Jharkhand High Court Reaffirms Insurer’s Liability in Third-Party Motor Accident Compensation Claims
M.A. No. 24 of 2018
By Rishika Sinha
In Branch Manager, National Insurance Co. Ltd. v. Jharia Devi & Ors., the High Court of Jharkhand considered the scope of an insurer’s liability in a motor accident compensation claim involving allegations relating to the validity of the driver’s licence and breach of policy conditions. The appeal arose from an award passed by the Motor Vehicles Accident Claims Tribunal, Pakur, directing the insurer to pay compensation of ₹38,55,560 along with interest to the family of a deceased police employee who lost his life in a road accident caused by a rashly driven Scorpio vehicle.
According to the facts placed before the Tribunal, the deceased was returning home on his motorcycle when he was hit by the offending vehicle, resulting in fatal injuries. An FIR was registered against the driver of the Scorpio, and upon completion of the investigation, a charge sheet was filed under various provisions of the Indian Penal Code relating to rash and negligent driving. The claimants, being the family members of the deceased, sought compensation on the ground that the deceased was the sole earning member of the household and was employed with the Jharkhand Police. The offending vehicle was admittedly insured with National Insurance Company Limited at the time of the accident.
Before the High Court, the insurer challenged the award principally on the ground that the owner of the offending vehicle had failed to conclusively establish the validity of the driver’s licence, thereby amounting to a breach of policy conditions under Section 149 of the Motor Vehicles Act. The insurer further contended that the compensation awarded by the Tribunal was excessive and inconsistent with the principles laid down by the Supreme Court in relation to deduction of personal expenses, consortium, and interest.
Rejecting the appeal, the High Court observed that in third-party motor accident claims, the burden lies upon the insurer not merely to allege breach of policy conditions but to establish wilful and fundamental breach on the part of the insured. Relying extensively upon the decisions of the Supreme Court of India in National Insurance Co. Ltd. v. Laxmi Narain Dhut and Nirmala Kothari v. United India Insurance Co. Ltd., the Court reiterated that an insured owner is only expected to verify whether the driver possesses a licence that appears genuine on its face and is competent to drive the vehicle. Unless the insurer demonstrates that the owner knowingly permitted a person with a fake or invalid licence to operate the vehicle, liability towards third parties cannot ordinarily be avoided.
The Court further held that the Tribunal had correctly assessed the compensation and that no illegality existed in the award of interest or amounts granted under conventional heads such as funeral expenses and loss of consortium. Consequently, the appeal was dismissed, and the insurer was directed to satisfy the award within six weeks.
The judgment is significant for reaffirming the protective framework underlying third-party motor accident compensation law in India. By placing a high threshold upon insurers seeking to evade liability on technical grounds, the Court reinforced the principle that compensation statutes must be interpreted in a manner that safeguards the rights and interests of accident victims and their dependants.
