After a bus crash killed 53 people, Himachal Pradesh High Court directs insurer to pay all compensation awards first and recover amounts beyond its cover from the owner

The connected appeals arose from a bus accident on 11 August 2012 involving vehicle No. HP-68-4949, which left the road and fell into a gorge.

The bus was authorised to carry 42 passengers, in addition to the driver and conductor, but substantially more people were travelling in it; the inquiry report attributed the accident to overloading.

The Motor Accidents Claims Tribunal awarded compensation in numerous death and injury claims and, in the relevant awards, directed the insurer to satisfy claims up to the policy’s passenger limit, with recovery rights against the owner for amounts beyond that limit.

The appeals comprised 79 by the insurer, 30 by the owner, and one seeking enhancement.

Whether carrying substantially more passengers than the bus’s permitted capacity constituted a fundamental breach of the insurance policy that relieved the insurer of liability.

How the insurer’s liability should be apportioned where claims arising from the accident exceeded the number of passengers covered by the policy.

Whether the compensation awarded in the individual death and injury claims required adjustment under the applicable principles governing just compensation.

Under Sections 166 and 173 of the Motor Vehicles Act, 1988, a claimant may seek compensation before the Claims Tribunal and an aggrieved party may appeal the award.

Relying on *Lakhmi Chand v. Reliance General Insurance Co. Ltd.* and *B.V. Nagaraju v. Oriental Insurance Co. Ltd.*, the Court held that excess passengers do not, by themselves, establish a fundamental breach sufficient to discharge the insurer; the breach must be fundamental and causally connected to the accident.

Under *National Insurance Co. v. Anjana Shyam*, the insurer’s covered liability is measured by the highest awards, in descending order, up to the number of insured passengers.

The Court also relied on *United India Insurance Co. Ltd. v. K.M. Poonam* for the procedure of initially depositing compensation awarded to all claimants, with recovery from the vehicle owner of amounts paid beyond the insurer’s covered liability.

The evidence established that the bus’s authorised capacity was 42 passengers plus driver and conductor, and that it was overloaded.

Applying *Lakhmi Chand* and *B.V. Nagaraju*, the Court rejected the insurer’s contention that overloading alone entitled it to avoid liability.

Applying *Anjana Shyam* and *K.M. Poonam*, it held that the insurer was liable, without recovery, for the 42 highest passenger awards; for the remaining awards, it had to pay claimants in the first instance and could recover the excess from the owner.

The Court separately reassessed compensation in the connected cases, applying future-prospect additions, personal-expense deductions, appropriate multipliers and conventional heads in death claims, and the relevant pecuniary and non-pecuniary heads in injury claims.

The insurer was held liable for the highest 42 awards; it was directed to satisfy the remaining awards in the first instance, with a right to recover the excess from the owner.

The connected insurer appeals were disposed of through appeal-specific modifications, including revisions to compensation and, where applicable, interest.

The owner’s appeals were disposed of in accordance with the liability ruling, and the enhancement appeal was allowed on the terms stated by the Court.

Any compensation already received from the Government was directed to be deducted from the total compensation awarded.