Page 141 - The Motor Vehicles Act, 1988

SECTION 150 THE MOTOR VEHICLES ACT, 1988 127

entitled to the benefit of the decree in the manner and to the extent specified in sub-section (1), as
if the judgment were given by a court in India:
PROVIDED that no sum shall be payable by the insurer in respect of any such judgment
unless, before the commencement of the proceedings in which the judgment 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 conditions other than those in
clause (b) of 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:
PROVIDED that any sum paid by the insurer in or towards the discharge of any liability
of any person which is covered by the policy by virtue only of this sub-section shall be recoverable
by the insurer from that person.
(5) If the amount which an insurer becomes liable under this section to pay in respect of a
liability incurred by a person insured by a policy exceeds the amount for which the insurer
would apart from the provisions of this section be liable under the policy in respect of that
liability, the insurer shall be entitled to recover the excess from that person.
(6) In this section the expressions “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 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 could be so covered but for the fact that the insurer is
entitled to avoid or cancel or has avoided or cancelled the policy.
(7) 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.
Explanation : For the purposes of this section “Claims Tribunal” means a Claims Tribunal
constituted under section 165 and “award” means an award made by that Tribunal under section
168.
150. Rights of third parties against insurers on insolvency of the insured
(1) Where under any contract of insurance effected in accordance with the provisions of
this Chapter, a person is insured against liabilities which he may incur to third parties, then—
(a) in the event of the person becoming insolvent or making a composition or
arrangement with his creditors, or
(b) where the insured person is 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 a 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,