An insurer cannot be held liable when the vehicle’s policy expired before the accident.

On 14 January 2019, Shivayya was injured while riding as a pillion passenger when the motorcycle carrying him was struck by another motorcycle.

He sustained fractures to the medial and lateral malleoli of his right ankle, underwent surgery and remained hospitalised for six days.

He claimed that the injuries caused permanent disability and loss of income.

The Tribunal awarded him Rs. 3,86,700 with 6% annual interest and directed Bharati AXA General Insurance Company to satisfy the award.

Shivayya appealed, seeking enhanced compensation; the insurer appealed, contending that the policy had expired before the accident.

1. Whether the Tribunal’s assessment of Shivayya’s disability and compensation was inadequate and required enhancement

2. Whether the insurer was liable to satisfy the award when the policy on record had expired before the accident

The appeals were brought under Section 173(1) of the Motor Vehicles Act, 1988.

In assessing accident compensation, the Court considered the medical evidence and the functional impact of the injury on earning capacity, rather than mechanically converting limb disability into whole-body disability; it also applied the multiplier method to assess future loss of income.

The Court further treated the existence of valid insurance coverage on the date of the accident as necessary to impose liability on the insurer under the policy.

No precedent was cited in the judgment.

The Court found that the ankle fractures had malunited, ankle movement was restricted, and early arthritis was present; considering those findings, it assessed whole-body disability at 20%, while noting that the claimant had not established the nature of his business or how the impairment affected his earning capacity.

Using monthly income of Rs. 13,520 and a multiplier of 15, it awarded Rs. 4,77,000 for future loss of income, and enhanced compensation under several other heads, including treatment-period income, attendant, food and conveyance charges, loss of amenities and future medical expenses.

As to liability, the policy document and the owner’s pleading showed coverage from 7 October 2017 to 6 October 2018, whereas the accident occurred on 14 January 2019; the insurer therefore had no valid policy covering the accident date.

Total compensation was reassessed at Rs. 7,27,500, an enhancement of Rs. 3,40,800, carrying 6% annual interest from the date of the claim petition until realization.

The insurer was exonerated, and liability to pay the compensation was placed on the vehicle owner, who was directed to deposit the entire compensation before the Tribunal within six weeks of receiving the certified judgment.