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Report No. 85

1.4. Claims under the Motor Vehicles Act.-

For understanding the importance of the statutory scheme1 relating to claims for compensation for accidents caused by motor vehicles, it is necessary to go into history of the legislation on the subject. At common law, even where there was an insurance in respect of an accident caused by a motor vehicle, the injured party could not sue the insurer (directly or indirectly) in the name of the assured, to compel the insurer to pay the insurance money to him. The reason was that under the common law, a stranger to a contract could not sue upon it. In England, the Third Parties (Rights against Insurers) Act, 1930, was enacted to confer on third parties rights against the insurer of third party risks in the event of an assured becoming insolvent and in certain other events. But this Act could not come to the aid of a person injured by an insolvent whose vehicle was not insured.

The Road Traffic Act, 1930, was then enacted, prohibiting the use of a motor vehicle on a road, unless the owner or other person using it took a policy of insurance or gave security against liability to third parties. Yet another lacuna was detected in the legislative scheme. The insurer and the insured could, while satisfying the requirement of compulsory insurance, introduce stipulation in the policy, the breach of which would render it void and by this device the insurer could escape liability to third parties. Therefore, the Road Traffic Act, 1934, was passed to prevent the insurer from escaping the liability under the insurance policy by compelling him to satisfy the judgment obtained against the assured, and also by rendering ineffective certain clauses in the policy which might be aimed at avoiding the liability arising under it. This was the position upto 1939, in England.

1. Paras. 2.3 to 2.5, infra.

Claims for Compensation under Chapter 8 of the Motor Vehicles Act, 1939 Back

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