Insurer Must Pay Compensation for Gratuitous Tractor Passenger’s Death, Then Recover from the Owners.

On 12 November 2000, Dhulabhai was struck by a tractor while returning from his farm and later died.

His family sought compensation under Section 166 of the Motor Vehicles Act, claiming that he was 40 years old and earned Rs.3,000 per month.

The Tribunal awarded Rs.2,06,100 with 6% interest, assessed his monthly income at Rs.1,800, and exonerated the insurer, recording breaches relating to the driver’s licence and Dhulabhai’s status as a gratuitous passenger.

The claimants appealed, challenging the assessment of compensation and seeking a “pay and recover” direction against the insurer.

Under Sections 166 and 173 of the Motor Vehicles Act, a claimant may seek just compensation and appeal an award; Section 171 empowers the Tribunal to award simple interest on compensation.

Applying National Insurance Co. Ltd. v. Pranay Sethi, the Court used 40% future prospects for a deceased aged 40 with no permanent employment, a multiplier of 15, and the prescribed conventional heads, including the periodic enhancement to those amounts.

It also applied the deduction of one-fourth of income for personal expenses where the deceased left four dependants.

Under the “pay and recover” principle, as discussed in Kaminiben & Ors. v. The Oriental Insurance Company Limited & Ors., drawing on Manuara Khatun and National Insurance Co. Ltd. v. Saju P. Paul, an insurer may be directed to pay claimants first and recover the amount from the insured, notwithstanding its defence to ultimate liability.

The Court found no evidence supporting the claimed monthly income of Rs.3,000, but held that the Tribunal’s Rs.1,800 assessment was too low; it substituted Rs.2,100, identified as the applicable minimum monthly wage for a skilled worker at the time of the accident.

It retained the deceased’s age at 40, applied 40% future prospects, deducted one-fourth for personal expenses, and used a multiplier of 15. It recalculated compensation at Rs.6,52,590, including loss of dependency and enhanced conventional damages.

The Court increased interest to 7.5% simple interest, relying on Section 171 and its prior decision concerning interest from the date of the claim petition.

Although it upheld the finding exonerating the insurer, it directed the insurer to satisfy the award first, applying the “pay and recover” principle to avoid requiring the claimants to pursue recovery themselves.

The award was modified to grant total compensation of Rs.6,52,590 with 7.5% simple interest from the date of the claim petition until realization, excluding 434 days of delay, against the driver and owner jointly and severally.

The insurer was directed to deposit the amount with the Tribunal within eight weeks and then recover it from the driver and owner; the Tribunal was directed to disburse the amount to the claimants after verification.