Bandhan Singh Vs Itwar Singh

2 - Sangram Singh S/o Late Mangalu Singh (Owner Of The Vehicle), Both are R/o Dhelwadih Colony Q.N. 14/131 Tahsil Katghora, District- Korba, Chhattisgarh.

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3 - The Iffco Tokio General Insurance Co. Ltd. Iffco Sadan C-1, DistrictSaket New Delhi. .........(Insurer)

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4 - I.C.I.C.I. Lombard General Insurance Co.Ltd. Address I.C.I.C.I. Lombard House 414 Vir Sawarkar Marg Siddhi Vinayak Mandir Prabha Devi Mumbai.400025. ...........(Insurer).

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….Respondents

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For Appellants	: Mr. Vikash Patel, Advocate on behalf of Mr. P.K. Tulsyan, Advocate
For Respondent No.1 & 2	: Mr. Abhinav Tiwari, Advocate on behalf of Mr. Manish Upadhyay, Advocate
For Respondent No.3	: Mr. P.R. Patankar, Advocate
For Respondent No.4	: Mr. Amitesh Pathak, Advocate on behalf of Mr. Amrito Das, Advocate

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Hon'ble Shri Justice Parth Prateem Sahu

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BALRAM PRASAD DEWANGAN Order On Board Digitally signed by BALRAM PRASAD DEWANGAN 18/07/2025 Date: 2025.08.06 13:25:36 +0530

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Claimants/appellants have filed this appeal under Section 173 of the Motor Vehicles Act, 1988 (for short ‘the Act of 1988’) seeking enhancement of compensation awarded by the learned Additional Motor Accident Claims Tribunal, Katghora, District – Korba (for short ‘the Claims Tribunal’) vide award dated 16.10.2018 passed in Claim Case No.153/2016 thereby allowing application in part and awarding Rs.36,82,444/- as compensation in a death case.

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Facts relevant for disposal of this appeal are that appellants/claimants filed an application under Section 166 of the Act of 1988 claiming total compensation of Rs.42,63,816/- under different heads on account of the death of Revti Raman Singh, who died in the road accident, pleading therein that on 18.4.2016 Revati Raman Singh was going to his night duty on his motorcycle No. CG12 AM 4933, when he reached near Arda Turn, non-applicant No.1 while driving the offending motor cycle no. CG12 B 6901 rashly and negligently, hit Revati Raman Singh due to which he suffered serious injuries. He was immediately taken to SECL Banki Hospital. Looking to his serious conditions, he was referred to Balaji Trauma Centre Hospital, Korba for treatment, where during treatment he died on 19.4.2016. It was also pleaded that at the time of accident, deceased was employed as General Mazdoor Category-I and getting net monthly salary of Rs.22,262/-. The claimants are dependent upon him and due to his untimely death they are facing great financial crises.

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No reply was filed on behalf of respondent No.1 and 2. Non-applicant No.3 filed its reply resisting the claim of the claimants. It was pleaded that the deceased, fell from his own motorcycle and suffered fatal

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injuries. It was further pleaded that the incident was reported after 45 days implicating the owner and driver of the alleged offending vehicle in order to get compensation. Additionally, it was pleaded that Nonapplicant No. 1 did not possess a valid and effective driving licence at the time of the incident, and motorcycle was being driven in violation of the terms and conditions of the insurance policy. Non-applicant No.4 also filed its reply denying the averments made in the application. It was pleaded that accident occurred due to rash and negligent driving of motor cycle driven by non-applicant No.1.

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The learned Claims Tribunal upon appreciation of the pleadings and the evidence brought on record by respective parties, allowed the claim application in part, awarded total compensation of Rs.36,82,444/- and fastened liability upon non-applicant No.1 and 2, owner and driver of offending vehicle holding that on the date and time of accident, non-applicant was not holding valid and effective driving license to drive the offending vehicle. .

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Learned counsel for appellants submits that learned Claims Tribunal assessed the income of the deceased on lower side. It is submitted that the learned Claims Tribunal erred in deducting amounts towards PF, PPF, APF, LIC, and other similar heads from the monthly income of the deceased, took net income of ₹22,262/- mentioned in the document, which is not legally sustainable. He further contended that learned Claims Tribunal has wrongly exonerated the insurance company from its liability holding that non-applicant No.1 did not possess valid and effective driving license. It is contended that on the date of accident, the offending vehicle was duly insured with non-

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applicant No.3. Therefore, despite breach of conditions of the insurance policy, the learned Claims Tribunal ought to have directed the insurer/non-applicant No.3 to first satisfy the amount of compensation to the claimants and thereafter recover the same from owner of the offending vehicle, in accordance with the settled principles of law.

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Learned counsel for respondents No.3 and 4 opposes the submission of learned counsel for appellants and supports the impugned award. They submits that the learned Claims Tribunal after appreciating of all the documentary and oral evidence brought on record has passed the impugned award, which does not call for any interference.

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Learned counsel for respondents No.1 and 2 opposes the submissions advanced by the learned counsel for the appellants. He contends that the learned Claims Tribunal erred in concluding that, on the date of accident, non-applicant No.1 did not possess a valid and effective driving license. He further submits that the vehicle in question was duly insured with non-applicant No.3 at the relevant time. Therefore, the learned Claims Tribunal has committed serious error in fastening liability for payment of compensation upon non-applicants No.1 and 2, instead of directing the insurer to satisfy the award.

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I have heard learned counsel for parties and also perused the record of claim case.

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In order to appreciate the grounds raised by learned counsel for appellants/claimants that the learned Claims Tribunal erred in assessing income of the deceased to calculate the compensation, I

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have perused (Ex.P-18), which is a salary slip of March, 2016. As per the salary slip (Ex.P-18), deceased Rewati Raman Singh was working as General Mazdoor in SECL, Gevra Project and his net pay has been mentioned as Rs.22,262/- and gross deduction of Rs.6,415/-, which includes the PF, EPF, APF, LIC recovery etc. The learned Claims Tribunal while assessing the monthly income of the deceased has not made any discussion about the gross deduction of Rs.6,415/-.

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Hon'ble Supreme Court in the case of Vimal Kanwar and others v. Kishore Dan and others reported in (2013) 7SCC 476 , has considered that the deduction from salary of an employee towards investment and saving which he will receive in future has to be treated as income and held thus:-

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“18. The first issue is “whether provident fund, pension and insurance receivable by claimants come within the periphery of the Motor Vehicles Act to be termed as 'pecuniary advantage' liable for deduction.

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The aforesaid issue fell for consideration before this Court in Helen C. Rebello v. Maharashtra SRTC, (1999) 1 SCC 90. In the said case, this Court held that Provident Fund, Pension, Insurance and similarly any cash, bank balance, shares, fixed deposits, etc. are all a “pecuniary advantage” receivable by the heirs on account of one’s death but all these have no correlation with the amount receivable under a statute occasioned only on account of accidental death. Such an amount will not come within the periphery of the Motor Vehicles Act to be termed as “pecuniary advantage” liable for deduction. The following was the observation and finding of this Court: (SCC pp. 111-12, para 35)

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“(35). Broadly, we may examine the receipt of the provident fund which is a deferred payment out of the contribution made by an employee during the tenure of his service. Such employee or his heirs are entitled to receive this amount irrespective of the accidental death. This amount is secured, is certain to be

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received, while the amount under the Motor Vehicles Act is uncertain and is receivable only on the happening of the event, viz., accident, which may not take place at all. Similarly, family pension is also earned by an employee for the benefit of his family in the form of his contribution in the service in terms of the service conditions receivable by the heirs after his death. The heirs receive family pension even otherwise than the accidental death. No correlation between the two. Similarly, life insurance policy amount is received either by the insured or the heirs of the insured on account of the contract with the insurer, for which insured contributes in the form of premium. It is receivable even by the insured if he lives till maturity after paying all the premiums. In the case of death, the insurer indemnifies to pay the sum to the heirs, again in terms of the contract for the premium paid. Again, this amount is receivable by the claimant not on account of any accidental death but otherwise on the insured's death. Death is only a step or contingency in terms of the contract, to receive the amount. Similarly, any cash, bank balance, shares, fixed deposits, etc. though all are pecuniary advantage receivable by the heirs on account of one's death but all these have no correlation with the amount receivable under a statute occasioned only on account of accidental death. How could such an amount come within the periphery of the Motor Vehicles Act to be termed as 'pecuniary advantage' liable for deduction? When we seek the principle of loss and gain, it has to be on a similar and same plane having nexus, inter se, between them and not to which there is no semblance of any correlation. The insured (deceased) contributes his own money for which he receives the amount which has no correlation to the compensation computed as against the tortfeasor for his negligence on account of the accident. As aforesaid, the amount receivable as compensation under the Act is on account of the injury or death without making any contribution towards it, then how can the fruits of an amount received through contributions of the insured be deducted out of the amount receivable under the Motor Vehicles Act? The amount under this Act he receives without any contribution. As we have said, the compensation payable under the Motor Vehicles Act is statutory

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while the amount receivable under the life insurance policy is contractual.”

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In another judgment, rendered by the Hon’ble Supreme Court in case of National Insurance Company Vs. Indira Shrivastava reported in (2008) 2 SCC 763 , has also considered income of the deceased for the purpose of awarding compensation and held as under :

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“ 19. The amounts, therefore, which were required to be paid to the deceased by his employer by way of perks, should be included for computation of his monthly income as that would have been added to his monthly income by way of contribution to the family as contradistinguished to the ones which were for his benefit. We may, however, hasten to add that from the said amount of income, the statutory amount of tax payable thereupon must be deducted.”

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Recently in a judgment dated 11th July, 2024 in National Insurance Company Ltd. v. Nalini and Ors. [Petition for Special Leave to Appeal (C) No. 4230/2019], Hon’ble Supreme Court has held that, allowances under the heads of transport allowance, house rent allowance, provident fund loan, provident fund and special allowance ought to be added while considering the basic salary of the victim/deceased to arrive at the dependency factor.

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In the case at hand, the learned Claims Tribunal has assessed the total income of the deceased as Rs.22,262/- per month, the learned Claims Tribunal failed to add the gross deduction of Rs.6,415/, which was deducted towards PF, EPF, APF, LIC recovery etc. in the income of the deceased. The amount of EPF, PF, APF, LIC are the amounts of savings of the deceased, employee which is for the benefit of all family

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members. It is not the amount receivable only on account of accidental death. Learned Claims Tribunal failed to consider the amount of Rs.6,415/-, which was deducted towards PF, EPF, APF, LIC etc as income of the deceased, has only taken the net pay of deceased, which deserves to be and is hereby set aside. Now the monthly income/salary of the deceased is assessed as Rs.22,262/- net pay + gross deduction of Rs.6,415/- = Rs.28,677/-.

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The learned Claims Tribunal has rightly added 50% towards future prospects in the assessed income of the deceased, deducted 1/2 towards personal living expenses and applied multiplier of 18.

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Further the learned Claims Tribunal has awarded Rs.50,000/- towards love and affection and Rs.25,000/- for funeral expenses. No amount was awarded towards loss of estate and for loss of consortium.

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16. The Hon’ble Supreme Court in case of National Insurance Company Limited. Vs. Pranay Sethi & Ors, reported in (2017) 16 SCC 680 , has quantified the amount of compensation to be awarded under the head loss estate and funeral expenses of Rs.15,000/- each and Rs.40,000/- for loss of consortium. The learned Claims Tribunal has awarded Rs.25,000/- towards funeral expenses, however, no amount has been awarded towards loss of estate. The amount of Rs.25,000/awarded towards funeral expenses is not sustainable, which is required to be reduced to Rs.15,000/- as per the decision in case of Pranay Sethi (supra) . It is ordered accordingly. As no amount towards loss of estate is awarded, therefore, Rs.15,000/- is awarded to the appellants towards loss of estate.

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The Hon’ble Supreme Court in case of Magma General Insurance Company Limited vs. Nanu Ram alias Chuhru Ram & ors reported in (2018) 18 SCC 130 has explained the types of consortium and held that there are three types of loss of consortium i.e. loss of spousal consortium for widow/widower, loss of parental consortium to the children and loss of filial consortium to parents. The appellant No.1 being father of deceased is entitled for filial consortium of Rs.40,000/-. It is ordered accordingly. Because loss of love and affection subsumes compensation of loss of consortium and hence, the claimants will not be entitled for compensation under the head of loss of love and affection accordingly. It is set-aside.

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The amount of Rs.50,000/- awarded towards love and affection is not sustainable. It is set-aside.

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On the basis of above, the compensation calculated by the Tribunal is recomputed as under :-

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SN	Head		Amount(in Rs.).
1.	Annual income	:	28,677 x 12 = 3,44,124.00
2.	Addition of 50% towards future prospects	:	3,44,124 + 1,72,062.00 = 5,16,186.00
3.	1/2 deduction towards personal expenses	:	5,16,186.00 –2,58,093.00 = 2,58,093.00
4.	Loss of dependency after application of multiplier of 18	:	2,58,093 x 18= 46,45,674.00
5.	For loss of filial consortium to the appellant No.1	:	40,000.00
6.	For funeral expenses	:	15,000.00
7.	For loss of estate	:	15,000.00
	Grand Total	:	47,15,674.00

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Accordingly, the appeal is allowed in part. Now the appellants shall be entitled for total compensation of Rs.47,15,674.00. Any amount paid to the appellants as compensation as per impugned award shall be adjusted. Enhanced amount of compensation shall carry interest @ 8% per annum from the date of filing of application till its realization. Rest of the conditions mentioned in the impugned award shall remain intact.

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As regards the submission of learned counsel for the appellants seeking a direction to non-applicant No.3 to first pay the compensation and subsequently recover the amount from the owner, the learned Claims Tribunal, upon due appreciation of oral and documentary evidence, recorded a finding that non-applicant No.1 did not possess a valid and effective driving license on the date of the accident. Accordingly, it held that the vehicle was being operated in violation of the terms of the insurance policy, exonerated the insurer from liability, and fastened the responsibility for payment of compensation upon non-applicants No.1 and 2, the driver and owner of the offending vehicle. The above finding is correct and in accordance with law. However, in the facts of the case, consideration is whether Tribunal fell into error in not issuing direction of pay and recover.

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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 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

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Court in case of Shamanna & Anr. Vs. Divisional Manager, Oriental Insurance Company Ltd. & Ors., reported in (2018) 9 SCC 650 has issued 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

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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

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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” 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

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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 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

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… 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 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 the income of the deceased.

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For the foregoing discussion and in view of aforementioned decisions of Hon’ble Supreme Court, the non-applicant No.3/Insurance Company is directed to first pay the amount of compensation and thereafter to recover the same from owner of the vehicle. It is made clear that the Insurance Company can recover the amount of compensation so paid in terms of observation made by Hon’ble Supreme Court in case of Oriental Insurance Co. Ltd. v. Nanjappan, (2004) 13 SCC 224 in same execution proceeding .

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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

Bandhan Singh v. Itwar Singh

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Bandhan Singh v. Itwar Singh

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