The Madras High Court recently reaffirmed the principle that a person who borrows and drives a vehicle steps into the shoes of the owner, and therefore cannot claim compensation as a “third party” under Section 163A of the Motor Vehicles Act, 1988. The case arose from an appeal filed by an insurer, challenging a Motor Accident Claims Tribunal order that awarded compensation of ₹3,93,500 to the widow of a deceased who had died when the vehicle he was driving overturned. The vehicle was owned by his brother, and he had borrowed it at the time of the accident.
In the facts before the Court, the husband (deceased) was driving his brother’s motor vehicle, which was insured with New India Assurance Company. The widow claimed compensation on his behalf, arguing that the driver had been negligent and the expansion of liability ought to favor dependents. The insurer opposed the claim, contending that since the deceased was driving a vehicle he did not own, he could not fall within the category of a third party eligible to claim compensation in light of his assumption of the owner’s liability by borrowing the vehicle.
Justice R. Poornima of the Madurai Bench considered the relevant Supreme Court precedent, particularly the decision in Ramkhiladi & Anr. v. United India Insurance Co. & Anr., which holds that a borrower/permissible user of a vehicle is not entitled to claim compensation under Section 163A because the statute does not envision such a person as a third party distinct from the insured. The Court observed that when a person borrows a vehicle with the owner’s permission and drives it, he assumes the risks and responsibilities of the owner, thereby losing the status of a third party.
Applying that principle, the Court found that the compensation awarded by the Tribunal went contrary to settled law. The deceased had been driving the vehicle and according to the FIR, was solely responsible for the negligent driving that led to the accident. Because the deceased was equivalent to the owner in legal standing for that use, he could not contend for compensation from the insurer as a third party. The High Court held that the Tribunal should have dismissed the claim in view of the legal bar.
As a result, the Court allowed the insurer’s appeal and set aside the Tribunal’s order awarding compensation. The decision underscores that under the Motor Vehicles Act, the compensation regime under Section 163A does not extend to a borrower who drives a vehicle with the owner’s license, as such a person cannot be categorized as being outside the ownership circle. The ruling reaffirms that the statute draws a clear line between third parties and those who assume ownership liability through permissive use.
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