The Supreme Court on Friday delivered its verdict in a long-running dispute over motor accident compensation, striking a balance between the rights of the victim’s family and the insurance company. The bench of Justices K. Vinod Chandran and N.V. Anjaria heard the appeal filed by New India Assurance Company against an order of the Uttarakhand High Court.
Background
The case dates back to June 2006, when 21-year-old Hem Singh Mehta, employed as a security guard in Haldwani, lost his life after being struck by a truck near Tanda Chowk in the early hours.
The Motor Accident Claims Tribunal (MACT), Nainital, in 2007 awarded his family ₹3,87,000 along with 7% annual interest. The insurance company challenged the order, alleging fraud in the insurance policy submitted by the vehicle’s owner.
According to the insurer, while the document produced in the Tribunal showed validity from June 17, 2006, to June 16, 2007, verification later revealed that the actual policy covered only from June 28, 2006. This meant there was technically no coverage on the date of the accident. The Tribunal dismissed the company’s review petition, holding it had no authority to revisit the award.
Court’s Observations
The High Court upheld the Tribunal’s award in 2019, noting that the insurer had not raised the issue at the proper stage. It concluded that the compensation, calculated on the deceased’s annual income of ₹36,000 with a dependency loss of ₹24,000 and multiplier of 15, was fair. The family's cross-appeal for enhancement was also dismissed.
When the matter reached the Supreme Court, the insurer reiterated its claim of fraud by the owner in altering the policy dates. However, the bench observed that no conclusive evidence had been produced during the main proceedings. "Though the allegation of fraud is levelled, it could not be proved by the insurer," the bench pointed out.
At the same time, the judges acknowledged the verification report which established that the policy did not actually cover the accident date. This placed the court in a delicate position—balancing the rights of innocent claimants with the insurer’s grievance.
In its final order, the Supreme Court refused to disturb the compensation granted to the family. The bench, however, provided partial relief to the insurer. "It would subserve the ends of justice if the appellant-insurance company is allowed to recover 50% of the compensation from the owner and the driver in accordance with law," the court directed.
The company has been given six weeks to deposit any outstanding compensation with the Tribunal.
Case Title: New India Assurance Co. Ltd. vs. Narayan Singh & Ors.
Case Number: Civil Appeal arising out of SLP (C) No. 19976 of 2019