Motor Vehicles Act Section 153 — Settlement between insurers and insured persons
CHAPTER IX MOTOR VEHICLES TEMPORARILY LEAVING OR VISITING INDIA
Civil
Summary
Sub-section (1) states that if an insurer settles a claim that a third party could make against the insured person for the type of liability covered under clause (b) of sub-section (1) of section 147, that settlement is not valid unless the third party is also a party to the settlement. In other words, the insurer and the insured person cannot privately settle a claim in a way that cuts out the third party who is entitled to make the claim.
Sub-section (2) requires the Claims Tribunal to verify that any such settlement is made in good faith, is not the result of undue influence, and that the compensation paid matches the payment schedule referred to in sub-section (1) of section 164. The Tribunal acts as a check to ensure the settlement is fair and follows the prescribed payment structure.
Sub-section (3) deals with situations where the insured person becomes insolvent, or if the insured person is a company, where a winding-up order is made or a resolution for voluntary winding-up is passed. In such cases, any agreement made between the insurer and the insured person after the liability to a third party has arisen and after the start of the insolvency or winding-up, as well as any waiver, assignment, or other transfer made by, or payment made to, the insured person after that start, cannot be used to defeat the rights that have been transferred to the third party under this Chapter. The third party's rights remain the same as if no such agreement, waiver, assignment, or payment had ever been made.
Official Text
(1) No settlement made by an insurer in respect of any claim which might be made by a third party in respect of any liability of the nature referred to in clause (b) of sub-section (1) of section 147 shall be valid unless such third party is a party to the settlement.
(2) The Claims Tribunal shall ensure that the settlement is bona fide and was not made under undue influence and the compensation is made in accordance with the payment schedule referred to in sub-section (1) of section 164.
(3) Where a person who is insured under a policy issued for the purpose of this Chapter has become insolvent, or where, if such insured person is a company, a winding-up order has been made or a resolution for a voluntary winding-up has been passed with respect to the company, no agreement made between the insurer and the insured person after the liability has been incurred to a third party and after the commencement of the insolvency or winding-up, as the case may be, nor any waiver, assignment or other disposition made by or payment made to the insured person after the commencement aforesaid, shall be effective to defeat the rights transferred to the third party under this Chapter but those rights shall be the same as if no such agreement, waiver, assignment or disposition or payment has been made.