Partly allowed

The Oriental Insurance Co.Ltd v. Smt.Kaushilya Bai

Chhattisgarh HC11 Jun 2025MAC/219/2019

Case brief

AI extract

What is this about?

The High Court allowed the insurer's appeal partly. It upheld the Tribunal's 'pay and recover' direction despite the driver lacking a valid license, citing precedent. However, it modified the compensation quantum because the Tribunal deducted 1/4 for living expenses while only three dependents survived, instead of the deceased's father.

What did the court decide?

The award is modified; compensation recomputed to Rs. 9,26,800 based on a 1/3 deduction for personal expenses; pay and recover direction upheld.

The Oriental Insurance Co.Ltd Vs Smt.Kaushilya Bai — Money Laundering | Chhattisgarh HC (2025)

2025:CGHC:23327

NAFR

HIGH COURT OF CHHATTISGARH AT BILASPUR

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MAC No. 219 of 2019

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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

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--- Appellant

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versus

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1 - Smt.Kaushilya Bai Wd./o Late Vinod Singh Aged About 25 Years

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2 - Shiv Balak S/o Late Vinod Singh Aged About 8 Years Minor

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3 - Smt. Heermatiya Wd./ Late Mohan Singh Aged About 50 Years Respondent No.2 is minor, Through His Natural Guardian Smt. Kaushilya Bai (Mother)

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All are R/o Village Bundeli ,police Station Jharkhand Tahsil Manendragarh District Korea Chhattisgarh.

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4 - Rajkumar @ Pappu S/o Rajesh Kumar Aged About 29 Years R/o. village Udhanpur Police Station And Tehsil Khadganwa District Korea Chhattisgarh. (Driver)

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5 - Shafi Mohd. S/o Din Mohd. Aged About 62 Years R/o North Jharkhand Tahsil Manendragarh District Korea Chhattisgagrh (Owner Of The Vehicle )

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--- Respondent(s)

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BALRAM PRASAD DEWANGAN Digitally signed by BALRAM PRASAD DEWANGAN

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For Appellant :	Mr. Pravin Kumar Tulsyan, Advocate along with Mr. Anil Gulati, Advocate
For Respondent No.1 to 3 :	Mr. Punit Ruparel, Advocate along with Ms. Neha Ruparel, Advocate
For Respondents No.4 & 5 :	Ms. Usha Chandrakar, Advocate

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Hon'ble Shri Justice Parth Prateem Sahu

Order On Board

12/06/2025

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 2^nd 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.

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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.

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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/-.

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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.

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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.

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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.

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I have heard learned counsel for the parties and also perused the records of the Claims Tribunal.

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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.

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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.

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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.”

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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.

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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 :-

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“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 thirdparty 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)

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“110. The summary of our findings to the various issues as raised in these petitions is as follows:

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(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.

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(iii) The breach of policy condition e.g. disqualification of the driver or invalid driving licence of the driver, as contained in subsection (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.

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(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.

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(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.

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(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.

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(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.

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(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.

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(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.

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(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

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the 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.

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(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.”

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(emphasis supplied)

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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 thirdparty risks. The Tribunal is required to consider

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“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.”

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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 .

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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.

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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.

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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 the Claims Tribunal :	4,500 x 12 = 54,000.00
2.	Addition of 40% towards future prospects :	54,000.00 + 21,600.00 = 75,600.00
3.	1/3 deduction towards personal expenses :	75,600.00 – 25,200.00= 50,400.00
4.	Loss of dependency after application of multiplier of 17 :	50,400 x 17= 8,56,800.00
5.	For loss of love and affection and consortium, loss of estate and funeral expenses :	70,000.00
	Grand Total :	9,26,800.00
16.	Accordingly, the appeal filed by t	he appellant/Insurance Company is
	allowed in part. Now the claima	nts/respondents No.1 to 3 shall be
	entitled for total compensatio	n of Rs.9,26,800.00 instead of
	Rs.10,33,900/- as assessed an Tribunal.	d awarded by the learned Claims

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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.

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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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In the result, the appeal is allowed in part and the award impugned stands modified to the extent indicated above.

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Sd/(Parth Prateem Sahu) Judge

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Balram

The Oriental Insurance Co.Ltd v. Smt.Kaushilya Bai

Case brief

What is this about?

What did the court decide?

The Oriental Insurance Co.Ltd v. Smt.Kaushilya Bai

Case brief

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What did the court decide?

What the court decided

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