Hdfc Ergo Gen Ins Co. Ltd. Vs Kaushalya Devi & Ors.

The appellant before this Court was an opposite party in a case under Section 163A of the Motor Vehicles Act, 1988 and is aggrieved by the judgment and award dated 16.12.2018 passed by learned Additional District Judge, Fast Track Court – II, Howrah, in MAC Case No.61 of 2016.

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The claimants respondents being also aggrieved by the judgment and award passed by the learned Trial Judge has filed cross objection. The

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case of the claimants respondents before the learned Trial Court may be summed up thus: On 28.02.2016 at about 07-00 p.m. while victim Ajit Prasad along with his friend was passing through Bankim Setu slowly by bi-cycle under Howrah P.S. District-Howrah and while he reached near D.M. Office/Bunglow, the offending vehicle bearing No. WB/11A/9650 (Mini Bus) which was proceeding in rash and negligent manner, endangering human life and safety of others dashed the victim Ajit Prasad from the behind, Ajit fell down on the road, crushed his head and huge blood came out from the head. At once local people took the victim to District Hospital, Howrah, where the Medical Officer of emergency department declared the victim died on spot. Rash and negligent driving on the part of the driver of the offending vehicle bearing No. WB-11A/9650 (Mini Bus) was the sole and prime cause of this pathetic accident.

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Pursuant to filing of the case notice was issued upon the opposite parties. Opposite party vehicle owner did not contest the case. However, opposite party appellant HDFC Ergo General Insurance Company Ltd. contested the case by filing written statement as well as by adducing evidence . Issues were framed and evidence was adduced.

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Learned Trial Judge upon considering the evidence adduced and upon hearing the learned advocate was pleased to dispose of the claim case by observing and directing as follows.

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“Hence, it is

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ORDERED

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the instant M.A.C. Case no. 61 of 2016 be and the same is allowed on contest without costs against the insurance company being H.D.F.C Ergo General Insurance Co. Ltd. (O.P no. 2)

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The claimant no. 1 is entitled to a compensation of Rs. 3,84,000/- (Rupees three lakhs eighty four thousand) only.

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The O.P no. 2. H.D.F.C Ergo General Insurance Co. Ltd. is directed to pay to the claimant no. 1 Kaushalya Devi being the mother of victim Allt Prasad Rs.Rs. 3,84,000/- (Rupees three lakhs eighty four thousand) only. by account payee cheque together with interest @ 8% p.a to the claimant no.1 calculated from the date of filing of the present application till realisation. The O.P insurance company to draw a/c Payee cheque in favour of the claimant no.1 of amount mentioned above.

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Let a copy of this judgment be given to the O.P no.2. H.D.F.C Ergo General Insurance Co. Ltd for its information and necessary action.”

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The appellant insurance company being aggrieved by the judgment and award passed by the learned Trial Judge has come up with this appeal on the ground that the learned Trial Court did not grant liberty to recover the compensation amount from the vehicle owner although the driving license was proved to be fake. On the other hand, the respondent claimant preferred this counter objection on the ground that the quantum of compensation to be awarded under the statute is Rs.5 lakhs which the learned Trial Judge did not award.

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Mr. Singh learned advocate for the appellant insurance company submits that the learned Trial Judge erred in not granting any liberty to recover compensation from the vehicle owner in spite of the driving license proved to be fake.

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Attention is drawn with regard to the deposition of the motor vehicle inspector who was examined by the insurance company wherein it is stated that the driving license which was seized from the driver of the offending vehicle being WB2020090420141 is not found in the computer database.

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Further, learned Advocate draws attention to the deposition of the officer of the insurance company wherein the said officer upon inquiry

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has deposed that he came to know that the driving license of the driver of the offending vehicle is fake and, thus, the said vehicle owner has violated the conditions of the policy.

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Learned Advocate for the claimant respondent submits that although the claimant respondent is entitled to Rs.5 lakhs, but the learned Trial Judge erred in awarding Rs.3,84,000/-with 8% interest. Learned Advocate submits that the compensation awarded should be enhanced.

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With regard to the submission of learned Advocate for the insurance company that the driving license of driver of the offending vehicle was fake, it appears from the deposition of OPW 1 that upon verification that the said officer deposed that no such record of such driving license is found in the record of the motor vehicle authority.

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Although in the instant case, neither the vehicle owner nor the driver of the offending vehicle nor the I.O. was examined, but as the insurance company has a right to recover compensation in case of violation of condition of policy, mainly holding of fake driving license, the insurance company appellant should be granted liberty to recover the said compensation money upon giving the vehicle owner and the driver an opportunity of being heard.

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In this regard, it is necessary to quote the observation made in the case of National Insurance Co. Ltd. Vs. Lirasa Bibi & Anr. reported in FMA 1003 of 2025 It was observed in the said case as follows:

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“Now with regard to the submission of pay and recovery it is well settled that in case of violation of Insurance Policy Condition, the Insurance Company is entitled to recover from the insured the compensation amount awarded after making payment to the claimant/victim. However before proceeding to recover from the insured, the compensation amount the insurer upon making necessary enquiry and upon giving the vehicle owner an opportunity of being heard shall ascertain as to whether the violation of policy condition was bona fide unintentional or deliberate. Thereafter the Insurance Company may decide whether to proceed against the insured or to condone such breach.

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In the case of Reliance General Insurance Company Ltd. VS Niyati Kumar and ors FMA-1326 of 2025 reported in 2025 SCC Online Cal 8886 it was observed as follows:

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„Thus it is well settled that in order to absolve from liability of paying compensation and to obtain an order of pay and recovery it is mandatory for the

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Insurer to prove breach of the condition of Insurance Policy. Although all Insurance Companies are not „State‟ within the meaning of Article 12 of the Constitution of India but the fact that third party Motor Insurance Law is a beneficial Legislation and it has a public aspect and its object is to protect the public (third parties) from financial losses due to accidents caused by a motorist by ensuring that victims are compensated. On one hand, and also to protect the vehicle owners from bearing huge burden of compensation in case of accidents where the insurance policy condition is complied with on the other hand. Thus considering the public aspect of Motor Insurance Claims Insurance Companies have responsibilities to ensure that genuine accident claims are settled without delay and the vehicle owner who has not violated the terms of policy is not unnecessarily harassed. In the event the Insurance Company has reasons to believe that policy conditions were violated it should conduct an enquiry issue notice upon the vehicle owner and give him an opportunity of being heard. Where the Insurance Company is satisfied after enquiry that conditions of policy were not violated the allegations of violation of policy, namely the vehicle was driven without

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permit or without valid driving license should not be raised in Court.

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However upon Enquiry if the Insurance Company finds that there was violation of terms of policy such findings should be recorded by Insurance Company and necessary evidence should be adduced in Court. In such a case the Enquiry Report should also be filed in Court, apart from adducing evidence.

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A vehicle owner after getting his vehicle insured proceeds with the assumption that Insurance Company will settle the compensation claim in case of accidents thus the vehicle owners ordinarily do not appear in Court to contest claim cases. Thus in the event there is allegation of violation of condition of Policy the vehicle owners should be given an opportunity of being heard before such allegation being made in Court and before being examined in Court as witness. Upon such enquiry being made the Insurance Company can decide as to whether policy violation was minor or major and whether to condone such violation or recover the amount of compensation paid.

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In the instant case the Appellant Insurance Company has merely alleged that the vehicle was driven without permit on the ground permit was not seized by Police Authority but no steps were

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taken to conduct an enquiry and to examine officers of Regional Transport Authority as witness with regard to permit of the vehicle.‟

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In the event the violation of policy condition appears at the time of argument when the case is at the verge of disposal and there was no scope for the Insurance Company to make preliminary enquiry and give the vehicle owner an opportunity of being heard the Learned Tribunal after it arrives at a finding that there was breach of policy condition shall after directing payment by the Insurance Company to the claimant issue show cause upon the Insured/vehicle owner as to „why the compensation amount directed to be paid shall not be recovered.‟ Copy of the Award shall also be enclosed with the notice.

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Upon hearing the vehicle owner/insured with regard to violation of policy condition if the tribunal/Court comes to the conclusion that there was violation of policy condition which was not bona fide and without sufficient explanation, the Court/Tribunal will order recovery of amount directed to be Paid by Insurance Company.

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In the normal course where vehicle owners receives notice of claim case they ordinarily do not appear in Court on the ground that Insurance Company will settle the claim. However if subsequent allegation is made in the written

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statement about violation of policy condition and additional issue in this regard is framed, and evidence adduced by the Insurance Company further notice in this regard should be issued upon vehicle owner to meet the allegation. In the event the Court/Tribunal is of the view that notice to be issued after considering the evidence adduced in this regard Learned Tribunal may issue notice after evidence. In any event prior to directing recovery after payment notice in this regard must be issued specifically and the vehicle owner should be given an opportunity of being heard. In the instant case the vehicle owner/insured was not put to notice with regard to violation of policy condition for the purpose of pay and recovery. Thus no order with regard to recovery can be directed without the Appellant Insurance Company causing enquiry and giving the vehicle owner/insured an opportunity of being heard. Thus the Appellant National Insurance Company Limited is granted liberty to cause service of notice upon the vehicle owner/insured annexing copy of the order of trial Court and this order and upon hearing him with regard to violation of policy condition and recovery of compensation amount awarded. Upon hearing the insured respondent no-2 Subrata Nath the Appellant National Insurance Company Limited will decide whether to

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proceed against the said respondent for recovery. In the event recovery proceedings is instituted parties will be entitled to take relevant points involved to enable the Court/Tribunal to arrive at a just decision.”

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However, with regard to the submission of the learned Advocate for the claimant respondent, this Court is of the view that considering the amendment of the Motor Vehicles Act where the compensation under Section 163A is already fixed as Rs.5 lakh and the Motor Vehicles Claim legislation being a beneficial legislation the compensation awarded should be Rs.5 lakh.

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Thus, the respondent No.1 claimant is entitled to compensation of Rs.5 lakh from the appellant insurance company along with interest at the rate of 6% per annum from the date of filing claim case till today.

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The appellant insurance company shall deposit before the Registrar General, High Court, Calcutta, Rs.5 lakh along with interest at the rate of 6% per annum within 8 weeks from the date of communication of this order.

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In the event, the compensation awarded by the learned Trial Court is already deposited, the balance amount be deposited within 8 weeks. The claimant respondent will be entitled to

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withdraw the compensation upon compliance of necessary formalities.

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19. Upon deposit of the compensation amount, the appellant insurance company will be entitled to recover the compensation amount in accordance with law, upon complying the procedure as laid down in the case of National Insurance Co. Ltd.

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Vs. Lirasa Bibi & Anr. (Supra).

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This appeal FMA 223 of 2019 along with COT 160 of 2025 stand disposed of.

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Urgent Photostat certified copies of this order, if applied for, be supplied to the parties upon compliance of all necessary formalities.

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( BISWAROOP CHOWDHURY, J.)

Hdfc Ergo Gen Ins Co. Ltd. v. Kaushalya Devi & Ors.

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Hdfc Ergo Gen Ins Co. Ltd. v. Kaushalya Devi & Ors.

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