Insurer must prove policy breach; a licence’s different State of issue or name discrepancy alone is insufficient.

On 7 November 2014, Jagtar Singh, aged 23, was travelling by motorcycle from Banur to Landran when his motorcycle collided with the offending vehicle, which allegedly moved from the left side of the road towards the right without an indicator. Jagtar Singh sustained fatal injuries and was declared brought dead at Government Medical College and Hospital, Chandigarh. An FIR was registered against Bholla Singh, the driver of the offending vehicle

His parents filed a claim petition alleging that he was employed as an Engineer with Sony India and earned ₹15,000 per month. The Motor Accident Claims Tribunal found the accident to have resulted from the rash and negligent driving of Bholla Singh. It assessed the deceased’s notional income at ₹7,000 per month, added 50% for future prospects, deducted 50% towards personal expenses, and awarded ₹11,84,000 with 6% interest

The claimants filed FAO-5188-2016 seeking enhancement of compensation. The vehicle owner filed FAO-2260-2018 challenging the insurer’s recovery rights, which had been granted on the ground that the driver did not possess a valid and effective driving licence

1. Whether the compensation awarded to the parents of the deceased required enhancement, particularly regarding assessment of income, future prospects, deduction for personal expenses, multiplier, and conventional heads of compensation?

2. Whether the insurer established a breach of the insurance policy condition by proving that the driver did not possess a valid driving licence?

3. Whether the insurer was entitled to recover the compensation from the owner or driver after satisfying the award?

The Court applied the principles in National Insurance Company Ltd. v. Pranay Sethi, under which a deceased below 40 years of age is generally entitled to a 40% addition towards future prospects and compensation is separately payable under conventional heads

Under Sarla Verma v. Delhi Transport Corporation, 50% of the income of an unmarried deceased is ordinarily deducted towards personal and living expenses, and the multiplier corresponding to the deceased’s age is applied; for a deceased aged 23, the multiplier is 18

Relying on Magma General Insurance Co. Ltd. v. Nanu Ram, the Court recognised the parents’ entitlement to filial consortium

In relation to policy breach, the insurer bears the burden of proving, by cogent evidence, that the insured vehicle was driven by a person without a valid licence; a mere plea of breach, a licence bearing a different name, or a licence issued by another State is insufficient. The insurer cannot obtain recovery rights without establishing the alleged breach.

The Court accepted that the deceased’s pleaded employment with Sony India was not proved, but held that the Tribunal’s assessment of ₹7,000 per month failed to give adequate weight to his completed Diploma in Electronics and Communications, his age, and his earning potential. Considering comparable assessments in Joginder Singh and Gurmit Kaur, and the fact that the accident occurred in 2014, the Court fixed his notional income at ₹14,000 per month

It then added 40% for future prospects, deducted 50% for personal expenses as he was a bachelor, and applied the multiplier of 18, resulting in a loss of dependency of ₹21,16,800

The Court further awarded ₹40,000 each to the parents towards filial consortium, ₹15,000 for loss of estate, and ₹15,000 for funeral expenses, making the total compensation ₹22,26,800

Regarding liability, the Court held that the Tribunal had improperly inferred that the licence was fake merely because it was issued by the District Transport Officer, Tuensang, Nagaland. No official from the licensing authority was examined, nor was other cogent evidence produced to disprove the licence. The difference between the driver’s name, Bholla Singh, and the name on the licence, Gurjant Singh, also required evidentiary determination and could not by itself establish breach. Since the insurer failed to discharge its burden of proving that the driver lacked a valid licence, the recovery rights could not be sustained

Of the total compensation, ₹40,000 towards filial consortium, with proportionate interest, was made payable to the father; the remaining amount and proportionate interest were made payable to the mother

FAO-2260-2018 was also allowed. The insurer’s recovery rights were set aside, and all respondents were held jointly and severally liable, with the insurance company primarily liable to satisfy the award and having no right of recovery against the owner or driver