 168 of the Motor Vehicles Act clearly specifies that the award amount shall be paid either by the insurer or owner or driver of the vehicle involved in the accident or by all or any of them as the case may be. The insurance agent does not fall under any one of the categories. The insurance agent cannot be treated to be an insurer for passing an award under Section 168 of the Motor Vehicles Act. The Tribunal has erred in mulcting the liability upon the insurance agent, exonerating the insurance company.
The Tribunal in a claim petition filed by the third party has unnecessarily entered into a dispute between the agent and the insurance company and mulcted the liability upon the agent. The insurance agent is no way responsible for the death of the person in the accident. The only fault on the part of the agent was that having received the premium, he had not remitted it to the company on time, the court observed.
As far as the renewal policies are concerned, they take effect from the date of payment of premium to the authorised agent or the insurance company as the case may be. Merely because the agent has remitted the premium amount belatedly or the company has issued a policy from a future date, that will not absolve the insurance company from its liability. Only in cases of fresh insurance policy (not a renewal one), commencement of the policy would be from date and time mentioned in the policy, the court observed.
When the premium amount has been paid to the authorised agent on January 19, 2016, the coverage commences from the said date and time. The delay in remittance by the agent is the dispute between the agent and the principal for which a third party cannot be made to suffer.
In case, the insurance company finds that their agent had been negligent in belatedly remitting the amount causing loss to the company, it is for the insurance company to initiate independent proceedings, the court said.
Whenever premium is remitted by an owner of the vehicle, a statutory duty is cast upon the insurance company to issue the policy. The court is of the opinion that the insurance company does not have any power whatsoever to postpone the date of commencement of the policy after receipt of the premium either directly or through their agent.
The authorised agent received the premium on January 19, 2016. It should be deemed that the principal namely the insurance company had received the premium on the said date. The insurance company cannot take advantage of non issuance of the policy or postponement of commencement of the policy. Therefore, the court finds that on the date of the accident, the insurance was subsisting covering the offending vehicle, the court observed.
The court exonerated the insurance agent and fixed the liability upon the insurance company to pay the award passed by the Tribunal. The award of the Tribunal was confirmed.
