Gujarat High Court
New India Assurance Co Ltd vs Leelaben Maheshbhai Prajapati on 24 March, 2026
NEUTRAL CITATION
C/FA/1608/2015 JUDGMENT DATED: 24/03/2026
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 1608 of 2015
With
R/CROSS OBJECTION NO. 8 of 2016
In
R/FIRST APPEAL NO. 1608 of 2015
FOR APPROVAL AND SIGNATURE:
HONOURABLE MS. JUSTICE NISHA M. THAKORE --Sd/-
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Approved for Reporting Yes No
YES
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NEW INDIA ASSURANCE CO LTD
Versus
LEELABEN MAHESHBHAI PRAJAPATI & ORS.
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Appearance:
MR PALAK H THAKKAR(3455) for the Appellant(s) No. 1
MR MTM HAKIM(1190) for the Defendant(s) No. 1,2,3,4
RULE SERVED for the Defendant(s) No. 5,6
RULE UNSERVED for the Defendant(s) No. 7
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CORAM: HONOURABLE MS. JUSTICE NISHA M. THAKORE
Date : 24/03/2026
COMMON ORAL JUDGMENT
1. The present appeal is filed at the instance of the insurance company being aggrieved and dissatisfied with the judgment and award dated 22nd December 2014 passed by the Motor Accident Claims Tribunal (Aux.) in Motor Accident Claim Petition no.1011 of 2010. By this said judgment and award, the Tribunal has partly allowed the claim petition Page 1 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined preferred by the original claimants under Section 166 of the Motor Vehicles Act, 1988 holding them entitled to recover sum of Rs.5,63,200/- from the original appellant nos.1, 2, 3, jointly and separately together with proportionate cost and interest at a rate of 9% per annum from the date of filing of the claim petition till its realization.
2. Considering the grounds raised in the appeal and the submissions made by learned advocate for the appellant at the admission hearing of the appeal, this Court vide order dated 10th August, 2015 had admitted the appeal. In the application for stay preferred by the insurance company the Court had directed them to deposit entire award amount with the concerned Tribunal with further directions to disburse 20% of the aforesaid deposited amount in favour of the claimant and 80% was directed to be invested in long term fixed deposit with any Nationalized bank, initially for a period of 3 years which was directed to be renewed from time to time till the final disposal of the present appeal. Considering the fact that the amount as directed was deposited by the insurance company, this Court vide order dated 5 th October, 2015 had extended liberty to the claimants to withdraw periodical interest on such FDRs. The record and proceedings were called for.
3. The notice of admission of appeal was reported to have been duly served upon the respondents except for respondent no.7. The attempts were made to serve the respondent no.7 who is the owner of the offending vehicle. Despite service of Page 2 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined the notice upon respondent no.7 in the original claim proceedings, had choose not to appear and contest the claim proceedings.
4. It is required to be noted that on admission of the appeal the original claimants have entered their appearance and had also preferred cross objections assailing the same self impugned judgment and award, with a prayer for enhancement of amount of compensation to the sum of Rs.5,63,200/-. The cross objections are directed to be heard along with the captioned appeal.
5. With the able assistance of learned advocate appearing on record for the respective parties, the appeal as well as the cross objections are heard and decided together by this common judgment.
6. Mr.Palak Thakkar, learned advocate appearing for the appellant has vehemently submitted that it has been successfully established by the insurance company that the driving license of the driver in respect of the offending truck which falls in the category of 'Heavy Goods Vehicle', was not renewed after 9th September, 2004 and therefore, the driver was not holding any valid and effective driving license on the date of the accident i.e. on 9 th June, 2010. In order to substantiate his submission, learned advocate had drawn my attention to the certificate of driving license issued by the licensing authority of Godhara in reference to the driving license of the driver of the offending truck. The copy of which Page 3 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined has been produced on record at Exh.33 and the certified copy being produced on record at Exh.39. Referring to the contents of the aforesaid certificate, learned advocate had submitted that as against item of "issuing authority", the validity period is referred as 10 th March, 1995 to 9th March, 1998, 9th September, 2001 to 9th September, 2004. Further, the reference is made to "HGV, HPV - 10 th March, 1995 to 9th September, 2004". As against the aforesaid certificate provided by the licensing authority with regard to the validity period, the contents of the driving license of the driver of the offending truck which is produced on record at Exh.51 suggest the renewal period from 9 th September, 1998 and thereafter on 9th September, 2001. It was further submitted that generally, the renewal of heavy goods vehicle would be for period of 3 years and therefore considering the last endorsement of 9th September 2001, it can safely be inferred that the validity period was extended up to 9 th September, 2004. In absence of any further endorsement being mentioned in the driving license, it clearly establishes the defence raised by the appellant - insurance company that there was no valid and effective driving license as on the date of the accident that is 9th June, 2010.
6.1 The attention of this Court was also invited to the fact that the vehicle in question falls in the category of 'Heavy Goods Vehicle' (HGV). The evidence in the nature of the FIR, the statement of the driver recorded before the investigating officer, the consignment note, the invoices etc., establishes the fact that the driver was carrying Hydrochloric Acid (HCL) Page 4 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined which is considered as hazardous chemical. He had therefore submitted that as on the date of the accident, the driver of the offending truck was not holding valid and effective driving license to drive heavy goods vehicle for carrying hazardous chemical for which according to him separate endorsement was required.
6.2 Referring to the aforesaid evidence on record, learned advocate had further invited my attention to the record and proceedings, more particularly, the applications submitted by the insurance company before the Tribunal seeking presence of the driver as well as owner of the offending vehicle as produced on record at Exhs.28 and 29. The reliance was also placed on the Bailiff report which is forming part of the record, which suggest that the aforesaid summons have been duly served upon the driver of the vehicle. However, as regards the owner of the vehicle, the Bailiff though attempted the service of summons on three occasions, the same could not be served. Learned advocate had therefore submitted that the defence as raised in the written statement about not holding valid and effective driving license has been duly proved and established before the Tribunal. Despite the aforesaid evidence being brought on record, the Tribunal has held the appellant - insurance company liable to pay the amount of compensation. Hence, the present appeal disputing their liability to pay the amount of compensation.
6.3 On the issue of quantum, learned advocate had mainly disputed the amount of Rs.4,000/- being assessed as the Page 5 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined income of the deceased. It was submitted that in absence of any evidence on record, the Tribunal had committed serious error in determining the income of the deceased as Rs.4,000/-. The quantum of compensation was also assailed on the ground of multiplier being wrongly applied in the facts of the case. Learned advocate had therefore urged this Court to quash and set aside the impugned judgment and award.
6.4 In support of the aforesaid submissions made, learned advocate had placed reliance upon unreported decision of Division Bench of this Court in case of Mahmad Rafik Munnebhai Ansari Vs. Gujarat State Road Transport Corporation & Ors. in First Appeal no.3173 of 2021 and allied matters, oral order dated 24 th December, 2021. Also, reliance was placed on the decision of Hon'ble Supreme Court in the case of National Insurance Co. Ltd., Vs. Vidhyadhar Mahariwala & Ors., reported in (2008) 12 SCC 701 and in the case of Ram Babu Tiwari Vs. United India Insurance Co. Ltd., reported in (2008) 8 SCC 165.
6.5 Learned advocate for the appellant - insurance company had therefore prayed for allowing the appeal by exonerating the appellant - insurance company from its liability to pay any amount of compensation to the claimant.
7. Mr. Hakim, learned advocate for the respondent - claimant had vehemently objected to the aforesaid submissions of the learned advocate for the appellant - insurance company. Learned advocate had placed reliance Page 6 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined upon the findings and reasons assigned by the Tribunal while holding the appellant - insurance company jointly and severally liable to pay the amount of compensation, more particularly as recorded in para-13 of the impugned judgment. It was submitted that the Tribunal has rightly followed the principles laid down by the three Judges' bench of the Hon'ble Supreme Court in case of National Insurance Company Limited Vs. Swaran Singh & ors., reported in 2004 (3) SCC
297. It was submitted that the burden lies upon the insurance company to prove that the insured has committed a breach of contract of insurance as envisaged under sub-clause-(ii) of Clause-a of sub-section-2 of Section 149 of the M.V. Act. It is in those circumstances, the insurance company shall be entitled to realize the awarded amount from the owner or driver of the vehicle, as the case may be, in the execution of the same award considering the provisions of Section 165 and 168 of the Act.
7.1 As regards the submission made by the learned advocate for the appellant insurance company praying for exoneration from its liability to pay the amount of compensation, it was submitted that the present case does not fall in that category of exceptional cases as, considering the provisions of Section 149(2)(a), when a fraud or collusion is noticed between the victim and the owner of the vehicle or such fact is subsequently detected at a later stage, the Court may consider exonerating the insurance company from its liability to pay the amount of compensation.
Page 7 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined 7.2 Learned advocate had placed reliance upon various judgments of the Hon'ble Supreme Court, wherein despite the breach of policy condition, i.e. invalid driving license of the driver at the time of the accident, the Courts have time and again issued appropriate directions of "pay and recover". The reliance was placed on the relevant observations made by the three Judges' Bench judgment, more particularly in paragraph nos.41 to 44, 107 and 110 in the case of Swaran Singh (supra), the reliance was also placed on the judgment of the Hon'ble Supreme Court in the case of Jawahar Singh vs. Bala Jain reported in (2011) 6 SCC 425 [equivalent citation AIR 2011 SC 2436]. Referring to the facts of the case, the learned advocate had submitted that it was a case where the minor, admittedly being an unlicensed driver, was held responsible for the accident. The primary legal contention was raised by the respondent - insurance company disputing their liability on the ground of breach of policy conditions. The Hon'ble Supreme Court upheld the decision of the Tribunal as well as the High Court holding the owner of the vehicle responsible for the accident. The Court, referred to the earlier decision in the case of Ishwar Chandra Vs. Oriental Insurance Company Ltd., (2007) SCC 650, holding that if a driver lacks a valid license, the liability to pay compensation shifts to the owner of the vehicle, emphasizing the owner's duty to prevent unauthorized usage. However, the Court held that the insurance company can recover compensation from the owner of the vehicle even in case if the driver is not holding any license, thus reinforcing the owner's ultimate responsibility.
Page 8 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined 7.3 The reliance was also placed on the decision of the Hon'ble Supreme Court in the case of Shamanna Vs. The Divisional Manager, the Oriental Insurance Company Ltd., reported in AIR 2018 SC 3726. According to the learned advocate, the Court had reaffirmed the principles laid down by the three Judges' Bench in the case of Swaran Singh (supra). Inviting my attention to the facts of the case, it was pointed-out that the driver of the offending vehicle Jeep had no valid driving license at the time of the accident and since there was a violation of the terms of the insurance policy, the Tribunal had directed the insurance company to pay the compensation to the claimants and had further granted liberty to the insurance company to recover the same from the owner of the offending vehicle. Being aggrieved by the aforesaid directions, the insurance company had preferred an appeal before the High Court. At the same time, the claimants had also approached in appeal seeking enhancement of the amount of compensation. The High Court had allowed the appeal of the insurance company and had observed that such directions of "pay and recover" can only be issued by the Hon'ble Supreme Court considering the discretionary power conferred under Article 142 of the Constitution of India. In the absence of any such power being vested with the High Court or the Tribunal, the directions issued by the Tribunal to make payment of compensation at the first instance with liberty to recover the same were held to be without jurisdiction. The Hon'ble Supreme Court, considering the case of third-party risk in view of the decision in the case of Swaran Singh (supra), had held that the onus is always upon Page 9 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined the insurance company to prove that the driver had no valid driving license and there was a breach of policy conditions. Even in cases where the driver did not possess a valid driving license and there are breaches of policy conditions, "pay and recover" can be ordered in case of third-party risk.
7.4 The reference was also made to the two Judges' Bench judgment of the Hon'ble Supreme Court in the case of National Insurance Company Ltd., Vs. Parvathneni and another reported in (2009) 8 SCC 785, wherein the reference was made. The Court expressed reservations about directions of "pay and recover" even where insurance company was held not liable and doubted the correctness of such earlier decisions by resorting to special power conferred under Article 142 of the Constitution of India. The Court noted that since the reference has been disposed of keeping the question of law open, and since the principles laid down in the case of Swaran Singh (supra) hold the field, the Court had upheld the directions of the Tribunal with regard to pay and recover.
7.5 Learned advocate had therefore submitted that considering the view expressed by the larger Bench headed by three Judges in the case of Swaran Singh (supra), the judgments relied upon by learned advocate for the appellant insurance company in the cases of Mahmad Rafik Munnebhai Ansari (supra), Vidhyadhar Mahariwala (supra), and Ram Babu Tiwari (supra), which are the cases decided in peculiar facts, does not lay down a binding precedent.
Page 10 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined 7.6 Learned advocate had further relied upon the judgment of the Division Bench of this High Court in the case of Subhashrao Anandrao Pawar Vs. Ashokbhai Bhikhabhai Makwana, 2021 (0) AIJEL-HC 243529, wherein this Court has reaffirmed the legal principles that mere absence or invalidity of a driving license does not absolve the insurance company from compensating a third-party claim unless it is proved that negligence was on the part of the insured to fulfill the policy conditions. It was further submitted that in fact, on bare appreciation of the provisions of the Motor Vehicles Act, 1988, more particularly Section 149(2)(a)(ii), the Court has uphold the arguments advanced by learned advocate as recorded in para 10. The Court has reiterated the principles laid down by the Hon'ble Supreme Court in the case of Swaran Singh (supra) and thereby set aside the directions issued by the Tribunal to recover the compensation from the owner of the vehicle.
7.7 Learned advocate had also placed reliance upon a recent decision of the Hon'ble Supreme Court in the case of Chatha Service Station Vs. Lalmati Devi and others, AIR Online 2025 SC 303. The attention of this Court was invited to the facts of the case wherein the accident had occurred due to the rash and negligent driving of the offending vehicle which was an oil tanker. It was submitted that the said vehicle was intended to carry goods of dangerous and hazardous nature. Admittedly, the driver of the offending vehicle did not have a license as required under the Act and the Rules to drive a vehicle carrying dangerous and hazardous goods. The Court upon Page 11 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined appreciation of record had noted that the transport vehicle driving license produced by the driver, did not have the requisite endorsement. Despite the aforesaid evidence on record, the Hon'ble Supreme Court had upheld the directions of the High Court holding the insurance company liable to pay compensation to the claimants with further liberty to recover such amount from the owner of the oil tanker.
7.8 The reliance was placed on the decision of the larger Bench of this Court in the case of Shantaben wd/o. deceased Kantibhai Punjabhai Vankar Vs. Yakubbhai Ibrahimbhai Patel reported in 2012 (3) GLR 1985. It was submitted that the matter was referred to the larger Bench in view of two conflicting views taken by different division Benches of this Court. The issue had arose for consideration in light of the approach of the Tribunal as regards interpretation of Section- 95 of the Motor Vehicles Act, 1939, restricting the liability of the insurance company limited to the statutory liability as envisaged under the Act. The core contention which was raised by the claimant was that insurance policies in all cases contain an avoidance clause and provided that nothing in the policy shall affect the right of any person indemnified by the policy or any other person to recover an amount under or by virtue of the provisions of the Motor Vehicles Act. In fact, the aforesaid clause provided that the insured shall repay to the company all sums paid by the company which otherwise the company would not have been liable to pay, but in view of the said provisions of the Act, the insurance company is principally liable to satisfy the award irrespective of the Page 12 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined statutory limit. As against the aforesaid contention raised by the claimants, the learned counsel appearing for the insurance company had opposed the appeals mainly on the ground that the insurance policies in question were "Act policies" and the liability of the insurance company was thus restricted to Rs.50,000/-, the statutory limit prevailing at the relevant time.
7.9 Learned advocate had further invited my attention to the avoidance clause appearing in the policy as reproduced in para 29 of the judgment. It was further submitted that a similar avoidance clause is also reflected in the policy in the present case. The larger bench upon appreciating the contents of the avoidance clause questioned that whether the insurance company could have avoid the indemnification of a third party to the full extent and claim their restricted liability in terms of the insurance policy under the statutory provisions. While answering to the aforesaid issue, the Court has taken into consideration the judgment of the Hon'ble Supreme Court in the cases of Amrit Lal Sood Vs. Kaushalya Devi Thapar, reported in (1998) 3 SCC 744, National Insurance Co. Ltd., Vs. Jugal Kishore, reported in (1988) 1 SCC 626, and National India Assurance Co. Ltd., Vs. Shanti Bai reported in (1995) 2 SCC 539. The Hon'ble Supreme Court had in the case of Amrit Lal Sood (supra) taken a view that considering the avoidance clause, the insurance company was liable to meet the claim of the claimant and satisfy the award passed by the Tribunal. The larger bench had noted the relevant observations recorded in para-6 of the decision in Page 13 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined the case of New India Assurance Co. Ltd., Vs. C. M. Jaya and others, reported in (2002) 2 SCC 278, wherein the Constitution Bench had held that in a policy for limited liability, it was not open to the Court to direct the insurance company to make any payment beyond the amount of limited liability, but at the same time, it took note of the decision in the case of Amrit Lal Sood (supra) with approval. More particularly, noticing the avoidance clause in the policy which according to Court makes all difference, the directions of the High Court to the appellant insurance company to make payment of the full amount of compensation was upheld. The larger Bench therefore, after considering the issue in light of the observations made by the Hon'ble supreme Court in the case of New India Assurance Co. Ltd., Vs. Vimal Devi reported in (2010) 12 SCC 492 answered the reference by concluding that wherever the insurance policy contains an avoidance clause providing that nothing in the policy shall affect the right of any person indemnified by the policy or any other person by recovering amount under or by virtue of provisions of Motor Vehicles Act, the insurance company shall be liable to pay compensation.
7.10 On the merits of the case, learned advocate had therefore submitted that the burden was upon the insurance company to prove that the driver of the offending vehicle was not holding any valid and effective driving license, that the insured was guilty or negligent and had failed to take due care before handing over the offending vehicle to the driver. Considering the evidence on record, according to learned Page 14 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined advocate, merely producing the extract of driving license on record is not sufficient to exonerate the appellant - insurance company from its liability to pay the amount of compensation in absence of the driver or the owner of the offending vehicle being examined as witness. Learned advocate had therefore prayed for dismissal of the appeal preferred by the appellant - insurance company.
8. On the quantum of compensation, learned advocate had assailed the findings and reasons assigned by the Tribunal by contending that the Tribunal committed grave error in assessing the income of the deceased as Rs.4,000/- per month. It was submitted that considering the vocation of the deceased who was earning his livelihood of Rs.10,000/- per month by doing idol making work, the Tribunal ought to have treated it as a case of skilled person. In order to substantiate his claim, learned advocate had placed reliance upon the copy of receipts of purchase of raw material being produced for the purpose of making of the idol at Exh.37. The reliance was also placed on the evidence of the witness examined by the claimant in this regard. Learned advocate had prayed for the income of the deceased to be assessed as Rs.10,000/- per month. Alternatively, it was submitted that considering the skills of the deceased, this Court may consider minimum wages of a skilled labourer prevailing at the time of accident for the determination of just and reasonable amount of compensation. It was submitted that fair amount of Rs.4,210/- may alternatively be considered as the income of the deceased at the time of accident.
Page 15 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined 8.1 It was further submitted that the deceased was aged 49 years and 8 months at the time of the accident. Considering the landmark decision of the Hon'ble Supreme Court in the case of National Insurance Company Ltd., Vs. Pranay Sethi and others reported in (2017) 16 SCC 680, 25% future rise in the income is required to be considered for the purpose of determination of dependency loss suffered by the claimants. According to him, the Tribunal has committed error in deducting 1/4th of the amount of income towards personal and living expenses of the deceased. Though the ground was raised by contending that the Tribunal has committed error in adopting multiplier of 13 in the facts of the case, however considering the well settled principles laid down in the case of Sarla Verma & Ors. Vs. Delhi Transportation & Anr., reported in (2009) 6 Supreme Court Cases 121, he had fairly conceded to apply multiplier of 13, in the facts of the case.
8.2 Learned advocate has lastly urged this Court to consider enhancement of amount of compensation under the conventional heads as well in view of the settled principles and propositions of law in this regard. Learned advocate had therefore urged this Court to allow the cross objections by enhancing the amount of compensation which may be awarded with 9% interest from the date of filing of claim petition till its actual realization with proportionate cost.
9. Learned advocate for the insurance company has objected to the aforesaid submissions made by learned Page 16 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined advocate for the claimant praying for enhancement of amount of compensation. According to learned advocate, considering the findings and reasons assigned by the Tribunal in light of the evidence on record, the Tribunal has rightly answered the issue of quantum of compensation which calls for no interference. Learned advocate had therefore prayed for dismissal of the cross objections.
10. I have heard the learned advocates appearing for the respective parties at length. I have also closely examined the findings and reasons assigned by the Tribunal on the issue of quantum of compensation and the liability of the insurance company in light of the evidence brought on record. I have carefully considered the various judgments relied upon by learned advocates appearing for the respective parties.
11. Considering the arguments made by learned advocates for the respective parties, the question which arises for consideration of this Court is as to whether the Tribunal committed any error in deciding the issue of quantum of compensation and the liability of the insurance company to pay the amount of compensation to the claimants in the facts of the case and the evidence on record, while examining the claim petition under Section 166 of the Act of 1988?
12. Before adverting to the merits of the case, it would be appropriate to consider the manner in which the accident was reported.
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13. From the record it transpires that on 9th June, 2010 the deceased Maheshbhai Ramanbhai Prajapati was traveling in a three-wheeler tempo along with his goods, mainly the material required for making the idols of the God. While he was traveling towards Miyagam and when he had reached near the place at Miyagam, the driver of the offending vehicle, i.e. tanker bearing registration no.GJ-6 TT 9717, had approached in full speed in rash and negligent manner on the wrong side of the road and had dashed with the tempo resulting into the accident. Because of the aforesaid impact between the two vehicles the deceased had succumbed to the injuries on the spot. The aforesaid incident was reported to the Vadodara Rural Police Station which was registered as I- C.R. no.86 of 2010 against the driver of the offending vehicle tanker. The claimants, viz. the wife of the deceased, his aged parents as well as his major sons, have preferred claim petition under section 166 of the Motor Vehicles Act, 1988 praying for compensation of Rs.12,00,000/- with interest and proportionate cost. The said claim petition was registered as MACP no.1011 of 2010 before the Motor Accident Claim Tribunal (Aux.) at Vadodara.
13.1 Before the Tribunal, the summons were duly served upon the driver and the owner of the offending vehicle tanker, however they have chose not to appear and contest the claim petition. The insurance company of the offending vehicle was joined as opponent no.3 who have objected to the claim petition by filing their written statement at Exh.11. In the written statement the insurance company had not only Page 18 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined disputed the negligence on part of the driver of the tanker but have also disputed their liability to pay the amount of compensation by contending that the driver of the offending vehicle was not holding a valid and effective driving license at the time of accident and further he was not qualified for holding or obtaining driving license. It was further submitted that the driver had contravened the statutory provisions of the Motor Vehicle Act and the Rules framed thereunder and the owner of the vehicle having committed the breach of the terms and conditions of the policy, the insurance company shall not be liable to pay any amount of compensation.
13.2 Considering the pleadings, the Tribunal had framed the issues at Exh.17, which reads as under :
1. Whether the petitioners prove that deceased died in a vehicular accident due to negligent driving by the driver of vehicle involved in the accident?
2. Whether the petitioners are entitled to get any compensation? If yes, what amount and from whom?
3. What order and award.
13.3 Before the claim Tribunal the claimants have produced oral as well as documentary evidence in support of their claim, the details of which are reproduced hereunder in tabular form.Page 19 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026
NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined ~:: Documentary Evidence ::~ Sr. Description Exh.
no.
1. Xerox copy of R.C. Book of vehicle 34no.GJ.6.TT.9717 2. Xerox copy of chargesheet 35 3. True copy of insurance policy of vehicle 36 no.GJ.6.TT.9717 4. Bills of Venus Plaster Industries 37 5. Xerox copy of S.L.C. of deceased 38
6. Certificate pertaining to driving license 39 of opponent no.1 - Parmar Nansing 7. Certified of copy of complaint 46 8. Certified of copy of panchnama 47 9. Copy of P.M. Note 48 10. Xerox copy of R.C. book of Vehicle 50 no.GJ.6.TT.9717 11. Copy of driving license of Nansing 51 Parmar 12. Xerox copy of identity card of claimant 52 no.1 13. Xerox copy of identity card of claimant 53 no.2 14. Xerox copy of identity card of claimant 54 no.3 15. Xerox copy of identity card of claimant 55 no.4 16. Xerox copy of identity card of claimant 56 no.5 17. True copies of police papers relating to 57 chargesheet Page 20 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined 13.4 As against the aforesaid evidence led by the claimants, the insurance company had preferred applications at Exh.27 and Exh.28 seeking permission of the Tribunal to examine the driver and the owner of the tanker as witnesses. The prayer was also made with regard to production of relevant documents, more particularly the set of entire record of charge-sheet papers, the extract of the driving license. Considering the aforesaid prayer, the Tribunal had issued summons upon the said witnesses. The record reveals that the summons issued upon the driver of the tanker has been duly served as per Bailiff's report, however the attempts made to serve the owner of the vehicle had failed as reported by the Bailiff.
13.5 The insurance company had also led documentary evidence along with the list produced on record at Exh.26, which mainly include the certificate issued by the RTO office as regards the driving license in the name of the opponent no.1 (Exh.39), the statement of the driver of the tanker recorded by the investigating officer (Exh.40), the extract of the consignment note acknowledging the fact that the tanker was carrying hazardous goods in the nature of hydrochloric acid (Exh.41) and the invoice copy of the tanker reflecting the hazardous good carried by the vehicle at the time of accident (Exh.42).
13.6 The Tribunal upon appreciation of the entire evidence on record in light of the arguments made by learned advocates for the respective parties had held the driver of the tanker Page 21 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined negligent towards the occurrence of accident.
13.7 On the issue of quantum of compensation, the Tribunal had determined the monthly income of the deceased as Rs.4,000/- in absence of any direct proof of income being produced on record thereby discarding the bills of purchase of raw material produced on record at Exh.37. Further, the Tribunal has considered the school leaving certificate produced on record at Exh.38 indicating the date of birth of the deceased as 7th October, 1960 and has accordingly determined the age of the deceased as 50 years at the time of accident. Having noted the aforesaid facts, Tribunal has further followed the principle laid down by the Hon'ble Supreme Court in the case of Rajesh and others Vs. Rajbirsingh and others reported in 2013 ACJ 1403 as well as in the case of Sarla Verma (supra) and has extended 15% future rise of the income and by applying multiplier of 13 and deduction of 1/4th of the income, determined the dependency loss as Rs.5,38,200/-. Under the conventional heads, the Tribunal has awarded Rs.10,000/- towards loss of consortium and towards loss of estate each whereas Rs.5,000/- has been awarded towards funeral expenses. The Tribunal has thus by impugned judgment and award determined total amount of compensation as Rs.5,63,200/-.
13.8 On the issue of liability, the Tribunal has considered the defense raised by the insurance company disputing their liability to pay any amount of compensation on the ground of absence of valid driving license by following the judgments of Page 22 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined the Hon'ble Supreme Court, has held that since the driver of the tanker was solely negligent towards the occurrence of accident and the policy being in force, the tanker was insured with the opponent insurance company at the time of accident and has thereby directed the opponent insurance company to indemnify the insured i.e. opponent no.2. Thus, the Tribunal by impugned judgment and award has held the original opponent nos.1, 2, 3 jointly and severally liable to pay the aforesaid amount of compensation with proportionate cost and interest at the rate of 9% per annum from the date of filing of claim petition till its realization.
14. Having noted the aforesaid findings and reasons assigned by the Tribunal and having reappreciated the evidence on record in light of the arguments advanced by learned advocate for the respective parties, it would be appropriate at the outset to look into the core contention raised by the appellant insurance company in its appeal on the issue of liability. The main ground which is raised by the appellant insurance company disputing their liability is on the premises that the driver of the tanker was not holding valid effective driving license to drive the vehicle, more particularly carrying the goods which was a hazardous chemical. I have carefully considered the aforesaid arguments advanced by learned advocate for the appellant insurance company in light of the evidence on record, more particularly the certificate issued by the RTO office Godhra as produced on record at Exh.36 and Exh.39 as well as the extract of the driving license produced on record at Exh.51. On close perusal of the Page 23 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined aforesaid documentary evidence, as rightly pointed-out by learned advocate for the appellant - insurance company, the driver of the tanker was authorized to drive the tanker during period 10th March, 1995 to 9th March, 1998 which was thereafter renewed from 9th September, 2001 to 9th September, 2004. Despite service of summons to the driver and the owner of the vehicle before the Tribunal, they have choose not to appear and led any evidence. In view of the settled principles laid down by the Hon'ble Supreme Court in the case of Swaran Singh (supra), undoubtedly the defense is available to the insurance company under section 149(2)(a)(ii) of the Motor Vehicle Act, 1988, to take a plea that the offending vehicle was driven by an unauthorized person and the driver did not hold a valid driving license. Considering the summary findings as recorded in para-110 of the aforesaid decision, the onus would shift on the insurance company only after the owner of the offending vehicle pleads and proves the basic facts within his knowledge that the driver of the offending vehicle was authorized by him to drive the vehicle and was having a valid driving license at the relevant time. As recorded earlier, and as evident from the record, the appellant insurance company in absence of the driver and the owner of the vehicle having appeared before the Tribunal, has placed on record along with the list at Exh.26, the documents in the nature of the certificate issued by the RTO office which clearly suggest that the driver of the tanker was holding the driving license to drive the tanker and such driving license had remained in force till 9 th September, 2004. In absence of any further document reflecting the renewal of the aforesaid Page 24 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined driving license, the defense raised by the insurance company that the driver of the tanker was not holding driving license at the relevant time stands established.
15. As regards the contention raised by learned advocate for the appellant insurance company of absence of the requisite permit with regard to driving the tanker carrying hazardous goods is concerned, the extract of the driving license does reflect the necessary endorsement in this regard. Having held so, the next issue which arises for consideration of this Court is as to whether in the fact situation of this case, the insurance company can be exonerated from its liability to pay the compensation or whether the insurance company can be directed to pay the amount of compensation at first instance with liberty to recover the same from the owner of the vehicle?
16. Considering the various authorities relied upon by learned advocates for the respective parties, in my view, the legal issue involved is no more res integra in view of the landmark decision of three Judges Bench of the Hon'ble Supreme Court in the case of Swaran Singh (supra). It would be appropriate to revisit the relevant observations of the Hon'ble Supreme Court in this regard.
"107. We may, however, hasten to add that the Tribunal and the court must, however, exercise their jurisdiction to issue such a direction upon consideration of the facts and circumstances of each case and in the event such a direction has been issued despite arriving at a finding of fact to the effect that Page 25 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined the insurer has been able to establish that the insured has committed a breach of contract of insurance as envisaged under sub-clause (ii) of clause (a) of sub- section (2) of Section 149 of the Act, the insurance company shall be entitled to realise the awarded amount from the owner or driver of the vehicle, as the case may be, in execution of the same award having regard to the provisions of Section 165 and 168 of the Act . However, in the event, having regard to the limited scope of inquiry in the proceedings before the Tribunal it had not been able to do so, the insurance company may initiate a separate action therefor against the owner or the driver of the vehicle or both, as the case may be. Those exceptional cases may arise when the evidence becomes available to or comes to the notice of the insurer at a subsequent stage or for one reason or the other, the insurer was not given opportunity to defend at all. Such a course of action may also be resorted when a fraud or collusion between the victim and the owner of the vehicle is detected or comes to the knowledge of the insurer at a later stage.
110. The summary of our findings to the various issues as raised in these petitions are 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.
(ii) 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.Page 26 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026
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(iii) The breach of policy condition e.g., disqualification of driver or invalid driving licence of the driver, as contained in sub- section (2)(a)(ii) of section 149, have 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 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 duly licensed driver or one who was not disqualified to drive at the relevant time.
(iv) The insurance companies are, 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 said burden would be discharged, inasmuch as the same would depend upon the facts and circumstance 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 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 Page 27 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined policy conditions would apply "the rule of main purpose" and the concept of "fundamental breach" to allow defences available to the insured 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 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 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.
(xi) The provisions contained in sub-section (4) with proviso thereunder and sub-section (5) which are intended to cover specified contingencies mentioned therein to enable the insurer to recover amount paid under the contract of insurance on behalf of the insured can be taken recourse of by the Tribunal and be extended to claims and defences of insurer against 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."
17. Having noted the aforesaid principles laid down by the Page 29 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined Hon'ble Supreme Court, the aforesaid principles has been followed later on in the subsequent decision, more particularly the three Judges Bench in the case of Pappu and others Vs. Vinod Kumar Lamba and another reported in (2018) 3 SCC 208. The Court has reiterated the principles laid down in the case of Swaran Singh (supra) holding thereby that though the insurance company is entitled to take a defense that offending vehicle was driven by unauthorized person or that the person driving the vehicle did not have a valid driving license, however, as regards third party insurance vis-a-vis liability of insurance company is concerned, the insurance company cannot escape its liability. The Court has considered sub Section-2 of Section 149 of the Act, 1988. On facts of the case, the Court observed that the insurance company had succeeded in establishing its defense of unauthorized driver with invalid license. However, applying the principles laid down in the case of Swaran Singh (supra) in order to subserve the ends of justice, directed the insurance company to pay the amount of compensation to the claimants at first instance with liberty to recover the same from the owner of the vehicle in accordance with law.
18. Having noted the aforesaid decisions even in case of breach of policy conditions, more particularly the disqualification of driver or invalid driving licence of the driver as contained in sub Section-2(a)(ii) of Section 149, such defence is though available to the insurer against the insured, may not be a ground to avoid liability towards third parties. At this stage, it would be appropriate to note that the Page 30 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined insurance policy produced on record at Exh.49 indicates that insurance company has agreed for the avoidance clause being incorporated in the policy. It is mentioned that the "insured is not indemnified, if the vehicle is used or driven otherwise than in accordance with the schedule. Any payment made by the company by reason of wider terms appearing in the certificate in order to comply with the Motor Vehicle Act, 1988 is recoverable from the insured". See clause added "avoidance of certain terms and right of recovery."
19. The similar avoidance clause fell for consideration before the larger Bench of this Court in the case of Shantaben (supra). The Court was considering the issue of liability of insurance company in light of the provisions of Section 95 of the old Motor Vehicle Act, 1939. More particularly, the extent of liability in third party policy whether in case where in the insurance policy avoidance clause has been incorporated to the effect that nothing in policy should affect the right of any person indemnified by policy or any other person to recover amount under or by virtue of provisions of the act. In such circumstances, whether insurance company could have pressed in service the limit of statutory liability under the act and could have avoid satisfying the award insofar as claimants were concerned? The larger Bench having appreciated the terms and conditions of the policy as well as the provisions of law, has noted that though the Court is not required to go into the question with regard to the principle of "pay and recover"
in the set of appeals, the Court was of the view that in view of the decision of the Hon'ble Supreme Court in the case of Jugal Page 31 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined Kishore (supra), holding that liability of insurance company would be limited as well as in the case of New Asiatic Insurance Company Ltd., Vs. Pessumal Dhanamal Aswani reported in AIR 1964 SC 1736, holding that even in case of avoidance clause the liability of insurance company which was otherwise limited would not become unlimited, the Court noted that there was a similar avoidance clause appearing in the policy and therefore considering the judgment of Hon'ble Supreme Court in the case of Amrit Lal Sood (supra), such avoidance clause does not enable the insurance company to resist or avoid claim made by the claimant. Such clause was to be considered only in a dispute between the insurer and insured. Thus, considering the decisions in the cases of Amrit Lal Sood (supra), Jugal Kishore (supra) and Shanti Bai (supra), which has been considered later on in the case of C.M. Jaya (supra). The Court further took into consideration the relevant observations made in C.M. Jaya (supra), and concluded as under :
"(33) The decisions in the cases of Amrit Lal Sood (supra), Jugal Kishore (supra) and Shanti Bai (supra) all came up for consideration before the Apex Court in the case of C.M.Jaya (supra). The appeals were placed before the Larger Bench of five Judges referring following questions :
"1. The question involved in these appeals is whether in a case of insurance policy not taking any higher liability by accepting a higher premium, in case of payment of compensation to a third party, the insurer would be liable to the extent limited under Section 95 (2) or the insurer would be liable to pay the entire amount and he Page 32 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined may ultimately recover from the insured. On this question, there appears to be some apparent conflict in the two three Judge Bench decisions of this Court (1) New India Assurance Co. Ltd. v. Shanti Bai, ((1995) 2 SCC 539) and (2) Amrit Lal Sood v. Kaushalya Devi Thapar ((1998) 3 SCC
744).
2. In the latter decision, unfortunately the decision in New India Assurance case (supra) has not been noticed though reference has been made to the decision of this Court in National Insurance Co. Ltd. v. Jugal Kishore, ((1988) 1 SCC 626), which was relied upon in the earlier threeJudge Bench judgment. In view of the apparent conflict in these two three Judge Bench decisions, we think it appropriate that the records of this case may be placed before my Lord, the Chief Justice of India to constitute a larger Bench for resolving the conflict. We accordingly so direct. The record may now be placed before the Hon'ble the Chief Justice of India."
(34) The Apex Court drew a distinction between two sets of cases, one represented by Jugal Kishore and Shanti Bai and another by Amrit Lal Sood. The Apex Court observed as under:
"9. In Shanti Bai's case (supra), a Bench of three learned Judges of this Court, following the case of Jugal Kishore, has held that (i) a comprehensive policy which has been issued on the basis of the estimated value of the vehicle does not automatically result in covering the liability with regard to third party risk for an amount higher than the statutory limit,(ii) that even though it is not permissible to use a vehicle unless it is covered at least under an "Act only"
policy, it is not obligatory for the owner of a vehicle to get it comprehensively insured, and
(iii) that the limit of liability with regard to third Page 33 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined party risk does not become unlimited or higher than the statutory liability in the absence of specific agreement to make the insurer's liability unlimited or higher than the statutory liability.
10. On a careful reading and analysis of the decision in Amrit Lal Sood (supra), it is clear that the view taken by the Court is no different. In this decision also, the case of Jugal Kishore is referred to. It is held (i) that the liability of the insurer epends on the terms of the contract between the insured and the insurer contained in the policy; (ii) there is no prohibition for an insured from entering into a contract of insurance covering a risk wider than the minimum requirement of the statute whereby risk to the gratuitous passenger could also be covered; and (iii) in such cases where the policy is not merely statutory policy, the terms of the policy have to be considered to determine the liability of the insurer. Hence the Court aftrer noticing the relevant clauses in the policy, on facts found that under Section II1(a) of the policy, the insurer has agreed to indemnify the insured against all sums which the insured shall become legally liable to pay in respect of death of or bodily injury to "any person". The expression "any person" would undoubtedly include an occupant of the car who is gratuitously travelling in it. Further, referring to the case of Pushpabai Purshottam Udeshi (supra), it was observed that the said decision was based upon the relevant clause in the insurance policy in that case which restricted the legal liability of the insurer to the statutory requirement under Section 95 of the Act. As such, that decision had no bearing on Amrit Lal Sood's case as the terms of the policy were wide enough to cover a gratuitous occupant of the vehicle. Thus, it is clear that the specific clause in the policy being wider, covering higher risk, Page 34 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined made all the difference in Amrit Lal Sood's case as to unlimited or higher liability. The Court decided that case in the light of the specific clause contained in the policy. The said decision cannot be read as laying down that even though the liability of the insurance company is limited to the statutory requirement, an unlimited or higher liability can be imposed on it. The liability could be statutory or contractual. A statutory liability cannot be more than what is required under the statute itself. However, there is nothing in Section 95 of the Act prohibiting the parties from contracting to create unlimited or higher liability to cover wider risk. In such an event, the insurer is bound by the terms of the contract as specified in the policy in regard to unlimited or higher liability as the case may be. In the absence of such a term or clause in the policy, pursuant to the contract of insurance, a limited statutory liability cannot be expanded to make it unlimited or higher. If it is so done, it amounts to rewriting the statute or the contract of insurance which is not permissible.
11. In the light of what is stated above, we do not find any conflict on the question raised in the order of reference between the decisions of two Benches of three learned Judges in Shanti Bai and Amrit Lal Sood aforementioned and, on the other hand, there is consistency on the point that in case of an insurance policy not taking any higher liability by accepting a higher premium, the liability of the insurance company is neither unlimited nor higher than the statutory liability fixed under Section 95(2) of the Act. In Amrit Lal Sood's case, the decision in Shanti Bai is not noticed. However, both these decisions refer to the case of Jugal Kishore and no contrary view is expressed."
(35) From the above noted portion of the decision in Page 35 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined the case of C.M.Jaya (supra), it can be seen that the Apex Court did not find that in the decisions in the cases of Shanti Bai and Amrit Lal Sood any contrary views are expressed. It was observed that the case of Amrit Lal Sood was decided in light of the specific clause contained in the policy.
(36) These decisions in the case of Amrit Lal Sood, C.M.Jaya were considered by a Division Bench of this Court in the case of Firdoz Pervez Mysorewala (supra) in light of the avoidance clause contained in the insurance policy. The plea of the Insurance Company that the decision in the case of Amrit Lal Sood has been overruled by five Judges Constitution Bench of the Supreme Court in the case of C.M.Jaya (supra) was negatived. It was observed as under :
"The above paragraphs quoted from the decision of the Constitution Bench would indicate that the judgment in Amrit Lal Sood (supra) is not overruled at all. Further, five Judge Constitution Bench had no occasion to consider the avoidance clause in the insurance policy which is considered in Amrit Lal Sood (supra) and Oriental Insurance Co.Ltd. (supra). Applying the principles laid down in the above referred to two decisions of the Supreme Court to the facts of the present case and more particularly to the terms and conditions stipulated in the insurance policy Exh.51, this Court is of the opinion that though the liability of the Insurance Company is limited to the extent of Rs.50,000/ (Rupees Fifty Thousand) only, the Insurance Company is liable to pay the entire award amount to the claimant and upon making such payment, the Insurance Company can recover the excess amount from the insured by executing the award against the insured to the extent of such excess amount as per Section 96(4) of the Motor Vehicles Act, 1939."
(37) Our task of culling the ratio in the case of Amrit Page 36 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined Lal Sood (supra) and the effect of the subsequent decisions in the case of C.M.Jaya (supra) however, has been considerably simplified by a later decision in the case of New India Assurance Co. Ltd. v. Vimal Devi, 2010 ACJ 2878. It was a case wherein the Insurance Company had appealed to the Supreme Court. The High Court had accepted the limited liability of the Insurance Company to the extent of Rs.50,000/, but still directed it to pay the entire amount along with interest to claimants and then to recover the amount beyond the liability of Rs.50,000/ from the owner of the vehicle involved in the accident. The policy under consideration in the said case also contained an avoidance clause which read as under:
"Avoidance of certain terms and right of recovery. Nothing in this policy or any endorsement hereon shall affect the right of any person indemnified by this Policy or any other erson to recover an amount under or by virtue of the provisions of the Motor Vehicles Act, 1939, Section 96. But the insured shall repay to the Company all sums paid by the Company which the Company would not have been liable to pay but for the said provisions."
(38) The Apex Court relying on the decision in the case of Amrit Lal Sood (supra) held that in view of avoidance clause, the Insurance Company would be liable to meet the claim of the claimant and satisfy the award passed by the Tribunal. The decision in the case of C.M.Jaya (supra) was noticed by the Apex Court in the said decision and it was observed as under:
"6.Mr.Calla further submitted that in C.M.Jaya, 2002 ACJ 271 (SC), a Constitution Bench of this court indeed held that in a policy for limited liability it was not open to the court to direct the insurance company to make any payment beyond the amount of the limited liability but it took note of the decision in Amrit Lal Sood, 1998 ACJ 531 Page 37 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined (SC) with approval. He referred to paras 8 and
12 of the judgment in C.M.Jaya (supra) where the decision in Amrit Lal Sood (supra) is noticed with approval.
7. The avoidance clause in the policy in this case makes all the difference and the direction of the High Court to the appellant insurance company to make payment of the full amount of compensation to the claimants and to recover its due from the owner of the vehicle is directly in accordance with that clause. In our view, the submission of Mr.Calla is well founded. The appellant in this case can derive no benefit from the decision in C.M.Jaya, 2002 ACJ 271 (SC)."
(39) In view of the above pronouncement of the Apex Court, we have no hesitation in holding that in face of avoidance clause contained in the insurance policy, the Insurance Company despite its limited liability must in so far as third party is concerned, satisfy the entire award of the Claims Tribunal. The Insurance Company, of course, would be entitled to recover the amount in excess of Rs.50,000/ which is the statutory limit of liability, from the owner of the vehicle insured which was involved in the accident."
20. Considering the aforesaid principles in the facts of the case on hand, and having appreciated the similar avoidance clause appearing in the policy produced on record at Exh.36 (Exh.49), I have no hesitation in holding that despite there being breach of the vital term and condition of the policy as proved by the insurance company in absence of any ground of fraud being involved, the insurance company is liable to satisfy the amount of compensation at first instance insofar as third party like claimants are concerned. In view of the avoidance clause read with the third party risk covered as Page 38 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined contained in the insurance policy, which is 'standard commercial vehicle package policy' the insurance company is bound to satisfy the entire award amount to the claimants at first instance with liberty to recover such amount of compensation from the owner of the vehicle insured, which was involved in the accident.
21. Having held so, as regards the quantum of compensation is concerned, the core contention of the claimant which is required to be dealt with at the outset is the income of the deceased being determined on lower side. On appreciation of the evidence of the claimant no.1 whose deposition has been recorded at Exh.20 and having appreciated the bills of Venus Plaster Industries produced on record at Exh.38, undoubtedly the claimant have established the case that the deceased was earning his livelihood by doing making of idols. However, there is no direct proof of any income of Rs.10,000/- being produced on record to accept the case of the claimant for determining the income as Rs.10,000/-. In absence of any proof of income being produced on record, this Court is inclined to consider the case of the claimant based on the minimum wages prevailing at the time of accident. Indisputably, the accident has taken place on 9 th June, 2010 considering the rates of minimum wages notified in the State of Gujarat during the aforesaid period, it would be appropriate to fix the income of the deceased as Rs.4,210/- per month considering the nature of the work of the deceased as that of skilled labourer.
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22. The age of the deceased has been proved by the claimant as 50 years at the time of accident which is fixed by the Tribunal based on the documentary evidence in the nature of school leaving certificate produced on record at Exh.38, wherein the date of birth of the deceased is reflected as 7 th October, 1960. Admittedly, the claimants includes the widow of the deceased, both aged parents and two major sons of the deceased. Thus, the deceased being survived by 5 dependents in the family, the Tribunal has rightly considered 1/4 th deduction towards the personal and living expenses of the deceased bearing in mind the well settled principles laid down in this regard in the case of Sarla Verma (supra).
23. This brings me to the future rise of income to be considered for the purpose of determination of dependency loss in light of well settled principles laid down in the landmark decision of Hon'ble Supreme Court in the case of Pranay Sethi (supra). Considering the fact that the deceased was self employed, as rightly submitted by learned advocate for the claimant, it would be appropriate to consider 25% towards future rise of the established income.
24. So far as the multiplier of 13 being applied by the Tribunal considering the fact that the age of the deceased will fall in the age group of 46 to 50 years, in view of the guidelines issued by the Hon'ble Supreme Court in the case of Sarla Verma (supra), the Tribunal has rightly applied the multiplier of 13. Considering the aforesaid components, the dependency benefit is thus redetermined as Rs.4,210 x 25% = Page 40 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026 NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined Rs.1,053 + Rs.4,210 - 1/4th deduction = Rs.3,947/- x 12 x 13 = Rs.6,15,732/-.
25. This brings me to the amount of compensation to be reconsidered under conventional heads. Considering the well settled principles laid down by the Hon'ble Supreme Court in the landmark judgment of Pranay Sethi (supra), giving them benefit of 10% rise on the ground that the claimants have pursued the proceedings all throughout praying for enhancement under the conventional heads as well, it would be appropriate to fix amount of Rs.18,150/- each towards the funeral expenses as well as loss of estate.
26. As regards the amount of compensation under the head of loss of consortium is concerned, considering the fact that the widow of the deceased has suffered loss of love, affection and companionship of her husband, is hereby held entitled to an amount of Rs.48,400/- towards spousal consortium. Similarly, both the aged parents of the deceased are held entitled to amount of Rs.96,800/- towards filial consortium. The two major sons having lost love and affection of their father at early age, are hereby held entitled to amount of Rs.96,800/- towards loss of parental consortium. The total amount of loss of consortium comes to Rs.2,41,800/-, which is rounded upto Rs.2,42,000/-.
27. Thus in light of the aforesaid reasoning, the total amount of compensation is reconsidered as under :-
Page 41 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined Sr. Particular Amount Enhanced no. awarded by amount the Tribunal
1. Loss of dependency benefit Rs.5,38,200/- Rs.6,15,732/-
2. Loss to estate Rs.5,000/- Rs.18,150/-
3. Loss of consortium Rs.10,000/- Rs.2,42,000/-
4. Funeral expenses Rs.10,000/- Rs.18,150/-
======== =========
Total :- Rs.5,63,200/- Rs.8,94,032/-
28. For the foregoing reasons the appeal preferred by the appellant - insurance company is partly allowed and the cross objections preferred by the original claimants are hereby allowed. Consequently, the impugned judgment and award dated 22nd December, 2014 passed by the Motor Accident Claims Tribunal (Aux.) and 7 th Addl. District Judge, Vadodara in MACP no.1011 of 2010 is hereby modified by holding the original claimant entitled to seek recovery of sum of Rs.8,94,032/- with interest at the rate of 9% per annum from the date of filing of claim petition till its actual realization together with proportionate costs from the original opponent nos.1 and 2 jointly and severally.
29. For the reasons recorded earlier, to subserve the ends of justice, the respondent no.3 insurance company is hereby directed to satisfy the aforesaid amount of compensation with proportionate costs and interest as awarded, at first instance to be paid to the claimants with further liberty to recover the aforesaid amount of compensation with proportionate costs and interest from the owner of the vehicle (original opponent no.2) by way of execution in accordance with law.Page 42 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026
NEUTRAL CITATION C/FA/1608/2015 JUDGMENT DATED: 24/03/2026 undefined
30. The appellant - insurance company is therefore directed to deposit the enhanced amount of compensation to the tune of Rs.3,30,832/- (Rs.8,94,032 - Rs.5,63,200) with 9% interest and proportionate costs as awarded, with the concerned Tribunal within period of six weeks from the date of receipt of certified copy of this order. On deposit of the aforesaid amount of compensation, the Tribunal shall be at liberty to proceed with the release and disbursement of the entire award amount in favour of the claimants as per the apportionment as directed in the impugned judgment and award. Let the aforesaid exercise be undertaken by the Tribunal within period of two weeks on deposit of the entire award amount. The Tribunal shall also look into the Court fees, if any to be realized before proceeding with the disbursement of the award amount.
31. With these observations the first appeal stands partly allowed whereas the cross objection stands allowed. The R. & P. are directed to be remitted back to the concerned Tribunal with the writ of this judgment.
Sd/-
(NISHA M. THAKORE, J.) AMAR RATHOD.../sfs/24.03 Page 43 of 43 Uploaded by AMAR RATHOD(HC01074) on Mon Mar 30 2026 Downloaded on : Mon Mar 30 20:57:32 IST 2026