Sikkim High Court
The Branch Manager, National Insurance ... vs Ms. Avipsa Pathak And Others on 26 March, 2024
Author: Meenakshi Madan Rai
Bench: Meenakshi Madan Rai
THE HIGH COURT OF SIKKIM : GANGTOK
(Civil Appellate Jurisdiction)
DATED : 26th MARCH, 2024
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SINGLE BENCH : THE HON‟BLE MRS. JUSTICE MEENAKSHI MADAN RAI, JUDGE
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MAC App. No.03 of 2023
0
Appellant : The Branch Manager,
National Insurance Company Limited
versus
Respondents : Ms. Avipsa Pathak and Others
Appeal under Section 173 of the Motor Vehicles Act, 1988
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Appearance
Mr. Thupden G. Bhutia, Advocate for the Appellant.
Mr. Sishir Mothay, Advocate for the Respondents No.1 to 3.
Mr. Sushant Subba, Advocate for the Respondent No.4.
Mr. Romit Gurung, Advocate for the Respondent No.5.
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with
CO No.01 of 2023 in MAC App. No.03 of 2023
Cross Objector : Uday Kumar Pradhan
versus
Respondents : Ms. Avipsa Pathak and Others
Cross Objection under Order XLI Rule 22(1) and (2) read
with Section 151 of the Code of Civil Procedure, 1908
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Appearance
Mr. Sushant Subba, Advocate for the Cross Objector.
Mr. Sishir Mothay, Advocate for the Respondents No.1 to 3.
Mr. Romit Gurung, Advocate for the Respondent No.4.
Mr. Thupden G. Bhutia, Advocate for the Respondent No.5.
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JUDGMENT
Meenakshi Madan Rai, J.
1. MAC App. No.03 of 2023 and CO No.01 of 2023 are
being taken up together and disposed of by this common Judgment
MAC App. No.03 of 2023 : The Branch Manager, National Insurance Company Limited vs. Ms. Avipsa Pathak and Others
CO No.01 of 2023 : Uday Kumar Pradhan vs. Ms. Avipsa Pathak and Others
as both variously assail the findings of the Learned Motor Accidents
Claims Tribunal, District - Gyalshing (for short, "Learned Claims
Tribunal"), in the impugned Judgment and Award dated 16-11-
2022, in MACT Case No.03 of 2020 (Ms. Avipsa Pathak and Others
vs. The Branch Manager, National Insurance Company Limited and
Others).
2. The Respondents No.1, 2 and 3 herein were the
Claimants before the Learned Claims Tribunal and were granted
compensation amounting to ₹ 1,53,66,600/- (Rupees one crore,
fifty three lakhs, sixty six thousand and six hundred) only, along
with interest @ 10% per annum on the said sum, from the date of
filing of the Claim Petition, i.e., 13-10-2020, till full and final
payment. It was further ordered that as there was violation of a
condition of the Insurance Policy by the owner of the vehicle,
Respondent No.4 herein (Opposite Party No.2 before the Learned
Claims Tribunal), on account of lack of "route permit", despite the
vehicle in question being insured with the Appellant herein,
(Opposite Party No.1), the Claimants were entitled to receive the
amount from the Appellant, who was at liberty to recover the same
from the Respondent No.4, after satisfying the claim put forth.
3. Hereinafter the parties shall be referred to in their
order of appearance before this Court.
4. Although the Appellant Company assailed the
impugned Judgment and Award stating that the Learned Claims
Tribunal was not justified in granting the relief of "pay and
recovery" when it was proved that there was a breach of a policy
condition and therefore, ought to have exonerated the Appellant
MAC App. No.03 of 2023 : The Branch Manager, National Insurance Company Limited vs. Ms. Avipsa Pathak and Others
CO No.01 of 2023 : Uday Kumar Pradhan vs. Ms. Avipsa Pathak and Others
Company from satisfying the claim of the Respondents No.1, 2 and
3 at all, however, during his verbal submissions before this Court,
Learned Counsel conceded that in view of the pronouncement of
this Court in Suresh Khati vs. Santosh Chetry @ Santosh Chettri and
Others which has discussed at length the issue pertaining to "pay
and recovery" and the circumstances when the principle would be
applicable, with due reference to Supreme Court Judgments, he
does not press this point. That, the multiplier of „15‟ adopted by
the Learned Claims Tribunal while computing the compensation
was assailed on the ground that it ought to have been „14‟ in terms
of the Judgment Sarla Verma (Smt) and Others vs. Delhi Transport
Corporation and Another . The third ground urged by Learned
Counsel was that the Learned Claims Tribunal erred in granting an
exorbitant amount of ₹ 4,25,000/- (Rupees four lakhs and twenty
five thousand) only, under conventional heads, overlooking the
Judgment of the Hon‟ble Supreme Court in National Insurance
Company Limited vs. Pranay Sethi and Others . The rate of interest
@ 10% was also assailed on grounds that it was against the ratio
laid down by the Hon‟ble Supreme Court in Benson George vs.
Reliance General Insurance Company Limited and Another wherein
the interest granted was 6%. Hence, besides the quantum of
compensation granted by the Learned Claims Tribunal being
excessive and exorbitant, in view of the grounds urged, the
impugned Judgment deserves to be set aside.
MAC App. No.06 of 2021 decided on 12-06-2023 : 2023 SCC OnLine Sikk 58
(2009) 6 SCC 121
(2017) 16 SCC 680
(2022) 13 SCC 142
MAC App. No.03 of 2023 : The Branch Manager, National Insurance Company Limited vs. Ms. Avipsa Pathak and Others
CO No.01 of 2023 : Uday Kumar Pradhan vs. Ms. Avipsa Pathak and Others
5. A Cross Objection being CO No.01 of 2023 was filed by
Respondent No.4 herein, the owner of the vehicle, Mahindra Xylo
bearing registration No.SK/1/TR/2018/3223, which had travelled
from Namchi District to Kaluk, Gyalshing District and had met with
the fateful accident at Tinzerbong near Reshi, Gyalshing District, on
22-10-2018 around 1930 hours, under the jurisdiction of the
Nayabazar Police Station, Gyalshing District, resulting in the death
of the father of Respondents No.1 and 2, and the husband of
Respondent No.3.
6. The Cross Objector while assailing the Judgment dated
16-11-2022 passed by the Learned Claims Tribunal in MACT Case
No.03 of 2020 (Ms. Avipsa Pathak and Others vs. The Branch
Manager, National Insurance Company Limited and Others)
contended that all documents of the vehicle in accident including
the Insurance Policy were valid and up-to-date at the time of the
accident, consequently there was no violation of any of the terms
and conditions of the Insurance Policy. That, the Learned Claims
Tribunal while ordering recovery of the award/compensation paid
to the Claimants by the Appellant Company from the Respondent
No.4, after satisfying the claims of the Claimants, failed to
appreciate that the Respondent No.4 had applied for the "route
permit" of the vehicle in accident from the Motor Vehicles Division,
Transport Department, Government of Sikkim, on 08-10-2018, well
before the accident but it was issued by the Department belatedly
on 26-10-2018, i.e., after the accident occurred on 22-10-2018.
The Respondent No.4 was not at fault on this aspect and there was
no violation of the terms of the Insurance Policy from his end.
MAC App. No.03 of 2023 : The Branch Manager, National Insurance Company Limited vs. Ms. Avipsa Pathak and Others
CO No.01 of 2023 : Uday Kumar Pradhan vs. Ms. Avipsa Pathak and Others
Therefore, the Judgment to that extent which ordered recovery of
compensation amount from the Respondent No.4 be set aside.
7. Learned Counsel for Respondents No.1 to 3 and 5 had
no specific submissions to put forth.
8. The rival contentions advanced by Learned Counsel for
the parties were heard at length. All documents on record
including the evidence and the impugned Judgment have been duly
perused.
9. The question for consideration is "Whether the
compensation of computation arrived at by the Learned Claims
Tribunal was correct"?
10. While first considering the question of "pay and
recovery" as ordered by the Learned Claims Tribunal, this Court in
Suresh Khati (supra) had in Paragraphs 11 and 12 of the Judgment
discussed the provisions of Sections 147 and 149 of the Motor
Vehicles Act, 1988 and the law as settled by a plethora of
Judgments of the Hon‟ble Supreme Court. The discussions ensued
as follows;
"11. Section 147 of the Motor Vehicles Act,
1988 (hereinafter, the "MV" Act) lays down the
requirements of Policies and limits of liability. In
order to comply with the requirements of Chapter XI
of the MV Act, a policy of insurance must be a policy
which is issued by a person, who is an authorized
insurer and insures the person or classes of persons
specified in the policy, to the extent mentioned in
Sub-section 2 of Section 147 of the MV Act. The
object of obtaining an insurance policy is to ensure
that it covers the liability incurred by the insured, in
respect of death or bodily injury to any person,
carried in the vehicle of the insured or damage to any
property of a third party, caused by or arising out of
the use of the vehicle. The provision mandates a
compulsory coverage of insurance for passengers
travelling in public transport vehicle, passenger
vehicle, goods vehicle along with goods and the
workmen under the Workmen‟s Compensation Act,
MAC App. No.03 of 2023 : The Branch Manager, National Insurance Company Limited vs. Ms. Avipsa Pathak and Others
CO No.01 of 2023 : Uday Kumar Pradhan vs. Ms. Avipsa Pathak and Others
1923, employed in connection with the motor vehicle,
etc.
(i) Section 149 of the MV Act lays down the
duty of the insurer to satisfy Judgments and Awards
against persons insured, in respect of third party risk.
(ii) It is not in dispute that the vehicle was
duly insured vide Insurance policy, Exhibit B,
Respondent No.2 being the insurer and the Appellant
the owner of the insured vehicle.
(iii) That, the contract of insurance is a
contract of indemnity is no more res integra. The
insurer is an indemnifier, while the insured is an
indemnity holder. Thus, the essence of the contract
of insurance is to indemnify the insured against the
claim of a third party. The expression „third party‟
means a person who is not a party to the contract,
but beneficiary of the contract and has the right to
enforce the terms of contract against the insurer and
the insured.
(iv) In National Insurance Company Limited vs.
Yellamma and Another [(2008) 7 SCC 526], the Supreme
Court, at Paragraph 11, observed as follows;
"11. A contract of insurance like any
other contract, is a contract between the
insured and the insurer. The amount of
premium is required to be paid as a
consideration for arriving at a concluded
contract. .............."
(v) In Sohan Lal Passi vs. P. Sesh Reddy and
Others [(1996) 5 SCC 21], it was observed that when the
insured had taken all precaution by appointing a duly
licensed driver, to drive the vehicle in question and it
was not established that it was the insured who had
allowed the vehicle to be driven by a person not duly
licensed, due to which the accident occurred, then the
Insurance-Company cannot repudiate its statutory
liability, on the grounds of contravention of condition
of policy, including its liability in case of vehicle being
driven by person not duly licensed.
(vi) In New India Assurance Co., Shimla vs.
Kamla and Others [(2001) 4 SCC 342], the Supreme Court,
at Paragraph 25, observed as follows;
"25. The position can be summed up
thus:
The insurer and the insured are bound
by the conditions enumerated in the policy
and the insurer is not liable to the insured if
there is violation of any policy condition. But
the insurer who is made statutorily liable to
pay compensation to third parties on account
of the certificate of insurance issued shall be
entitled to recover from the insured the
amount paid to the third parties, if there was
any breach of policy conditions on account of
the vehicle being driven without a valid
driving licence. ....................... In the present
case, if the Insurance Company succeeds in
MAC App. No.03 of 2023 : The Branch Manager, National Insurance Company Limited vs. Ms. Avipsa Pathak and Others
CO No.01 of 2023 : Uday Kumar Pradhan vs. Ms. Avipsa Pathak and Others
establishing that there was breach of the
policy condition, the Claims Tribunal shall
direct the insured to pay that amount to the
insurer. In default the insurer shall be
allowed to recover that amount (which the
insurer is directed to pay to the claimant
third parties) from the insured person."
(emphasis supplied)
(vii) In National Insurance Co. Ltd. vs. Swaran
Singh and Others [(2004) 3 SCC 297], a three Judge Bench
of the Supreme Court observed inter alia as follows;
"48. Furthermore, the insurance
company with a view to avoid its liabilities is
not only required to show that the conditions
laid down under Section 149(2)(a) or (b) are
satisfied but is further required to establish
that there has been a breach on the part of
the insured. By reason of the provisions
contained in the 1988 Act, a more extensive
remedy has been conferred upon those who
have obtained judgment against the user of
a vehicle and after a certificate of insurance
is delivered in terms of Section 147(3). After
a third party has obtained a judgment
against any person insured by the policy in
respect of a liability required to be covered
by Section 145, the same must be satisfied
by the insurer, notwithstanding that the
insurer may be entitled to avoid or to cancel
the policy or may in fact have done so. The
same obligation applies in respect of a
judgment against a person not insured by
the policy in respect of such a liability, but
who would have been covered if the policy
had covered the liability of all persons,
except that in respect of liability for death or
bodily injury." (emphasis supplied)
(viii) It was also further held that the breach
of policy condition e.g. disqualification of the driver or
invalid driving license of the driver, as contained in
Sub-section (2)(a)(ii) of Section 149 of the MV Act,
has to be proved to have been committed by the
insured, for the insurer to avoid any liability. The
insurer is also 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 use of vehicles by a duly licensed driver, or
one who was not disqualified to drive at the relevant
time. Mere absence of, fake or invalid driving license
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.
(ix) At Paragraph 110 (ix) and (x), of the
citation (ibid), it was observed as follows;
"110. .......................................................
(ix) The Claims Tribunal constituted
under Section 165 read with Section 168 is
empowered to adjudicate all claims in
respect of the accidents involving death or of
MAC App. No.03 of 2023 : The Branch Manager, National Insurance Company Limited vs. Ms. Avipsa Pathak and Others
CO No.01 of 2023 : Uday Kumar Pradhan vs. Ms. Avipsa Pathak and Others
bodily injury or damage to property of third
party arising in use of motor vehicle. The
said power of the Tribunal is not restricted to
decide the claims inter se between claimant
or claimants on one side and insured, insurer
and driver on the other. In the course of
adjudicating the claim for compensation and
to decide the availability of defence or
defences to the insurer, the Tribunal has
necessarily the power and jurisdiction to
decide disputes inter se between the insurer
and the insured. The decision rendered on
the claims and disputes inter se between the
insurer and insured in the course of
adjudication of claim for compensation by
the claimants and the award made thereon is
enforceable and executable in the same
manner as provided in Section 174 of the Act
for enforcement and execution of the award
in favour of the claimants.
(x) Where on adjudication of the
claim under the Act the Tribunal arrives at a
conclusion that the insurer has satisfactorily
proved its defence in accordance with the
provisions of Section 149(2) read with sub-
section (7), as interpreted by this Court
above, the Tribunal can direct that the
insurer is liable to be reimbursed by the
insured for the compensation and other
amounts which it has been compelled to pay
to the third party under the award of the
Tribunal. Such determination of claim by the
Tribunal will be enforceable and the money
found due to the insurer from the insured will
be recoverable on a certificate issued by the
Tribunal to the Collector in the same manner
under Section 174 of the Act as arrears of
land revenue. The certificate will be issued
for the recovery as arrears of land revenue
only if, as required by sub-section (3) of
Section 168 of the Act the insured fails to
deposit the amount awarded in favour of the
insurer within thirty days from the date of
announcement of the award by the Tribunal."
(emphasis supplied)
(x) That, where the Insurance-Company was
able to establish that the owner handed over the
vehicle to an unauthorized person, the Appellant shall
initially satisfy the award and thereafter, if so
advised, recover the same from the insured.
(xi) It is evident from all of the afore
extracted citations that only when the insurer is able
to prove that there has been a breach of condition of
the insurance policy that the Tribunal can conclude
that the insurer is liable to be reimbursed by the
insured, for the compensation and other amounts
which it had paid to the third party under the award
of the Tribunal. In other words „pay and recover‟ can
only be ordered by the Tribunal when a breach of the
policy conditions are established by the insurer.
12. That, having been said while considering
the rival contentions canvassed, it is imperative to
MAC App. No.03 of 2023 : The Branch Manager, National Insurance Company Limited vs. Ms. Avipsa Pathak and Others
CO No.01 of 2023 : Uday Kumar Pradhan vs. Ms. Avipsa Pathak and Others
refer to the Judgment of this Court in Binod Kumar
Agarwal (supra), wherein at Paragraphs 15 to 19, it
was observed as follows;
"15. In Skandia Insurance Company
ltd. [(1987) 2 SCC 654] relied on by the Appellant,
the Supreme Court took up the question as
to whether the insurer is entitled to claim
immunity from a decree obtained by the
dependents of the victim of a fatal accident,
on the ground that the insurance policy
provided "a condition excluding driving by a
named person or persons or by any person
who is not duly licensed or by any person
who has been disqualified for holding or
obtaining a driving license during the period
of disqualification and that such exclusion
was permissible in the context of Section
96(2)(b)(ii)". The facts therein were that a
truck had come from Barejadi and had been
unloaded at Baroda. The driver had gone to
bring snacks from the opposite shop, leaving
the engine running with the key in the
ignition and not in the cabin of the truck as
alleged by him. The driver was grossly
negligent in leaving the truck with its running
engine in the control of the cleaner, which
became the immediate cause of the accident.
The Claims Tribunal found the owner of the
car viz; insured, to be vicariously liable along
with the driver and the cleaner. The High
Court, inter alia, held that the owner never
gave permission to the cleaner to drive and
therefore, the owner even though he had
become liable by reason of his vicarious
liability, could not be held guilty of the
breach of the contractual condition embodied
in the policy of insurance. Thus, the insurer
could not plead any exemption on the ground
that the owner had committed breach of the
specified condition. Before the Supreme
Court, it was contended on behalf of the
Insurance Company that since admittedly
there was an exclusion clause, the insurance
company would not be liable if at the point of
time when the accident occurred, the person
who had been driving the vehicle was not a
person duly licensed to drive the vehicle. It
was immaterial that the insured had engaged
a licensed driver and had entrusted the
vehicle for being driven by him. Once it was
established that the accident occurred when
an unlicensed person was at the wheels, the
Insurance Company would be exonerated
from the liability. The validity of this
argument advanced in order to assail the
view taken by the High Court was to be
tested in the light of the provisions contained
in Sections 96(1) and 96(2)(b)(ii) of the Act
of 1939. The Supreme Court before doing so
discussed several decisions of various High
Courts on the same issue viz; in Sardar Nand
Singh v. Abhyabala Debi [AIR 1955 Ass 157], the
view taken therein was that the master is
undoubtedly liable for the wrongful act,
MAC App. No.03 of 2023 : The Branch Manager, National Insurance Company Limited vs. Ms. Avipsa Pathak and Others
CO No.01 of 2023 : Uday Kumar Pradhan vs. Ms. Avipsa Pathak and Others
conduct or negligence of his servant, where
the act or conduct or negligence occurs in
the course of the masters employment or in
furtherance of his interest, notwithstanding
the fact that the servant may have been
prohibited from doing such an act. However,
the High Court proceeded to absolve the
Insurance Company from the liability in the
light of Section 96(2) of the Act of 1939
without examining or analyzing the
provisions of the said section and had taken
for granted that once it is established that
the vehicle was driven by an unlicensed
person, the Insurance Company stood
exonerated.
16. In Shankar Rao vs. M/s
Babulal Fouzdar and Anr. [AIR 1980 MP 154], the
High Court exonerated the Insurance
Company for the reason that, according to
one of the terms of the policy of insurance,
the insurer‟s liability is subject to the
condition, that, the person driving the vehicle
holds a license to drive a vehicle or has held
and is not disqualified from holding or
obtaining such a license and provided he is in
the employment of the insured and is driving
on his order or with his permission. Unless
the person driving the vehicle falls in that
category, the insurer is not liable under the
policy and is therefore exempted from
indemnifying the insured. In Orissa State
Commercial Transport Corporation, Cuttack
v. Dhumali Bewa [AIR 1982 Ori 70], the High Court
concluded that the Insurer was not liable as
the vehicle was driven by a person who had
no driving license and the accident did not
take place in a public place. The decision in
Dwarka Prasad Jhunjhunwala and Anr. v.
Sushila Devi [AIR 1983 Pat 246], was also taken up
for consideration, where the liability of the
owner was shifted to the Insurer as the
vehicle was insured.
17. After considering the aforesaid
decisions as reflected hereinabove, the
Supreme Court found that the Judgments
were buttressed by „ipse dixit‟ rather than
rationality and, inter alia, observed that the
question therefore deserves to be examined
afresh on its own merits on principle. It
opined that the proposition is incontrovertible
that, so far as the owner of the vehicle is
concerned, his vicarious liability for damages
arising out of the accident cannot be
disputed, having regard to the general
principles of law, as also having regard to the
violation of the obligation imposed by Section
84 of the Act of 1939, which provides that no
person driving or in charge of motor vehicle
shall cause or allow the vehicle to remain
stationary in any public place, unless there is
in the driver‟s seat a person duly licensed to
drive the vehicle or unless the mechanism
has been stopped and a brake or brakes
applied or such other measures taken as to
MAC App. No.03 of 2023 : The Branch Manager, National Insurance Company Limited vs. Ms. Avipsa Pathak and Others
CO No.01 of 2023 : Uday Kumar Pradhan vs. Ms. Avipsa Pathak and Others
ensure that the vehicle cannot accidentally
be put in motion in the absence of the driver.
18. However, in the case of
Skandia Insurance Company ltd. [(1987) 2 SCC
654], the appellant had contended that the
exclusion clause is strictly in accordance with
the statutorily permissible exclusion
embodied in Section 96(2)(b)(ii) of the Act of
1939 and that under the circumstances the
appellant Insurance Company is not under a
legal obligation to satisfy the judgment
procured by the respondents. Being in
disagreement with the argument canvassed,
the Supreme Court held in Paragraph 12 as
follows;
"12. The defence built on the
exclusion clause cannot succeed for
three reasons, viz;-
1. On a true interpretation of
the relevant clause which
interpretation is at peace with the
conscience of Section 96, the
condition excluding driving by a
person not duly licensed is not
absolute and the promisor is absolved
once it is shown that he has done
everything in his power to keep,
honour, and fulfil the promise and he
himself is not guilty of a deliberate
breach.
2. Even if it is treated as an
absolute promise, there is substantial
compliance therewith upon an express
or implied mandate being given to the
licensed driver not to allow the vehicle
to be left unattended so that it
happens to be driven by an
unlicensed driver.
3. The exclusion clause has to
be „read down‟ in order that it is not
at war with the „main purpose‟ of the
provisions enacted for the protection
of victims of accidents so that the
promisor is exculpated when he does
everything in his power to keep the
promise."
19. The Supreme Court while
reflecting on the reasons for insuring against
third party risk was of the opinion that the
provision has been inserted in order to
protect the members of the Community
travelling in vehicles or using the roads, from
the risk attendant upon the user of motor
vehicles on the road. If an accident occurs
and compensation is awarded to the victims,
then there ought to be a guarantee that, the
compensation, would be recoverable from
the persons held liable for the consequences
of the accident. Thus, the legislature has
made it obligatory that no motor vehicle
shall be used, unless a third party insurance
is in force. Further, in order to make the
protection real, the legislature has also
provided that the judgment obtained shall
MAC App. No.03 of 2023 : The Branch Manager, National Insurance Company Limited vs. Ms. Avipsa Pathak and Others
CO No.01 of 2023 : Uday Kumar Pradhan vs. Ms. Avipsa Pathak and Others
not be defeated by incorporation of the
exclusion clause other than those authorized
by Section 96 of the Act of 1939 and by
providing that except and save to the extent
permitted by Section 96 of the Act of 1939, it
will be the obligation of the Insurance
Company to satisfy the judgment obtained
against the persons insured against third
party risks. It was thus concluded that
Section 96(2)(b)(ii) of the Act of 1939,
extends immunity to the Insurance Company
if a breach is committed of; "a condition
excluding driving by a named person or
persons or by any person who is not duly
licensed or by any person who has been
disqualified for holding or obtaining a driving
license during the period of
disqualification....." That, if the insured was
not at fault and had not done anything he
should not have, or was not amiss in any
respect, how could it be conscientiously
posited that he had committed a breach. It is
only when the insured himself places the
vehicle in charge of a person who does not
hold a driving license that it can be said that
he is guilty of the breach of the promise that
the vehicle will be driven by a licensed
driver. Unless, the insured is at fault and is
guilty of a breach, the insurer cannot escape
from the obligation to indemnify the insured
and successfully contend that he is
exonerated, having regard to the fact that
the promisor (the insured) committed a
breach of his promise. Therefore, it was
concluded that the exclusion clause does not
exonerate the insurer." (emphasis supplied)
(i) In the case of Binod Kumar Agarwal
(supra), it was clear that the insured had given the
vehicle in the hands of his authorized and licensed
driver. The insured though not travelling in the same
vehicle was of the firm belief that his employee would
be driving the vehicle. That, as held in Skandia
Insurance Company Ltd. (supra), when the insured had
done everything within his power inasmuch as he had
engaged a licensed driver and placed the vehicle in-
charge of the said driver with the express or implied
mandate that it would be driven by him, it cannot be
said that the insured is guilty of any breach of the
terms of the Insurance policy. That, it is only in case
of a breach or a violation of the promise on the part
of the insured that the insurer can hide under the
umbrella of the exclusion clause and avoid payment
of compensation to the third party or as in this case
seek to recover it from the Appellant, the
Respondents No.3 and 4. That, in Paragraph 14 of
Skandia Insurance Company Ltd. (supra), it was
succinctly pointed out that in view of this provision,
apart from the implied mandate to the licensed driver
not to place an unlicensed person in-charge of the
vehicle, there is also a statutory obligation on the said
person not to leave the vehicle unattended and not to
place it in-charge of an unlicensed driver. That, what
is prohibited by law must be treated as a mandate to
the employee and should be considered sufficient in
the eye of law for excusing non-compliance with the
MAC App. No.03 of 2023 : The Branch Manager, National Insurance Company Limited vs. Ms. Avipsa Pathak and Others
CO No.01 of 2023 : Uday Kumar Pradhan vs. Ms. Avipsa Pathak and Others
conditions. It cannot therefore in any case be
considered as a breach on the part of the insured.
(ii) The observation in Skandia Insurance
Company Ltd. (supra), was affirmed by a three Judge
Bench in Sohan Lal Passi (supra), which in turn came
up for discussion before a three Judge Bench of the
Supreme Court in Swaran Singh and Others (supra),
where it was observed that an Insurance-Company
cannot shake off its liability to pay compensation only
by saying that at the relevant point of time, the
vehicle was driven by a person who did not have a
license.
(iii) In Sohan Lal Passi (supra), the Supreme
Court elucidated and observed that;
"12. ............................................................
96. ...............................................
..................................... If the insured has taken
all precautions by appointing a duly licensed
driver to drive the vehicle in question and it
has not been established that it was the
insured who allowed the vehicle to be driven
by a person not duly licensed, then the
insurance company cannot repudiate its
statutory liability under sub-section (1) of
Section 96. In the present case far from
establishing that it was the appellant who
had allowed Rajinder Pal Singh to drive the
vehicle when the accident took place, there is
not even any allegation that it was the
appellant who was guilty of violating the
condition that the vehicle shall not be driven
by a person not duly licensed. From the facts
of the case, it appears that the appellant had
done everything within his power inasmuch
as he has engaged a licensed driver
Gurbachan Singh and had placed the vehicle
in his charge. While interpreting the contract
of insurance, the tribunals and courts have to
be conscious of the fact that right to claim
compensation by heirs and legal
representatives of the victims of the accident
is not defeated on technical grounds. Unless
it is established on the materials on record
that it was the insured who had wilfully
violated the condition of the policy by
allowing a person not duly licensed to drive
the vehicle when the accident took place, the
insurer shall be deemed to be a judgment-
debtor in respect of the liability in view of
sub-section (1) of Section 96 of the Act. It
need not be pointed out that the whole
concept of getting the vehicle insured by an
insurance company is to provide an easy
mode of getting compensation by the
claimants, otherwise in normal course they
had to pursue their claim against the owner
from one forum to the other and ultimately
to execute the order of the Accident Claims
Tribunal for realisation of such amount by
sale of properties of the owner of the vehicle.
The procedure and result of the execution of
the decree is well known."
MAC App. No.03 of 2023 : The Branch Manager, National Insurance Company Limited vs. Ms. Avipsa Pathak and Others
CO No.01 of 2023 : Uday Kumar Pradhan vs. Ms. Avipsa Pathak and Others
(iv) Despite the clear and concise Judgment
of this Court, explaining the provisions of law with
due reference to the law laid down by the Hon‟ble
Supreme Court, vide its afore cited Judgments and
reference to it by Learned Counsel for the Appellant
before the Claims Tribunal, the Claims Tribunal
disregarded the Judgment and remained in ignorance
of the observations on the issue not only of this Court
but also of the Hon‟ble Supreme Court. As a result,
the Claims Tribunal has not been able to comprehend
the provisions of Sections 147 and 149 of the MV Act.
It is clear, the Appellant as the owner of the vehicle in
accident had placed his driver, Respondent No.3, in-
charge of the vehicle, the said driver had a valid and
effective license at the time of the accident. That, it
was Respondent No.3, who has acted irresponsibly
and in an inebriated condition handed over the vehicle
to Respondent No.4. The vehicle had been placed in
the charge of Respondent No.3 with the express and
implied mandate that it would be driven by him and
none else. Consequently, there is no breach of the
terms of the contract by the Appellant."
11. Similarly, in the matter at hand, the Learned Claims
Tribunal despite being seized of the fact that the owner of the
vehicle Respondent No.4 had applied for "route permit" for the
vehicle in accident from the Motor Vehicles Division, Transport
Department, Government of Sikkim, on 08-10-2018, it was issued
only on 26-10-2018, i.e., four days after the accident, i.e., on 22-
10-2018, went on to hold that -
"39. Consequently, in view of the finding arrived at
issue No.(iv) the principle of pay and recover has
been developed by Hon'ble Supreme court of India in
the various cases including in the reported case of S.
Iyyapan vs United India Ins. Co. Ltd. (2013 ACJ
1944) in which the apex court has observed as
follows-
"18. ******************************In any case , it is
the statutory right of a third party to recover the amount of
compensation so awarded from the insurer. It is for the
insurer to proceed against the insured for recovery of the
amount in the event there has been violation of any
condition of the Insurance policy"." [emphasis supplied]
12. I am consequently in disagreement with the finding of
the Learned Claims Tribunal and opine that the Learned Claims
Tribunal has mis-directed itself while interpreting the principle of
"pay and recovery" which has already been discussed in detail in
MAC App. No.03 of 2023 : The Branch Manager, National Insurance Company Limited vs. Ms. Avipsa Pathak and Others
CO No.01 of 2023 : Uday Kumar Pradhan vs. Ms. Avipsa Pathak and Others
the case of Suresh Khati (supra) as extracted hereinabove, for
comprehension of the said principle.
13. In the case at hand, it is evident that all other
documents of the vehicle were in order. The Respondent No.4 on
08-10-2018 had applied for the "route permit" much before the
accident which occurred on 22-10-2018. The owner of the vehicle
cannot be held to ransom for the tardiness in ministerial and
administrative works of the concerned Department and he cannot
be foisted with paying the Appellant on their satisfying the claims
of the Respondents No.1, 2 and 3 in the absence of wilful violation
of the terms of insurance on his part. Once the vehicle is validly
insured with the Insurance Company and no terms therein are
flouted by the insured, it is the sole responsibility of the Insurance
Company to pay the compensation.
14. That having been said, the next question is with regard
to the multiplier adopted by the Learned Claims Tribunal for
calculating loss of income. The multiplier „15‟ adopted by the
Learned Claims Tribunal is certainly erroneous as in Sarla Verma
(supra) it has specifically been laid down as follows;
"42. We therefore hold that the multiplier to be
used should be as mentioned in Column (4) of the
table above (prepared by applying Susamma Thomas
[(1994) 2 SCC 176], Trilok Chandra [(1996) 4 SCC 362] and
Charlie [(2005) 10 SCC 720]), which starts with an
operative multiplier of 18 (for the age groups of 15 to
20 and 21 to 25 years), reduced by one unit for every
five years, that is M-17 for 26 to 30 years, M-16 for
31 to 35 years, M-15 for 36 to 40 years, M-14 for 41
to 45 years, and M-13 for 46 to 50 years, then
reduced by two units for every five years, that is, M-
11 for 51 to 55 years, M-9 for 56 to 60 years, M-7 for
61 to 65 years and M-5 for 66 to 70 years."
[emphasis supplied]
Since the victim was 42 years old, the correct multiplier to be
adopted is „14‟.
MAC App. No.03 of 2023 : The Branch Manager, National Insurance Company Limited vs. Ms. Avipsa Pathak and Others
CO No.01 of 2023 : Uday Kumar Pradhan vs. Ms. Avipsa Pathak and Others
15. So far as the compensation under conventional heads
is concerned, here too the Learned Claims Tribunal while exercising
its discretion has gone overboard under some heads and granted
less under some heads and thus failed to comply with the decision
of the Hon‟ble Supreme Court in Pranay Sethi (supra) as also in
Magma General Insurance Company Limited vs. Nanu Ram alias Chuhru
Ram and Others . However, loss of love and affection of ₹
1,00,000/- (Rupees one lakh) only, granted by the Learned Claims
Tribunal cannot be faulted as this is fortified by the ratio in Magma
General Insurance Company Limited (supra). The Learned Claims
Tribunal has granted the following compensation under the
conventional heads;
"7. Funeral Expenses : Rs. 25,000/-
8. Loss of Estate : Rs.1,00,000/-
9. Loss of Consortium : Rs.1,00,000/-
10. Loss of Love and affection to minors : Rs.1,00,000/-
11. Loss of guidance to minor children : Rs.1,00,000/-
12. Litigation costs : Rs. 25,000/-"
[emphasis supplied]
(i) Funeral expenses of ₹ 25,000/- (Rupees twenty-five
thousand) only, is in excess of the amount of ₹ 15,000/- (Rupees
fifteen thousand) only as settled by the ratio in Pranay Sethi
(supra).
(ii) ₹ 1,00,000/- (Rupees one lakh) only, granted under
the head of loss of estate, is placed at ₹ 15,000/- (Rupees fifteen
thousand) only, as settled by the ratio in Pranay Sethi (supra).
(iii) Loss of consortium has been detailed in the decision of
Magma General Insurance Company Limited (supra) as follows;
(2018) 18 SCC 130
MAC App. No.03 of 2023 : The Branch Manager, National Insurance Company Limited vs. Ms. Avipsa Pathak and Others
CO No.01 of 2023 : Uday Kumar Pradhan vs. Ms. Avipsa Pathak and Others
"21. A Constitution Bench of this Court in
Pranay Sethi [(2017) 16 SCC 680] dealt with the various
heads under which compensation is to be awarded in
a death case. One of these heads is loss of
consortium. In legal parlance, "consortium" is a
compendious term which encompasses "spousal
consortium", "parental consortium", and "filial
consortium". The right to consortium would include
the company, care, help, comfort, guidance, solace
and affection of the deceased which is a loss to his
family. ..............
21.1 Spousal consortium is generally defined
as rights pertaining to the relationship of a husband-
wife which allows compensation to the surviving
spouse for loss of "company, society, cooperation,
affection, and aid of the other in every conjugal
relation". [Black‟s Law Dictionary (5th Edn., 1979]
21.2 Parental consortium is the granted to
the child upon the premature death of a parent, for
loss of "parental aid, protection, affection, society,
discipline, guidance and training".
..............................................."
(iv) Hence, the total loss of consortium of ₹ 1,00,000/-
(Rupees one lakh) only, granted by the Learned Claims Tribunal is
short changing the Respondents No.1, 2 and 3. As per Magma
General Insurance Company Limited (supra) an amount of ₹ 40,000/-
(Rupees forty thousand) only, is granted to the Respondent No.3
as spousal consortium for loss of the company, society,
cooperation, affection, and aid of her spouse in every conjugal
relation. Parental consortium of ₹ 40,000/- (Rupees forty
thousand) only, each, is allowed to the Respondents No.1 and 2
upon the premature death of their father, for loss of parental aid,
protection, affection, society, discipline, guidance and training.
(v) Loss of guidance to minors computed at ₹ 1,00,000/-
(Rupees one lakh) only, is set aside as it finds no place in the
scheme of the Judgments of the Supreme Court supra.
(vi) Litigation costs also do not find place in the
ratiocination of Pranay Sethi (supra) or Magma General Insurance
Company Limited (supra) and is accordingly set aside.
MAC App. No.03 of 2023 : The Branch Manager, National Insurance Company Limited vs. Ms. Avipsa Pathak and Others
CO No.01 of 2023 : Uday Kumar Pradhan vs. Ms. Avipsa Pathak and Others
16. The next point raised by Learned Counsel for the
Appellant was the rate of interest payable @ 10% imposed on the
awarded compensation. It was the case of the Appellant that the
interest rate ought to be placed at 6%. I have carefully perused
the Judgment of the Supreme Court in Benson George (supra)
where the High Court had reduced the interest rate of 9% to 6%
per annum and the Hon‟ble Supreme Court was loathe to interfere
in the interest rate fixed. It may be noted here that this Court has
in all matters of motor accident cases uniformly awarded interest
rate @ 9%. Hence, in the interest of justice, in my considered
opinion, as no specifics are mentioned in the case of Benson George
(supra) for reduction of the rate of interest, 9% as previously
granted by this Court in other similar matters is maintained as
interest rate in the instant matter as well. Rate of 10% interest
imposed by the Learned Claims Tribunal is set aside.
17. In light of the discussions and findings which thereby
answers the question framed for determination by this Court, the
compensation requires re-computation. It may pertinently be
noted that the sentence at Paragraph 59.8 of Pranay Sethi (supra)
propounds that the aforesaid amounts, i.e., loss of estate, loss of
consortium and funeral expenses should be enhanced @ 10% in
every three years, which is thereby duly considered. Since Pranay
Sethi (supra) was pronounced on 31-10-2017 and as the accident
occurred on 22-10-2018, six years have elapsed since then, hence
20% each is added on loss of estate, loss of consortium and
funeral expenses. Consequently, the compensation is re-computed
and modified as follows;
MAC App. No.03 of 2023 : The Branch Manager, National Insurance Company Limited vs. Ms. Avipsa Pathak and Others
CO No.01 of 2023 : Uday Kumar Pradhan vs. Ms. Avipsa Pathak and Others
Annual income of the deceased (₹ 95,619/- x 12) ₹ 11,47,428.00
Add 30% of ₹ 11,47,428/- as Future Prospects (+) ₹ 3,44,228.00
[in terms of the Judgment of Pranay Sethi (supra)] ₹ 14,91,656.00
Less 1/3rd of ₹ 14,91,656/- (-) ₹ 4,97,219.00
[Deducted from the said amount as expenses
that the deceased would have incurred towards
himself had he been alive]
Net yearly income ₹ 9,94,437.00
Multiplier to be adopted „14‟ (₹ 9,94,437/- x 14) (+) ₹ 1,39,22,118.00
[The age of the deceased at the time of death was
„42‟ and the relevant multiplier as per Judgment of
of Sarla Verma (supra) is „14‟]
Add Funeral Expenses (+) ₹ 18,150.00
[in terms of the Judgment of Pranay Sethi (supra) and
enhancement @ 10% in every three years.
Therefore, the figure calculated is as follows;
₹ 15,000/- @ 10% = 16,500/- and ₹ 16,500/- @ 10%
= 18,150/-]
Add Loss of Estate (+) ₹ 18,150.00
[in terms of the Judgment of Pranay Sethi (supra) and
enhancement @ 10% in every three years.
Therefore, the figure calculated is as follows;
₹ 15,000/- @ 10% = 16,500/- and ₹ 16,500/- @ 10%
= 18,150/-]
Add Loss of love and affection (+) ₹ 1,00,000.00
[in terms of the Judgment of Magma General Insurance
Co. Ltd. (supra)]
Add Loss of Spousal Consortium (+) ₹ 48,400.00
[@ wife of the deceased, in terms of the Judgment
of Magma General Insurance Co. Ltd. (supra) and
enhancement @ 10% in every three years.
Therefore, the figure calculated is as follows;
₹ 40,000/- @ 10% = 44,000/- and ₹ 44,000/- @ 10%
= 48,400/-]
Add Loss of Parental Consortium (₹ 40,000/- x 2) (+) ₹ 96,800.00
[@ two daughters of the deceased, in terms of the
Judgment of Magma General Insurance Co. Ltd. (supra) and
enhancement @ 10% in every three years.
Therefore, the figure calculated is as follows;
₹ 80,000/- @ 10% = 88,000/- and ₹ 88,000/- @ 10%
= 96,800/-] Total = ₹ 1,42,03,618.00
(Rupees one crore, forty-two lakhs, three thousand, six hundred and eighteen) only.
18. The Claimants-Respondents No.1 to 3 shall be entitled
to simple interest @ 9% per annum on the above amount with
effect from the date of filing of the Claim Petition before the
Learned Claims Tribunal, i.e., 13-10-2020, until its full realisation.
19. The Appellant-Insurance Company is directed to pay
the awarded compensation to the Claimants-Respondents No.1 to 3
within one month from today, failing which, it shall pay simple
interest @ 12% per annum from the date of filing of the Claim
MAC App. No.03 of 2023 : The Branch Manager, National Insurance Company Limited vs. Ms. Avipsa Pathak and Others
CO No.01 of 2023 : Uday Kumar Pradhan vs. Ms. Avipsa Pathak and Others
Petition, till full realisation. Amounts, if any, already paid by the
Appellant-Insurance Company to the Claimants-Respondents No.1
to 3, shall be duly deducted from the awarded compensation.
20. The modified awarded amount of compensation along
with interest as specified above shall be divided amongst the
Claimant-Respondent No.3 being the spouse of the deceased and
Claimants-Respondents No.1 and 2 being the minor children, in the
following manner, duly setting aside the order of the Learned
Claims Tribunal on this aspect.
(i) From the awarded compensation, Claimant-Respondent
No.3, spouse of the deceased, is entitled to 34%; and
(ii) 66% of the total amount of compensation awarded shall be
divided equally amongst the Claimants-Respondents No.1
and 2 (minor children of the deceased), i.e., 33% each.
50% of the share of each child shall be kept in individual
Fixed Deposits in a Nationalised Bank, until the child attains
the age of majority. The remaining 50% of each of the
minor's share shall be expended towards their education and
upkeep.
21. Appeal and Cross Objection stand disposed of
accordingly.
22. No order as to costs.
23. Copy of this Judgment be sent to the Learned Claims
Tribunal for information, along with its records.
( Meenakshi Madan Rai )
Judge
26-03-2024
Approved for reporting : Yes
ds/sdl
