Wakia Afrin (Minor) vs M/S National Insurance Co. Ltd on 1 August, 2025

Supreme Court of India

Wakia Afrin (Minor) vs M/S National Insurance Co. Ltd on 1 August, 2025

Author: Sudhanshu Dhulia

Bench: Sudhanshu Dhulia

2025 INSC 919


                                                                                   Non-reportable

                                                  IN THE SUPREME COURT OF INDIA
                                                   CIVIL APPELLATE JURISDICTION

                                      SPECIAL LEAVE PETITION(CIVIL) NOS.15447-48 OF 2024

                                     WAKIA AFRIN (MINOR)
                                                                                   …PETITIONER
                                                                   VERSUS
                                     M/S NATIONAL INSURANCE CO. LTD.
                                                                                 …RESPONDENT


                                                                   ORDER

1. The petitioner, a minor, was before the Motor

Accident Claims Tribunal1, Cuttack claiming

compensation under Section 163A of the Motor Vehicles

Act, 19882 for the death of both her parents in a motor-

vehicle accident. The unfortunate accident occurred

when the vehicle dashed against a road side building, it

Signature Not Verified

1
Digitally signed by
NARENDRA PRASAD “the MACT, for brevity”
Date: 2025.08.01
2
18:11:56 IST
Reason:

“the Act”

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having gone out of control due to a tyre burst, Four

persons travelling in the vehicle, two of whom were the

parents of the petitioner, died in the accident. The

petitioner who was two years old then, was represented

by her aunt in the claim petition. The MACT allowed the

claim and awarded a compensation of Rs.4,08,000/- for

the death of the petitioner’s mother and Rs.4,53,339/- for

the death of the petitioner’s father. The owner of the

vehicle was the petitioner’s father and before the

Tribunal as also the High Court, he was shown as the first

respondent with the clear recital that he was dead. The

second respondent was the Insurance Company. The

High Court found that a dead person cannot be made a

defendant and hence, the claim petitions were not

maintainable. However it was also categorically found

that there was no dispute about the validity of the

insurance policy and it has to be stated that the vehicle

was driven by a person who held a valid licence.

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2. Insofar as the ground on which the claim petitions

were found to be not maintainable by the High Court,

useful reference can be made to Section 155 of the Act.

Section 155 provides that even if the insured dies after

the happening of an event which gave rise to a claim, it

shall not be a bar to the survival of any cause of action

arising out of the said event, against the insurer. The

event which gave rise to the claim is the accident and the

death occurred after the event; albeit a direct result of

the accident. A third party claim for compensation would

definitely survive since, on the death of the insured it

would lie against his estate, which the insurer has an

obligation to indemnify. The insurer, hence, can defend

any claim against the insured, which the insurer has the

liability to indemnify in accordance with the policy

issued. The ground stated by the High Court definitely is

not tenable. However, herein the question arises as to

whether the petitioner, who is the daughter of the owner

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of the vehicle has the right to claim compensation for the

death of the owner of the vehicle, when the claim is

raised under Section 163A of the Act, requiring no proof

of negligence leading to the accident, resulting in the

death or injury suffered.

3. The compelling contention of the Insurance

Company is that the petitioner who is the sole heir of the

owner, having succeeded to the estate of the owner of the

vehicle who died in the accident cannot at the same time,

be the person who has the liability and the recipient of

the compensation. The liability to compensate on the

death of the owner falls on his estate; which the claimant

succeeds to and there cannot be any further

compensation on the loss of dependency, is the

argument.

4. We have already found that Section 155 enables

the claim to be filed and prosecuted even after the death

of the owner of the vehicle, if there is a valid insurance

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SLP (C) Nos. 15447-48 of 2024
policy, which would put the insurer in the shoes of the

owner who would be able to take all contentions

available to the insured, to defend the claim; in addition

to any dispute on the validity or enforceability of the

policy. Insofar as the claim raised against the mother is

concerned, we are clear in our minds that it has to be

admitted and the award under Section 163A passed by

the Tribunal has to be restored. What remains is the

liability with respect to the death of the owner which we

see from the insurance policy produced as Annexure P-

1, is limited for the owner-driver to Rs.2 lakhs. Whether

the liability of the insurer can be confined to that

provided in the policy or it can be determined under

Section 163A would also be an issue before us.

5. On the liability under Sections 163A & 166, in the

absence of a third party claim, a number of decisions

were placed before us, which we will have to refer to.

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SLP (C) Nos. 15447-48 of 2024
Dhanraj v. New India Assurance Co. Ltd.3, found that an

Insurance Policy under Section 147 of the Act does not

require the insurer to assume the risk of death or injury

on the body of the owner of the vehicle, since the policy

issued only indemnifies the insured against liabilities

incurred towards a third person or in respect of damages

to property. That was a case in which the appellant was

travelling in his own jeep and suffered injuries in

pursuance to an accident. The driver of the jeep was held

responsible for the accident by the Tribunal and the

challenge was against the direction to the insurer to pay

compensation to the owner/claimant. Extracting Section

147 and referring to Oriental Insurance Co. Ltd. v.

Sunita Rathi4, it was held that Section 147 covers only the

liability towards a third person or in respect of damages

to property. When the owner of the vehicle, the insured,

has no liability to a third party, the Insurance Company

3
(2004) 8 SCC 553
4
(1998) 1 SCC 365

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SLP (C) Nos. 15447-48 of 2024
also does not have any liability. A premium paid under

the head “own damage” was held to be a premium on the

vehicle and the non-electrical accessories not relatable

to the personal injury of the owner/injured.

6. Immediately we have to notice that Sunita Rathi4

relied on in Dhanraj3 only considered whether the

insurer had any liability to indemnify the owner when the

motor accident occurred prior to the issuance of the

insurance policy; in that case a few minutes before. The

observation that the liability of the insurer arises, only

when the liability of the owner is proved, to indemnify

the insured under the contract of insurance, was in the

context of there existing no valid policy at the time of

accident, and not under Section 163A.

7. In National Insurance Co. Ltd. v. Laxmi Narain

Dhut5, the question considered was whether principles

5
(2007) 3 SCC 700

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laid down in National Insurance Co. Ltd. v. Swaran

Singh6, with reference to fake licenses were applicable

even to third party claims. While finding that Section 149

applies only to third party risks, the principles in Swaran

Singh6 that any condition taking away the rights of third

parties are void, was reaffirmed; not really relevant for

the issue arising herein.

8. Oriental Insurance Co. Ltd. v. Jhuma Saha7, was

a case in which the owner, while driving an insured

vehicle swerved the vehicle to save a goat and dashed

against a tree causing injuries inter-alia to the owner-

driver. The claim under Section 166 of the Act was held

to be not maintainable, relying on Dhanraj3.

9. Oriental Insurance Co. Ltd. v. Rajni Devi8 was

concerned with an application under Section 163-A of the

Act. Two persons were riding in a motorcycle which went

6
(2004) 3 SCC 297
7
(2007) 9 SCC 263
8
(2008) 5 SCC 736

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out of control resulting in an accident in which one of the

riders was killed. There was no evidence as to who was

in the driver’s seat and the claim was resisted by the

insurer on the ground that the cover of personal

insurance cannot be invoked in the case of a pillion rider

and in any event the owner of the vehicle is not a third

party within the meaning of Section 147 of the Act; into

whose shoes the driver steps in. Though Section 163A

was noticed, reliance was placed on Dhanraj3 and Jhuma

Saha7 which dealt with claims under Section 166 of the

Act. It was held that under Section 163A of the Act the

liability is on the owner of the vehicle and a person

cannot be both ‘the claimant and also a recipient’ (sic);

presumably meaning the same individual who has the

liability cannot be the recipient of the compensation.

10. New India Assurance Co. Ltd. v. Sadanand

Mukhi9 considered the claim of the owner of the vehicle

9
(2009) 2 SCC 417

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arising from the death of his son while riding the vehicle,

which was insured in the father’s name. The specific

contention taken by the insurer was that given the

relationship of the owner and the deceased, the latter

was not a third party. The claim petition was under

Section 166 of the Act and it was specifically observed by

the Court that it is not a case of invocation of Section 163A

(sic – para 12); leading to an inference that then, the

decision would have been otherwise. Relying on Jhuma

Saha7 and Oriental Insurance Co. Ltd. v. Meena

Variyal10 the claim under Section 166 was disallowed.

11. Meena Variyal10 was a case in which a Regional

Manager was driving the vehicle owned by his

employer-company which met with an accident leading

to his death. The claimants though alleged that another

person was driving the vehicle, failed to implead the said

10
(2007) 5 SCC 428

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person; who in fact was the first informant which

information was also to the effect that the accident

occurred while the deceased was driving the vehicle.

The Tribunal absolved the Insurance Company on the

ground that the policy did not cover an employee driving

the vehicle and directed the owner of the car to pay the

compensation. The claimants filed an appeal in which this

Court found that the application under Section 166 would

not be maintainable since the deceased was not a third

party and an Insurance Policy under Section 147(1), in

addition to a third party would not cover the liability in

respect of death or injury arising out and in the course of

the employment of an employee of the insured unless it

be a liability arising under the Workmen’s

Compensation Act, 1923 in respect of a driver or a

conductor in the case of a public service vehicle or

otherwise the owner of the goods carried in a goods

vehicle or his representative. It was found that under

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Section 166, the claimants would not have a case, in both

instances of the deceased being an employee, having

driven the vehicle or having travelled in the vehicle; the

deceased being an employee not covered by the

Workmen’s Compensation Act. It was held that the

liability of the insured owner could be indemnified by

the insurer only if there is a special contract bringing

such person under the coverage of the policy. In fact this

Court has specifically referred to a three-Judge Bench of

this Court in Minu B. Mehta v. Balkrishna Ramchandra

Nayan11 wherein it was categorically held that proof of

negligence was necessary before the owner or the

Insurance Company could be held to be liable for the

payment of compensation in a motor accident claim case.

It was in recognition of the principle laid down in Minu

B. Mehta11 that the provision for no-fault liability came

to be incorporated, was the finding.

11
(1977) 2 SCC 441

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12. Ningamma v. United India Insurance Co. Ltd.12,

considered the claim of the wife and son, legal heirs of

the person who was driving a vehicle, which he

borrowed from the real owner. The accident occurred

while a bullock cart proceeding in front of the motorcycle

abruptly stopped, leading to a collision and the rider of

the motorcycle succumbing to the injuries sustained.

While noticing the beneficial provision under Section

163A, it was held that Section 163A will not have any

application when the claim is for the owner of the vehicle

who cannot be the recipient of the compensation and the

person who has the liability. Quite surprisingly this Court

remanded the matter to the Tribunal for consideration

under Section 166 of the Act.

13. Ramkhiladi v. United India Insurance Co.13 was

again with respect to a vehicular accident involving two

12
(2009) 13 SCC 710
13
(2020) 2 SCC 550

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motorbikes. The legal representatives of the deceased,

who was driving one of the motor cycles, filed an

application under Section 163A; impleading only the

owner and the Insurance Company of the motorcycle

driven by the deceased. Even the Insurance Company

had a contention that the rash and negligent driving of

the other motorcycle resulted in the accident; giving rise

to a valid claim under Section 166 against the owner and

insurer of the other vehicle. It was held that though in a

claim under Section 163A of the Act, there was no

requirement to plead or prove the negligence or default

of the driver or owner of the vehicle since a claim under

Section 163A is based on the principle of “no fault

liability”; still only if the deceased is a third party, the

claim can be maintained.

14. We have to observe that all the cases referred to

above are with respect to the claims raised by the legal

representatives of the deceased or the injured owner

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who was either the driver of the vehicle involved in the

accident or its passenger. While Dhanraj3, Jhuma Saha7

and Sadanand Mukhi9 dealt with claim petitions under

Section 166 of the Act, Rajni Devi8, Ningamma12 and

Ramkhiladi13 dealt with claims under Section 163A. In

Sadanand Mukhi9 while the Court rejected the

application filed under Section 166, the learned Judges

also made an observation that Section 163A was not

invoked. Insofar as Ningamma12 is concerned while the

claim under Section 163A was found to be not

maintainable there was a direction to the Tribunal to

examine whether the claim could have been sustained

under Section 166. There is considerable variance in the

observations made in the decisions but however as a

principle, statutory liability was held to be not applicable

in case of the owner/insured, since the coverage was

confined to third party risks or those specified in Section

147 read with Section 149.

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15. We cannot but notice that Section 163A is a special

provision brought in, which is a non-obstante clause

which overrides not only the entire provisions of the

Motor Vehicles Act, 1988 but also any other law for the

time being in force and any instrument having the force

of law. We cannot but understand the non-obstante

clause having a superseding effect over the laws of

insurance or even the terms in the policy, which

definitely is an instrument having the force of law. It has

also to be noticed that Section 163A makes liable the

owner of the vehicle or the authorized insurer to pay in

accordance with the IInd Schedule in the case of death or

permanent disablement due to the accident arising out of

the use of a motor vehicle.

16. Trite is the principle that the liability with respect

to an accident is on the tortfeasor and in the case of a

motor vehicle accident if the tortfeasor is the driver, the

owner has the vicarious liability, which liability is

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indemnified by the insurer, when there is a valid policy.

The liability is essentially of the owner but the provision,

in addition to the insured/owner makes liable the

authorized insurer too. Hence, when there is a valid

policy issued in the name of the vehicle involved in the

accident, a claim under Section 163A, as per the words

employed in the provision, according to us covers every

claim and is not restricted to a third party claim; without

any requirement of establishing the negligence, if death

or permanent disability is caused by reason of the motor

accident. This would also take in the liability with respect

to the death of an owner or a driver who stepped into the

shoes of the owner, if the claim is made under Section

163A dehors the statutory liability under Section 147 or

the contractual liability as reduced to writing in an

insurance policy. It would override the provisions under

Sections 147 & 149 along with the other provisions of the

M.V. Act and the law regulating insurance as also the

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terms of the policy confining the claim with respect to an

owner-driver to a fixed sum. This according to us is the

intention of incorporating the non-obstante clause under

Section 163A providing for no-fault liability claims, the

compensation for which is restricted to the structured

formula under the IInd Schedule. It is a beneficial piece of

legislation brought in, keeping in mind the enhanced

chances of an accident, resulting from the prevalence of

vehicles in the overcrowded roads of today. It was a

social security scheme, brought about considering the

need for a more comprehensive scheme of ‘no-fault’

liability for reason of the ever-increasing instances of

motor vehicle accidents and the difficulty in proving rash

and negligent driving.

17. We are of the opinion that this issue concerning

the liability of the insurer in a claim under Section 163A

qua the owner/insured requires an authoritative

pronouncement. The dictum arising from the various

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decisions of different benches of two Judges is that the

claim under Section 163A is restricted to third party risks,

which, with all the respect at our command, we are

unable to agree with. We are conscious that the

provision, Section 163A, appears under the Chapter with

the heading ‘Insurance of Vehicles Against Third Party

Risks’, but, as we observed the non-obstante clause is in

suppression of the entire Act, the other laws in force and

any instrument valid in law. We have to notice that the

three Judge Bench in Sunita Rathi4 did not consider the

issue arising hereunder. We perfectly agree with the

three Judge Bench decision in Minu B. Mehta11 which

held that under Section 166 the claimants have to prove

the negligence of the driver to sustain a claim with

respect to compensation arising from the death or injury

in a motor vehicle accident and the statutory liability

arises only with respect to third parties or those specified

11
(1977) 2 SCC 441

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under Section 147. We have, herein above doubted, with

due respect, the decisions of co-ordinate Benches of two

Judges which now will have to be placed before a larger

Bench. We direct the Registry to place the matter before

the Hon’ble the Chief Justice of India for appropriate

orders.

……….…………………….….. J.

(SUDHANSHU DHULIA)

……….…………………….….. J.

(K. VINOD CHANDRAN)

NEW DELHI;

AUGUST 01, 2025.

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