MFA/517/2020 of M/S UNITED INDIA INSURANCE CO. LTD Vs SMT. SHOBHA on 25 April 2026

ORAL JUDGMENT

(PER: HON'BLE MR. JUSTICE T.M. NADAF)

The insurer is before us in this appeal calling in question the judgment and award dated 27.06.2019 in MVC.No.855/2016 passed by the Additional Senior Civil Judge and JMFC and Motor Accident Compensation Tribunal at Putturu, D.K1, on the ground of liability.

2. The parties are referred to as per their ranking before the Tribunal.

3. The brief facts leading to filing of the present appeal are as under: In an accident occurred on 14.12.2015 at about 10.00 a.m, the deceased Nagaraja while proceeding towards his house at Hirebandady of Puttur Taluk, in the Maruthi car belonging to respondent No.1, who was driving the same in rash and negligent manner and when they reached near Attatodu of Nilakal, Pattaman Titta District, the driver of the car i.e., respondent No.1 lost control over the vehicle due to which the car capsized on the right side water canal and in the 1 'Tribunal'

HC-KAR

accident, the deceased Nagaraj sustained multiple grievous injuries all over the body. Immediately he was shifted to Nelakal Government Hospital and thereafter taken to Government Hospital Pattaman Titta and on the way to the hospital he succumbed to the injuries. The deceased was aged 30 years and was working as an agriculturalist so also a coolie and was earning Rs.15,000/- per month and due to the untimely death of Nagaraja, the claimants have lost love and affection as well as financial support to the family and accordingly they filed claim petition seeking Compensation of Rs.35,00,000 along with interest of 16% per annum.

4. Upon notice both the respondents appeared and filed their respective statement of objections through their counsel. Respondent No.1 though disputed the claim petition averments regarding the age, occupation and compensation claimed, but has taken the contention that since the vehicle is insured with the respondent No.2-Insurer, in any event, the Insurer is liable to indemnify. Whereas respondent No.2, apart from denying the claim petition averments, taken a specific contention regarding the driving license and violation of policy

HC-KAR

conditions, so also the contention that the deceased was travelling as a paid passenger and since there is no coverage, as the policy being act policy, i.e., 'liability only policy', the insurer is not liable to pay compensation.

5. The Tribunal after considering of entire evidence allowed the claim petition granting compensation of Rs.18,29,000/- with interest at the rate of 7% per annum from the date of petition till realization. However, considering the fact that the deceased was not a fair paid passenger and he being the friend of the owner, they had gone to a Shabarimale and while returning back, met with the accident and in view of the fact that the Act beneficial enactment, respondent No.2 is liable to pay the compensation. It is this judgment and award passed by the Tribunal is called in question mainly on two grounds by the respondent-Insurer.

6. Heard Sri.A.M.Venkatesh, learned counsel along with Sri.Lakshmi Narasappa, learned counsel appearing for the appellant, Ms.Vanchika Mathur, learned counsel for Sri.Suyog Herele and Sri.Nishanth S.K, learned counsel for respondent

HC-KAR

Nos.1 to 3 and Sri.Manoj.K, learned counsel for Sri.Hareesh Bhandary.T, learned counsel for respondent No.4.

7. Sri.A.M.Venkatesh argued firstly, that since the policy issued is act policy i.e., 'liability only policy', the vehicle being a private car, in the absence of any special premium paid, the inmate of the car is not covered under the insurance policy, as such the Insurer is not liable to pay the compensation.

8. Secondly, learned counsel submits that the Tribunal has awarded higher rate of interest on the compensation i.e., 7%. Normally, in general, interest awarded on compensation is 6% and sought to allow the appeal.

9. To buttress his argument, Sri.A.M.Venkatesh, relied on the judgment of Supreme Court in National Insurance Company Limited Vs. Balakrishnan and Another2, especially at paragraphs Nos.26 and 28, emphasizing on the fact that in the absence of special premium the Insurer is not liable to pay compensation.

2 (2013) 1 SCC 731

HC-KAR

10. In contrast Ms.Vanchika, relying on the judgment of the Supreme Court in Sunita and others Vs. United India Insurance Co. Ltd. and others3 drawing the attention of this Court to paragraph No.13 of the judgment, submits that the Supreme Court has held that even where the insurance is a "liability only policy" and no premium was paid to cover the driver, owner, or a gratuitous passenger traveling therein, the insurer is liable to pay primarily and with liberty to recover the same from the owner of the vehicle and sought to dismiss the appeal.

11. Having considered the entire material placed on record, we have perused the entire appeal paper.

12. Sri.Lakshmi Narasappa, learned counsel appearing on behalf of Sri.A.M.Venkatesh, tried to convince us on the judgment referred to by Ms.Vanchika Mathur, contending that the judgment is factually distinguishable. He tries to impress upon us that in the case on hand the deceased was an inmate in a private car and the policy issued is a private car - act policy i.e., "liability only policy". However, in the case of Sunita 3 2025 SCC Online SC 1464

HC-KAR

supra, the person died was an inmate traveling in a goods vehicle i.e., TATA 407 Truck, as such the facts are different, further, taking us through paragraph Nos.11 and 12 submits that since the special premium not paid in respect of the inmates, the policy cannot be extended to the inmate of the vehicle, since it is an act policy. On this he submits that the judgment of the Supreme Court is distinguishable. We failed understand what difference it would make for an inmate to be in a goods vehicle and in a private car. The facts referred in the judgment of the Supreme Court clearly stated that the deceased was an inmate in the TATA 407 Truck i.e., goods vehicle and the policy issued is act policy. The policy issued in respect of private car in the case on hand is also the same i.e., "liability only policy". In that view of the matter, the contentions of the learned counsel for the Insurer that judgments distinguishable on the facts cannot be countenanced. In that view of the matter, the latest judgment of the Supreme Court, in Sunita case supra in clear terms has held that even where the insurance policy is a "liability only policy" and no premium was paid to cover the driver, owner, or

HC-KAR

a gratuitous passenger traveling therein, the principle of pay and recovery can be invoked.

13. We find force in the argument of Sri. A.M.Venkatesh and Sri.Lakshmi Narasappa, learned counsel for the Insurer that the Tribunal has awarded excess interest in the absence of any exceptional circumstances made out by the claimants. Though Ms.Vanchika Mathur in a feeble attempt tried to convince us that the deceased was survived by two minor children and in that view of the matter the interest awarded may be maintained. We decline to accept the said submission, in the absence of any exceptional case made out for granting of higher interest than the one generally being awarded i.e., 6% per annum in motor vehicle claim petitions.

14. The judgment of Supreme Court in Sunita supra more especially at paragraph Nos.13, 14, 15 and 17 reads as under: "13. Adverting to the facts in hand, from a bare perusal of the record, it is borne that the vehicle in question was insured with "Liability Only Policy" and no premium was paid to cover the driver, owner, or a gratuitous passenger traveling therein. However, even then, in our view, the Courts below erred in holding that the Insurance Company is not liable to pay the compensation to the claimant-appellants, for the principle of "Pay and Recover: ought to have

HC-KAR

been invoked. As such, we are inclined to interfere with the above findings of the Courts below.

14. We must advert to the exposition of this Court in National Insurance Co. Ltd. v. Baljit Kaur. The deceased therein was traveling as a gratuitous passenger, and due to the rash and negligent driving of the offending vehicle, lost his life. The Insurance Company was directed to satisfy the amount awarded by the Courts below and recover the same from the owner of the vehicle, as the premium was not paid by the owner of the vehicle towards gratuituous passenger.

15. The above position has been followed by this Court in Anu Bhanvara v. IFFCO Tokio General Insurance Co. Ltd., wherein the injured person was traveling as a gratuitous passenger and was not covered under the Insurance Policy, the driver and owner of the vehicle was held liable for payment of compensation amount. This Court applied the principle of "Pay and Recover" and directed the Insurance company to pay the amount and, thereafter, recover the same from the owner of the vehicle.

17. Applying the above expositions of law, the Courts below ought to have directed the Insurance Company to indemnify, the amount and thereafter recover the same."

15. In view of the latest exponent of law on "liability only policy" by the Supreme Court, following the same under the mandate of Article 141 of the Constitution of India, we hold that the Insurer is primarily liable to pay the compensation with liberty to recover the same from the owner of the vehicle.

HC-KAR

16. In that view of the matter, the appeal filed by the Insurer is allowed in part. For the foregoing reasons, we proceed to pass the following:

ORDER

(i) Appeal by the Insurer is allowed in part.

(ii) The judgment and award dated 27.06.2019 in MVC.No.855/2016 passed by Additional Senior Civil Judge and JMFC and Motor Accident Compensation Tribunal at Putturu, D.K, so far as fastening absolute liability is modified as pay and recovery, so also reducing the interest from 7% to 6% per annum.

(iii) The Insurer is primarily made liable to pay the compensation with liberty to recover the same from the owner.

(iv) The amount in deposit shall be transmitted to the concerned Tribunal for disbursement.

(v) The appellant-Insurer shall deposit the entire amount along with interest at the rate of 6% per annum from date of petition till realization,

HC-KAR

with liberty to recover the same from the owner.

(vi) The appellant-Insurer shall deposit balance compensation amount along with interest at 6% per annum from the date of petition till realization before the concerned Tribunal within six weeks from the date of receipt of copy of this order.

(vii) The apportionment and disbursement ordered by the Tribunal is unaltered.

(viii) The trial Court records, if any secured, be transmitted to the concerned Tribunal forthwith.

(ix) No order as to cost.

Sd/- (D K SINGH) JUDGE

Sd/- (T.M.NADAF) JUDGE

RR List No.: 2 Sl No.: 3 ct-vn