Motor Vehicles - Cover Note issued for insurance has the same value and effect as an insurance policy

Gauhati High Court Upholds Tribunal’s Award in Auto Rickshaw Accident Case. United India Insurance Company’s Appeal Dismissed; Interest Rate on Compensation Increased to 9%

In a significant judgment, the Gauhati High Court has upheld the decision of the Motor Accident Claims Tribunal (MACT), Goalpara, which directed the United India Insurance Company Limited to compensate Mustt. Sahida Bibi, an accident victim, for injuries sustained in a road mishap involving an auto rickshaw. The court dismissed the insurance company's appeal against the tribunal’s award of Rs. 1,10,600 to the claimant, ruling that the insurer was liable based on a valid insurance cover note.

The incident occurred on September 16, 2010, when Sahida Bibi was traveling in an auto rickshaw that overturned due to rash and negligent driving, resulting in serious injuries to her leg and other parts of her body. Following her treatment at local hospitals, she filed a claim under Section 166 of the Motor Vehicles Act, 1988.

The insurance company argued that it had not issued an insurance policy for the vehicle involved, challenging the tribunal's reliance on an existing cover note. However, the court noted that under Section 147 of the Motor Vehicles Act, a cover note has the same effect as an insurance policy unless canceled. Since the insurance company had not canceled the cover note, its liability to pay compensation remained intact.

Justice Robin Phukan, presiding over the case, modified the interest rate on the awarded compensation from 6% to 9% per annum, aligning with Supreme Court precedents for such cases. The court directed the insurance company to pay the revised compensation amount within 30 days.

The decision reinforces the legal standing of cover notes in insurance claims under the Motor Vehicles Act and emphasizes the insurer's obligation to notify authorities if a cover note is not converted into a formal policy.

Bottom Line:

Motor Vehicles Act, 1988 - Cover Note issued for insurance has the same value and effect as an insurance policy unless it is canceled within the specified time period.

Statutory provision(s): Motor Vehicles Act, 1988 Sections 147, 166, 173

United India Insurance Company Limited v. Mustt. Sahida Bibi, (Gauhati)(Principal Seat at Guwahati) : Law Finder Doc Id # 2796867