Gujarat HC Upholds Insurer Liability While Modifying Compensation Award

A bench of Honourable Ms. Justice Nisha M. Thakore heard a first appeal arising under Section 173 of the Motor Vehicles Act, 1988 challenging the Motor Accident Claims Tribunal’s award in a claim under Section 166 of the Motor Vehicles Act, 1988, and was seized of the question whether the insurer was liable where the driver’s endorsement for a heavy goods vehicle was not in force on the date of the accident.

The Court in its Decision Summary held that the insurer had not made out a sufficiency of proof to establish that absence of a valid licence was the root cause of the accident and therefore declined to exonerate the insurer, but it re-determined the quantum of compensation. The appellant had relied upon the Supreme Court decision in Bajaj Alliance General Insurance Co. Ltd. vs. Rambha Devi and Ors. ( "2025 (3) SCC 95": 2024 CaseBase(SC) 825) to press the point that lack of a specific endorsement for a transport vehicle was dispositive, while the claimants and respondents relied upon the principles in National Insurance Co. Ltd. v. Swaran Singh ( "(2004) 3 SCC 297": 2004 CaseBase(SC) 114) to contend that mere non-possession of an endorsement would not disentitle the victim where no causal nexus to the accident was established. The Court noted that the principles in National Insurance Co. Ltd. v. Swaran Singh ( "(2004) 3 SCC 297": 2004 CaseBase(SC) 114) were directly relevant and that the appellant had also invoked the guidance in Sarla Verma & Ors vs Delhi Transport Corp.& Anr ( "(2009) 6 SCC 121": 2009 CaseBase(SC) 380) on deduction for personal expenses. The Court further applied the framework in National Insurance Company Ltd. vs. Pranay Sethi and Others ( "(2017) 16 SCC 680": 2017 CaseBase(SC) 551) when calculating prospective income and multiplier, and followed the authority in Magma General Insurance Co. Ltd vs Nanu Ram Alias Chuhru Ram for the award of filial consortium to both parents.

The Court, in its reasoning, observed: _"_A bench of Honourable Ms. Justice Nisha M. Thakore heard a first appeal arising under Section 173 of the Motor Vehicles Act, 1988 challenging the Motor Accident Claims Tribunal’s award in a claim under Section 166 of the Motor Vehicles Act, 1988, and was seized of the question whether the insurer was liable where the driver’s endorsement for a heavy goods vehicle was not in force on the date of the accident.

The Court in its Decision Summary held that the insurer had not made out a sufficiency of proof to establish that absence of a valid licence was the root cause of the accident and therefore declined to exonerate the insurer, but it re-determined the quantum of compensation. The appellant had relied upon the Supreme Court decision in Bajaj Alliance General Insurance Co. Ltd. vs. Rambha Devi and Ors. ( "2025 (3) SCC 95": 2024 CaseBase(SC) 825) to press the point that lack of a specific endorsement for a transport vehicle was dispositive, while the claimants and respondents relied upon the principles in National Insurance Co. Ltd. v. Swaran Singh ( "(2004) 3 SCC 297": 2004 CaseBase(SC) 114) to contend that mere non-possession of an endorsement would not disentitle the victim where no causal nexus to the accident was established. The Court noted that the principles in National Insurance Co. Ltd. v. Swaran Singh ( "(2004) 3 SCC 297": 2004 CaseBase(SC) 114) were directly relevant and that the appellant had also invoked the guidance in Sarla Verma & Ors vs Delhi Transport Corp.& Anr ( "(2009) 6 SCC 121": 2009 CaseBase(SC) 380) on deduction for personal expenses. The Court further applied the framework in National Insurance Company Ltd. vs. Pranay Sethi and Others ( "(2017) 16 SCC 680": 2017 CaseBase(SC) 551) when calculating prospective income and multiplier, and followed the authority in Magma General Insurance Co. Ltd vs Nanu Ram Alias Chuhru Ram for the award of filial consortium to both parents.

The Court, in its reasoning, observed: "Considering the aforesaid principles, if one looks at the particulars of license issued to the driver, as evident from Exh. 78, he was found competent to drive HMV i.e. heavy motor vehicle in 1983 and such license was in force for period of 30 years and had expired 12.07.2003 which was approximately four months before the accident dated 01.11.2003. Subsequently, he had secured a license for transport vehicles on 07.11.2003 as evident from the smart card at Exh. 86. Which is 6 days after the accident. The fact remains that driver had wide experience to drive heavy motor vehicle and therefore in absence of any nexus established by the appellant insurance company to remotely suggest that nin holding of license has led to accident, this Court finds no good reason to exonerate insurance company from its liability to indemnify the insurer as well as to compensate the victims of the accident. Further, there is no evidence on record to suggest that the owner had failed to inquire into the holding of valid and effective license by the driver at the time of accident before handing over the vehicle. For the foregoing reasons, the appeal on grounds of the liability is meritless and fails.”

Background

The appeal was filed by the insurer against the Motor Accident Claims Tribunal’s award dated 17.12.2014, which had awarded Rs.6,73,000 to the claimants. The insurer challenged primarily the fixation of liability on the ground that the driver of the offending HGV dumper did not hold a valid endorsement to drive a heavy goods vehicle on the date of the accident. The Tribunal had found negligence and had awarded compensation; the insurer deposited the award amount and secured interim directions. The Court examined the driving licence records exhibited at trial and the vehicle registration particulars showing gross weight in excess of 12,000 kg, and observed that although the driver held earlier HMV competence, the specific endorsement for HGV was not in force on 01.11.2003 and a fresh transport endorsement was recorded only after the accident. Applying the ratio in National Insurance Co. Ltd. v. Swaran Singh ( "(2004) 3 SCC 297": 2004 CaseBase(SC) 114), the Court held that the insurer had proved absence of valid endorsement but had not established that the absence was the proximate cause of the accident nor that the owner knowingly permitted an unendorsed driver to operate the dumper. The appellant’s reliance on Bajaj Alliance General Insurance Co. Ltd. vs. Rambha Devi and Ors. ( "2025 (3) SCC 95": 2024 CaseBase(SC) 825) was considered but the Court found the facts distinguishable on the vehicle class and records. On quantum, the Court applied the deduction guideline in Sarla Verma & Ors vs Delhi Transport Corp.& Anr ( "(2009) 6 SCC 121": 2009 CaseBase(SC) 380), the income and future prospects approach in National Insurance Company Ltd. vs. Pranay Sethi and Others ( "(2017) 16 SCC 680": 2017 CaseBase(SC) 551), and awarded filial consortium following Magma General Insurance Co. Ltd vs Nanu Ram Alias Chuhru Ram.

The Court re-calculated dependency as Rs.4,53,600, awarded Rs.48,400 to each parent under loss of consortium, Rs.18,150 for loss of estate and Rs.18,150 for funeral expenses, and fixed the total awarded amount at Rs.5,86,700 with interest at 9% from the date of filing of the claim petition. The First Appeal was partly allowed only on quantum, and the Tribunal was directed to effect payments and refund the balance to the insurer; the Court observed that the insurer could seek reimbursement from the owner if entitled under policy terms and the Court retained the procedural route under Order XLIII Rule 33 of the Code of Civil Procedure, 1908 to effect complete justice."

Background

The appeal was filed by the insurer against the Motor Accident Claims Tribunal’s award dated 17.12.2014, which had awarded Rs.6,73,000 to the claimants. The insurer challenged primarily the fixation of liability on the ground that the driver of the offending HGV dumper did not hold a valid endorsement to drive a heavy goods vehicle on the date of the accident. The Tribunal had found negligence and had awarded compensation; the insurer deposited the award amount and secured interim directions. The Court examined the driving licence records exhibited at trial and the vehicle registration particulars showing gross weight in excess of 12,000 kg, and observed that although the driver held earlier HMV competence, the specific endorsement for HGV was not in force on 01.11.2003 and a fresh transport endorsement was recorded only after the accident. Applying the ratio in National Insurance Co. Ltd. v. Swaran Singh ( "(2004) 3 SCC 297": 2004 CaseBase(SC) 114), the Court held that the insurer had proved absence of valid endorsement but had not established that the absence was the proximate cause of the accident nor that the owner knowingly permitted an unendorsed driver to operate the dumper. The appellant’s reliance on Bajaj Alliance General Insurance Co. Ltd. vs. Rambha Devi and Ors. ( "2025 (3) SCC 95": 2024 CaseBase(SC) 825) was considered but the Court found the facts distinguishable on the vehicle class and records. On quantum, the Court applied the deduction guideline in Sarla Verma & Ors vs Delhi Transport Corp.& Anr ( "(2009) 6 SCC 121": 2009 CaseBase(SC) 380), the income and future prospects approach in National Insurance Company Ltd. vs. Pranay Sethi and Others ( "(2017) 16 SCC 680": 2017 CaseBase(SC) 551), and awarded filial consortium following Magma General Insurance Co. Ltd vs Nanu Ram Alias Chuhru Ram.

The Court re-calculated dependency as Rs.4,53,600, awarded Rs.48,400 to each parent under loss of consortium, Rs.18,150 for loss of estate and Rs.18,150 for funeral expenses, and fixed the total awarded amount at Rs.5,86,700 with interest at 9% from the date of filing of the claim petition. The First Appeal was partly allowed only on quantum, and the Tribunal was directed to effect payments and refund the balance to the insurer; the Court observed that the insurer could seek reimbursement from the owner if entitled under policy terms and the Court retained the procedural route under Order XLIII Rule 33 of the Code of Civil Procedure, 1908 to effect complete justice.

Case Details:
Case No.: R/FIRST APPEAL NO. 613 of 2015
NeutralCitation: 2026:GUJHC:27761
Case Title: NATIONAL INSURANCE COMPANY LTD. Versus LEGAL HEIRS OF DECD. HITESH POKIYA & ORS.
Appearances: 
For the Petitioner(s): MR DAKSHESH MEHTA(2430) for the Appellant(s) No. 1
For the Respondent(s): DELETED for the Defendant(s) No. 2,4,5; MR AMAR D MITHANI(484) for the Defendant(s) No. 1.1,1.2; MR.HIREN M MODI(3732) for the Defendant(s) No. 3

Source: 2026 CaseBase(GUJ) 208