Claimant Borrowing Two-Wheeler Held Not Entitled to Structured Compensation from Insurer; Personal Accident Coverage May Apply
In a significant judgment dated August 18, 2026, the Gauhati High Court, presided over by Justice Manish Choudhury, clarified the scope of compensation claims under Section 163A of the Motor Vehicles Act, 1988. The case arose from a motor vehicle accident involving a two-wheeler, where the claimant, Mr. Motiur Rahman, was riding a motorcycle borrowed from its owner when he met with an accident. The claimant sought compensation of Rs. 12.5 lakh from the insurer, National Insurance Company Limited, under Sections 166 and 163A of the Motor Vehicles Act.
The Motor Accident Claims Tribunal initially awarded Rs. 3,45,000 with interest, holding the insurer liable. However, the insurer appealed the decision, arguing that as the claimant was a permissive user and borrower of the vehicle, he effectively stepped into the shoes of the owner and therefore could not claim compensation under Section 163A against the insurer.
The Court carefully examined the evidence, including prior Supreme Court rulings such as Ningamma v. United India Insurance Company (2009) and Ramkhiladi v. United India Insurance Company (2020), which established that Section 163A compensation applies only to third parties and not to the owner or borrower of the vehicle involved in the accident. The Court found that since the claimant was riding the two-wheeler borrowed from the owner and was solely responsible for the accident, he could not maintain a claim under Section 163A against the insurer.
Further, the Court observed that the Tribunal's suo moto conversion of the claim from Section 166 to Section 163A without notice to the parties was improper, but as the claimant was not entitled to compensation under either section, this issue need not be decided.
However, the Court acknowledged that the claimant may be entitled to personal accident coverage under the insurance policy, subject to its terms. The insurer was directed to finalize any personal accident coverage claim within two months, with interest payable from the date of filing the claim.
This judgment reinforces the principle that a permissive user or borrower is considered in the position of the owner and thus cannot claim no-fault compensation under Section 163A. It also highlights the distinction between structured compensation under the Motor Vehicles Act and personal accident coverage under insurance contracts.
Detailed Analysis and Background:
1. Facts:
The claimant, Mr. Motiur Rahman, was riding a two-wheeler borrowed from the owner when he lost control due to poor road conditions and fog, resulting in injuries. He filed a claim under Section 166 read with Section 140 for compensation from the owner and insurer.
2. Tribunal's Decision:
The Tribunal found the claimant responsible for the accident and did not award compensation under Section 166 but converted the claim suo moto to Section 163A, awarding Rs. 3,45,000 with interest.
3. Appeal Grounds:
The insurer contended that a permissive user who borrows a vehicle cannot claim under Section 163A because such a user is not a third party but is in the owner's position. They also challenged the Tribunal's suo moto conversion of the claim.
4. Legal Principles:
- - Section 163A provides for no-fault compensation to victims or legal heirs but applies only to third-party claims.
- - Borrowers or permissive users are considered as stepping into the owner's shoes and cannot claim under Section 163A against the owner or insurer.
- - Supreme Court precedents Ningamma and Ramkhiladi affirm these principles, clarifying that owners cannot claim compensation from themselves or their insurer under Section 163A.
5. Court's Findings:
- - The claimant was a permissive user and responsible for the accident, hence not entitled to compensation under Section 166 or 163A.
- - The Tribunal's suo moto conversion without notice was improper but did not affect the claimant's lack of entitlement.
- - The claimant may claim personal accident benefits under the insurance policy, which the insurer must settle within two months.
6. Outcome:
The appeal was allowed, the Tribunal's award was set aside, and the insurer was held not liable for the compensation under Section 163A. The claimant's personal accident claim was upheld with instructions for timely resolution.
Bottom Line:
A claimant who steps into the shoes of the owner of a vehicle as a permissive user or borrower cannot claim compensation under Section 163A of the Motor Vehicles Act, 1988, from the insurer of the vehicle.
Statutory provision(s):
Motor Vehicles Act, 1988 Section 163A, Section 166, Section 140
National Insurance Company Limited v. Motiur Rahman, (Gauhati) : Law Finder Doc Id # 2975046
