Karnataka High Court
The Legal Manager vs Shailaja on 28 July, 2025
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IN THE HIGH COURT OF KARNATAKA,
KALABURAGI BENCH
DATED THIS THE 28TH DAY OF JULY, 2025
BEFORE
THE HON'BLE MR. JUSTICE C M JOSHI
MISCL. FIRST APPEAL NO. 201632 OF 2021 (MV-D)
BETWEEN:
THE LEGAL MANAGER,
IFFCO TOKIO G.I.C. LTD.,
G1, G12 AND G13, ASIAN ARCADE,
NEAR ANAND HOTEL,
S.B. TEMPLE ROAD,
KALABURAGI.
(NOW REP. BY AUTHORISED SIGNATORY,
KASTURI NAGAR, BENGALURU).
...APPELLANT
(BY SMT. PREETI PATIL MELKUNDI, ADVOCATE)
Digitally signed AND:
by NANDINI R
Location: 1. SHAILAJA,
HIGH COURT W/O SHARANABASAPPA BIRADAR,
OF
KARNATAKA AGED ABOUT 42 YEARS,
OCC: HOUSEHOLD.
2. BHAGYASHREE,
D/O SHARANBASAPPA BIRADAR,
AGED ABOUT 16 YEARS,
OCC: STUDENT.
3. BHAGESH,
S/O SHARANBASAPPA BIRADAR,
AGED ABOUT 13 YEARS,
OCC. STUDENT.
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4. POOJA,
D/O SHARANBASAPPA BIRADAR,
AGED ABOUT 11 YEARS,
OCC. STUDENT.
RESP. NO. 2 TO 4 HEREIN ARE MINORS,
U/G OF THEIR MOTHER RESP. NO.1 HEREIN,
ALL ARE R/O. E/9/693/17, NEAR HANUMAN TEMPLE,
FILTERBED, SHAHABAZAR TANDA, KALABURAGI,
NOW AT DHARMWADI, TQ. ALAND,
DIST. KALABURAGI-585 101.
5. SHARANBASAPPA,
S/O GURULINGAPPA BIRADAR,
AGED ABOUT 46 YEARS,
OCC. MASON,
(GOUNDI) WORK,
R/O. E/9/693/17, NEAR HANUMAN TEMPLE,
FILTERBED, SHAHABAZAR TANDA,
KALABURAGI-585 101.
...RESPONDENTS
(BY SRI BABU H METAGUDDA, ADVOCATE FOR R1 TO R4;
R-5 SERVED)
THIS MFA IS FILED UNDER SECTION 173(1) OF THE
MOTOR VEHICLES ACT, PRAYING TO SET-ASIDE THE
IMPUGNED JUDGMENT AND AWARD DATED 31.03.2021 IN MVC
NO. 156/2019 PASSED BY THE SENIOR CIVIL JUDGE AND
MACT AT ALAND.
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 28.04.2025 AND COMING ON FOR
'PRONOUNCEMENT OF JUDGMENT', IN THE PRINCIPAL BENCH
AT BENGALURU THIS DAY, THE COURT DELIVERED THE
FOLLOWING:
CORAM: HON'BLE MR. JUSTICE C.M. JOSHI
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CAV JUDGMENT
(PER: HON’BLE MR. JUSTICE C.M. JOSHI)
Being aggrieved by the judgment and award in
MVC.No.156/2019 dated 31.03.2021 by learned Senior
Civil Judge and MACT, Aland, Kalaburagi District, the
Insurance Company (who was respondent No.2 therein)
has approached this Court in appeal questioning the
liability fastened upon it.
2. The factual matrix of the case is that on
27.08.2015, deceased Gururaj was proceeding towards
Muktambika College of Science, Kalaburagi, on his Hero
Honda Splendor Plus motorcycle bearing registration
No.KA-32-EB-1761, which was owned by his father-
Sharanabasappa i.e., respondent No.1. The deceased-
Gururaj fell down from the said motorcycle due to a skid in
front of Pratibha Photo Studio near Lalgeri Cross and he
succumbed to the injuries on the way to the hospital. The
Gulbarga Additional Traffic Police registered a case in
Cr.No.132/2015 and ultimately, filed a report that the
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deceased was negligent but the case stands abated. The
petitioners who are the mother, brother and sisters of the
deceased filed a claim petition under Section 163A of the
Motor Vehicles Act, 1988 before the Tribunal contending
that the deceased was aged 24 years working as a Clerk in
Muktambika College of Science, Kalaburagi, earning a
salary of Rs.40,000/- per annum. They sought the
compensation from the owner and insurer of the vehicle.
3. In pursuance to the notice, respondent No.1 did
not appear and as such, he was placed ex-parte.
Respondent No.2-Insurance Company appeared and
resisted the petition denying the age, occupation and
income of the deceased. It was contended that deceased-
Gururaj himself was driving the motorcycle in a rash and
negligent manner and he fell down on the road sustaining
injuries and later succumbed to it. The deceased being the
tortfeasor, is not covered by the policy of insurance issued
by respondent-Insurance Company. Inter-alia, the
Insurance Company also denied the claim as it is
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exorbitant and imaginary and the mandatory conditions of
the policy were violated by the rider as he did not possess
a valid driving licence.
4. On the basis of the above contentions, the
Tribunal framed the following:
Issues
“1) Whether petitioners prove that on 27.08.2015
at about 12-00 hours, the deceased Gururaj
S/o Sharanabasappa Biradar was proceeding
on Hero Honda Splendor Plus motorcycle
bearing Regn.No.KA-32-EB-1761, near to
Arab Masjid, Opposite to Pratibha Photo
Studio on Lalgeri Cross to Goa Hotel Road of
Kalaburagi, due to skid of said motorcycle, he
fell down on the ground and sustained
grievous injuries and he died on the way to
hospital?
2) Whether the petitioners prove that, they are
the legal heirs of the deceased Gururaj S/o
Sharanabasappa Biradar?
3) Whether the respondent No.2 proves that, the
rider of the Hero Honda Splendor Plus
motorcycle bearing Regn. No. KA-32-EB-1761
was not having valid and effective driving
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license and he was not authorized to drive the
specific class of vehicle as on the date of
accident, and violated the terms on the date
of accident, and violated the terms and
conditions of the policy, as such the
respondent No.2 is not liable to pay
compensation to the petitioners?
4) Whether petitioners are entitled for
compensation as prayed in the petition? If so,
what is the compensation amount and from
whom?
5) What order or award?”
5. Petitioner No.1, who is mother of the deceased
was examined as PW.1 and Exs.P1 to 8 were marked in
evidence. The official of respondent No.2-Insurance
Company was examined as RW.1 and the policy was
marked as Ex.R1.
6. After hearing the arguments, the Tribunal held
issue Nos.1, 2 and 4 in the affirmative, issue No.3 in the
Negative and fastening the liability on the Insurance
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Company, awarded a compensation of Rs.6,86,000/-
under following heads:
1 LOSS OF DEPENDENCY Rs. 6,80,000/-
2 TRANSPORTATION CHARGES Rs. 3,000/-
AND FUNERAL EXPENSES
3 LOSS OF ESTATE Rs. 3,000/-
TOTAL AWARD AMOUNT Rs. 6,86,000/-
7. While coming to such conclusion, it considered
the judgments in the case of UNITED INDIA INSURANCE
COMPANY LTD VS. SUNIL KUMAR AND ANOTHER1,
NINGAMMA AND ANOTHER VS. UNITED INDIA
INSURANCE COMPANY LIMITED2, RAM KHILADI AND
ANOTHER VS. UNITED INDIA INSURANCE COMPANY AND
ANOTHER3 and held that the policy was in force and
therefore, the insurer is liable to pay the compensation.
8. Being aggrieved by fastening the liability on the
Insurance Company, the Insurance Company has
approached this Court in appeal.
1
2017 SCC OnLine SC 1504
2
(2009) 13 SCC 710
3
(2020) 2 SCC 550
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9. On appeal being admitted, notice was issued to
the respondents. The claimants/petitioners have appeared
through their counsel and owner of the vehicle
(respondent No.5 herein) did not appear despite service of
notice. The Tribunal records have been secured and the
arguments by learned counsel appearing for the appellant
and respondent Nos.1 to 4 were heard.
10. Learned counsel Smt.Preeti Patil Melkundi,
appearing for the appellant-Insurance Company submits
that when there is no involvement of a third party vehicle,
it being a self made accident by the deceased, who
become tortfeasor in himself, is not covered under the
policy of Insurance. She submits that the deceased cannot
be termed as third party and therefore, the Insurance
Company is not bound to compensate the LRs of the
deceased as there is no statutory requirement of the
same. If the policy covers the rider for personal accident
claim, only to that extent, it is liable under the contractual
obligations. She submits that the contractual liability with
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a tortfeasor, who comes under the insured is only to the
extent of Rs.1,00,000/- provided an additional premium is
paid under the policy. It is stated that the policy at Ex.R1
covers the liability of the owner/driver to the extent of
Rs.1,00,000/- under the contract, which if refused by
Insurance Company would be determinable before a
different forum but certainly not the MACT.
11. In this regard, she relies upon the judgment in
the case of SMT.SANGEETA AND OTHERS VS.
SRI.KRISHNA CHARI AND ANOTHER4. She also relies
upon the judgment by a Division Bench of this Court in the
case of APPAJI (SINCE DECEASED) AND ANOTHER VS.
M.KRISHNA AND ANOTHER5 and THE ORIENTAL
INSURANCE CO. LTD. VS. SMT.MAHABUNNI6.
12. Per contra, Sri. Babu H. Metagudda, learned
counsel appearing for the petitioners (respondent Nos.1 to
4 herein) submits that the question raised is no more res-
4
2018 Kant MAC 552
5
2004 ACJ 1289
6
2008 ACJ 1158
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integra. It is submitted that a Division Bench of this Court
in the case of SMT.PRIYA AND OTHERS VS.
SRI.ARMUGAM AND ANOTHER7 has considered this aspect
in detail and has held that when the petition is filed under
Section 163A of MV Act, despite the claim was by the
tortfeasor, the Insurance Company is liable to pay the
compensation. In furtherance of his contention, he relies
on the judgment of the Apex Court in case of NATIONAL
INSURANCE COMPANY LTD. VS. SINITHA AND OTHERS8,
SHIVAJI AND ANOTHER VS. DIVISIONAL MANAGER
UNITED INDIA INSURANCE CO. LTD AND ORS.9, THE
BRANCH MANAGER VS. SMT.LALITABAI AND OTHERS10,
MR.B.MAKBUL PASHA AND OTHERS VS.
S.R.BHAKTHAVATHSALAM AND ANOTHER11, THE
ORIENTAL INSURANCE CO. LTD. VS. SMT.BHAGYALAKSHI
AND OTHERS12. It is his submission that Section 163A of
the Motor Vehicles Act, specifically states that the question
7
MFA 3889/2011 DD 11.06.2019
8
2012 (2) SCJ 227
9
2018 AIAR (Civil) 803
10
MFA No.31626/2009 DD 30.08.2012
11
MFA No.3172/2019 DD 13.04.2023
12
MFA No.10260/2010 DD 19.08.2020
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of negligence cannot be looked into and the compensation
has to be awarded to the claimant as per the structured
formula. He submits that going into the question of the
negligence and due to whose fault the accident occurred is
an anathema for the purport of Section 163A of MV Act
and therefore, no indulgence is required in respect of the
judgment and award passed by the Tribunal.
13. The question that arises in this appeal is,
Whether the LRs of deceased rider of a two wheeler, not
being the owner can claim compensation for an accident
where no other vehicle is involved, under Section 163A of
the MV Act?
14. To understand the provisions of Section 163A of
MV Act, in a better manner, the same is reproduced
below:
“163A. Special provisions as to payment of
compensation on structured formula basis.–
(1) Notwithstanding anything contained in this Act
or in any other law for the time being in force or
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instrument having the force of law, the owner of
the motor vehicle of the authorised insurer shall be
liable to pay in the case of death or permanent
disablement due to accident arising out of the use
of motor vehicle, compensation, as indicated in the
Second Schedule, to the legal heirs or the victim,
as the case may be.
Explanation.–For the purposes of this sub-section,
“permanent disability” shall have the same
meaning and extent as in the Workmen’s
Compensation Act, 1923 (8 of 1923).
(2) In any claim for compensation under sub-
section (1), the claimant shall not be required to
plead or establish that the death or permanent
disablement in respect of which the claim has been
made was due to any wrongful act or neglect or
default of the owner of the vehicle or vehicles
concerned or of any other person.
(3) The Central Government may, keeping in view
the cost of living by notification in the Official
Gazette, from time to time amend the Second
Schedule.
15. The law on tort is based on ‘fault liability’. The
person who commits an ‘actionable negligence’ is liable to
compensate for the injuries caused due to his negligence.
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If he is indemnified by a contract of insurance in respect of
such acts during which the ‘actionable negligence’ was
committed, then the indemnifier or the insurer is liable
due to the contractual obligations. It is pertinent to note
that a borrower of a vehicle from the registered owner
commits such actionable negligence, the borrower would
be stepping into the shoes of the owner or the insured. In
view of this, if a borrower commits an actionable
negligence, the insurer, who issued the Insurance Policy
would be held liable due to the contractual liability. The
question is ‘Whether the statute require the insurer to
compensate the insured even if the contract is otherwise?’.
16. The provisions of Section 163A of MV Act, carve
out an exception to this principle. It is worth to note that
Sections 165 and 166 of Motor Vehicles Act, dilute the
principle of ‘Strict Liability’ by incorporating the word ‘use
of the vehicle’ instead of ‘actionable negligence’.
Obviously, it was in the object of providing a solace to the
victims of the accidents arising out of the use of the motor
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vehicle. The use of the motor vehicles is an indispensable
requirement of facilities of transportation in any growing
economy of the Country. Therefore, in order to augment
and to meet the effects of the accidents on any person or
his family, it was felt that the requirement of an
‘actionable negligence’ under Sections 165 and 166 of MV
Act, need to diluted further. Therefore, the provisions of
Section 163A of MV Act, were introduced. It is pertinent to
note that the compensation payable under Sections 165
and 166 of MV Act, would be more comprehensive in
nature, but the compensation under Section 163A of MV
Act, would be as stated in the Schedule-2 of the Motor
Vehicles Act. Keeping these aspects in mind, the case law
that has developed concerning Section 163A of MV Act,
needs to be considered by this Court.
17. In the case of APPAJI (supra), the Division
Bench of this Court in paragraph Nos.22 and 23 has held
as below:
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“22. Two decisions relied upon by the
appellants may at this stage be noticed. In Kokla
Devi’s case (supra), a Division Bench of the High
Court of Himachal Pradesh held that Section 163A
had brought about a drastic change in the concept
of tortuous liability prevaling prior to it. The Court
was of the view that the non obstante clause in
Section 163A permitted even the tort feasor to
claim compensation on the principle of ‘no fault
liability’. With respect to the Hon’ble Judges who
delivered the said decision we find it difficult to
subscribe to that view. Section 163A of the Act no
doubt bring about a significant change in the legal
position as regards the obligation to prove fault is
concerned, but the change is not so drastic so as
to make even a tort feasor entitled to claim
compensation for his own act of rashness,
negligence or imprudence. The non obstante
clause in Section 163A simply dispenses with proof
of fault by the claimants against the driver or the
owner of the vehicle involved in the accident. The
claimant under Section 163A therefore need not
prove that the driver to the owner of the vehicle
was at fault in the sense that the accident had
occurred on account of any negligence or rashness
on his part. That does not however mean that the
claimant can maintain a claim on the basis of his
own fault or negligence and argue that even when
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he himself may have caused the accident on
account of his own rash and negligent driving, he
can nevertheless make the insurance company pay
for the same. Inasmuch as Section 163A dispenses
with proof of fault, it does so only where the
claimant is not solely responsible for the accident.
The correct approach appears to us to be to find
out whether in the absence of Section 163A, a
claim could on the facts pleaded be maintained by
the claimant of the answer is ‘no’ because the
claimant was himself the tort feasor, the provisions
of Section 163A would not come to his rescue and
make such a claim maintainable. If the answer is
‘yes’ the beneficial provisions of Section 163A
would absolve the claimant of the obligation to
prove that the accident had taken place on account
of the fault of the driver or owner of the vehicle
provided he is willing to accept the amount of
compensation offered according to the structured
formula prescribed in the Schedule. That is the
only way in which the anomaly arising out of a
contrary interpretation can possibly be avoided.
23. In New India Assurance Co. Ltd.‘s case
(supra), a Division Bench of Gujarat High Court
also took the view that the non obstante clause
appearing in Section 163A permitted even the tort
feasor to claim compensation and that the
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insurance company can contest the claim only on
the ground of total absence of a contract of
insurance and not otherwise. For the reasons that
we have set out above, we regret our inability to
follow that line of reasoning. As held by the
Supreme Court in Oriental Insurance Co. Ltd.’s
case (supra) the non obstante clause simply
excludes determination of compensation on the
principle of fault liability. The said provision does
not permit a person to place a premium upon his
own fault and make the insurance company pay
for the same.”
(underlining supplied)
18. In the case of SMT.MAHABUNNI (supra),
learned Single Judge of this Court in paragraph Nos.12 to
16 has held as below:
“12. In the light of these rival contentions the
questions that arise for consideration in the
present appeals are:
a. Whether an insurer is liable to satisfy the
claim for compensation on the death of the
rider of the vehicle insured, when a claim is
made under Section 163-A of the Act.
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b. Whether the insurer can claim that a
policy of insurance issued in terms of Section
147 of the Act, would not require it to cover
the risk to the life of the rider of a two-
wheeler.
c. Whether a claim for compensation be
made by the insured himself or his legal
representatives on injury or death, as the
case may be, by the use of his own vehicle
which is involved in an accident, against the
insurer.
13. In answering these questions the limits of
liability of the insurer in respect of a policy of
insurance issued in terms of Chapter XI of the Act,
need to be kept in view. Section 147 sets out the
requirements and limits of liability under a policy
to be issued in compliance with Chapter XI of the
Act. The said section provides that the policy must
insure a owner against any liability to a third party
caused by or arising out of the use of the vehicle in
a public place and against death or bodily injury to
any passenger of a public service vehicle caused
by or arising out of the use of the vehicle in a
public place. The policy shall not be required to
cover an employee of the insured in respect of
bodily injury or death arising out of and in the
course of his employment. An exception is that the
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policy must cover a liability arising under
the Workmen’s Compensation Act, 1923, in
respect of the death or bodily injury to an
employee who is engaged in driving the vehicle or
who serves as a conductor in a public service
vehicle or an employee who travels in the vehicle
of the employer carrying goods, if it is a goods
carriage. It is clear that the object is to ensure
compulsory coverage of the liability relating to the
person or properties of third parties and in respect
of employees of the insured employer. Hence
whether the claim is under Section 140, 163-A or
under 166 of the Act, the limit of liability of the
insurer in respect of a policy issued as required
under the Act, would not cover the risk to the
owner, or any other who is permitted the use of
the vehicle, other than an employee.
14. It is not possible to envisage that Section
163-A is a departure from the concept of tortious
liability. The non obstante clause incorporated in
the section does not alter the legal basis on which
a liability arises under Section 147 of the Act nor
does it provide a different basis for the same. It
would not permit even the tort-feasor to claim
compensation on the principle of no fault liability.
As held by the Apex Court in Oriental Insurance
co. Ltd v. Hansrajbhai V. Kodala 2001 ACJ 827, the
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non obstante clause simply excludes determination
of compensation on the principle of fault liability.
The provision does not permit a person to place a
premium upon his own fault and make the
insurance company pay for the same.
15. The first question is answered in the
negative. In the instant case the Insurer cannot be
made liable even if the claim petition is
under Section 163-A of the Act.
16. The second question is answered in the
affirmative. In the absence of any special contract,
the Insurer can question any liability sought to be
fastened beyond the requirement of the terms
of Section 147 of the Act. The terms of any special
contract are enforceable elsewhere and not before
the Motor Accident Claims Tribunal.”
(underlining supplied)
19. This Court in the case of NAVEEN VS.
BASANNA13 relied on the judgment in the case of APPAJI
(Supra) and held in paragraph No.8 as below:
“8. In catena of decisions, this Court has held
that, the statutory liability contemplated under the13
MFA No.201440/2019 DD 24.03.2025
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provisions of the M.V.Act, emanate from the fact
that the driver or the rider is the tortfeasor and as
such, he is liable to pay the compensation for the
tort committed by him. The owner of the vehicle
being vicariously liable, is to compensate
the victim out of vicarious liability. The liability of
the Insurance Company would arise from the
contractual relationship with the owner of the
vehicle. In other words, the claimant has to be a
third party to maintain a claim petition under the
provisions of 163A or 166 of the M.V.Act.”
20. Another Bench of this Court in the case of
SMT.SANGEETA (Supra) after referring as many as 11
judgments including APPAJI (Supra) has summarized its
opinion in paragraph No.35 as below:
“35. To sum up, in the opinion of this Court, a
claim petition seeking payment of compensation in
a road accident, by the owner of the vehicle or by
any other person driving the vehicle and not being
an employee, is not maintainable under Section
163A or Section 166 of the M.V.Act, before MACT.
This position holds good even where the vehicle is
insured for own damages and premium is paid to
cover the risk of “owner-cum-driver” under
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comprehensive policy or contract policy. The basis
for maintaining a petition, both under Sections
163A and 166 of the M.V.Act is provided
under Section 147 of the M.V.Act. The difference
between Sections 163A and 166 is, the need to
prove negligence under Section 166 and non-
requirement of proving negligence under Section
163A. The other difference is unlimited liability on
the Insurer under Section 166 and payment of
compensation on structured formula basis as
indicated in the Second schedule of M.V.Act in case
of a claim made under Section 163A. The only
exception in Section 163A is that a claim petition
could be maintained by an employee (or his legal
heirs) being a driver/rider having to plead and
prove that the motor vehicle accident was caused
during the course of employment. As stated
earlier, in the context of chapter XI of the MV Act,
wherever the word “employee” is used, it is
impliedly referable to the meaning it receives
under the Workmen’s Compensation Act, 1923.”
21. As against the above judgments, there are set
of judgments which have a deferent view, which are relied
by the counsel for the petitioners. In the case of
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SMT.PRIYA (Supra), a Division Bench of this Court
observes in paragraph Nos.26 to 30 as below:
“26. The rapid growth of fast moving
transportation and high technology is leading
towards risks of numerous injuries to person and
property caused by collisions. To meet these
consequences, there should be a sensible and
equitable system of compensation and sound
paraphernalia of prevention of these hazards.
27. The person who uses the vehicles on
the road should be held liable to make
compensation to anyone who is killed or injured
as a consequence of its use. The provisions
relating to no-fault liability as contained in
the Motor Vehicle Act 1988 evolved to serve the
purpose of the social security of the victim. On
perusal of the above judgments’ it can be
inferred that the concept of strict liability
recognised under Sections 140 and 163A of the
Motor Vehicles Act, 1988.
28. The rule of strict liability which is based
on causation rather than fault, has become
increasingly prominent in the laws of continental
European countries. French Civil Code makes a
person liable for damage caused by things of
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which he is in charge. ‘Strict liability is imposed
in Germany, the Netherlands and Switzerland.
The departure from tort liability began in
Germany in nineteenth century in the form of
scheme of industrial accident insurance. Since
then it has spread all over the world.
29. In the Federal units of the United
States of America exist a variety of provision
regarding imposition of no-fault liability. Some
States have introduced ‘add-on- plans’ schemes,
giving no- fault compensation for road injuries
without any restriction on tort liability other than
an offset of no-fault compensation paid or
payable.
30. In the circumstances, it is held that the
principle of strict liability has been incorporated
under Section 163A of the Act. Therefore, even in
a case where there is no tortfeasor and no
negligence caused by any tort feasor, but on
account of the use of the motor vehicle in a
public place, an injury or death is caused, in such
a situation under Section 163A of the Act read
with Second Schedule, on structured formula
basis, the claim petition would have to be
considered dehors the aspect of negligence. But,
in the instant case, the claim petition has been
dismissed. In the circumstances, we set aside the
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judgment and award of the Tribunal. Matter is
remanded to the concerned Tribunal to re-
consider the case afresh in light of the law laid
down by the Hon’ble Supreme Court and followed
by this Court and in accordance with law.”
(underlining supplied)
22. The judgment relied by the learned counsel for
the petitioners in the case of SINITHA (Supra) appear to
be not in their favour. The Apex Court discussed the law
on this aspect and the interpretation of Sections 163A,
140 and 166 of MV Act in detail as below:
“1. Shijo, aged 27 years, was riding a
motorcycle bearing Registration No. KL 8J 6528,
on 3-3-1999 on Wadakkanchery-Kunnamkulam
Road. George K., also aged 27 years, was pillion
riding with Shijo. While giving way to a bus coming
from the opposite side at Kumaranelly, the
motorcycle hit a big laterite stone lying on the tar
road. On impact, the motorcycle overturned.
Resultantly, the rider as also the pillion rider
suffered injuries. They were taken to Divine
Medical Centre, Wadakkanchery, for treatment.
Thereafter, the rider Shijo was taken to West Fort
Hospital, Thrissur. The pillion rider George K. was
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taken to Medical College Hospital, Thrissur. Shijo
succumbed to his injuries on the following day.
George K. survived. The motorcycle was insured
with the petitioner herein i.e. the National
Insurance Company Ltd. A valid Act-only policy, at
the time of the occurrence, is admitted.
xxxxxx
3. The Tribunal by its order dated 19-4-2005
allowed the claim petition filed by the wife, minor
children and parents of Shijo. They were awarded
compensation of Rs 4,26,650. The instant
compensation included Rs 2000 towards funeral
expenses, Rs 5000 for loss of consortium to the
widow, Rs 2500 as loss of estate, Rs 4150 towards
medical expenses and Rs 5000 as compensation
for pain and suffering. Additionally, interest at the
rate of 6% per annum was awarded with effect
from 18-8-2000 (i.e. the date of filing the claim
petition), till realisation. The claimants were also
awarded costs quantified at Rs 8000.
xxxxxxx
19. We are, therefore, satisfied that it would be
incorrect to hold that the controversy raised in the
instant case can be deemed to have been settled
by this Court in Hansrajbhai case [(2001) 5 SCC
175] . We have delineated the inferences drawn by
us from the observations recorded in Hansrajbhai
case in extenso hereinabove. We have also
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reproduced hereinabove para 22 of the judgment
in Hansrajbhai case so as to determine with some
sense of exactitude the conclusions drawn in the
aforesaid judgment. It cannot be stated that the
issue arising in the present controversy has been
dealt with or adjudicated upon in Hansrajbhai case.
Additionally, the contentions advanced at the
hands of the learned counsel for the appellant,
more particularly reliance placed by him on sub-
section (4) of Section 140 has certainly not been
dealt with in Hansrajbhai case .
20. Thus viewed, it is not possible for us to
conclude that the issue arising in this case can be
stated to have been settled. The assertion made
by the learned counsel for the respondents that
the issue raised in the instant case, by the learned
counsel of the petitioner, is no longer res integra,
can therefore not be accepted.
xxxxxxx
29. The heading of Section 163-A also needs a
special mention. It reads, “Special provisions as to
payment of compensation on structured formula
basis”. It is abundantly clear that Section 163-A
introduced a different scheme for expeditious
determination of accident claims. Expeditious
determination would have reference to a provision
wherein litigation was hitherto before (before the
insertion of Section 163-A of the Act) being long
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drawn. The only such situation (before the
insertion of Section 163-A of the Act) wherein the
litigation was long drawn was under Chapter XII of
the Act. Since the provisions under Chapter XII are
structured under the “fault” liability principle, its
alternative would also inferentially be founded
under the same principle. Section 163-A of the Act
catered to shortening the length of litigation by
introducing a scheme regulated by a pre-
structured formula to evaluate compensation. It
provided for some short cuts, as for instance, only
proof of age and income need to be established by
the claimant to determine the compensation in
case of death. There is also not much discretion in
the determination of other damages, the limits
whereof are also provided for.
30. All in all, one cannot lose sight of the fact
that claims made under Section 163-A can result in
substantial compensation. When taken together
the liability may be huge. It is difficult to accept
that the legislature would fasten such a prodigious
liability under the “no-fault” liability principle
without reference to the “fault” grounds. When
compensation is high, it is legitimate that the
insurance company is not fastened with liability
when the offending vehicle suffered a “fault”
(“wrongful act”, “neglect”, or “defect”) under a
valid Act-only policy. Even the instant process of
reasoning leads to the inference that Section 163-
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A of the Act is founded under the “fault” liability
principle.
32. Additionally, we have concluded
hereinabove that on the conjoint reading of
Sections 140 and 163-A, the legislative intent is
clear, namely, that a claim for compensation raised
under Section 163-A of the Act need not be based
on pleadings or proof at the hands of the claimants
showing absence of “wrongful act”, being “neglect”
or “default”. But that is not sufficient to determine
that the provision falls under the “fault” liability
principle. To decide whether a provision is
governed by the “fault” liability principle the
converse has also to be established i.e. whether a
claim raised thereunder can be defeated by the
party concerned (the owner or the insurance
company) by pleading and proving “wrongful act”,
“neglect” or “default”.
33. From the preceding paras (commencing
from para 22), we have no hesitation in concluding
that it is open to the owner or the insurance
company, as the case may be, to defeat a claim
under Section 163-A of the Act by pleading and
establishing through cogent evidence a “fault”
ground (“wrongful act” or “neglect” or “default”). It
is, therefore, doubtless that Section 163-A of the
Act is founded under the “fault” liability principle.
To this effect we accept the contention advanced
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at the hands of the learned counsel for the
petitioner.
xxxxxxx
40. In the present case, only one witness was
produced before the Tribunal. The aforesaid
witness appeared for the claimants. The witness
asserted that while giving way to a bus coming
from the opposite side, the motorcycle being
ridden by Shijo hit a large laterite stone lying on
the tar road, whereupon the motorcycle
overturned and the rider and the pillion rider
suffered injuries. The petitioner Insurance
Company herein did not produce any witness
before the Tribunal. In the absence of evidence to
contradict the aforesaid factual position, it is not
possible for us to conclude that Shijo was
“negligent” at the time when the accident
occurred. Since no pleading or evidence has been
brought to our notice (at the hands of the learned
counsel for the petitioner), it is not possible for us
to conclude that the inverse onus which has been
placed on the shoulders of the petitioner under
Section 163-A of the Act to establish negligence,
has been discharged by it. We, therefore, find no
merit in the first contention advanced at the hands
of the learned counsel for the appellant.
41. The second contention advanced at the
hands of the learned counsel for the petitioner was
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that Shijo being the rider of the motorcycle, cannot
be treated as a third party. It was pointed out that
the claim under Section 163-A can only be raised
at the behest of a third party. It seems that the
instant determination raised at the hands of the
learned counsel for the petitioner is based on the
determination rendered by this Court in Oriental
Insurance Co. Ltd. v. Jhuma Saha [(2007) 9 SCC
263] wherein this Court held as under: (SCC p.
265, para 10)
“10. The deceased was the owner of the
vehicle. For the reasons stated in the claim
petition or otherwise, he himself was to be
blamed for the accident. The accident did not
involve motor vehicle other than the one
which he was driving. The question which
arises for consideration is that the deceased
himself being negligent, the claim petition
under Section 166 of the Motor Vehicles Act,
1988 would be maintainable.”
According to the learned counsel for the petitioner,
since the rider of the vehicle involved in the
accident was Shijo himself, he would stand in the
shoes of the owner, and as such, no claim for
compensation can be raised in an accident caused
by him, under Section 163-A of the Act.
42. To substantiate his second contention, it
would be essential for the petitioner to establish
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that Shijo having occupied the shoes of the owner,
cannot be treated as the third party. Only factual
details brought on record through reliable evidence
can discharge the aforesaid onus. During the
course of hearing, despite our queries, the learned
counsel for the petitioner could not point out the
relationship between Shijo and the owner of the
motorcycle involved in the accident. Shijo is not
shown to be an employee of the owner. He was
not even shown as the representative of the
owner. In order to establish the relationship
between Shijo and the owner, the petitioner
Insurance Company could have easily produced
either the owner himself as a witness, or even the
claimants themselves as witnesses. These or other
witnesses who could have brought out the
relationship between the owner and Shijo were not
produced by the petitioner herein, before the
Tribunal. The petitioner has, therefore, not
discharged the onus which rested on its shoulders.
43. Since the relationship between Shijo and
the owner has not been established, nor the
capacity in which he was riding the vehicle has
been brought out, it is not possible for us to
conclude that Shijo while riding the motorcycle on
the fateful day was an agent, employee or
representative of the owner. It was open to the
petitioner to defeat the claim for compensation
raised by the respondents by establishing that the
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rider Shijo represented the owner, and as such,
was not a third party, in terms of the judgment
rendered by this Court in Oriental Insurance Co.
Ltd. case [(2007) 9 SCC 263 : (2007) 3 SCC (Cri)
443] . The petitioner failed to discharge the said
onus. In view of the above, it is not possible for us
to accede to the second contention advanced at
the hands of the learned counsel for the
petitioner.”
(underlining supplied)
Thus, it is clear that even in a case where the claim
petition is filed under Section 163A of MV Act, the fault
liability persists.
23. In the case of SHIVAJI (Supra), where the
accident was involving two vehicles and the owner and
insurer of both vehicles were party to the proceedings, a
Three Judge Bench of Supreme Court has held in
paragraph Nos.4 and 5 as below:
“2. The appellants are parents of Shaji Shivaji
Dudhade, who was the driver of a car bearing
Registration No. MH-06/W-604, which met with an
accident on 15-6-2010. The accident occurred
when the car dashed into a truck, bearing
Registration No. KA-25/B-5363, resulting in his
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death; the death of two other persons and injuries
to two more persons, all of whom were travelling
in the car.
xxxxxxx
4. The insurer preferred an appeal before the
High Court of Karnataka. The appellants also filed
an appeal before the High Court seeking
enhancement of compensation awarded by the
Tribunal. The High Court, by its impugned
judgment, allowed the insurer’s appeal and set
aside the order of the Tribunal. The High Court
opined that the idea behind enacting Section 163A
is to ensure that even in the absence of any
mistake on the part of the driver of the offending
vehicle, the injured person or the legal heirs of the
deceased person are compensated by the owner
and the insurer. As a result, under this provision,
since the victim has been contemplated to be an
innocent third party, protection is extended only to
the injured person or to the legal heirs of the
deceased victim, and not to the driver who is
responsible for causing the said accident. Since the
deceased driver in this case was the tortfeasor and
responsible for causing the accident, the High
Court held that compensation could not have been
awarded to the appellants.
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5. The issue which arises before us is no
longer res integra and is covered by a recent
judgment of three judges of this Court in United
India Insurance Co. Ltd. v. Sunil Kumar &
Anr.,1 wherein it was held that to permit a defence
of negligence of the claimant by the insurer and/or
to understand Section 163A of the Act as
contemplating such a situation, would be
inconsistent with the legislative object behind
introduction of this provision, which is “final
compensation within a limited time frame on the
basis of the structured formula to overcome
situations where the claims of compensation on
the basis of fault liability was taking an unduly long
time”. The Court observed that if an insurer was
permitted to raise a defence of negligence
under Section 163A of the Act, it would “bring a
proceeding under Section 163A of the Act at par
with the proceeding under Section 166 of the Act
which would not only be self- contradictory but
also defeat the very legislative intention”.
Consequently, it was held that in a proceeding
under Section 163A of the Act, the insurer cannot
raise any defence of negligence on the part of the
victim to counter a claim for compensation.”
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It is pertinent to note that it was not an accident
which was solely on the negligence of the deceased.
Therefore, on facts it can be distinguished easily.
24. In the case of SUNIL KUMAR (Supra) after
referring to SINITHA (Supra), DEEPAL GIRISHBHAI SONI
AND OTHERS VS. UNITED INDIA INSURANCE CO. LTD.,
BARODA14 and ORIENTAL INSURANCE CO. LTD. VS.
15
HANSRAJBHAI V. KODALA holds in paragraph No.8 as
below:
“8. From the above discussion, it is clear that grant
of compensation under Section 163-A of the Act on
the basis of the structured formula is in the nature
of a final award and the adjudication thereunder is
required to be made without any requirement of
any proof of negligence of the driver/owner of the
vehicle(s) involved in the accident. This is made
explicit by Section 163A(2). Though the aforesaid
section of the Act does not specifically exclude a
possible defence of the Insurer based on the
negligence of the claimant as contemplated by
Section 140(4), to permit such defence to be14
(2004) 5 SCC 385
15
(2001) 5 SCC 175
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introduced by the Insurer and/or to understand the
provisions of Section 163A of the Act to be
contemplating any such situation would go
contrary to the very legislative object behind
introduction of Section 163A of the Act, namely,
final compensation within a limited time frame on
the basis of the structured formula to overcome
situations where the claims of compensation on
the basis of fault liability was taking an unduly long
time. In fact, to understand Section 163A of the
Act to permit the Insurer to raise the defence of
negligence would be to bring a proceeding
under Section 163A of the Act at par with the
proceeding under Section 166 of the Act which
would not only be self-contradictory but also
defeat the very legislative intention.”
(underlining supplied)
25. In fact, this issue was settled in the case of
SINITHA (Supra). It appears that the final outcome of the
judgment in the case of SINITHA (Supra) is relied, but not
the reasoning concerning the requirement of fault liability.
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26. In the case of RAM KHILADI (Supra) after
relying on the case of NINGAMMA (Supra), it was
observed as below:
“9. xxxxxx
The short question which is posed for consideration
of this Court is whether, in the facts and
circumstances of the case and in a case where the
driver, owner and the insurance company of
another vehicle involved in an accident and whose
driver was negligent are not joined as parties to
the claim petition, meaning thereby that no claim
petition is filed against them and the claim petition
is filed only against the owner and the insurance
company of another vehicle which was driven by
the deceased himself and the deceased being in
the shoes of the owner of the vehicle driven by
himself, whether the insurance company of the
vehicle driven by the deceased himself would be
liable to pay the compensation under Section 163-
A of the Act? Whether the deceased not being a
third party to Vehicle No. RJ 02 SA 7811 being in
the shoes of the owner can maintain the claim
under Section 163-A of the Act from the owner of
the said vehicle?
9.4. An identical question came to be considered
by this Court in Ningamma [Ningamma v. United
India Insurance Co. Ltd., (2009) 13 SCC 710] . In
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that case, the deceased was driving a motorcycle
which was borrowed from its real owner and met
with an accident by dashing against a bullock cart
i.e. without involving any other vehicle. The claim
petition was filed under Section 163-A of the Act
by the legal representatives of the deceased
against the real owner of the motorcycle which
was being driven by the deceased. To that, this
Court has observed and held that since the
deceased has stepped into the shoes of the owner
of the vehicle, Section 163-A of the Act cannot
apply wherein the owner of the vehicle himself is
involved. Consequently, it was held that the legal
representatives of the deceased could not have
claimed the compensation under Section 163-A of
the Act. Therefore, as such, in the present case,
the claimants could have even claimed the
compensation and/or filed the claim petition under
Section 163-A of the Act against the driver, owner
and insurance company of the offending vehicle
i.e. motorcycle bearing Registration No. RJ 29 2M
9223, being a third party with respect to the
offending vehicle. However, no claim under Section
163-A was filed against the driver, owner and/or
insurance company of the motorcycle bearing
Registration No. RJ 29 2M 9223. It is an admitted
position that the claim under Section 163-A of the
Act was only against the owner and the insurance
company of the motorcycle bearing Registration
No. RJ 02 SA 7811 which was borrowed by the
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deceased from the opponent-owner Bhagwan
Sahay. Therefore, applying the law laid down by
this Court in Ningamma [Ningamma v. United
India Insurance Co. Ltd., (2009) 13 SCC 710] ,
and as the deceased has stepped into the shoes of
the owner of the vehicle bearing Registration No.
RJ 02 SA 7811, as rightly held by the High Court,
the claim petition under Section 163-A of the Act
against the owner and insurance company of the
vehicle bearing Registration No. RJ 02 SA 7811
shall not be maintainable.
9.5. It is true that, in a claim under Section 163-A
of the Act, there is no need for the claimants to
plead or establish the 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. It is also true that the claim petition
under Section 163-A of the Act is based on the
principle of no-fault liability. However, at the same
time, the deceased has to be a third party and
cannot maintain a claim under Section 163-A of
the Act against the owner/insurer of the vehicle
which is borrowed by him as he will be in the
shoes of the owner and he cannot maintain a claim
under Section 163-A of the Act against the owner
and insurer of the vehicle bearing Registration No.
RJ 02 SA 7811. In the present case, the parties
are governed by the contract of insurance and
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under the contract of insurance the liability of the
insurance company would be qua third party only.
In the present case, as observed hereinabove, the
deceased cannot be said to be a third party with
respect to the insured vehicle bearing Registration
No. RJ 02 SA 7811. There cannot be any dispute
that the liability of the insurance company would
be as per the terms and conditions of the contract
of insurance. As held by this Court
in Dhanraj [Dhanraj v. New India Assurance Co.
Ltd., (2004) 8 SCC 553] , 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. In the said decision,
it is further held by this Court that Section 147
does not require an insurance company to assume
risk for death or bodily injury to the owner of the
vehicle.
9.6. In view of the above and for the reasons
stated above, in the present case, as the claim
under Section 163-A of the Act was made only
against the owner and insurance company of the
vehicle which was being driven by the deceased
himself as borrower of the vehicle from the owner
of the vehicle and he would be in the shoes of the
owner, the High Court has rightly observed and
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held that such a claim was not maintainable and
the claimants ought to have joined and/or ought to
have made the claim under Section 163-A of the
Act against the driver, owner and/or the insurance
company of the offending vehicle i.e. RJ 29 2M
9223 being a third party to the said vehicle.
9.9. Now, so far as the submission made on behalf
of the claimants that in a claim under Section 163-
A of the Act mere use of the vehicle is enough and
despite the compensation claimed by the heirs of
the owner of the motorcycle which was involved in
the accident resulting in his death, the claim under
Section 163-A of the Act would be maintainable is
concerned, in view of the decision of this Court
in Rajni Devi [Oriental Insurance Co. Ltd. v. Rajni
Devi, (2008) 5 SCC 736] , the aforesaid cannot be
accepted. In Rajni Devi , it has been specifically
observed and held that the provisions of Section
163-A of the Act cannot be said to have any
application with regard to an accident wherein the
owner of the motor vehicle himself is involved.
After considering the decisions of this Court
in Oriental Insurance Co. Ltd. v. Jhuma
Saha [Oriental Insurance Co. Ltd. v. Jhuma Saha,
(2007) 9 SCC 263] ; Dhanraj [Dhanraj v. New
India Assurance Co. Ltd., (2004) 8 SCC 553]
; National Insurance Co. Ltd. v. Laxmi Narain
Dhut [(2007) 3 SCC 700]
and Premkumari v. Prahlad Dev [(2008) 3 SCC
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193] , it is ultimately concluded by this Court that
the liability under Section 163-A of the Act is on
the owner of the vehicle as a person cannot be
both, a claimant as also a recipient and, therefore,
the heirs of the owner could not have maintained
the claim in terms of Section 163-A of the Act. It is
further observed that, for the said purpose, only
the terms of the contract of insurance could be
taken recourse to. In the recent decision of this
Court in Ashalata Bhowmik [National Insurance Co.
Ltd. v. Ashalata Bhowmik, (2018) 9 SCC 801] , it
is specifically held by this Court that the parties
shall be governed by the terms and conditions of
the contract of insurance. Therefore, as per the
contract of insurance, the insurance company shall
be liable to pay the compensation to a third party
and not to the owner, except to the extent of Rs 1
lakh as observed hereinabove.”
(underlining supplied)
27. Thus, it is consistently held by the Apex Court
that even in the event of a claim petition filed under
Section 163A of the MV Act, it cannot be said that it is on
a principle of ‘No Fault Liability’. The ‘Fault Liability
Principle’ applies when the driver/rider claims against his
own insurer. More so, when there is no other vehicle which
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is involved, in as much as he steps into the shoes of the
owner. The judgment in the case of SUNIL KUMAR
(Supra) does not address the reasoning in the case of
SINITHA (Supra) and as such, the same can be
distinguished.
28. In the case on hand, except the motorcycle,
which was driven by the deceased, no other vehicle was
involved. He was riding a vehicle owned by his father.
There is no pleading by respondent No.1/owner that the
vehicle was being used by the deceased without his
knowledge, so as to bring the exceptions under Section
147 of the Act in play, to restrict the defences of the
insurer. Therefore, the facts involved in the case of
SINITHA (Supra) and SMT.MAHABUNNI (supra) are
applicable to the facts of the case on hand on all fours.
29. Moreover, as observed in paragraph No.9.9 in
the case of RAM KHILADI (Supra), the deceased having
stepped into the shoes of owner, the LRs of the deceased
cannot maintain the petition. If the contractual obligations
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provide, the relief is elsewhere. The perusal of the policy
at Ex.R1 shows that there was no personal accident cover.
No premium was paid covering the risk of the rider/owner.
30. The Tribunal, though mention the ratio laid
down in the case of RAM KHILADI (Supra) and
NINGAMMA (Supra), without giving any reason allows the
petition. Obviously, it has not applied its mind to the ratio
laid in the aforementioned cases. In the result, the point
raised is answered in favour of the appellant-Insurer.
31. For aforesaid reasons, the appeal deserves to
be allowed. Hence the following:
ORDER
The appeal is allowed.
The impugned judgment and award is set
aside. The petition in MVC.No.156/2019 stands
dismissed.
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The amount in deposit be refunded to the
appellant-Insurance Company.
Sd/-
(C M JOSHI)
JUDGENR/-
List No.: 19 Sl No.: 1