150. Duty of insurers to satisfy judgments and awards against persons insured in respect of
third party risks. —
(1) If, after a certificate of insurance has been issued under sub-section
(3) of
section 147 in favour of the person by whom a policy has been effected, judgment or award in respect of
any such liability as is required to be covered by a policy under clause
(b) of sub-section
(1) of section
147 (being a liability covered by the terms of the policy) or under the provisions of section 164 is
obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled
to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions
of this section, pay to the person entitled to the benefit of the award any sum not exceeding the sum
assured payable thereunder, as if that person were the decree holder, in respect of the liability, together
with any amount payable in respect of costs and any sum payable in respect of interest on that sum by
virtue of any enactment relating to interest on judgments.
(2) No sum shall be payable by an insurer under sub-section
(1) in respect of any judgment or award
unless, before the commencement of the proceedings in which the judgment or award is given the insurer
had notice through the court or, as the case may be, the Claims Tribunal of the bringing of the
proceedings, or in respect of such judgment or award so long as its execution is stayed pending an appeal;
and an insurer to whom notice of the bringing of any such proceedings is so given shall be entitled to be
made a party thereto, and to defend the action on any of the following grounds, namely:—
(a) that there has been a breach of a specified condition of the policy, being one of the following
conditions, namely:––
(i) a condition excluding the use of the vehicle—
(A) for hire or reward, where the vehicle is on the date of the contract of insurance a vehicle
not covered by a permit to ply for hire or reward; or
(B) for organised racing and speed testing; or
(C) for a purpose not allowed by the permit under which the vehicle is used, where the
vehicle is a transport vehicle; or
(D) without side-car being attached where the vehicle is a two-wheeled vehicle; or
(ii) a condition excluding driving by a named person or by any person who is not duly licenced or
by any person who has been disqualified for holding or obtaining a driving licence during the period
of disqualification or driving under the influence of alcohol or drugs as laid down in section 185; or
(iii) a condition excluding liability for injury caused or contributed to by conditions of war, civil
war, riot or civil commotion; or
(b) that the policy is void on the ground that it was obtained by nondisclosure of any material fact or
by representation of any fact which was false in some material particular; or
(c) that there is non-receipt of premium as required under section 64VB of the Insurance Act, 1938
(4 of 1938).
(3) Where any such judgment or award as is referred to in sub-section
(1) is obtained from a court in a
reciprocating country and in the case of a foreign judgment is, by virtue of the provisions of section 13 of
the Code of Civil Procedure, 1908 (5 of 1908) conclusive as to any matter adjudicated upon by it, the
insurer (being an insurer registered under the Insurance Act, 1938 (4 of 1938) and whether or not that
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person is registered under the corresponding law of the reciprocating country) shall be liable to the person
entitled to the benefit of the decree in the manner and to the extent specified in sub-section
(1), as if the
judgment or award were given by a court in India:
Provided that no sum shall be payable by the insurer in respect of any such judgment or award unless,
before the commencement of the proceedings in which the judgment or award is given, the insurer had
notice through the court concerned of the bringing of the proceedings and the insurer to whom notice is so
given is entitled under the corresponding law of the reciprocating country, to be made a party to the
proceedings and to defend the action on grounds similar to those specified in sub-section
(2).
(4) Where a certificate of insurance has been issued under sub-section
(3) of section 147 to the person
by whom a policy has been effected, so much of the policy as purports to restrict the insurance of the
persons insured thereby, by reference to any condition other than those in sub-section
(2) shall, as
respects such liabilities as are required to be covered by a policy under clause
(b) of sub-section
(1) of
section 147, be of no effect.
(5) No insurer to whom the notice referred to in sub-section
(2) or sub-section
(3) has been given
shall be entitled to avoid his liability to any person entitled to the benefit of any such judgment or award
as is referred to in sub-section
(1) or in such judgment as is referred to in sub-section
(3) otherwise than in
the manner provided for in sub-section
(2) or in the corresponding law of the reciprocating country, as the
case may be.
(6) If on the date of filing of any claim, the claimant is not aware of the insurance company with
which the vehicle had been insured, it shall be the duty of the owner of the vehicle to furnish to the
tribunal or court the information as to whether the vehicle had been insured on the date of the accident,
and if so, the name of the insurance company with which it is insured.
Explanation.—For the purposes of this section,—
(a) “award” means an award made by the Claims Tribunal under section 168;
(b) “Claims Tribunal” means a Claims Tribunal constituted under section 165;
(c) “liability covered by the terms of the policy” means the liability which is covered by the
policy or which would be so covered but for the fact that the insurer is entitled to avoid or cancel or
has avoided or cancelled the policy; and
(d) “material fact” and “material particular” mean, respectively, a fact or particular of such a
nature as to influence the judgment of a prudent insurer in determining whether he shall take the risk
and, if so, at what premium and on what conditions.
