SC raps insurance firm over accident relief

The Supreme Court has held that an insurance company cannot absolve itself from the obligation to pay compensation to victims in road accident cases, even if the offending vehicles were plying without valid permits.

A bench of Chief Justice Dipak Misra and justices A M Khanwilkar and D Y Chandrachud said the insurance company has to first pay the amount to the claimants with liberty to recover the amount from the owner of such a vehicle.

The matter involved a motorcycle-lorry accident in Bengaluru in which two-wheeler Satish died, while Anand, the pillion rider, sustained injuries. The lorry, going from Bengaluru to Tumakuru on March 17, 2009, was being driven in a rash and negligent manner.

The Motor Accident Claims Tribunal, Bengaluru, determined the amount of compensation as Rs 4.53 lakh for the family of Satish and Rs 1.72 lakh for Anand.

The National Insurance Company Ltd challenged the award before the Karnataka High Court contending that it cannot be fastened with the liability to pay compensation as the offending vehicle was being driven without a valid permit. The high court agreed to this, but enhanced compensation for the family members of the deceased to Rs 16 lakh.

Advocate Sanjay M Nuli, representing the victims, contended that the high court could not have restricted the liability of paying money to the owner of the offending vehicle. He said the amount must be first paid by the company with liberty to recover from the owner. The insurance company submitted it should not be asked to pay the amount as the vehicle didn't have permit and it would be difficult to trace and recover the money from its owner.

Rejecting the plea, the bench said, "The appeal would succeed to the limited extent that the amount of compensation determined by the high court shall be first paid by the insurance company with liberty to recover it from the owner of the vehicle."

The top court declined to allow the plea for enhancing the compensation for the family members of the deceased, saying the high court has already done it. With regard to the injured victim, the court said he had failed to produce any evidence on his income and permanent disability beyond 10% of the body.