CMA(MD)/127/2022 of S. Valliammal Vs M. Kanagaraj on 2 November 2026

JUDGMENT

The claimants in M.C.O.P. No. 609 of 2014, on the file of the Motor Accident Claims Tribunal-cum-II Additional District Court, Tirunelveli, have filed the present C.M.A.(MD).No. 127 of 2022, seeking enhancement of the compensation awarded by the Tribunal by its award dated 18.04.2016.

2. Facts of the case:

2.1. The claimants are the dependants of the deceased Murugan. On 22.03.2014, while the deceased was riding his two-wheeler bearing Registration No. TN-72-AU-3463 at Kallikulam Village, the offending vehicle bearing Registration No. TN-48-B-9493, belonging to the first respondent, came from the opposite direction in a rash and negligent manner and rammed into the two- wheeler. In the accident, the deceased sustained injuries and succumbed to them. Consequently, an FIR was registered against the driver of the offending vehicle.

2.2. The claimants instituted the claim petition seeking compensation for the death of Murugan and impleaded the second respondent insurance company on the basis of the insurance policy purportedly covering the offending vehicle. The insurance company filed its counter, disputing the genuineness of the policy

and contending that the document produced by the claimants was a fake policy. On that basis, it denied its liability to indemnify the owner or satisfy the compensation awarded by the Tribunal.

2.3. The first respondent, the owner of the offending vehicle, contested the claim by disputing the allegation of negligence against the driver of his vehicle and contending that the accident occurred due to the negligence of the deceased two-wheeler rider. The owner also maintained that the vehicle had been insured and that the insurance company was liable to satisfy the award.

2.4. To substantiate their claim, the claimants examined P.W.1 to P.W.3 and marked Exs.P1 to P6. On the side of the respondents, R.W.1 was examined and Exs.R1 to R7 were marked.

3. Findings of the Tribunal:

3.1. Upon consideration of the oral and documentary evidence, the Tribunal held that the accident occurred due to the rash and negligent driving of the first respondent's vehicle and fixed liability accordingly. However, on the question of insurance liability, the Tribunal accepted the insurance company's contention that the policy produced in respect of the offending vehicle was fake. Consequently, the second respondent insurance company was exonerated from liability, and the first respondent owner was directed to pay compensation of

Rs.13,51,000/- with interest at 9% per annum. Sl.No. Heads Amounts in Rs.

Loss of dependency 12,48,000/-

Loss of Consortium 30,000/-

Loss of Love and Affection 60,000/-

Funeral Expenses 5,000/-

Loss of Estate 5,000/-

Transport Expenses 3,000/- Total Compensation Awarded Rs.13,51,000/-

3.2. Aggrieved by the quantum of compensation and the exoneration of the insurance company, the claimants have preferred the present appeal.

4. Submissions of the learned counsel appearing for the appellant/claimant:

4.1. The learned counsel appearing for the claimants would submit that the Tribunal erred in exonerating the insurance company without considering the applicability of the principle of pay and recover. He would further contend that the compensation awarded by the Tribunal is inadequate. Though the deceased was engaged in agricultural activities and vegetable vending and was earning more than Rs.10,000/- per month, the Tribunal fixed his monthly income at only

Rs.6,500/-. The learned counsel would therefore seek enhancement of the income and consequential enhancement of the compensation, including the amount awarded under the conventional heads.

5. Submission of the learned counsel appearing for the respondent/Insurance Company:

5.1. Per contra, the learned counsel appearing for the second respondent insurance company would submit that the Tribunal, upon consideration of the evidence, specifically found that the policy produced by the claimants was fake. According to him, the principle of pay and recover cannot be invoked in a case where no genuine insurance policy existed. He would distinguish the decisions of the Hon'ble Supreme Court relied upon in support of the claimants' contention by submitting that, in those cases, the insurance companies had failed to establish their plea concerning the invalidity or falsity of the insurance policy, whereas, in the present case, the Tribunal had recorded a specific finding that the policy was fake. He would further point out that the owner did not effectively contest the insurance company's contention regarding the genuineness of the policy. On these grounds, he would seek dismissal of the appeal.

6. This Court considered the rival submissions and perused the entire materials available on record.

7. In view of the rival submissions and the materials available on record, the following points arise for consideration:

(i) Whether the second respondent insurance company is liable to satisfy the award, notwithstanding the finding that the insurance policy produced in respect of the offending vehicle was fake, and whether the principle of pay and recover can be applied in the facts and circumstances of the case?

(ii) Whether the compensation of Rs.13,51,000/- awarded by the Tribunal is just and reasonable or requires enhancement?

8. Discussion on the liability of the insurance company:

8.1. The learned counsel appearing for the insurance company would contend that, once the Tribunal has recorded a specific finding that the policy was fake, the insurance company cannot be fastened with liability in the absence of a valid contract of insurance. He would further submit that the decisions of the Hon'ble Supreme Court directing insurance companies to pay compensation and thereafter recover the same from the vehicle owners are distinguishable, as the plea regarding the falsity of the policy was not established in those cases.

8.2. The question, therefore, is not merely whether the document produced by the claimants was found to be fake, but whether, in the circumstances established by the evidence, the claimants can nevertheless invoke the principle of pay and recover. The distinction between a case in which the insurer fails to establish its defence and a case in which the falsity of the policy is affirmatively established is relevant to the determination of this question.

8.3. In the present case, the Tribunal, upon consideration of the evidence adduced on behalf of the insurance company, accepted its contention that the policy was fake. The owner of the offending vehicle did not effectively rebut that contention. In the absence of a genuine policy, the contractual liability of the insurance company cannot be presumed merely because the claimants are third parties.

8.4. The principle of pay and recover must therefore be considered with reference to the applicable statutory provisions and the principles laid down by the Hon'ble Supreme Court in the relevant decisions. The mere fact that the claimants are third parties does not, by itself, establish that an insurer is liable under a policy that has been affirmatively found to be fake. Equally, the precise basis and evidentiary foundation of the Tribunal's finding must be examined before concluding that the insurer is entitled to complete exoneration.

8.5. In the present case, having regard to the specific finding of the Tribunal regarding the falsity of the policy and the evidence relied upon to sustain that finding, this Court is not inclined to direct the insurance company to pay the compensation and recover the same from the owner.

8.6. Insofar as the plea for application of the principle of pay and recover is concerned, for the reasons discussed above, the same is declined. The finding of the Tribunal exonerating the second respondent insurance company from liability is sustained, and the first respondent, being the owner of the offending vehicle, shall be liable to satisfy the enhanced compensation.

9. Discussion on the quantum:

9.1. As regards the quantum of compensation, the deceased was engaged in vegetable vending and agricultural activities. The accident occurred on 22.03.2014. The Tribunal fixed his monthly income at Rs.6,500/-. Considering the nature of his occupation and the year of the accident, the said assessment appears to be on the lower side.

9.2. The learned counsel for the claimants would rely upon the principles laid down by the Hon'ble Supreme Court concerning the assessment of income in motor accident claims, including the application of an appropriate cost-index method where applicable. Having regard to the year of the accident, the nature

of the deceased's avocation and the materials available on record, this Court is of the view that the monthly income of the deceased may reasonably be fixed at Rs.7,500/-.

9.3. In view of the principles laid down by the Hon'ble Supreme Court in National Insurance Co. Ltd. v. Pranay Sethi, an addition of 40% towards future prospects is applicable, subject to the deceased's age and employment category satisfying the relevant criteria. Accordingly, the monthly income of Rs.7,500/- is enhanced by 40%, resulting in a monthly income of Rs.10,500/- for the purpose of calculating the loss of dependency.

9.4. Since the deceased was a bachelor, a deduction of 50% towards his personal and living expenses is ordinarily applicable, subject to the principles laid down in Sarla Verma v. Delhi Transport Corporation. The multiplier must be selected with reference to the age of the deceased in accordance with the applicable principles.

9.5. Accordingly, the monthly income of the deceased is fixed at Rs.7,500/-. By adding 40% towards future prospects, a sum of Rs.3,000/- is added, and the total monthly income is arrived at Rs.10,500/-. After deducting one-third towards the personal and living expenses of the deceased and applying the multiplier of 16, the loss of dependency is calculated as follows:

Rs.10,500 × 2/3 × 16 × 12 = Rs.13,44,000/-.

9.6. As regards the conventional heads, considering that the claimants are four in number, a sum of Rs.40,000/- is awarded to each claimant towards loss of consortium/love and affection, totalling Rs.1,60,000/-, subject to the nature of the relationship and the applicable principles laid down by the Hon'ble Supreme Court. A sum of Rs.20,000/- is awarded towards funeral expenses and Rs.10,000/- towards loss of estate.

10. Conclusion:

10.1. For the foregoing reasons, the compensation awarded by the Tribunal to the claimant is re-determined as follows:- Sl.No Heads Award in Rs.Amount awarded by the Tribunal Re-quantified amount by this Court Status

Loss

of dependency 12,48,000/- 13,44,000/- Enhanced

Loss

of Consortium/L oss of Love and Affection 90,000/- 1,60,000/- Enhanced

Funeral 5,000/- 20,000/- Enhanced

Expenses

Loss of Estate 5,000/- 10,000/- Enhanced

Transport Expenses 3,000/- 3,000/- Confirmed Total Compensation Awarded Rs.13,51,000/ - Rs.15,37,000/ - Enhanced

11. Result:

11.1. In the result, this Civil Miscellaneous Appeal is partly allowed.

11.2. The award amount passed in the M.C.O.P. No. 609 of 2014, on the file of the Motor Accident Claims Tribunal-cum-II Additional District Court, Tirunelveli is enhanced from Rs.13,51,000/- to Rs.15,37,000/- together with interest at the rate of 7.5% per annum from the date of the claim petition.

11.3. The plea for pay and recover is rejected, and the liability of the first respondent owner to satisfy the award is sustained and the owner of the vehicle is directed to deposit entire award amount including enhanced amount with 7.5% from the date of filing the petition within eight weeks from the date of the receipt of a copy of this order.

11.4. Upon such deposit, the claimants are entitled to withdraw the amount in accordance with the apportionment fixed by the Tribunal. There shall be no order as to costs.

.11.2026 NCC :Yes/No Index :Yes/No Internet :Yes/No AKM To

1. Motor Accident Claims Tribunal, (II Additional District Court)

Tirunelveli

2. The Section Officer, VR Section, Madurai Bench of Madras High Court, Madurai.

K.K.RAMAKRISHNAN,J. AKM C.M.A.(MD).No.127 of 2022