Ajit Kumar v. Satendra Kumar Jaiswal

Judgment

1. Satendra Kumar Jaiswal, Son of Sri Ajodhya Prasad, Resident of village- Chamardih, P.O. and P.S. Barwadih, District – Latehar.

2. Neyaz Ahmad son of Suchan Mian, Resident of village Garhwa Tanr, P.O. and P.S. Barwadih, District Latehar

3. The New India Assurance Company Limited, Branch Office, Dharamshala Road, Post – Daltonganj, P.S. Daltonganj (now being called as Medininagar Town Police Station), District – Palamu. With M.A. No. 518 of 2015 ….. ….. Respondents The New India Assurance Company Limited Branch Office at Dharamshala Road, P.O. & P.S. Daltonganj, District- Palamau, represented through its Divisional Office No. 1, P.P. Compound, P.O. Ranchi, P.S. Chutia, District- Ranchi. …. ….. Appellant

1. Ajit Kumar, Son of Sri Panna Lal, Resident of Mohalla-Shantipuri, Near Versus Police Line, P.O. & P.S. Daltonganj, District- Palamau.

2. Satendra Kumar Jaiswal, Son of Sri Ajodhya Prasad, Resident of Village- Chamardih, P.O. & P.S. Barwadih, District- Latehar.

3. Neyaz Ahmad, Son of Suchan Mlan, Resident of Village-Garhwa Tanr, P.O. & P.S. Barwadih, District- Latehar. ------ …. …. Respondents CORAM : HON’BLE THE CHIEF JUSTICE ------ In M.A. No. 517 of 2015 For the Appellant : For the Resp. Nos. 1 & 2 : For the Respondent No.3 : In M.A. No. 518 of 2015 For the Appellant : For the Respondent No. 1: For the Resp. Nos. 2 & 3 : 33 /Dated: 14.08.2026 ----- Mr Arvind Kumar Lall, Advocate Ms D. Arati Kumari, Advocate Mr Shivam Singh Kashyap, Advocate Md Faruque Ansari, Advocate Md Sharukh Ansari, Advocate Mr Manish Kumar, Advocate Mr Mr Manish Kumar, Advocate Mr Arvind Kumar Lall, Advocate Ms D. Arati Kumari, Advocate Mr Shivam Singh Kashyap, Advocate Md Faruque Ansari, Advocate Md Sharukh Ansari, Advocate

Heard Mr Manish Kumar, learned counsel for the appellant-Insurance Company, Mr Arvind Kumar Lall, learned counsel for the claimant and Md 1 ( 2026:JHHC:24523 ) Sharukh Ansari, learned counsel for the owner and driver of the offending vehicle.

2. Both appeals challenge the same Judgment and Award dated 05.08.2015 passed in MACT Case No. 60 of 2004 by the Motor Accident Claims Tribunal at Daltonganj (Tribunal).

3. Mr Manish Kumar, the learned counsel for the Insurance Company, which has filed M.A. No. 518 of 2015, submitted that the claimant was a passenger in the insured vehicle, which was covered by an Act-only policy. He submitted that coverage under an Act-only policy does not entitle the occupant of the insured vehicle to receive any compensation from the Insurance Company. He submitted that this plea was raised but was incorrectly negated by the Tribunal in the impugned order.

4. In the alternative, Mr Manish Kumar submitted that at least a pay-and- recover order should have been made in this matter, so that the Insurance Company would recover the compensation amount from the owner/insured. He relied upon the decision of the Hon’ble Supreme Court in the case of National Insurance Company Limited Vs. Balakrishan & Another, (2013) 1 SCC 731.

5. Mr Manish Kumar submitted that even the quantum of compensation awarded is excessive. He had a particular grievance regarding the award of penal interest at 9% per annum.

6. Mr Arvind Kumar Lall submitted that the plea now raised was never raised in the pleadings by the Insurance Company. In any event, the Insurance Company led no evidence in this matter. He pointed out that the claimant produced only the first page of the insurance policy, as was given to them by the police authority. He submitted that the terms and conditions on which the Insurance Company now claims exemption were never produced by the 2 ( 2026:JHHC:24523 ) Insurance Company. He submitted that in the absence of any proper pleadings or evidence, the contention now raised about absolving the Insurance Company should not be entertained or, in any event, such contention should be rejected.

7. Mr Lall relied upon the India Motor Tariff Regulation and the decision of the Gujarat High Court in the case of Hemendrasinh Mansinh Jadav Vs Sanjaybhai Govindbhai Dabhi & Ors., 2019 0 ACJ 600 to support his contentions.

8. Mr Lall submitted that the compensation awarded is inadequate because no allowance has been made towards future prospects. He submitted that the interest of 6% per annum is also inadequate and, in the facts and circumstances, the interest rate should have been 7.5 per cent at the least.

9. Md Shahrukh Ansari, learned counsel for the owner and driver of the insured vehicle, submitted that this was a private vehicle and that nothing in the insurance policy allows the insurance company to avoid liability. Accordingly, he submitted that there is no error in the impugned award and there is no case made out for making any pay and recovery order.

10. Md Shahrukh Ansari also adopted the arguments of Mr Arvind Kumar Lall in opposition to the contentions now raised by Mr Manish Kumar on the issue of absolving the Insurance Company of its liability.

12. The rival contentions now fall for my determination. The first point to be determined in this appeal is whether the Insurance Company should be absolved of any liability to indemnify the owner and pay the compensation to the claimant. Related to this point is the sub-point as to whether the Tribunal should have, in the facts of the present case, made a pay and recovery order thereby entitling the Insurance Company to recover the amount from the owner of the insured vehicle. 3 ( 2026:JHHC:24523 ) In this regard, reference has to be made to the written statement filed by

13. the Insurance Company to the claim petition. In paragraphs 08 and 09 of the written statement, the Insurance Company has pleaded as follows:- “8. That, in reply to the statements made in column no.9 of the claim application this opposite party only admits the interest of the opposite party no.1 in vehicle no. BR 15P 0423 was insured with this opposite party subject to the terms, conditions, limitation and exceptions as contained in the policy. Admittedly, the vehicle involved in the accident is a private vehicle which can be used only for the insured’s use and the same cannot be used for hire or reward. As such, accordingly to 147 of the M.V. Act and the terms and conditions of the policy this opposite party is not liable to indemnify the opposite party no.1 for the injury of the applicant who was travelling by the vehicle as passengers.

9. That, without to the prejudice to the contention raised hereinabove and without admitting any lability whatsoever this opposite party seeks the protection of section 64 VB of the Insurance Act and Section 147 and 149 (2) of the M.V. Act. This opposite party hereby calls upon the opposite party no.1 and 2 to produce and prove the registration, fitness and read permit if any respect of vehicle no. BR-15P-0423 and the driving license of the opposite party no.2. In case they fail to do so it shall be presumed that there was a violation of statutory condition of the insurance policy as contemplated 149 (2) of the M.V. Act and it shall be further presumed that the opposite party no. 2 driving the vehicle without having valid and effective driving license and in such circumstances this opposite party shall not stand in law to indemnify the opposite party no.1. It has already been submitted that the above vehicle which is private one was being used for carrying passenger in violation of the provisions of the M.V. Act and the terms and conditions of the policy as such this opposite party is not liable to pay any compensation in the instant case.” 4

14. Thus, the Insurance Company’s plea was not at all the plea now raised ( 2026:JHHC:24523 ) by Mr Manish Kumar, namely, that the offending vehicle was insured under an Act Policy and that such an Act Policy absolves the Insurance Company from indemnifying the insured for any loss or claim arising from the death or injury of an occupant in an insured vehicle. The plea was that the vehicle was a private vehicle and could not have been used for any hire or reward. The further contention was that the insured vehicle was being used to carry passengers for hire and reward, in breach of the terms and conditions of the insurance policy.

15. In the written arguments filed before the Tribunal for the first time, an argument based on the premise that this was only an Act Policy was raised. Without proper pleadings in the written statement, such an issue cannot be raised by filing written arguments or by advancing oral arguments before the Tribunal.

16. Moreover, in this case, the Insurance Company chose to lead no evidence. Neither oral evidence was led nor documentary evidence produced. The ground now advanced is sought to be substantiated based upon the first page of the insurance policy which the claimant produced as was furnished to the claimant by the policy authority. The entire argument proceeds without any backing in the pleadings or oral or documentary evidence.

17. Simply because the first page refers to policy ‘A’ (Act only), the present argument has been advanced. There is nothing on record to show the terms and conditions of the insurance policy or the basis on which the exemption was claimed during the course of arguments.

18. Besides, in this case, the Tribunal, after referring to the statutory provisions, has held that the insurer’s right is safeguarded. The decision of the 5 ( 2026:JHHC:24523 ) Gujarat High Court in Hemendrasinh Mansinh Jadav (supra) also supports the case of the claimant and the owner of the insured vehicle.

19. In paragraph-28, the Gujarat High Court made the following observations:- “28. Third party insurance is compulsory for all motor vehicles. In G. Govindan v. New India Assurance Co. Ltd., 1999 ACJ 781(SC), it was held that third party risks insurance is mandatory under the statute. This provision cannot be overridden by any clause in the insurance policy. Third party insurance does not cover injuries to the insured himself but to the rest of the world who is injured by the insured. Beneficiary of third party insurance is the injured third party, the insured or the policyholder is only nominal beneficiary of the policy. In third party policies the premiums do not vary with the value of what is being insured because what is insured is the legal liability and it is not possible to know in advance, what that liability will be. Third party insurance is almost entirely fault-based thereby one has to prove the fault of the insured first and that injury occurred from the fault of the insured to claim damages from him but now with the amendment provision of section 163-A even fault of insured is not material if claimant chose to file claim under section 163-A. The third party insurance is unpopular with insurance companies as compared to first party insurance, because they never know the maximum amounts they will have to pay under third party policies, which they are unable to avoid being statutory policy, and probably because such situation insurance companies are always trying to misguide the courts by their lucid submissions but without supporting evidence to hold that their liability is limited even towards third party, which is not the correct position of law and its intention.”

20. In National Insurance Company Limited Vs. Balakrishnan & Another, (2013) 1 SCC 731, relied upon by Mr Manish Kumar at paragraph 26, the Hon’ble Supreme Court observed that there was no discussion as to 6 whether, in the case at hand, the policy was an “Act Policy” or a ( 2026:JHHC:24523 ) “Comprehensive / package policy”. The Hon’ble Supreme Court noted that Annexure P-1 had been filed, which was a policy issued by the insurer. However, it only stated that the policy was a comprehensive policy. The Hon’ble Supreme Court observed that it was inclined to think that there has to be a scanning of the terms of the entire policy to arrive at a conclusion as to whether it is really a package policy to cover the liability of an occupant in a car.

21. Even in the present case, all that is produced by the claimant is the Schedule to the insurance policy which refers to policy-A (Act only). However, as observed by the Hon’ble Supreme Court, there has to be a scanning of the terms of the entire policy to arrive at a conclusion whether it is really an “Act only Policy” and whether there were any terms and conditions that absolved the Insurance Company of its liability. The Insurance Company, having now raised the plea, did not lead any oral or documentary evidence.

22. Besides, in this case, in the pleadings filed by the Insurance Company, no such defence was led. The only defence which was raised was found to be meritless, and therefore, it was not necessary for the Tribunal to have gone any further in this matter and absolve the Insurance Company.

23. Mr Arvind Kumar Lall’s argument based upon the general regulation of the India Motor Tariff also need not be considered in detail. However, General Regulation-3 (GR-3) provides that policies insuring Motor Vehicles are to be issued only as per the Standard Form(s) given in Section 6 of the India Motor Tariff. Further, it provides that there are two types of policies:- (i) Liability Only Policy: This covers Third Party Liability for bodily injury and / or death and Property Damage. Personal Accident Cover for Owner-Driver is also included. 7 ( 2026:JHHC:24523 ) (ii) Package Policy: This covers loss or damage to the vehicle insured in addition to (i) above. Restricting the scope of cover under Section-I (loss of or damage to the vehicle insured) of the Package policy without any reduction in Tariff rates is permitted. Excepting this, no alternation or extension or any of the Covers, Terms, Conditions, Exclusions, etc. of any of the Policies / Endorsements laid down in this tariff is permitted without prior approval of the TAC.”

24. The above, prima facie, suggests that even a liability-only policy covers third-party liability for bodily injury and/ or death and property damage. The package policy covers loss or damage to the vehicle insured in addition to (i) above. This does assist the case of the claimant and the owner of the insured vehicle. However, in the absence of pleadings, there is no necessity to delve any deeper into this issue.

25. The first ground raised on behalf of the Insurance Company therefore fails and is hereby rejected.

26. The second point for determination relates to the quantum of compensation and the issue of interest. The Tribunal has made no addition towards future prospects in this matter. If this were to be made, then the compensation would be enhanced by Rs. 1,29,600/-. Accordingly, the compensation amount is enhanced by Rs. 1,29,600/-.

27. Insofar as the issue of interest is concerned, the Tribunal has awarded interest at the rate of 6% per annum from the date of institution of the claim petition till payment, provided the payment is made within one month of the claimant depositing the Court Fees. However, if the compensation is not paid within this period, the Tribunal has awarded penal interest at the rate of 9% per annum from the date of filing till the date of its realisation.

28. The award of penal interest at the rate of 9% per annum warrants interference in the facts of the present case. At the same time, since the accident 8 ( 2026:JHHC:24523 ) in this case took place on 30.12.2002, interest at 6% per annum also appears too conservative. Interest in this case should have been 7.5% per annum, and the same is awarded accordingly. The award of penal interest at 9% per annum is set aside.

29. Accordingly, both the appeals are partly allowed. The compensation amount is enhanced by further Rs. 1,29,600/-. This amount shall carry interest at the rate of 6% per annum from the date of institution of the claim petition till the payment of this amount. The award of penal interest at the rate of 9% per annum, however, is quashed and set aside.

30. The Insurance Company should now deposit the entire compensation amount together with interest at the rate of 7.5% per annum from the date of institution of the claim petition within six weeks from today in this Court with due intimation to the learned counsel for the claimants. The statutory deposited amount can be adjusted. Upon such deposit, the claimant is permitted to withdraw the said amount by furnishing his identity and bank details. The Registry must transfer the deposited amount to the bank account of the Appellant and, under no circumstances, should any payment be made otherwise through the regular banking channels. (M.S. Sonak, C.J.) August 14, 2026 Ranjeet / R.Kr. AFR Uploaded on 17.08.2026 9