Sikkim High Court

The Branch Manager, New India Assurance ... vs Kailash Rai And Ano on 22 May, 2025

Author: Meenakshi Madan Rai

Bench: Meenakshi Madan Rai

              THE HIGH COURT OF SIKKIM : GANGTOK
                                   (Civil Appellate Jurisdiction)
                                    DATED : 22nd May, 2025
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 SINGLE BENCH : THE HON‟BLE MRS. JUSTICE MEENAKSHI MADAN RAI, JUDGE
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                                MAC App. No.03 of 2024
                Appellant           :    The Branch Manager,
                                         New India Assurance Co. Ltd.

                                               versus

                Respondents :           Kailash Rai and Another

       Appeal under Section 173 of the Motor Vehicles Act, 1988
       -----------------------------------------------------------------------------------------
          Appearance
                Mr. Dipayan Roy, Advocate for the Appellant.
                Mr. Tashi Wongdi Bhutia and Ms. Anjali Pradhan, Advocates for the
                Respondent No.1.
                Mr. Mahesh Subba, Advocate for the Respondent No.2.
        -----------------------------------------------------------------------------------------

                                          JUDGMENT

Meenakshi Madan Rai, J.

1. The Appellant-Insurance Company assails the Judgment

dated 13-02-2024, of the Learned Motor Accidents Claims Tribunal,

Gangtok, Sikkim (hereinafter, "MACT"), in MACT Case No.32 of

2022. The Respondent No.1-Claimant, father of the deceased, in an

application filed under Section 166 of the Motor Vehicles Act, 1988

(hereinafter, "MV Act") sought compensation of a sum of ₹

30,38,000/- (Rupees thirty lakhs and thirty eight thousand) only, on

account of the death of his twenty-seven year old son, due to a

motor vehicle accident on 21-06-2022. ₹ 15,00,000/- (Rupees

fifteen lakhs) only, was granted against the said claim by the MACT.

The Appellant is aggrieved by the fact that despite the insured-

Respondent No.2 herein, having opted out of the "compulsory

personal accident" (CPA) and not paid the premium thereof, the

The Branch Manager, New India Assurance Co. Ltd. vs. Kailash Rai and Another

amount of ₹ 15,00,000/- (Rupees fifteen lakhs) only, was

erroneously granted by the MACT, contrary to the terms of the

insurance policy, the MACT having reasoned that the driver, since

deceased, had stepped into the shoes of the owner and thus entitled

to the compulsory PA cover.

2. The Appellant, before this Court, urged that, as

Respondent No.2 the owner of the vehicle, had opted out of the CPA

coverage of the insurance policy, the liability of the Appellant to

compensate did not arise. Drawing strength from the decision in

Ramkhiladi and Another vs. United India Insurance Company and

Another and Dhanraj vs. New India Assurance Co. Ltd. and Another2, it

was contended that as the deceased son, stepped into the shoes of

the owner of the vehicle Respondent No.2, his mother, the

Respondent No.1 was disentitled to the compensation claimed.

3. The Respondent No.1, on the other hand, submitted that

the issue of Respondent No.2 opting out from the personal accident

cover was never agitated before the MACT and is being raised for

the first time in Appeal. That, the policy is a "Private Car Package

Policy" and covers all persons travelling in the vehicle, including the

driver of the vehicle. That, there is no error in the finding of the

MACT granting ₹ 15,00,000/- (Rupees fifteen lakhs) only, to the

Respondent No.1.

4. Respondent No.2 had no submissions to advance, but

endorsed the submissions put forth by Learned Counsel for the

Respondent No.1.

5. Before considering the merits of the matter, a brief

summary of the facts is narrated herein. The deceased Suraj Rai,

(2020) 2 SCC 550 : AIR 2020 SC 527

(2004) 8 SCC 553 : AIR 2004 SC 4767

The Branch Manager, New India Assurance Co. Ltd. vs. Kailash Rai and Another

aged about twenty-seven years and drawing a monthly salary ₹

20,000/- (Rupees twenty thousand) only, was the son of the

Respondent No.1-Claimant and the Respondent No.2 the vehicle

owner. He was driving vehicle bearing registration No.SK 05 P 0815

(Mahindra Bolero) on the Gangtok road, District Namchi, on 21-06-

2022. He met with the unfortunate accident at about 0915 hours

the same day, resulting in his fatality. The Respondent No.1 filed

the Claim Petition under Section 166 of the MV Act before the

Learned MACT, seeking compensation as detailed hereinabove.

6. Having considered the arguments of the Learned

Counsel for the parties and examined the documents on record, it is

relevant to notice in the first instance that the MACT in the

impugned Judgment while granting compensation amounting to ₹

15,00,000/- (Rupees fifteen lakhs) only, rationalised in Paragraphs

12 and 14 of the impugned Judgment inter alia that (i) there was no

rash or negligent driving of any other person in the present case.

(ii) A claim for compensation cannot be maintained where no other

vehicle is involved and the deceased driver is the owner‟s son. (iii)

As the personal accident (PA) cover for the owner driver is upto ₹

15,00,000/- (Rupees fifteen lakhs) only, and since the deceased is

deemed to have stepped into the shoes of the owner, his family is

entitled to the compulsory PA cover of ₹ 15,00,000/- (Rupees fifteen

lakhs) only. (iv) However, he is not entitled to the compensation

claimed under Section 166 of the MV Act.

(i) While addressing the findings of the MACT that there

was no rash and negligent driving of any other person in the present

case and hence a claim for compensation was not maintainable, in

my considered view, on this facet, the MACT has failed to consider

The Branch Manager, New India Assurance Co. Ltd. vs. Kailash Rai and Another

the doctrine of res ipsa loquitur. Undoubtedly in an action for

negligence, the legal burden of proof rests on the Claimant, but

barring exceptional cases, it may not be possible for the Claimant to

specify the exact cause of the accident. The maxim (supra) suggests

that, in the circumstances of a given case, the res or the action

speaks and is eloquent. When the facts stand unexplained, the

natural and reasonable inference from the facts which are not

conjectural inference, shows that the act is attributable to some

person‟s negligent conduct. In Mohammed Aynuddin alias Miyam vs.

State of A.P. the Supreme Court held as follows;

"8. The principle of res ipsa loquitur is only a rule of evidence to determine the onus of proof in actions relating to negligence. The said principle has application only when the nature of the accident and the attending circumstances would reasonably lead to the belief that in the absence of negligence the accident would not have occurred and that the thing which caused injury is shown to have been under the management and control of the alleged wrongdoer."

[emphasis supplied]

Accordingly, the attendant circumstances of the instant

accident are indicative of the fact that there was rashness and

negligence on the part of the deceased driver, which led to the

accident, based on the inference that there are certain incidents

which do not occur normally, unless there is the existence of

negligence. Where two vehicles are not involved but all

circumstances indicate negligence, the claim for compensation

cannot be denied.

(ii) The MACT also opined that the personal accident cover

for owner driver is upto ₹ 15,00,000/- (Rupees fifteen lakhs) only.

In this context, while examining Exhibit 9, the insurance policy, the

schedule of the premium is perused and extracted hereinbelow for

clarity;

(2000) 7 SCC 72

The Branch Manager, New India Assurance Co. Ltd. vs. Kailash Rai and Another

SCHEDULE OF PREMIUM

Own Damage Liability Basic OD Premium 1745 Basic TP Premium 3221 Calculated OD Premium 1745 Calculated TP Premium 3221 Total OD Premium 1745 Total TP Premium 3221 Net Premium in Rs 4976

In the continuing page of Exhibit 9, it is inter alia recorded as "PA

cover for Owner Driver - As per the declaration given, the Insured

has opted out of CPA cover under this policy". The insured owner

had not paid premium to be covered by the policy which was

specified to be for the owner driver. Exhibit 9 nowhere mentions

personal accident cover for owner driver as ₹ 15,00,000/- (Rupees

fifteen lakhs) only, as erroneously discussed by the MACT. All that

the insurance policy inter alia details with regard to amount payable

is "Limits of Liability: Limit of the amount the Company's Liability

Under Section II 1(a) in respect of any one accident: as per the

Motor Vehicles Act, 1988. Limit of the amount of the Company's

Liability, Under Section II 1(ii) in respect of any one claim or series

of claims arising out of one event: Up to Rs.7,50,000". Sans

reasons, the award of ₹ 15,00,000/- (Rupees fifteen lakhs) only,

granted by the MACT is erroneous, as it lacks any basis, nor has any

discussion emanated on this point in the impugned Judgment. I am

of the considered view that there has been no application of judicial

mind while dealing with the aspect of insurance cover to the owner.

The Judgment also does not reveal under what provision the

compensation was granted if Section 166 of the MV Act was found

inapplicable as no discussion has emanated on this point as well.

7. It is pertinent to notice that the reasoning of the MACT

at Paragraph 14 in the impugned Judgment that the deceased being

The Branch Manager, New India Assurance Co. Ltd. vs. Kailash Rai and Another

the son of Respondent No.2 stepped into her shoes is cryptic and

made without reference to any documentary evidence or the

evidence of any party and therefore appears to have been decided

on a whim. It is therefore imperative for this Court to consider

whether the deceased had stepped into the shoes of the owner

Respondent No.2 his mother.

(i) In Ramkhiladi (supra), the deceased was travelling on a

motorcycle, which he had borrowed from the opponent-owner

Bhagwan Sahay. The Supreme Court concluded inter alia that, it is

true that in a claim under Section 163A of the MV Act, there is no

need for the Claimants to plead or establish negligence and/or that

the death in respect of which the Claim Petition is sought to be

established was due to wrongful act, neglect or default of the owner

of the vehicle concerned. However, at the same time, the deceased

has to be a third party and cannot maintain a claim under Section

163A of the MV Act, if he is the borrower as he will step into the

shoes of the owner. That, the parties are governed by the contract

of insurance and the liability of the insurance would be qua third

party only. In the case of Ramkhiladi (ibid) it is clear that the

insurance company was not liable, for the reason that, the

motorcycle driver had „borrowed‟ the motorcycle. By virtue of the

fact that he had „borrowed‟ the motorcycle, he stepped into the

shoes of the owner of the motorcycle and was thereby deemed to be

the insured. A contract of indemnity is between the insurer and the

insured, vide which the insurer agrees to indemnify a third party in

the event of loss of life or damage to property. The insurer and the

insured are the first and second party, hence where the deceased

The Branch Manager, New India Assurance Co. Ltd. vs. Kailash Rai and Another

has stepped into the shoes of the owner, no liability accrues to the

insurance company to indemnify the loss.

(ii) In Dhanraj (supra), the Supreme Court opined that, an

insurance policy covers the liability incurred by the insured in

respect of death of or bodily injury to any person (including "an

owner of the goods" or his "authorised representative") carried in

the vehicle or damage to any property of a third party caused by or

arising out of the use of the vehicle. It was further held that,

Section 147 of the MV Act does not require an insurance company to

assume risk for death or bodily injury of the owner of the vehicle.

In the said matter, the owner was travelling in his own Jeep when it

met with the accident, in which he was injured along with other

occupants. The MACT directed the Appellant as the owner and the

driver and insurance company to be liable to pay the compensation.

The insurance company appealed against the Judgment. At the

appellate stage it was held that, as the Petitioner was the owner of

the vehicle, the insurance company was not liable to pay him any

compensation. The Supreme Court making a reference to the

decision of Oriental Insurance Co. Ltd. vs. Sunita Rathi and Others4

noticed that the liability of an insurance company is only for the

purpose of indemnifying the insured, against the liabilities incurred

towards the third person, or in respect of damages to property.

Where the owner of the vehicle has no liability to a third party, the

insurance company has no liability as well. On the anvil of that

decision, it was observed that in the case of Dhanraj (ibid), it has not

been shown that the policy covered any risk for injury to the owner

himself. It was further observed that the premium of ₹ 4,189/-

(1998) 1 SCC 365

The Branch Manager, New India Assurance Co. Ltd. vs. Kailash Rai and Another

(Rupees four thousand, one hundred and eighty nine) only, paid

under the heading "Own damage", the words "premium on vehicle

and non-electrical accessories" appeared, making it clear that this

premium was paid towards damage to the vehicle and not for injury

to the person of the owner. The owner of a vehicle can only make a

claim provided a "personal accident insurance" has been taken out.

8. It is evident from the foregoing discussions that the

facts and circumstances of the above cases Ramkhiladi (supra) and

Dhanraj (supra) are distinguishable from the matter at hand. If

there is no specific premium paid for the owner driver, the insurance

company would obviously not be liable, however in the instant case

the deceased could not have stepped into the shoes of Respondent

No.2 merely by reason of his relationship with her as mother and

son as wrongly concluded by the MACT. Exhibit 11, the document

duly exhibited before the MACT, which was clearly ignored by the

MACT sans reasons, reveals that Suraj Rai (the deceased) was in

fact authorised by Respondent No.2 to drive the vehicle in accident.

The evidence of the Respondent No.1-Claimant at Paragraph 10

reads as;

"..............................................................................

10. I say that my son (Late Suraj Rai) who was driving the said vehicle bearing registration no.SK 05 P 0815 was authorised by the respondent no.3 to drive the said ill-fated vehicle and to that effect an authorisation letter was also issued by the respondent no.3. Exhibit-11 is the authorisation letter issued by the respondent no.3 in the name of the deceased Late Suraj Rai and Exhibit-11(a) is the signature of the respondent no.3 and Exhibit-11(b) is the signature of Late Suraj Rai which I can identify. .............................................................................."

(i) The insurance company had the benefit of cross-

examining the Respondent No.1-Claimant but the fact of

The Branch Manager, New India Assurance Co. Ltd. vs. Kailash Rai and Another

authorisation granted to the deceased by Respondent No.2 was not

decimated. The deceased driver was clearly authorised by

Respondent No.2 to drive the vehicle vide Exhibit 11. He had not

„borrowed‟ the vehicle from the Respondent No.2, had he done so,

he would have stepped into her shoes and the insurer would not

have been liable to indemnify the insured as Respondent No.2 had

opted out of the CPA, but the deceased having driven under her

authority, he would be covered by the definition of "third party".

Thus, even though Respondent No.2 had opted out of the

"compulsory personal accident" cover, it did not affect the deceased,

who was a third party not being either the insurer or the insured. It

need no reiteration that the owner becomes vicariously liable for the

acts of the driver, duly authorised by the owner to drive.

Consequently, the insurance company becomes liable to pay the

compensation on behalf of the owner of the vehicle, as they had

insured the vehicle in accident and entered into a contract with the

insured for payment of compensation. The MACT was thus in error

in concluding that the deceased stepped into the shoes of the owner

by completely bypassing Exhibit 11, while at the same time

contrarily opining that a claim for compensation cannot be

maintained where the deceased driver is the owner‟s son, revealing

the confusion of the MACT in its vacillating findings about the status

of the deceased qua the compensation.

9. In fine, I am of the considered view that the Respondent

No.1 is entitled to compensation under Section 166 of the MV Act.

For the foregoing reasons, the assailed Judgment is liable to be and

is accordingly set aside in its entirety.

The Branch Manager, New India Assurance Co. Ltd. vs. Kailash Rai and Another

10. The compensation which is found to be "just

compensation" under Section 168 of the MV Act is calculated

hereinbelow;

Annual income of the deceased (₹ 20,000/- x 12) ₹ 2,40,000.00

Add 40% of ₹ 2,40,000/- as Future Prospects (+) ₹ 96,000.00 [in terms of Paragraph 59.4 of the Judgment of National ₹ 3,36,000.00 Insurance Company Limited vs. Pranay Sethi and Others : (2017) 16 SCC 680]

Less 50% of ₹ 3,36,000/- (-) ₹ 1,68,000.00 [as the deceased was a bachelor in terms of Paragraph 32 of the Judgment of Sarla Verma (Smt) and Others vs. Delhi Transport Corporation and Another : (2009) 6 SCC 121]

Net yearly income ₹ 1,68,000.00 Multiplier to be adopted „17‟ (₹ 1,68,000/- x 17) ₹ 28,56,000.00 [The age of the deceased at the time of death was ‟27‟ and the relevant multiplier in terms of Paragraph 42 of the Judgment of Sarla Verma (supra) is „17‟]

Add Funeral Expenses @ ₹ 18,150/- (+) ₹ 18,150.00 [in terms of Paragraph 59.8 of the Judgment of Pranay Sethi (supra) enhancement @ 10% in every three years Therefore, the figure calculated is as follows; First three years -- ₹ 15,000/- @ 10% = 16,500/- Second three years -- ₹ 16,500/- @ 10% = 18,150/-]

Add Loss of Estate @ ₹ 18,150/- (+) ₹ 18,150.00 [in terms of Paragraph 59.8 of the Judgment of Pranay Sethi (supra) enhancement @ 10% in every three years Therefore, the figure calculated is as follows; First three years -- ₹ 15,000/- @ 10% = 16,500/- Second three years -- ₹ 16,500/- @ 10% = 18,150/-] Add Loss of Filial Consortium (+) ₹ 48,400.00 [₹ 40,000/-, payable to Respondent No.1-Claimant, in terms of Paragraphs 21 and 24 of the Judgment of Magma General Insurance Company Limited vs. Nanu Ram alias Chuhru Ram and Others : (2018) 18 SCC 130] [also in terms of Paragraph 59.8 of the Judgment of Pranay Sethi (supra) enhancement @ 10% in every three years Therefore, the figure calculated is as follows; First three years -- ₹ 40,000/- @ 10% = 44,000/- Second three years -- ₹ 44,000/- @ 10% = 48,400/-] Total = ₹ 29,40,700.00 (Rupees twenty nine lakhs, forty thousand and seven hundred) only.

11. The Appellant-Insurance Company is directed to pay the

awarded compensation to the Respondent No.1-Claimant, within one

month from today, with simple interest @ 9% per annum, failing

which, it shall pay simple interest @ 12% per annum, from the date

The Branch Manager, New India Assurance Co. Ltd. vs. Kailash Rai and Another

of filing of the Claim Petition, i.e., 21-12-2022, till final realization.

Amounts, if any, already paid by the Appellant-Insurance Company

to the Respondent No.1-Claimant, under the Claim Petition, shall be

duly deducted from the awarded compensation.

12. Appeal dismissed and disposed of accordingly.

13. No order as to costs.

14. Copy of this Judgment be sent forthwith to the Learned