Madhya Pradesh High Court
The New India Assurance Company Ltd. vs Kamlabai on 7 November, 2025
Author: Hirdesh
Bench: Hirdesh
NEUTRAL CITATION NO. 2025:MPHC-GWL:28324
1 MA-510-2008
IN THE HIGH COURT OF MADHYA PRADESH
AT GWALIOR
BEFORE
HON'BLE SHRI JUSTICE HIRDESH
ON THE 7 th OF NOVEMBER, 2025
MISC. APPEAL No. 510 of 2008
THE NEW INDIA ASSURANCE COMPANY LTD.
Versus
KAMLABAI AND OTHERS
Appearance:
Shri Bal Krishna Agrawal - Advocate for the appellant/Insurance
Company.
Shri Arun Sharma - Advocate for respondent Nos. 1 to 5/claimants.
ORDER
This Miscellaneous Appeal under Section 173(1) of the Motor
Vehicles Act has been filed at the instance of the Insurance Company
challenging the impugned award dated 22/02/2008 passed by the Third
Motor Accident Claims Tribunal (Fast Track), District Dabra District
Gwalior (M.P.) in Claim Case No.15/2007, whereby the Claims Tribunal
awarded compensation of Rs.1,69,500/- in favour of the claimants and
directed the Insurance Company to pay the compensation to the claimants
and thereafter recover the same from the owner and driver of the offending
vehicle.
2 . Brief facts of the case is that respondent No.1 to 5 filed claim
petition under Section 166 of the Motor Vehicle Act before the Tribunal
seeking compensation to the tune of Rs. 52,50,000/- for death of Ramesh,
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husband of respondent No.1 and father of respondent No. 2 to 5, said to have
been caused due to alleged accident occurred on 08/02/2007 while he was
travelling on tractor bearing registration No. MP07-H-8901 alongwith
claimants and other relatives which was hired for Rs. 400/- per day and
tractor trolley turned turtle due to rash and negligent driving of respondent
No.6, as a result of which Ramesh and Pushpa died and other occupants
were injured. The aforesaid tractor was said to be owned by respondent No.7
and insured with appellant. Respondent Nos. 6 and 7 and appellant filed
their written statement denying all the allegations. Appellant/Insurance
Company contended that tractor was insured for agricultural purposes and at
the time of accident, it was used for carrying passenger. Therefore, it
breached terms and conditions of insurance policy. Hence, Insurance
Company is not liable to pay compensation to the claimants.
3. Tribunal framed the issues and after taking evidence of both the
parties, awarded compensation in favour of claimants/ respondent Nos. 1 to 5
with interest of filing of claim petition till its realization.
4. Appellant/Insurance Company filed this appeal on the ground
that offending vehicle was insured for agricultural purposes and at the time
of accident, it was used for carrying passengers alongwith deceased.
Therefore, it is violation of terms and conditions of insurance policy and in
passing impugned Award, Claims Tribunal also found that Tractor was used
for commercial purpose for carrying passenger on rent. It is submitted that
Insurance Company did not receive any premium for passengers who were
travelling in tractor. So, it is totally breach of terms and conditions of
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insurance policy and Insurance Company is not liable to pay compensation
to the claimants. It is further submitted that deceased was not third party,
therefore, findings of the Tribunal that Insurance Company shall pay
compensation to the claimants with liberty to recover from owner and driver
is erroneous and accordingly, it is prayed that the Insurance Company be
exonerated from the liability to pay compensation to the claimants.
5. On the other hand, learned counsel for the respondents/claimants
supported the impugned award and prayed for dismissal of the appeal.
6. No one appeared on behalf of respondent Nos.6 and 7 (owner and
driver of the offending vehicle) despite service of notice.
7. Heard learned counsel for the parties and perused the entire record.
8 In para 14 of the impugned Award, Tribunal hold that deceased was
sitting on the tractor and tractor was insured for agricultural purposes but at
the time of accident, tractor was being used for carrying passengers not for
agricultural purposes. Therefore, it is breach of terms and conditions of
insurance policy and no objection was filed by owner and driver of the
offending vehicle against this finding. The findings of the Tribunal in this
regard is intact, as it was not challenged by owner and driver of the offending
vehicle. Therefore, the findings of the Tribunal that owner and driver
breached terms and conditions of insurance policy is correct in the eye of
law, and is hereby affirmed.
9. Now the only issue is as to whether, the insurance company should
be directed to pay the amounts and then recover it from the owner, which measure
this Court adopted in various cases to avoid hardship to the claimants.
10. A reading of Manager, National Insurance Company Ltd. Vs. Saju P.
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Paul and anr (2013) 2 SCC 41 wherein the Apex Court held that it would indicate
that therein the injured/claimant was travelling in a vehicle as a spare driver, as
contended by the claimant himself. The claimant was stated to be the driver of
another vehicle of the owner, and a spare driver was not covered under a third-
party insurance policy which along with the third-party coverage included only
the driver and cleaner of the vehicle.
11. In considering the measure of pay and recover, in Saju P. Paul
(supra), the Apex Court held that noticed a number of decisions where such
measure was employed. National Insurance Co. Ltd. v. Baljit Kaur, (2004) 2
SCC 1 , wherein the Apex Court held that it was a case in which the Tribunal and
the this Court proceeded in terms of the decisions of the Apex Court in New India
Assurance Company v. Satpal Singh (2000) 1 SCC 237 , wherein the Apex Court
held that it was overruled in New India Asurance Co. Ltd. Vs. Asha Rani, (2003)
2 SCC 223. Since the Tribunal and the High Court had allowed the compensation
based on Satpal Singh (supra) , the measure of pay and recover was adopted in the
said case. National Insurance Co. Ltd. v. Challa Bharathamma (2004) 8 SCC
517 wherein the Apex Court held that it is yet another case in which 'pay and
recover' was ordered. Therein the breach of condition of policy was projected
insofar as the vehicle having not been covered by a permit to ply for hire or
reward. The finding of the High Court as to the absence of permit not leading to
violation of policy condition, was reversed by this Court. Therein also the
measure of pay and recover was adopted.
12. National Insurance Company Limited v. Kaushalaya Devi , (2008) 8
SCC 246 wherein the Apex Court held that it was a case in which an identical
condition of gratuitous passenger being carried in a good carriage vehicle had
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resulted in the liability being mulcted on the owner and the insurer absolved of its
liability to indemnify. Therein it was directed that the amount deposited by the
insurer if withdrawn, it would be recovered from the owner and if not returned, it
would be refunded to the insurance company, and the claimants would be entitled
to proceed against the owner for recovery of the award amounts.
13. This is a case in which there was a fundamental breach noticed and the
deceased claimant, being a person who travelled in the goods carriage after
paying fare, the damages for his death was not entitled to be indemnified by the
insurer. There was no amount deposited or paid by the insurance company. In the
above circumstances, we find absolutely no reason to interfere with the order of
the High Court
14. In the present case, according to pleading deceased was travelling
on the tractor as a passenger and tractor was used for carrying passengers,
not for agricultural purposes and Insurance Company has not taken any
premium for passengers. Therefore, Insurance Company is not liable to pay
compensation. The finding of the Tribunal that Insurance Company is not
liable to pay compensation to the claimant with liberty to recover from
owner and driver is not correct in the eye of law.
15. Accordingly, the findings of the Claims Tribunal on this issue are
modified. The Insurance Company is hereby totally exonerated from
liability to pay compensation to the claimants. The claimants are entitled to
recover the awarded compensation amount from the owner and driver of the
offending vehicle jointly and severally.
1 6 . In view of the above, miscellaneous appeal filed by the
appellants/ Insurance Company stands disposed of.
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17. Claimants filed cross appeal under Order 41 Rule 27 of the CPC
for enhancement of compensation and submits that Claims Tribunal awarded
compensation in lower side. It is further submitted that Claims Tribunal
wrongly assessed income of deceased i.e. Rs. 15,000/- per annum. It is
further submitted that there is no documentary proof of deceased then Claims
Tribunal should have assessed income of deceased under the Minimum
Wages Act, as accident occurred on 08/02/2007, therefore, according to
Minimum Wages Act, an unskilled person income should be assessed as Rs.
2476/- per month. Hence. it is payed that compensation amount be
enhanced.
18. Per contra, learned counsel for the Insurance Company opposed
the cross-objections and submitted that the compensation awarded by the
learned Tribunal is just and proper, requiring no interference.
19. No one appeared on behalf of owner and driver even after service
of notice.
20. Heard counsel for claimants and perused the entire record of the
Tribunal
21. This Court is of the considered view that due to lack of evidence,
income of deceased must be assessed on the basis of Minimum Wages Act
as an unskilled labour i.e.2476/- per month instead of Rs. 15,000/- per
annum.
22. As regards loss of income including future prospects, in the light of
judgment of National Insurance Co. Ltd. Vs. Pranay Sethi , 2017 ACJ 2700 ,
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the claimants are entitled for loss of income including future prospects of
40% and as per the judgment of the Apex Court in the case of Sarla Verma
and ors. Vs Delhi Transport Corporation and Anr. reported in (2009) 6 SCC
121, even if age of the deceased is to be taken into account, multiplier of 15
should be applied, personal expenses of deceased should be assessed as 1/4
and claimants are entitled for consortium.
23. Accordingly, appellants- claimants are entitled to get compensation
under the following heads:-
HEAD AMOUNT
Income Rs.2,476X 12=29,712/- pa
Future Prospects@40% Rs. 11,885
Total Income Rs. 41,597/-
personal expense 1/4 Rs.10,400/-
Loss of Income Rs.31,197X15= 4,67,955
Other Heads:-
Loss of Estate and funeral expenses Rs.30,000/-
Consortium 40,000/- X 5 2,00,000/-
Total Compensation = Rs.6,97,955/-
24. Thus, the just and proper amount of compensation in the instant
case is Rs.6,97,955/- as against the Award of the Claims Tribunal of
Rs.1,69,000/-. Accordingly, the appellants/claimants are entitled to an
additional sum of Rs. 5,28,955/- over and above the amount, which has been
awarded by the Claims Tribunal.
25. In the result, this miscellaneous appeal is partly allowed, by
enhancing the compensation amount by a sum of Rs.5,28,955/-. The
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enhanced amount shall carry interest as fixed by the learned Claims Tribunal
from the date of filing of claim petition till its realization. The said amount
be paid by owner and driver within a period of three months from the date of
receipt of certified copy of this order. Rest of conditions as imposed by
learned Claims Tribunal shall remain intact.
26. If the enhanced amount of compensation is in excess to the
valuation of appeal, the difference of the Court fee (if not already paid) shall
be deposited by the appellants- claimants within a period of one month and
proof thereof, shall be submitted before the Registry. Thereafter, the Registry
shall issue the certified copy of the order passed today.
27. In view of the above, cross appeal filed by the claimants
stands disposed of.
(HIRDESH)
JUDGE
Prachi
