Chattisgarh High Court
The Oriental Insurance Co.Ltd vs Smt.Kaushilya Bai on 12 June, 2025
Author: Parth Prateem Sahu
Bench: Parth Prateem Sahu
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2025:CGHC:23327
NAFR
HIGH COURT OF CHHATTISGARH AT BILASPUR
MAC No. 219 of 2019
1 - The Oriental Insurance Co.Ltd Through Branch Manager Branch Office
Manendragarh Police Station And Tahsil Manendragarh District Korea
Chhattisgarh (Insurer), District : Koriya (Baikunthpur), Chhattisgarh
--- Appellant
versus
1 - Smt.Kaushilya Bai Wd./o Late Vinod Singh Aged About 25 Years
2 - Shiv Balak S/o Late Vinod Singh Aged About 8 Years Minor
3 - Smt. Heermatiya Wd./ Late Mohan Singh Aged About 50 Years
Respondent No.2 is minor, Through His Natural Guardian Smt. Kaushilya Bai
(Mother)
All are R/o Village Bundeli ,police Station Jharkhand Tahsil Manendragarh
District Korea Chhattisgarh.
4 – Rajkumar @ Pappu S/o Rajesh Kumar Aged About 29 Years R/o. village
Udhanpur Police Station And Tehsil Khadganwa District Korea Chhattisgarh.
(Driver)
5 – Shafi Mohd. S/o Din Mohd. Aged About 62 Years R/o North Jharkhand
Tahsil Manendragarh District Korea Chhattisgagrh (Owner Of The Vehicle )
— Respondent(s)
For Appellant : Mr. Pravin Kumar Tulsyan, Advocate along with
Mr. Anil Gulati, Advocate
BALRAM For Respondent No.1 to 3 : Mr. Punit Ruparel, Advocate along with
PRASAD
DEWANGAN Ms. Neha Ruparel, Advocate
Digitally signed
by BALRAM
PRASAD
DEWANGAN For Respondents No.4 & 5 : Ms. Usha Chandrakar, Advocate
Hon’ble Shri Justice Parth Prateem Sahu
Order On Board
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12/06/2025
1. Appellant/Insurance Company has filed this appeal under Section 173
of the Motor Vehicles Act, 1988 (for short ‘the Act of 1988’) against the
impugned award dated 13.09.2018 in Claims Case No.51 of 2015,
whereby the learned 2nd Additional Motor Accident Claims Tribunal,
Manendragarh, District – Korea (C.G.) has awarded total
compensation of Rs.10,33,900/- in favour of the claimants against the
death of Vinod Sigh, who died on account of motor accidental injuries.
2. Facts relevant for disposal of this appeal are that a claim application
was filed by the claimants/respondents No.1 to 3 being the legal
representative of the deceased Vinod Singh seeking total
compensation of Rs.37,10,000/- under different heads stating that on
08.07.2015 when Vinod Singh was going to village Banji on his motor
cycle and reached near Banji turn, respondent No.1 driving the
offending bus in a rash and negligent manner, dashed the motor cycle
of Vinod Singh, due to which, he suffered severe injuries and
succumbed to the injuries during the course of treatment. It was
further pleaded that at the time of accident, deceased Vinod Singh
was 30 years of young and healthy man and was working as driver
and was earning Rs.6,000/- per month. The claimants were dependent
upon the deceased and because of his untimely death they are facing
great financial crises.
3. The appellant/Insurance Company, owner and driver of the offending
vehicle filed their reply to the claim application and resisted the claim
of claimants. It was specifically pleaded by the appellant/Insurance
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Company in its reply that respondent No.1 was not having any valid
driving licence to drive the vehicle at the time of accident. The learned
Claims Tribunal after appreciation of pleadings and evidence brought
on record by respective parties, allowed the claim application in part
and awarded compensation of Rs.10,33,900/-.
4. Learned counsel for the appellant/Insurance Company would submit
that the impugned award passed by the learned Claims Tribunal is bad
in law and erroneous. He would further submit that the
appellant/Insurance Company has filed this appeal primarily on two
grounds first that, learned Claims Tribunal even after recording a
finding that on the date of incident, driver of the offending vehicle was
not possessed with valid and effective driving licencse has issued a
direction to first pay the amount of compensation and thereafter
recover the same from owner, is not sustainable. The learned Claims
Tribunal has applied the deduction of 1/4 towards living and personal
expenses overlooking the fact that on the date of passing of award
there were only three claimants in the claim application. He also
pointed out that initially there were four applicants including father of
the deceased, however, on the date of filing of application and
accident, the father of the deceased was aged 55 years and was
earning member, he cannot be said to be dependent upon the income
of the deceased, therefore, the appropriate deduction would be 1/3
instead of 1/4. He contented that on the date of accident driver was
not possessing valid and effective driving licence as such it is the case
of no driving license, therefore, the learned Claims Tribunal could not
have issued a direction of pay and recover. In support of his
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contention, he relied upon the decision of Hon’ble Supreme Court in
case of Balu Krishna Chavan Vs. Reliance General Insurance
Company Ltd., reported in AIR ONLINE 2022 SC 1692. He further
contended that even if the second ground on which the direction of
pay and recover could not be issued is that the claimants have not
produced any evidence that they will face difficulty in recovery of the
amount of compensation awarded by the learned Claims Tribunal from
the owner/driver of the offending vehicle. In support of his contention,
he placed reliance upon the decision of Hon’ble Supreme Court in
case of Oriental Insurance Company Ltd. Vs. Smt. Raj Kumari,
reported in AIR 2008 SC 403.
5. Learned counsel for respondents No.1 to 3/claimants vehemently
opposes the submission of learned counsel for the appellant and
would submit that insurance of the offending vehicle with the
appellant/insurance company is not disputed. The deceased was third
party and therefore, the learned Claims Tribunal considering that there
was breach of conditions of insurance policy while exonerating the
insurance company from its liability has rightly directed the insurance
company to first pay the amount of compensation to the claimants and
thereafter to recover the same from the owner and driver of the
offending vehicle, which cannot be said to be erroneous in the facts of
the case. He also contended that the amount of compensation
awarded by the learned Claims Tribunal is just and proper, which does
not call for any interference.
6. Learned counsel for respondents No.4 and 5 would support the award
and would submit that direction of pay and recovery cannot be said to
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be faulted with as the owner of the vehicle has purchased the
insurance policy of the offending vehicle and the policy was in
currency on the date of accident.
7. I have heard learned counsel for the parties and also perused the
records of the Claims Tribunal.
8. It is not in dispute that Vinod Singh while driving his motor cycle met
with an accident with the offending bus and succumbed to the motor
accidental injuries. On the date of accident, the offending vehicle was
insured with the appellant/insurance company. Admittedly, the
deceased Vinod Singh was third party. The learned Claims Tribunal
considering that the non-applicant No.1 driver of the offending vehicle
or the non-applicant No.2 owner of the vehicle did not produce the
driving license of the driver of the offending vehicle, recorded finding
that the driver of the offending vehicle did not possess the effective
and valid driving license. Such finding recorded by the learned Claims
Tribunal is not put to challenge by the driver or the owner of the
offending vehicle, hence, in the facts of the case the finding recorded
by the learned Claims Tribunal is based on the appreciation of
evidence that on the date of accident, the driver of the offending
vehicle did not possess effective and valid driving license on the
relevant date.
9. The insurance policy available on record as Ex.N.A.-4 would show that
it bears the driver’s clause, which reads as under :-
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“Driver’s clause.
Any person including insured: Provided that a person
driving holds an effective driving license at the time of
the accident and is not disqualified from holding or
obtaining such a license. Provided also that the person
holding an effective Learner’s license may also drive the
vehicle when not used for the transport of passengers at
the time of accident and that such a person satisfies the
requirements of Rule 3 of the Central Motor Vehicles
Rules, 1989.”
10. It provides that a person holding an effective driving license and is not
disqualified from holding or obtaining such licence, shall be authorized
person to drive the vehicle. The offending vehicle was being driven by
the person not possessed with driving license, hence, there is clear
breach of the conditions of the insurance policy, therefore, the learned
Claims Tribunal has rightly exonerated the insurance company from its
liability under the insurance policy to satisfy the amount of
compensation. However, the Claims Tribunal has issued a direction to
the appellant/insurance company to first pay the amount of
compensation and thereafter to recover the same from owner and
driver.
11. The issue with respect to issuance of direction to the insurance
company to first pay the amount of compensation and thereafter, to
recover the same from the owner and driver was firstly considered by
the Hon’ble Supreme Court in case of National Insurance Company
Vs.Swaran Singh, reported in (2004) 3 SCC 297. Relying upon the
decision in case of Swaran Singh (supra), the Hon’ble Supreme
Court in case of Shamanna & Anr. Vs. Divisional Manager, Oriental
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Insurance Company Ltd. & Ors., reported in (2018) 9 SCC 650 has
considered the issue with regard to issuance of direction to pay and
recover, in a case of no driving license with the driver on the date of
accident and observed in para 5, 6 and 13, which reads as under :-
“5. In the case of third-party risks, as per the decision in
National Insurance Co. Ltd. v. Swaran Singh [National Insurance
Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297 : 2004 SCC (Cri)
733] , the insurer had to indemnify the compensation amount
payable to the third-party and the insurance company may
recover the same from the insured. Doctrine of “pay and
recover” was considered by the Supreme Court in Swaran Singh
case [National Insurance Co. Ltd. v. Swaran Singh, (2004) 3
SCC 297 : 2004 SCC (Cri) 733] wherein the Supreme Court
examined the liability of the insurance company in cases of
breach of policy condition due to disqualifications of the driver or
invalid driving licence of the driver and held that in case of third-
party risks, the insurer has to indemnify the compensation
amount to the third-party and the insurance company may
recover the same from the insured. Elaborately considering the
insurer’s contractual liability as well as statutory liability vis-à-vis
the claims of third parties, the Supreme Court issued detailed
guidelines as to how and in what circumstances, “pay and
recover” can be ordered. In para 110, the Supreme Court
summarised its conclusions as under : (SCC pp. 341-42)“110. The summary of our findings to the various issues as
raised in these petitions is as follows:
(i) Chapter XI of the Motor Vehicles Act, 1988 providing
compulsory insurance of vehicles against third-party risks is a
social welfare legislation to extend relief by compensation to
victims of accidents caused by use of motor vehicles. The
provisions of compulsory insurance coverage of all vehicles are
with this paramount object and the provisions of the Act have to
be so interpreted as to effectuate the said object.
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(ii) An insurer is entitled to raise a defence in a claim petition
filed under Section 163-A or Section 166 of the Motor Vehicles
Act, 1988, inter alia, in terms of Section 149(2)( a)(ii) of the said
Act.
(iii) The breach of policy condition e.g. disqualification of the
driver or invalid driving licence of the driver, as contained in sub-
section (2)(a)(ii) of Section 149, has to be proved to have been
committed by the insured for avoiding liability by the insurer.
Mere absence, fake or invalid driving licence or disqualification
of the driver for driving at the relevant time, are not in
themselves defences available to the insurer against either the
insured or the third parties. To avoid its liability towards the
insured, the insurer has to prove that the insured was guilty of
negligence and failed to exercise reasonable care in the matter
of fulfilling the condition of the policy regarding use of vehicles
by a duly licensed driver or one who was not disqualified to drive
at the relevant time.
(iv) Insurance companies, however, with a view to avoid their
liability must not only establish the available defence(s) raised in
the said proceedings but must also establish “breach” on the
part of the owner of the vehicle; the burden of proof wherefor
would be on them.
(v) The court cannot lay down any criteria as to how the said
burden would be discharged, inasmuch as the same would
depend upon the facts and circumstances of each case.
(vi) Even where the insurer is able to prove breach on the part of
the insured concerning the policy condition regarding holding of
a valid licence by the driver or his qualification to drive during
the relevant period, the insurer would not be allowed to avoid its
liability towards the insured unless the said breach or breaches
on the condition of driving licence is/are so fundamental as are
found to have contributed to the cause of the accident. The
Tribunals in interpreting the policy conditions would apply “the
rule of main purpose” and the concept of “fundamental breach”
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to allow defences available to the insurer under Section 149(2)
of the Act.
(vii) The question, as to whether the owner has taken
reasonable care to find out as to whether the driving licence
produced by the driver (a fake one or otherwise), does not fulfil
the requirements of law or not will have to be determined in
each case.
(viii) If a vehicle at the time of accident was driven by a person
having a learner’s licence, the insurance companies would be
liable to satisfy the decree.
(ix) The Claims Tribunal constituted under Section 165 read with
Section 168 is empowered to adjudicate all claims in respect of
the accidents involving death or of bodily injury or damage to
property of third-party arising in use of motor vehicle. The said
power of the Tribunal is not restricted to decide the claims inter
se between claimant or claimants on one side and insured,
insurer and driver on the other. In the course of adjudicating the
claim for compensation and to decide the availability of defence
or defences to the insurer, the Tribunal has necessarily the
power and jurisdiction to decide disputes inter se between the
insurer and the insured. The decision rendered on the claims
and disputes inter se between the insurer and insured in the
course of adjudication of claim for compensation by the
claimants and the award made thereon is enforceable and
executable in the same manner as provided in Section 174 of
the Act for enforcement and execution of the award in favour of
the claimants.
(x) Where on adjudication of the claim under the Act the Tribunal
arrives at a conclusion that the insurer has satisfactorily proved
its defence in accordance with the provisions of Section 149(2)
read with sub-section (7), as interpreted by this Court above, the
Tribunal can direct that the insurer is liable to be reimbursed by
the insured for the compensation and other amounts which it
has been compelled to pay to the third-party under the award of
10the Tribunal. Such determination of claim by the Tribunal will be
enforceable and the money found due to the insurer from the
insured will be recoverable on a certificate issued by the
Tribunal to the Collector in the same manner under Section 174
of the Act as arrears of land revenue. The certificate will be
issued for the recovery as arrears of land revenue only if, as
required by sub-section (3) of Section 168 of the Act the insured
fails to deposit the amount awarded in favour of the insurer
within thirty days from the date of announcement of the award by
the Tribunal.
(xi) The provisions contained in sub-section (4) with the proviso
thereunder and sub-section (5) which are intended to cover
specified contingencies mentioned therein to enable the insurer
to recover the amount paid under the contract of insurance on
behalf of the insured can be taken recourse to by the Tribunal
and be extended to claims and defences of the insurer against
the insured by relegating them to the remedy before regular
court in cases where on given facts and circumstances
adjudication of their claims inter se might delay the adjudication
of the claims of the victims.”
(emphasis supplied)
6. As per the decision in Swaran Singh case [National
Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297 : 2004
SCC (Cri) 733] , onus is always upon the insurance company to
prove that the driver had no valid driving licence and that there
was breach of policy conditions. Where the driver did not
possess the valid driving licence and there are breach of policy
conditions, “pay and recover” can be ordered in case of third-
party risks. The Tribunal is required to consider
“as to whether the owner has taken reasonable care to
find out as to whether the driving licence produced by the driver
… does not fulfil the requirements of law or not will have to be
determined in each case”.
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13. Since the reference to the larger Bench in Parvathneni
case [National Insurance Co. Ltd. v. Parvathneni, (2009) 8 SCC
785 : (2009) 3 SCC (Civ) 568 : (2009) 3 SCC (Cri) 943] has
been disposed of by keeping the questions of law open to be
decided in an appropriate case, presently the decision in
Swaran Singh case [National Insurance Co. Ltd. v. Swaran
Singh, (2004) 3 SCC 297 : 2004 SCC (Cri) 733] followed in
Laxmi Narain Dhut [National Insurance Co. Ltd. v. Laxmi Narain
Dhut, (2007) 3 SCC 700 : (2007) 2 SCC (Cri) 142] and other
cases hold the field. The award passed by the Tribunal directing
the insurance company to pay the compensation amount
awarded to the claimants and thereafter, recover the same from
the owner of the vehicle in question, is in accordance with the
judgment passed by this Court in Swaran Singh [National
Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297 : 2004
SCC (Cri) 733] and Laxmi Narain Dhut [National Insurance Co.
Ltd. v. Laxmi Narain Dhut, (2007) 3 SCC 700 : (2007) 2 SCC
(Cri) 142] cases. While so, in our view, the High Court ought not
to have interfered with the award passed by the Tribunal
directing the first respondent to pay and recover from the owner
of the vehicle. The impugned judgment [Shamanna v. Laxman,
2016 SCC OnLine Kar 6928] of the High Court exonerating the
insurance company from its liability and directing the claimants
to recover the compensation from the owner of the vehicle is set
aside and the award passed by the Tribunal is restored.”
12. The decision relied upon by the learned counsel for
appellant/insurance company in case of Balu Krishna Chavan
(supra) and in case of Smt. Raj Kumari (supra) is on different facts.
13. The Act of 1988 is indeed considered a piece of welfare legislation.
Under the Act the injured or the family members of the deceased can
file an application seeking compensation against the loss suffered by
them and to protect their interest and to save them from deprivation of
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the income of the deceased, in the opinion of this Court, the direction
of pay and recover issued by the Claims Tribunal is just and proper,
which does not call for any interference by this Court. Accordingly, the
said grounds raised by the learned counsel for the appellant is sans
merit and it is not sustainable, therefore, it is hereby repelled.
14. So far as the second grounds raised by learned counsel for appellant
with respect to the deduction of 1/4 instead of 1/3 is concerned,
perusal of the record would show that on the date of filing of claim
application, there were 4 claimants including Mohan Singh i.e. father
of the deceased. During the pendency of the claim application, he died
and his name was deleted vide order dated 19.12.2016. The
impugned award was passed by the learned Claims Tribunal i.e. on
13.09.2018 i.e. much after the death of the one of the claimant. On
the date of passing of the award, there were only three claimants and
therefore, considering the decision of Hon’ble Supreme Court in case
of Sarla Verma (Smt.) & Ors. Vs. Delhi Transport Corporation &
Anr., reported in (2009) 6 SCC 121, the appropriate deduction towards
personal living expenses of the deceased would be 1/3 instead of 1/4.
However, the learned Claims Tribunal has applied the deduction of 1/4
which is not sustainable and accordingly it is hereby set-aside. It is
held that appropriate deduction towards personal living expenses of
the deceased would be 1/3. It is ordered accordingly.
15. For the forgoing discussions the amount of compensation to be
awarded to the claimants required recomputation, which is as under :-
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SN Head Amount (in Rs.).
1. Annual income assessed by : 4,500 x 12 = 54,000.00
the Claims Tribunal
2. Addition of 40% towards future : 54,000.00 + 21,600.00 = 75,600.00
prospects
3. 1/3 deduction towards personal : 75,600.00 – 25,200.00= 50,400.00
expenses
4. Loss of dependency after : 50,400 x 17 = 8,56,800.00
application of multiplier of 17
5. For loss of love and affection : 70,000.00
and consortium, loss of estate
and funeral expenses
Grand Total : 9,26,800.00
16. Accordingly, the appeal filed by the appellant/Insurance Company is
allowed in part. Now the claimants/respondents No.1 to 3 shall be
entitled for total compensation of Rs.9,26,800.00 instead of
Rs.10,33,900/- as assessed and awarded by the learned Claims
Tribunal.
17. The Insurance Company can recover the amount of compensation to
be paid by it, from insured in the same proceedings as held by the
Hon’ble Supreme Court in case of Oriental Insurance Company Ltd.
Vs. Nanjappan & Ors., reported in (2004) 13 SCC 224.
18. As submitted by learned counsel for the appellant/Insurance
Company, the appellant/Insurance Company has already deposited
75% the amount of compensation awarded by the learned Claims
Tribunal, the said amount of compensation shall be adjusted in the
amount of compensation as awarded by this Court. Rest of the
conditions mentioned in the impugned award shall remain intact.
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19. In the result, the appeal is allowed in part and the award impugned
stands modified to the extent indicated above.
Sd/-
(Parth Prateem Sahu)
Judge
Balram