Read Order: National India Insurance Co. Ltd. v. Smt. Fajari & Others

Monika Rahar

Chandigarh, April 9, 2022: While holding that the Motor Accident Claims Tribunal, Gurgaon (‘Tribunal’), in violation of the law laid down by the Supreme Court, failed to award any amount towards future prospects and spousal and parental consortium in its award of compensation given against the accused in a motor accident case, the Punjab and Haryana High Court has reworked the compensation award.

The Bench of Justice Alka Sarin opined, “The deceased in the present case was aged 37 years and is survived by his wife, three minor children and one major child. The minor children have their entire life ahead of them. Their education has to be taken care of as well as the living expenses of all the claimants. A perusal of the award further reveals that no amount has been granted towards the future prospects and the amount awarded under the conventional heads is also not in consonance as per the law laid down by the Supreme Court… The multiplier applied is also incorrect.”

The present appeal was filed by an insurance company challenging the award of the Tribunal on the ground that recovery rights were not given to it. The claimant-respondents (first to fifth) filed cross-objections seeking further enhancement of the amount of compensation awarded. The sixth respondent was the driver of the offending vehicle, the seventh respondent took the offending vehicle on superdari and the eighth respondent was the owner of the offending vehicle. 

In 1993, the deceased Jalaluddin was going on a motorcycle with his brother. He was hit by a car that was being broken in a rash and negligent manner. The wife of the deceased filed a claim petition. The Tribunal held that the claimants were entitled to claim compensation from the driver, owner and the insurance company. The Tribunal awarded compensation of Rs.1,54,000/- to the claimants against the driver, owner and the insurance company, who were held to be liable jointly and severally, along with interest @ 12% from the date of the petition till the date of realization. 

The Counsel for the appellant-Insurance Company contended that the Tribunal while awarding the compensation did not give recovery rights to the appellant-insurance company. According to the counsel, the driver of the offending vehicle did not hold a valid driving licence and therefore the appellant-insurance company ought to have been given recovery rights. He placed reliance upon the decision by the Supreme Court in Skandia Insurance Co. Ltd. vs. Kokilaben Chandravadan & Ors. and Pappu & Ors. vs. Vinod Kumar Lamba & Anr

The driver and owner of the offending vehicle did not contest this appeal while the claimants filed cross-objections seeking further enhancement of the amount of compensation awarded. According to their counsel, the Tribunal did not award future prospects and also did not award amounts under the conventional heads as per the law laid down by the Supreme Court in Smt. Sarla Verma & Ors. Vs. Delhi Transport Corporation & Anr.; National Insurance Co. Ltd. Vs. Pranay Sethi & Ors and Magma General Insurance Co. Ltd Vs. Nanu Ram alias Chuhru Ram & Ors.

In National Insurance Company Ltd. vs. Swaran Singh & Ors., it was held by the Supreme Court that the breach of policy condition e.g. disqualification of the driver or invalid driving licence of the driver has to be proved to have been committed by the insured (owner) for avoiding liability by the insurer. It was further held that mere absence, fake or invalid driving licence or disqualification of the driver for driving at the relevant time, are not in themselves defences available to the insurer against either the insured or the third parties.

The Top Court had also added that to avoid its liability toward the insured, the insurer has to prove that the insured was guilty of negligence and failed to exercise reasonable care in the matter of fulfilling the condition of the policy regarding the use of vehicles by a duly licensed driver or one who was not disqualified to drive at the relevant time. 

In view of the above, the Court observed (considering the factual position in this case) that the appellant-insurance company was unable to prove that the owner of the offending vehicle was aware of the fact that the licence of the driver was fake and despite that, it permitted him to drive. The owner of the vehicle stepped into the witness box and was cross-examined by the counsel for the insurance company, no suggestion was put to the owner that he was aware that the licence was fake and he was aware of the same. 

Thus, from the above-stated position, the Court concluded that the appellant-insurance company failed to prove that the insured (owner) was guilty of negligence and failed to exercise reasonable care in the matter of fulfilling the condition of the policy regarding the use of vehicles by a duly licensed driver or one who was not disqualified to drive at the relevant time. 

In this scenario, the Court found no merit in the submissions made by counsel for the appellant-insurance company, and it held that the appellant-insurance company cannot absolve itself from its liability of paying the compensation. 

Next, the Court examined the aspect of the cross-objections filed by the claimant-respondents on the quantum of compensation. The Court observed that the Tribunal did not award any compensation towards future prospects. The Counsel for the claimant argued that no amount was awarded towards future prospects and further no spousal and parental consortium was awarded. The Counsel, while replying upon Jayasree & Ors. vs. Cholamandalam MS General Insurance Company Ltd., argued that the claimant-respondents would be entitled to a 10% increase on the amounts under the conventional heads. 

Addressing this submission, the Court added that the deceased in the present case was aged 37 years and was survived by his wife, three minor children and one major child. The Court was concerned about the fact that the minor children had their entire life ahead of them; their education was to be taken care of along with the living expenses of all the claimants. After perusing the award, the Court noted that no amount was granted towards the future prospects and the amount awarded under the conventional heads was also not in consonance with the law laid down by the Supreme Court in the case Pranay Sethi (Supra). 

Thus, the Court reworked the compensation to be paid to Rs.5,55,400/- from the original compensation to the tune of Rs. 1,54,000/-. 

Thus, the appeal by the insurance company was dismissed, the cross-objections filed by the claimant-respondents were allowed and the award passed by the Tribunal was accordingly modified. The Court held that the enhanced amount of compensation shall attract interest @ 9% per annum from the date of the claim petition till the date of payment. Since all the claimant-respondents became major now, the Court directed that they would all be entitled to equal shares in the enhanced amount of compensation without it being kept in an FDR

0 CommentsClose Comments

Leave a comment