Insurers Held Jointly Liable Under Section 163A; High Court Award Modified and Reduced by Supreme Court

A Bench of Justices J.K. Maheshwari and Aravind Kumar heard appeals by two insurance companies challenging a Punjab & Haryana High Court order that set aside a tribunal's dismissal and awarded lump-sum compensation to the dependents of a deceased truck driver. The appeals raised questions on the applicability of Section 163A of the Motor Vehicles Act, 1988, the computation of compensation under the Second Schedule, and whether the deceased driver could be treated as a “third party” for the offending vehicle.

The Court allowed the appeals in part, held that claims filed under Section 163A required determination under the Second Schedule and not under Section 166, and reduced the compensation awarded by the High Court. The Court observed that the High Court was right to set aside the tribunal's dismissal because Section 163A claims did not require proof of negligence. The Court, in its reasoning, observed: “The High Court took note of the fact that there was collision between two vehicles, as the claim petition had been filed under Section 163A of the Act does not require any proof of negligence for seeking compensation. While entertaining a claim petition u/s 163A of the Act, the question of negligence cannot be looked into.” The Court further held that, in the absence of positive evidence by the insurer of the offending vehicle, the deceased would be a “third party” vis-à-vis that vehicle and the insurer would be liable to indemnify the award.

Background The dispute arose from a night collision on November 15, 2006, between a truck driven by the deceased, Surender Singh (registration HR-38L/6727), and a dumper/crusher (registration HR-38H-9100). Surender Singh sustained grievous injuries and died on November 22, 2006. FIR No. 411 registered offences under Sections 279, 337 and 304-A IPC against the dumper driver. Dependents filed a claim under Section 163A for Rs.15 lakhs, alleging rash and negligent driving by the dumper driver; they stated the deceased earned Rs.3,000 per month, was 35 years old and was survived by six dependents.

The Motor Accident Claims Tribunal dismissed the claim petition on October 15, 2011, finding that claimants failed to prove negligence attributable to the dumper driver. On appeal under Section 173, the High Court allowed the claim and awarded Rs.15 lakhs with 9% interest, directing joint and several liability on all respondents and ordering both insurers to indemnify initially, with liberty to recover from owners as per policy.

The insurers — The New India Assurance Co. Ltd. (insurer of the deceased’s truck) and National Insurance Co. Ltd. (insurer of the dumper) — filed special leave petitions. They argued that the award was excessive, that Section 163A prescribed structured compensation as per the Second Schedule and did not permit heads such as “love and affection” over and above the Schedule, and that the dumper insurer should be exonerated because the deceased was the driver of one vehicle and thus not a third party under Section 147.

The Court analysed precedent including United India Insurance Co. Ltd. v. Sunil Kumar and held that Section 163A had an overriding effect and required final compensation on the structured formula without proof of negligence. Applying the Second Schedule, the Court accepted an annual income of Rs.40,000 for the deceased (given six dependents), deducted one-third for personal expenses, applied multiplier 17 for age 35, and computed loss of dependency at Rs.4,53,339. It awarded prescribed general damages (loss of consortium Rs.2,000; funeral expenses Rs.5,000; loss of estate Rs.2,500) and medical expenses limited to Rs.15,000, making a total of Rs.4,77,839 with 8% interest from the date of petition. The Court found no evidence contradicting the collision and observed that the dumper insurer had not produced the alleged eyewitness; in view of the absence of positive evidence, the deceased was treated as a third party vis-à-vis the dumper and the National Insurance Company was held liable to indemnify the award.

The Court ordered the deposited sums to be adjusted: amounts deposited in SLP No.15191/2020 were to be refunded to The New India Assurance; the deposit in SLP No.9460/2022 was to be transmitted to the tribunal for disbursement with proportionate interest; the award shares were fixed in the ratio 50:10:10:10:10:10 among six claimants, with a direction that if respondent No.6 (the mother) was not alive, her share would go to the first claimant. The appeals were allowed in part.

Case Details: Case No.: 2025 INSC 836 (Special Leave Petition Nos. 15191 of 2020 & 9460 of 2022) Case Title: The New India Assurance Company Limited v. Usha Devi & Ors.; National Insurance Company Limited v. Usha Devi & Ors. Appearances: For the Petitioner(s): Ranjan Kumar Pandey, Advocate (for The New India Assurance Co. Ltd.); Ambhoj Kumar Sinha, Advocate (for National Insurance Co. Ltd.) For the Respondent(s): V. Elanchezhiyan, Advocate (for the claimants)