An insurer remains liable when the accident occurs within the policy’s geographical limits.

On 26 November 2011, a bus carrying students on a study trip overturned after its driver allegedly drove negligently, injuring several occupants.

The injured claimants filed petitions under Section 166 of the Motor Vehicles Act, 1988. The Tribunal awarded compensation but held the vehicle owner liable rather than the insurer, relying on the policy’s geographical limits and the fact that the bus had been hired for an educational trip to Madikeri. The owner appealed on liability, while three claimants appealed seeking enhanced compensation.

1. Whether the Tribunal was justified in holding the owner liable to satisfy the awards instead of the insurer.

2. Whether the claimants were entitled to enhanced compensation.

Section 166 of the Motor Vehicles Act, 1988 provides the basis for claims for compensation arising from motor vehicle accidents, and Section 173 provides for appeals against Tribunal awards. The Court treated the policy’s geographical limits as relevant to insurer liability, but found no breach where the accident occurred within Bengaluru, within the policy limits.

For quantifying compensation, it relied on V. Mekala v. M. Malathi & Another, (2014) 11 SCC 178, to assess a student’s notional income, and New India Assurance Co. Ltd. v. Dolly Satish Gandhi & Anr., 2026 SCC OnLine SC 861, for the rule that medical-expense reimbursement under a medi-claim policy is not a ground to reduce compensation for medical expenses.

The Court held that the accident occurred within the policy’s geographical limits, so the Tribunal’s reliance on the educational trip to Madikeri did not justify relieving the insurer of liability. It also noted that the insurer had accepted liability in connected claims arising from the same accident.

On compensation, it found no basis to enhance Sajeevan’s award, but increased Debina’s compensation by recognising her parents’ 57 days of earned leave and calculating future loss of income using a notional monthly income of ₹12,000, 10% disability and multiplier 18. For Imran, it allowed medical expenses of ₹52,000 despite partial medi-claim reimbursement, and calculated future loss of income using a notional monthly income of ₹12,000, 7% disability and multiplier 18.

It allowed the owner’s appeals (MFAs 2965/2015, 2966/2015, 2968/2015 and 2973/2015), dismissed Sajeevan’s enhancement appeal, and partly allowed Debina’s and Imran’s appeals, enhancing their awards from ₹9,25,000 to ₹13,05,842 and from ₹3,00,000 to ₹4,28,440, respectively. The enhanced amounts carry interest at 9% per annum; the insurer was directed to deposit the compensation within six weeks, after which the amounts were to be released to the claimants by NEFT.