Insurer remains liable for third-party compensation unless willful breach of policy by insured is proved.

Two cross-appeals were filed against the award dated 25.06.2019 passed by the 7th Additional Motor Accident Claims Tribunal (MACT), Bilaspur in Case No. 161/2017

Narendra Kumar Agrawal (claimant) suffered injuries in an accident involving a trailer truck (No. CG-10/R-0766).

The Insurance Company sought to avoid liability on the ground that the person caught at the scene and charged under Section 304-A IPC, Shiv Bhaina, did not possess a valid driving license

Conversely, the owner contended that he had authorized one Kiran Kumar (who held a valid license) to drive, but Kiran Kumar fled after the accident, leaving the sleeper, Shiv Bhaina, to be apprehended

The claimant sought enhancement of the compensation awarded by the Tribunal

1. Whether the Insurance Company can be exonerated from liability on the ground of a breach of policy conditions regarding the driver's license

2. Whether the compensation awarded by the Claims Tribunal is just and reasonable or requires enhancement

The Court applied the principles laid down in National Insurance Co. Ltd. v. Swaran Singh (2004) 3 SCC 297, which established that an insurer must prove a willful breach of policy conditions by the insured and that the mere absence of a license is not a sufficient defense against third parties

It also relied on Sohan Lal Passi v. P. Sesh Reddy (1996) 5 SCC 21 and Pushpabai Purshottam Udeshi v. Ranjit Ginning and Pressing Co. (P) Ltd. (1977) 2 SCC 745, which affirm the doctrine of vicarious liability of the master for acts of the servant occurring within the course of employment, even if the authorized act was performed in an unauthorized or improper manner

The Court observed that the Tribunal correctly relied on the testimony of the owner (Vinod Kumar Jain) and the authorized driver (Kiran Kumar) to conclude that the owner had indeed entrusted the vehicle to a licensed driver

The Court reasoned that since the accident occurred while the vehicle was being used for the owner’s business, the owner could not escape liability to third parties even if an unauthorized person (Shiv Bhaina) was at the wheel at the specific moment of the incident

Following Swaran Singh, the Court held that the Insurance Company failed to prove a "willful breach" by the insured, as the owner had exercised reasonable care by employing a licensed driver (Kiran Kumar)

Regarding compensation, the Court re-evaluated the heads of medical expenses, loss of income, pain and suffering, diet, and conveyance, determining that the original award was insufficient

The court held that the Insurance Company remains liable as no willful breach of policy was established

The total compensation was enhanced from ₹11,80,000/- to ₹13,80,000/-, granting an additional amount of ₹2,00,000/- to the claimant

The Insurance Company was directed to deposit the additional amount within 45 days with interest @ 8% per annum from the date of the claim application