Motor Vehicles Insurance (Third Party Risks) Act
Act 15 of 1950
1. Short title
This Act may be cited as the Motor Vehicles Insurance (Third‑Party Risks) Act.
2. Suspension and restriction of operation
The Minister may, by order published in the Gazette, suspend or restrict the operation of this Act.
In this Act, unless the context otherwise requires—"driver", where a separate person acts as steersman of a motor vehicle, includes that person as well as any other person engaged in the driving of the vehicle, and the word "drive" shall be construed accordingly;"motor vehicle" means a mechanically propelled vehicle intended or adapted for use on roads, but does not include a steam traction engine or a steam roller;"owner", in relation to a vehicle which is the subject of a hiring agreement or a hire‑purchase agreement, means the person in possession under that agreement;"policy of insurance" includes a cover note;"road" includes any place over which motor vehicles are capable of being driven;"statutory declaration" means a written statement in respect of which a person may be convicted of perjury by virtue of section 19.
4. Motor vehicles to be insured against third-party risks
(1)Subject to the provisions of this Act, it shall not be lawful for any person to use, or to cause or permit any other person to use, a motor vehicle on a road unless there is in force in relation to the use of the vehicle by that person or that other person, as the case may be, such a policy of insurance or such a security in respect of third party risks as complies with the requirements of this Act.(2)If a person acts in contravention of this section he shall be liable to a fine of two thousand rupees or to imprisonment for a term not exceeding six months, or to both such fine and imprisonment, and a person convicted of an offence under this section shall (unless the court for special reasons thinks fit to order otherwise and without prejudice to the power of the court to order a longer period of disqualification) be disqualified from holding or obtaining a certificate of competency for a period of twelve months from the date of the conviction.(3)This section shall not apply to a motor vehicle owned or used by the Government.
5. Requirements in respect of insurance policies
In order to comply with the requirements of section 4 the policy of insurance must be a policy which—
(a)is issued by a person who is approved by the Minister for Finance in the Gazette, as an insurer for the purposes of this Act; and(b)insures such person, persons or classes of persons as may be specified in the policy in respect of any liability which may be incurred by him or them in respect of the death of, or bodily injury to, any person caused by or arising out of the use of the vehicle on a road:
Provided that a policy in terms of this section shall not be required to cover—
(i)liability in respect of the death arising out of and in the course of his employment of a person in the employment of a person insured by the policy or of bodily injury sustained by such a person arising out of and in the course of his employment; or(ii)except in the case of a vehicle in which passengers are carried for the hire or reward or by reason of or in pursuance of a contract of employment, liability in respect of the death of or bodily injury to persons being carried in or upon or entering or getting on to or alighting from the vehicle at the time of the occurrence of the event out of which the claims arise; or(iii)any contractual liability.
6. Requirements in respect of securities
(1)In order to comply with the requirements of this Act a security must—
(a)consist of an undertaking by the giver of the security to make good, subject to any conditions specified therein, and up to an amount approved by the Minister for Finance, any failure by the owner of the vehicle or such other persons or classes of persons as may be specified in the security duly to discharge any such liability as is required to be covered by a policy of insurance under paragraph (b) of section 5 which may be incurred by him or them; and(b)be approved by the Minister for Finance and deposited with him.(2)Whenever such a security is approved by the Minister for Finance and deposited with him, the Minister for Finance shall give to the owner of the vehicle concerned a certificate (hereinafter referred to as "a certificate of security") in such form and containing such particulars of any conditions subject to which the security is given as may be prescribed.(3)References in sections 8, 9 and 11 to a policy, a certificate of insurance, an insurer or an insured shall be deemed to include references to a security, a certificate of security, a giving of a security or a person secured, respectively, as the case may be.
7. Certificate of insurance
A certificate of insurance shall be issued by the insurer to the person by whom a policy of insurance is effected at the same time as the cover note is issued. Such certificate shall be in the prescribed form and shall contain such particulars of any conditions subject to which the policy is issued, and of any other matters, as may be prescribed; and different forms and different particulars may be prescribed in relation to different cases or circumstances.
8. Certain conditions in policies of insurance of no effect
Any condition in a policy of insurance providing that no liability shall arise under the policy, or that any liability so arising shall cease in the event of some specified thing being done or omitted to be done after the happening of the event giving rise to a claim under the policy, shall, as respects such liabilities as are required to be covered by a policy under section 5, be of no effect:Provided that nothing in this section shall be taken to render void any provision in a policy requiring the persons insured to repay to the insurer any sums which the latter may have become liable to pay under the policy and which have been applied to the satisfaction of the claims of the third parties.
9. Production of certificate of insurance
(1)Any person driving a motor vehicle on a road shall on being required by a police officer, give his name and address and the name and address of the owner of the vehicle, and shall produce his certificate of insurance, and if he fails to do any of these things he shall be guilty of an offence:Provided that, if the driver of a motor vehicle within three days after the date on which the production of his certificate of insurance was so required produces the certificate of insurance or policy of insurance at such police station as may have been specified by him at the time its production was required, he shall not be convicted of an offence under this subsection by reason only of failure to produce his certificate of insurance to the police officer.(2)If, in any case where, owing to the presence of a motor vehicle on a road, an accident occurs involving personal injury to another person, the driver of the vehicle does not at the time produce his certificate of insurance to a police officer, or to some person who, having reasonable grounds for so doing, has required its production, the driver shall as soon as possible, and in any case within forty‑eight hours of the occurrence of the accident, report the accident at a police station, to a police officer, and shall thereupon produce his certificate of insurance and, if he fails to do so, he shall be guilty of an offence:Provided that a person shall not be convicted of an offence under this subsection by reason only of failure to produce his certificate of insurance if, within three days after the occurrence of the accident, he produces the certificate of insurance or policy of insurance at such police station as may be specified by him at the time the accident was reported.(3)It shall be the duty of the owner of a motor vehicle to give such information as he may be required by or on behalf of the Commissioner of Police to give for the purpose of determining whether the vehicle was or was not being driven in contravention of section 4 on any occasion when the driver was required under this section to produce his certificate of insurance, and if the owner fails to do so he shall be guilty of an offence.
10. Duty of insurers to satisfy judgments against persons insured in respect of third-party risks
(1)If, after a policy of insurance has been effected, judgment in respect of any such liability as is required to be covered by a policy under paragraph (b) of section 5 (being liability covered by the terms of the policy) 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 persons entitled to the benefit of the judgment any sum payable thereunder in respect of the liability, including 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 the foregoing provisions of this section—
(a)in respect of any judgment, unless before or within fourteen days after the commencement of this proceedings in which the judgment was given, the insurer had notice of the bringing of the proceedings; or(b)in respect of any judgment, so long as execution thereon is stayed pending an appeal; or(c)in connection with any liability, if before the happening of the event which was the cause of the death or bodily injury giving rise to the liability, the policy was cancelled by mutual consent or by virtue of any provision contained therein, and either—
(i)before the happening of the said event the certificate of insurance was surrendered to the insurer, or the person to whom the certificate of insurance was issued made a statutory declaration stating that the certificate of insurance had been lost or destroyed; or(ii)after the happening of the said event, but before the expiration of the period of fourteen days from the taking effect of the cancellation of the policy, the certificate of insurance was surrendered to the insurer, or the person to whom the certificate of insurance was issued made such a statutory declaration as aforesaid; or(iii)either before or after the happening of the said event, but within the said period of fourteen days, the insurer has commenced proceedings under this Act in respect of the failure to surrender the certificate of insurance.(3)It shall be the duty of a person who makes a statutory declaration, as provided in sub‑paragraphs (i) and (ii) of paragraph (c) of subsection (2), to cause such statutory declaration to be delivered to the insurer.(4)No sum shall be payable by an insurer under the foregoing provisions of this section, if, in an action commenced before, or within three months after, the commencement of the proceedings in which the judgment was given, he has obtained a declaration that, apart from any provision contained in the policy, he is entitled to avoid it on the ground that it was obtained by the non‑disclosure of a material fact, or by a representation of fact which was false in some material particular, or, if he has avoided the policy on that ground, that he was entitled so to do apart from any provision contained in it:Provided that an insurer who has obtained such a declaration as aforesaid in an action shall not thereby become entitled to the benefit of this subsection as respects any judgment obtained in proceedings commenced before the commencement of that action unless before or within fourteen days after the commencement of the action he has given notice thereof to the person who is the plaintiff in the proceedings specifying the non‑disclosure or false representation on which he proposes to rely, and any person to whom notice of such action is so given shall be entitled, if he thinks fit, to be made a party thereto.(5)If the amount which an insurer becomes liable under this section to pay in respect of a liability of a person insured by a policy exceeds the amount for which he would, apart from the provisions of this section, be liable under the policy in respect of that liability, he shall be entitled to recover the excess from that person.(6)In this section the expression "material" means of such a nature as to influence the judgment of a prudent insurer in determining whether he will take the risk, and, if so, at what premium and on what conditions; and the expression "liability covered by the terms of the policy" means a 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.(7)In this Act references to a certificate of insurance in any provision relating to the surrender, or the loss or destruction of a certificate of insurance shall, in relation to policies under which more than one certificate of insurance is issued, be construed as references to all the certificates of insurance, and shall where any copy has been issued of any certificate of insurance, be construed as including a reference to that copy.
11. Penalty for false statements and wilful avoidance of policy
If any person, for the purpose of obtaining a policy of insurance as required by section 5, makes any false statement, in consequence whereof the policy is liable to be avoided, or wilfully does any act which disentitles him to claim under the policy he shall be guilty of an offence.
12. Duty of persons, against whom claims are made, to give information as to insurance
(1)If any person against whom a claim is made in respect of any such liability as is required to be covered by a policy under paragraph (b) of section 5 shall, on demand by or on behalf of the person making the claim, state whether or not he was insured in respect of that liability by any policy having effect for the purposes of this Act, or would have been so insured if the insurer had not avoided or cancelled the policy, and, if he was or would have been so insured, shall give such particulars with respect to that policy as were specified in the certificate of insurance issued in respect thereof under section 7.(2)If, without reasonable excuse, any person fails to comply with the provisions of this section, or wilfully makes any false statement in reply to any such demand as aforesaid, he shall be guilty of an offence.
13. Duty to surrender certificate of insurance on cancellation of policy
Where a certificate of insurance has been issued under section 7 to the person by whom a policy has been effected and the policy is cancelled by mutual consent or by virtue of any provision in the policy, the person to whom the certificate of insurance was issued shall, within seven days from the taking effect of the cancellation, surrender the certificate of insurance to the insurer or, if it has been lost or destroyed, make a statutory declaration to that effect, and if he fails so to do he shall be guilty of an offence.
14. Procedure on application for motor vehicle licence
A person who applies for a licence or the renewal of a licence in respect of a motor vehicle under the Road Transport Act, shall produce such evidence as may be prescribed that either—
(a)a certificate of insurance to the effect that as from the date when the licence comes into operation there will be in force any necessary policy of insurance or the necessary security in relation to the user of the vehicle by the applicant or by other persons on his order or with his permission; or(b)the vehicle is a vehicle to which subsection (3) of section 4 applies.
15. Rights of third parties against insurers on bankruptcy, etc., of the insured
(1)Where under any contract of insurance a person (in this section referred to as "the insured") is insured against liabilities to third parties which he may incur, then—
(a)in the event of the insured becoming bankrupt or making a composition or arrangement with his creditors; or(b)in the case of the insured being a company, in the event of a winding‑up order being made, or a resolution for a voluntary winding‑up being passed, with respect to the company or of a receiver or manager of the company's business or undertaking being duly appointed, or of possession being taken, by or on behalf of the holders of any debentures secured by a floating charge, of any property comprised in or subject to the charge, if either before or after that event, any such liability as aforesaid is incurred by the insured, his rights against the insurer under the contract in respect of the liability shall, notwithstanding anything in any law to the contrary, be transferred to and vest in the third party to whom the liability was so incurred.(2)Where an order is made for the administration of the estate of a deceased debtor according to the law of bankruptcy, then, if any debt provable in bankruptcy is owing by the deceased in respect of a liability against which he was insured under a contract of insurance as being a liability to a third party, the deceased debtor's rights against the insurer under the contract in respect of that liability shall, notwithstanding anything in the said law, be transferred to and vest in the person to whom the debt is owing.(3)In so far as any contract of insurance made after the commencement of this Act in respect of any liability of the insured to third parties purports, whether directly or indirectly, to avoid the contract or to alter the rights of the parties thereunder upon the happening to the insured of any of the events specified in paragraph (a) or paragraph (b) of subsection (1) or upon the making of any such order as is referred to in subsection (2), in respect of his estate, the contract shall be of no effect.(4)Upon a transfer under subsection (1) or subsection (2), the insurer shall be under the same liability to the third party as he would have been under to the insured, but—
(a)if the liability of the insurer to the insured exceeds the liability of the insured to the third party, nothing in this section shall affect the rights of the insured against the insurer in respect of the excess; and(b)if the liability of the insurer to the insured is less than the liability of the insured to the third party, nothing in this section shall affect the rights of the third party against the insured in respect of the balance.(5)For the purposes of this section, the expression "liabilities to third parties", in relation to a person insured under any contract of insurance, shall not include any liability of that person in the capacity of insurer under some other contract of insurance.(6)This section shall not apply where a company is wound up voluntarily merely for the purposes of reconstruction or of amalgamation with another company.
16. Avoidance of restrictions of scope of politics covering third party risks
Where a certificate of insurance has been issued under section 7 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 of the following matters, namely—
(a)the age or physical or mental condition of persons driving the vehicle,(b)the condition of the vehicle,(c)the number of persons that the vehicle carries,(d)the weight or physical characteristics of the goods that the vehicle carries,(e)the times at which or the areas within which the vehicles is used,(f)the horse‑power or value of the vehicle,(g)the carrying on the vehicle of any particular apparatus, or(h)the carrying on the vehicle of any particular means of identification other than any means of identification required to be carried by or under the Road Act, shall, as respects such liabilities as are required to be covered by a policy under paragraph (b) of section 5, be of no effect:
Provided that nothing in this section shall require an insurer to pay any sum in respect of the liability of any person otherwise than in or towards the discharge of that liability, and any sum paid by an insurer in or towards the discharge of any liability of any person which is covered by the policy by virtue only of this section shall be recoverable by the insurer from that person.
17. Provision with regard to visitors
Where in respect of a motor vehicle there is in existence a valid and subsisting International Certificate issued in pursuance of the International Convention Relative to Motor Traffic, 1926, no person driving such motor vehicle shall be required to produce a certificate of insurance, but it shall be the duty of such person to give such information as he may be required by or on behalf of the Commissioner of Police to give for the purpose of determining whether the vehicle was or was not being driven in contravention of section 4 of this Act.
18. Power to make regulations
The Minister may make regulations prescribing anything required by this Act to be prescribed, and generally for the better carrying out of the provisions of this Act.
19. Penalty for offences
(1)Any person who is guilty of an offence against this Act or any regulation made thereunder, for which no other penalty is specifically provided, shall be liable to a fine not exceeding one thousand rupees or to imprisonment for a term not exceeding three months, or to both such fine and imprisonment, in the case of an offence against this Act and to a fine not exceeding five hundred rupees or to imprisonment for a term not exceeding one month, or to both such fine and imprisonment, in the case of an offence against any regulation made under this Act.(2)Any person making a statutory declaration which is wilfully false in any material particular shall be deemed guilty of perjury.