National Insurance Co. Ltd., Jhumri Telaiya, P.O. and P.S. Jhumri v. Zubaida Khatoon

1. Heard the learned counsel for the parties.

2. M.A. No. 274 of 2015, by the appellant-Insurance Company, challenges the Judgment and Award dated 01.07.2013 of the 5th District Judge-cum-Presiding Officer, Motor Vehicles Accident Claims Tribunal, Hazaribag (Tribunal), in Claim Case No. 194 of 1998, whereby the Tribunal awarded total compensation of Rs. 2,00,000/- without interest.

3. The appellant-Insurance Company contends that the compensation awarded by the Tribunal is erroneous and unsustainable in law. Its principal and sole ground of challenge is that the vehicle involved in the accident was not insured with it and that, consequently, no Neutral Citation No. 2026:JHHC:24972 liability could have been fastened upon the appellant. It is further contended that the photocopy of the insurance policy relied upon by the Tribunal is a forged and fabricated document and that the Tribunal erred in treating the same as evidence of a valid insurance cover.

4. Learned counsel appearing for the respondent-claimant, on the other hand, submitted that the compensation awarded by the Tribunal is inadequate and does not constitute just compensation. It was further submitted that the Tribunal erred in treating the claim as one under Section 163-A of the Motor Vehicles Act, 1988, and, on that basis, in applying the notional income prescribed under the Second Schedule. Learned counsel also submitted that the Tribunal erred in declining interest on the amount of compensation awarded.

5. Based on the rival arguments and material on record, the following points for determination arise in this appeal: - (i) Whether the Tribunal erred in fastening liability upon the appellant-Insurance Company based on a forged and fabricated insurance policy? (ii) Whether the compensation awarded by the Tribunal is “just and reasonable” in the facts and circumstances of the case?

6. Insofar as the first point for determination is concerned, the appellant’s principal contention is that the vehicle bearing Neutral Citation No. 2026:JHHC:24972 registration No. BR-13-P-9925 was not insured with it on the date of the accident and that the photocopy of the policy placed on record is forged and fabricated.

7. A perusal of the written statement filed by the appellant before the Tribunal shows that it had denied the existence of any insurance cover. However, the records reveal that the claimant produced a photocopy of the insurance policy indicating that the vehicle stood insured from the midnight of 31.03.1998 to the midnight of

30.03.1999, which the Claims Tribunal relied upon. The accident occurred on 12.04.1998, which falls squarely within the period of cover reflected in the document.

8. The insurer had every opportunity before the Tribunal to (a) summon its own records and deny issuance of the policy, or (b) lead evidence of non-existence of cover, and chose not to. In addition to this, no oral or documentary evidence of any kind was placed on record to support the bare denial contained in the written statement.

9. The law is well settled that a mere denial in the written statement, unaccompanied by any evidence, is insufficient to dislodge a document produced by the claimant and accepted by the Tribunal. It is equally true that a plea of forgery, having neither been established before the Tribunal nor supported by any independent or contemporaneous material, cannot now be accepted merely because the appellant reiterates the same in appeal. The Neutral Citation No. 2026:JHHC:24972 genuineness or validity of the policy was never put in issue by leading evidence before the original forum. Having failed to avail the opportunity available to it, the appellant cannot now succeed on the plea of forgery or non-existence of cover.

10. In addition to this, the position in law is also well settled that where an insurer seeks to avoid its liability on the ground of a fact which, if established, would exclude its obligation to indemnify, the burden of establishing such fact rests upon the insurer. In the cases of National Insurance Company Limited versus Swarn Singh [(2004) 3 SCC 297], and Narcinva V. Kamat and Another Versus Alfredo Antonio Doe Martins and Others [1985 ACJ 397 (SC)], the Hon’ble Supreme Court, while dealing with the burden of proof in the context of an insurance contract, held that the burden of proving the fact which excludes the liability of the insurer to pay compensation lies on the insurer alone.

11. The principle is equally attracted to the present case. Once the appellant asserted that the vehicle was not insured with it and that the policy relied upon by the claimant was forged and fabricated, it was incumbent upon the appellant to substantiate that assertion by leading appropriate evidence.

12. Consequently, the finding of the Tribunal that the vehicle was insured on the date of the accident and that the appellant is liable to indemnify the compensation is upheld. The first point for determination is accordingly answered against the appellant. Neutral Citation No. 2026:JHHC:24972

13. Turning to the second point for determination, the Tribunal proceeded on the footing that the claim was under Section 163-A of the Act and, accordingly, applied the notional income of Rs. 15,000/- per annum prescribed under the Second Schedule. This approach is clearly contrary to the claim petition itself.

14. The petition was expressly instituted under Ss. 140 and 166 of the Act. The claimant specifically pleaded the age of the deceased as 36 years, his occupation as a mason, and his monthly income as Rs. 3,000/- and accordingly, sought a lump-sum compensation of Rs. 5,00,000/- from the Tribunal below. There is, therefore, nothing in the pleadings to suggest that the claimant had invoked the structured formula contemplated under Section 163-A of the Act.

15. The distinction is material. A claim under Section 166 of the Act requires the Tribunal to determine the compensation which is just and reasonable based on the material brought on record, including the age, occupation and income of the deceased, the extent of dependency and the other relevant circumstances. The Second Schedule, which was framed in the context of Section 163-A, could not have been mechanically applied to a claim specifically instituted under Section 166. The Tribunal was, therefore, required to examine the pleaded income of the deceased and determine the compensation based on the evidence available on record. Neutral Citation No. 2026:JHHC:24972

16. The application of the notional income of Rs. 15,000/- per annum was, therefore, wholly misplaced. The Tribunal proceeded upon an erroneous understanding of the nature of the claim and, consequently, adopted an incorrect basis for computation of compensation.

17. Moving ahead, the claimant and the supporting witness consistently deposed that the deceased, a mason aged about 36 years, was earning Rs. 3,000/- per month. This assertion remained unchallenged and unrebutted in cross-examination. In the absence of any contrary evidence, the monthly income of Rs. 3,000/- is accepted.

18. Applying the principles laid down in National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16 SCC 680 and Sarla Verma v. DTC, (2009) 6 SCC 121, an addition of 40% is made towards future prospects. The annual income is thus taken as Rs. 50,400/-. The applicable multiplier for the age of 36 years is 15. The loss of dependency, after deducting one-fourth towards personal and living expenses (there being a widow and three children), works out to Rs. 5,67,000/-.

19. Under the conventional heads, each of the four family members including the claimant would be entitled to Rs. 40,000/- towards loss of consortium, aggregating to Rs. 1,60,000/-. This is in accordance with the law laid down by the Hon’ble Supreme Court in Magma General Insurance Co. Ltd. v. Nanu Ram alias Neutral Citation No. 2026:JHHC:24972 Chuhru Ram & Ors., reported in (2018) 18 SCC 130, which was subsequently reiterated in United India Insurance Co. Ltd. v. Satinder Kaur alias Satwinder Kaur, reported in (2021) 11 SCC 780. A further sum of Rs. 15,000/- is awarded towards funeral expenses and Rs. 15,000/- towards loss of estate.

20. Before parting, it is apposite to observe that this Court is conscious that, in the ordinary course, enhancement of compensation in an appeal preferred by the owner or the insurer would not be undertaken in the absence of a cross-appeal or cross-objection by the claimant. The present case, however, stands on a different footing. The interference with the quantum of compensation is necessitated by the palpable error committed by the Tribunal in treating the claim as one under Section 163-A of the Act and in computing the compensation based on the Second Schedule. The error goes to the very basis of computation and has resulted in the claimant being denied just compensation. In such exceptional circumstances, this Court cannot remain a mute spectator to an evident error in the determination of compensation and is required to correct the same in exercise of its jurisdiction to award just compensation.

21. Additionally, it is well settled that the power under Order XLI Rule 33 of the Code of Civil Procedure can be exercised by the appellate court to do complete justice between the parties and to pass any decree or order which ought to have been passed by the Neutral Citation No. 2026:JHHC:24972 Tribunal, even in the absence of a cross-appeal or cross-objection by the claimant. Reliance is placed on the decisions of the Hon’ble Supreme Court in Nagappa v. Gurudayal Singh, (2003) 2 SCC 274 and Surekha v. Santosh, (2021) 16 SCC 467, wherein it has been held that the appellate court can enhance the compensation to the just amount even without a formal appeal or cross-objection by the claimant.

22. The total compensation is therefore assessed at Rs. 7,57,000/-, which is rounded off to Rs. 7,60,000/-.

23. The Tribunal declined interest on the ground that the claimant concluded her evidence only in the year 2013. That reason cannot be sustained. Under Section 171 of the Act, interest compensates the claimant for the deprivation of the amount due from the date of the claim petition. In the absence of any delay attributable to the claimant, interest must run from the date of institution of the claim petition.

24. The rate of interest is fixed at 6 % per annum from the date of the claim petition till actual realisation.

25. The appeal is accordingly dismissed. The compensation amount is enhanced from Rs. 2,00,000/- to Rs. 7,60,000/-, with interest @ 6% per annum from the date of filing of the claim petition till actual realisation.

26. The enhanced compensation amount shall be distributed amongst the family members/dependents of the deceased in the same Neutral Citation No. 2026:JHHC:24972 proportion as directed by the Tribunal in its original award dated

01.07.2013.

27. The appellant is directed to deposit the enhanced compensation amount with this Court within six weeks from today, after giving due intimation to the learned counsel for the respondent-claimant. Any amount already paid shall be adjusted.

28. Once the amount is deposited, the Registry shall permit the claimant to withdraw the same by transfer into her bank account. Under no circumstances should the transfer be made otherwise than through regular banking channels.

29. The learned counsel for the respondent-claimant shall furnish the identity and bank details of the claimant so that the transfer can be effected at the earliest.

30. The appeal is dismissed and disposed of in the above terms, without any order as to costs. (M. S. Sonak, C.J.) August 19, 2026 A.F.R. Manoj/Cp.2 Uploaded on 19.08.2026