Insurer cannot recover compensation without proving a fake licence and wilful breach by the insured.

Jitender Singh Minhas died in a motor-vehicle accident on 9 April 1998 due to the rash and negligent driving of bus No. DL-IP-938 by respondent No.1.

His parents instituted a claim petition under Section 166 of the Motor Vehicles Act, 1988.

The Motor Accident Claims Tribunal, Jalandhar, awarded ₹6,00,000 with interest at 9% per annum and held respondents No.1 and 2 jointly and severally liable, while directing the Insurance Company to pay the award with liberty to recover it from the owner and driver.

The claimants appealed seeking enhancement, contending that the deceased’s income, future prospects, appropriate multiplier, and conventional heads had not been properly assessed.

During the appeal, the deceased’s mother died, and the enhanced amount was sought to be paid to his father.

Whether the compensation awarded by the Tribunal was inadequate and required enhancement by reassessing the deceased’s income, future prospects, deductions, multiplier, and conventional heads of compensation?

Whether the Insurance Company had proved that the driver possessed a fake driving licence and that the insured had committed a wilful breach of the insurance policy, thereby entitling the Company to recover the compensation from the owner and driver?

The Court applied Section 166 of the Motor Vehicles Act, 1988, governing claims for compensation arising from motor accidents.

For computation of loss of dependency, it relied on Sarla Verma v. Delhi Transport Corporation, applying the multiplier of 17 for a deceased aged 29 years and deducting 50% of the income towards personal expenses where the deceased was unmarried.

Under National Insurance Co. Ltd. v. Pranay Sethi, 40% was added towards future prospects and compensation was awarded under conventional heads.

The Court also relied on Magma General Insurance Co. Ltd. v. Nanu Ram and United India Insurance Co. Ltd. v. Satinder Kaur for filial consortium payable to the parents.

On insurer liability, the Court applied the principle that mere existence of a fake or invalid driving licence does not automatically establish a policy breach; the insurer must prove the insured’s wilful breach or lack of due diligence in entrusting the vehicle, as recognised in Rishi Pal Singh v. New India Assurance Co. Ltd. and Hind Samachar Ltd. (Delhi Unit) v. National Insurance Co. Ltd.

The Court affirmed the finding that the accident resulted from respondent No.1’s rash and negligent driving, as that finding had not been challenged by any respondent.

It held that the Tribunal had failed to assess the deceased’s income before calculating dependency.

Since the deceased had completed his MBBS and was pursuing MS in surgery, the Court reasonably assessed his monthly income at ₹9,000.

As he was below 30 years of age, 40% was added for future prospects, resulting in a monthly income of ₹12,600.

Because he was unmarried and left two dependent parents, 50% was deducted towards personal expenses, producing a monthly dependency loss of ₹6,300 and an annual loss of ₹75,600.

Applying multiplier 17, the loss of dependency was calculated at ₹12,85,200.

The Court further awarded ₹30,000 each to the parents for filial consortium and ₹20,000 towards loss of estate and funeral expenses, taking total compensation to ₹13,65,200, rounded off to ₹13,65,000.

Regarding the Insurance Company, the Court found that the alleged verification report showing that the driving licence was fake had neither been exhibited nor proved through the licensing authority.

Further, there was no evidence that the owner knowingly entrusted the vehicle to a person holding a fake licence or otherwise committed a wilful breach of the policy.

The total compensation was enhanced from ₹6,00,000 to ₹13,65,200, rounded off to ₹13,65,000.

The father, claimant No.1, was held entitled to the enhanced compensation of ₹7,65,000, over and above the amount awarded by the Tribunal, with interest at 9% per annum from 4 September 1998 until realization.

Respondents No.1 to 3, including the Insurance Company, were held jointly and severally liable, and the Insurance Company was not permitted to recover the amount from the owner or driver.

The Registry was directed to email the authenticated award to the Insurance Company in compliance with the Supreme Court’s directions in Bajaj Allianz General Insurance Co. v. Union of India.