Page 126 - The Motor Vehicles Act, 1988

112 THE MOTOR VEHICLES ACT, 1988 SECTION 150

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 non-disclosure
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).