If you are stuck in such a situation, here is what to do.

Mr. Verma purchased a Rhino SUV in 2017, which was covered by a one-year insurance policy from Apex General Insurance. About six months into the policy, the vehicle, driven by a hired driver, Mr. Singh, was involved in a tragic accident that resulted in a fatality. Following a police complaint and proceedings at the Motor Accident Claims Tribunal (MACT), the court ordered Apex General Insurance to pay compensation to the family of the deceased, which the company duly paid. The Verma family believed the matter was concluded. The following year, the SUV was sold to a new owner.

Years passed. Mr. Verma passed away in 2022, and the driver, Mr. Singh, also died last year. Recently, Mr. Verma’s family received a startling court notice. Apex General Insurance had filed a recovery case against the late Mr. Verma, claiming he owed them 18 lakh rupees—the amount they had paid as compensation. The notice indicated their intent to recover this amount by attaching property from his estate. The family informed the court official about Mr. Verma’s passing and provided his death certificate, but they are now in a state of confusion and distress, uncertain about their legal obligations and financial liability.

Advice in such cases

• Do not ignore the court notice. Failing to respond can lead to an ex-parte order against you, meaning the court could rule in the insurance company’s favour without hearing your side.
• Gather all documents related to the vehicle, the insurance policy, the accident, and any previous court proceedings. This includes the FIR, the MACT award, and the vehicle’s sale papers.
• Preserve the death certificate of the deceased owner, as it is crucial evidence.
• Understand that the liability of legal heirs is typically limited to the value of the estate they have inherited from the deceased. You are not personally liable to pay from your own pocket if you did not inherit any assets.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

Applicable Sections of Law

This situation is primarily governed by the Motor Vehicles Act, 1988, and the principles of contract law.

• Motor Vehicles Act, 1988: The Act mandates compulsory third-party insurance to protect accident victims. Tribunals often direct the insurance company to “pay and recover.” This means the insurer must first compensate the third-party victim to ensure they receive timely relief. Subsequently, the insurer is granted the right to recover this amount from the insured vehicle owner if there was a fundamental breach of the insurance policy terms (e.g., the driver did not have a valid license, the vehicle was used for commercial purposes when insured for private use, etc.).
• Indian Contract Act, 1872: The insurance policy is a contract between the insurer and the insured. The right to recover stems from a breach of this contract.
• Code of Civil Procedure, 1908: This code governs the procedure for civil litigation, including how recovery suits are filed and executed. It also contains provisions regarding suits by or against legal representatives, limiting their liability to the extent of the deceased’s estate in their hands.
• The Limitation Act, 1963: This act prescribes the time limit within which a lawsuit must be filed. Your lawyer will examine whether the insurance company filed the recovery suit within the legally permitted timeframe.

If you are the complainant

In this scenario, the insurance company is the complainant (plaintiff) seeking to recover its money.

• The company must file a civil suit or an execution petition for recovery before the appropriate court or tribunal.
• It must provide clear evidence of the policy breach by the insured (e.g., proof that the driver’s license was fake or invalid at the time of the accident).
• It must prove that it paid the compensation to the third party as per the court’s order.
• If the insured is deceased, the suit must be correctly filed against the legal heirs.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

If you are the victim

In this case, the family of the deceased owner is the victim of the recovery suit (the defendant).

• Immediately engage a lawyer to represent you in court and file a reply (written statement) to the notice.
• Your lawyer will examine the grounds on which the insurance company is claiming a breach of policy. You have the right to challenge their claim.
• The primary defence is to argue that there was no breach of the policy. For example, you can argue that the driver had a valid license and all policy conditions were met.
• Another defence could be based on the statute of limitations, arguing that the company filed the suit after the legally permissible period had expired.
• Crucially, assert that as legal heirs, your liability is limited only to the value of the assets you inherited from the deceased owner. If no assets were inherited, you have no liability.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

How the police behave in such cases

The role of the police in this matter is largely concluded. Their involvement was primarily during the initial accident investigation, which included filing the First Information Report (FIR) and the chargesheet. This recovery proceeding is a civil matter between the insurance company and the estate of the vehicle owner. The police will not be involved unless specifically directed by the court to enforce an order, such as executing a warrant for the attachment of property. They are not a party to this civil dispute.

FAQs people normally have

• Can the insurance company file a case against the family of the deceased owner?
  Yes, they can file a case against the “legal heirs” or “legal representatives” of the deceased. However, the liability of the heirs is limited to the value of the property or estate they inherited from the deceased.
• What is the “Pay and Recover” principle?
  It is a direction from the Motor Accident Claims Tribunal (MACT) that orders the insurance company to first pay the full compensation to the accident victim (the third party) and later recover that amount from the vehicle owner if the owner violated the insurance policy terms.
• What if we did not inherit any property from the deceased?
  If you can prove to the court that you did not inherit any assets from the deceased, you cannot be held liable for the debt. The insurance company can only recover from the estate of the deceased, not from the personal assets of the legal heirs.
• Is there a time limit for the insurance company to file for recovery?
  Yes, the Limitation Act, 1963, specifies time limits for filing different types of suits. Your lawyer will determine the applicable limitation period and whether the insurance company has filed the case within that time.

What evidence is required?

As the defendant (the family), you should gather the following evidence:

• The court notice you received.
• The death certificate of the deceased vehicle owner (Mr. Verma).
• Documents proving your status as legal heirs.
• A list or affidavit detailing the assets (if any) inherited from the deceased. If no assets were inherited, an affidavit to that effect is crucial.
• All papers related to the original accident case, especially the MACT award.
• The insurance policy document.
• Documents related to the sale of the vehicle.

How long will the investigation take?

This is not a police investigation but a civil court proceeding. The duration of a civil recovery suit can vary significantly. It is not a quick process. It can take anywhere from a few years to several years to reach a final decision, depending on the court’s case backlog, the complexity of the arguments, and the number of adjournments sought by the parties. Your lawyer’s active participation is key to ensuring the case proceeds without unnecessary delays from your side.

Advocate Sudhir Rao, Supreme Court of India