Insurer must prove a fake driving licence through reliable evidence to establish fundamental policy breach.

The claimants instituted a motor accident compensation claim arising from the death of a woman who was allegedly operating a kirana shop. The accident involved tractor bearing registration no. BR-21C-6748, insured with the appellant–National Insurance Company and owned by Arun Kumar Sinha.

The Motor Accident Claims Tribunal, Dhanbad, in T. (M.V.) Case No. 42 of 2012, awarded compensation of ₹3,60,500 with interest at 6% per annum from 6 December 2013 until realization.

In appeal, the Insurance Company contended that the tractor was being driven by Haldal Bishal, who allegedly possessed a fake driving licence, constituting a fundamental breach of the insurance policy.

It relied upon a letter from the District Transport Officer, Patna, and a private investigator’s report, but examined neither the District Transport Officer nor the investigator.

The owner remained absent despite service, and the driver had not been impleaded as a party.

The High Court also examined whether the compensation awarded by the Tribunal constituted “just compensation,” despite the absence of any cross-objection by the claimants.

Whether the Insurance Company established that the driver possessed a fake or invalid driving licence, thereby proving a fundamental breach of the insurance policy and disentitling the claimants from recovering compensation from the insurer?

Whether the High Court could enhance the compensation to a just amount in the absence of a cross-objection by the claimants?

Whether the compensation required recalculation on the basis of the deceased’s age, income, future prospects, personal-expense deduction, multiplier, and conventional heads of compensation?

The Court applied the principle that the insurer bears the burden of proving a fundamental breach of the insurance policy, including the allegation that the vehicle was driven by a person without a valid driving licence, as laid down in National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297.

Narcinva V. Kamat v. Alfred Antonio Doe Martins, (1985) ACJ 397 (SC), holds that the insured is not obliged to produce evidence enabling the insurer to avoid its liability.

For assessment of compensation, the Court applied the “just compensation” principle recognized in Surekha v. Santosh, (2021) 16 SCC 467, permitting enhancement even without a cross-objection.

The computation of future prospects, personal expenses, and the multiplier was guided by Sarla Verma v. Delhi Transport Corporation, (2009) 6 SCC 121, read with National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16 SCC 680.

The Court held that the Insurance Company failed to discharge its burden of proving that the driving licence was fake.

Although the letter of the District Transport Officer stated that the licence details corresponded to another person, and the investigator’s report made a similar assertion, neither author was examined as a witness.

Mere production of those documents was therefore insufficient to establish a fundamental breach.

The non-impleadment of the driver and the owner’s failure to contest the proceedings could not substitute for legally admissible proof, particularly when the insurer could have summoned and examined the driver.

The Court nevertheless found that the Tribunal’s award did not represent just compensation.

Accepting the husband’s evidence that the deceased was 54 years old, rather than relying on the age of 50 mentioned in the postmortem report, the Court applied a 10% addition for future prospects.

Her monthly income of ₹3,000 was thus increased to ₹3,300, or ₹39,600 annually. After deducting 25% towards personal expenses, the annual dependency was fixed at ₹29,700. Applying the multiplier of 11, the loss of dependency was calculated at ₹3,26,700.

The Court additionally awarded ₹2,00,000 towards consortium at ₹40,000 for each of the five claimants, ₹15,000 towards funeral expenses, and ₹15,000 towards loss of estate.

The Court held that the insurer had not proved the alleged fake driving licence or any fundamental breach of the policy.

Exercising its duty to award just compensation, the Court enhanced the compensation from ₹3,60,500 to ₹5,56,700, with interest at 6% per annum from the date of the claim petition until actual realization, rather than merely from 6 December 2013.

The appellant was directed to deposit the enhanced compensation with accrued interest within six weeks, subject to adjustment of any amount already paid or deposited.

The appeal was accordingly disposed of without costs.