Insurer cannot avoid liability for missing hazardous-goods endorsement without proving hazardous cargo and causal nexus.

The claimants sought compensation for the death of Jitendra Bhandari, who died in a motor accident on 29 December 2011 when tanker No. JH-10K-0720, allegedly driven rashly and negligently, dashed against his motorcycle.

The Motor Accident Claims Tribunal, Dhanbad, awarded ₹14,37,000 with interest at 7% per annum in Motor Accident Claim Case No. 295 of 2014, directing the appellant-insurer to satisfy the award.

The Insurance Company challenged the award, contending that the tanker driver did not possess the requisite authorisation under Section 14(2)(a) of the Motor Vehicles Act, 1988 read with Rule 9 of the Central Motor Vehicles Rules, 1989, to drive a vehicle carrying dangerous or hazardous goods.

It also disputed the method of computation of compensation. The claimants supported the award on liability but sought enhancement of compensation.

Whether the tanker driver lacked a valid and effective licence or the requisite hazardous-goods endorsement, and whether the alleged breach absolved the appellant-insurer from liability to satisfy the award?

Whether the Tribunal adopted an incorrect method of assessing compensation and whether the compensation awarded was not just and reasonable?

The Court applied Sections 3 and 149 of the Motor Vehicles Act, 1988, and Rule 9 of the Central Motor Vehicles Rules, 1989, concerning effective driving licences and the additional qualification required for driving a goods carriage carrying dangerous or hazardous goods.

Under National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297, an insurer seeking to avoid liability must prove a fundamental breach of the policy and, where relevant, its causal connection with the accident; even a licensing breach does not automatically exonerate the insurer.

Chatha Service Station v. Lalmati Devi, 2025 INSC 468, recognises the significance of the Rule 9 endorsement where a tanker is proved to be carrying hazardous goods and the breach is established, ordinarily permitting pay-and-recover directions rather than complete exoneration.

For compensation, the Court applied Sri Ramachandrappa v. Manager, Royal Sundaram Alliance Insurance Co. Ltd., (2011) 13 SCC 236, permitting reasonable assessment of income through evidence and judicial estimation; National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16 SCC 680, regarding 40% future prospects for a self-employed person below 40 years and conventional heads; Magma General Insurance Co. Ltd. v. Nanu Ram, (2018) 18 SCC 130, regarding spousal, parental and filial consortium; and Nagappa v. Gurudayal Singh, (2003) 2 SCC 274, together with Surekha v. Santosh, (2021) 16 SCC 467, recognising the power of a Tribunal or appellate court to award just compensation beyond the amount claimed, including without a cross-appeal or cross-objection.

The insurer failed to produce evidence showing that the tanker was carrying dangerous or hazardous goods at the time of the accident. The FIR, charge-sheet and oral evidence established rash and negligent driving and the collision with the deceased’s motorcycle, but did not establish the nature of the cargo. No survey report, goods receipt or other contemporaneous material was produced.

The driver’s licence was valid from 22 December 2009 to 21 December 2012, covering the date of the accident, and the insurer did not prove either a fundamental policy breach or any causal nexus between the alleged absence of endorsement and the accident.

Accordingly, the case was distinguishable from Chatha Service Station, and there was no basis even for a pay-and-recover direction.

On quantum, the Court found that the Tribunal had arbitrarily reduced the deceased’s asserted monthly income of ₹12,000 to ₹6,000 merely because the Mukhiya’s certificate was not conclusive. The consistent and largely unshaken oral evidence, the deceased’s self-employed occupation as a barber, and the economic conditions prevailing in Dhanbad in 2011 justified fixing monthly income at ₹10,000.

Adding 40% towards future prospects produced an annual income of ₹1,68,000; applying the multiplier of 17 and deducting one-fourth for personal expenses resulted in a loss of dependency of ₹21,42,000.

Applying Pranay Sethi and Magma General Insurance, the Court awarded ₹2,00,000 towards consortium, ₹15,000 for funeral expenses and ₹15,000 for loss of estate, totalling ₹23,72,000.

The Court exercised its power under Order XLI Rule 33 CPC to enhance the compensation despite the absence of a cross-appeal or cross-objection.

It further held that the Tribunal’s award was not just and reasonable and enhanced the compensation from ₹14,37,000 to ₹23,72,000.

The appeal was dismissed; any amount already paid was to be adjusted, and interest was awarded at 6% per annum from the date of the claim petition until realisation.

The Insurance Company was directed to deposit ₹23,72,000 before the Tribunal within eight weeks, after which the claimants could withdraw the amount through their joint bank account.