FAO No.362 of 2021 (O&M) with 1 XOBJC No.71 of 2021 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Reserved on 9th of April, 2026 Pronounced on 8th of July, 2026 Uploaded on 10th of July, 2026 Whether only operative part of the judgment is pronounced? No Whether full judgment is pronounced? Yes FAO No.362 of 2021 (O&M) with XOBJC No.71 of 2021 National Insurance Company ....Appellant Versus Parmod and others ...Respondents CORAM: HON'BLE MR. JUSTICE PANKAJ JAIN Present : Mr. Sandeep Suri, Advocate for the appellant. Mr. Atul Yadav, Advocate for cross-objectors/respondents No.1 to 3. PANKAJ JAIN, J. By way of instant order, I intend to dispose off the afore- captioned appeal as well as the cross-objections. 2. Claimants filed petition under Section 166 of the Motor Vehicles Act, 1988 seeking compensation on account of death of Smt. Kanchan Devi, who died in a road side motor-vehicular accident, dated DEEPAK KUMAR 2026.07.10 16:47 I attest to the accuracy and integrity of this document FAO No.362 of 2021 (O&M) with 2 XOBJC No.71 of 2021 10.04.2018 while travelling in a private bus bearing registration No.HR- 55AC-8479. 3. The Tribunal vide impugned award allowed the claim application holding claimants entitled to compensation of Rs.27,00,601/- to be distributed amongst the claimants in equal share, along with interest @ 7.5% per annum from the date of filing of the petition till realization. 4. Insurance Company is in appeal aggrieved of the findings recorded by Tribunal on Issues No.2 to 4. Apart from disputing the quantum of compensation, the Insurance Company pleads that they should not have been saddled with the joint liability as the insured vehicle was being operated without route permit in violation of the terms & conditions of the insurance policy. 5. Mr. Suri, counsel for the Insurance Company has further drawn attention of this Court to the observations made by Tribunal holding that no deduction needs to be applied to calculate loss of dependency. He submits that once future prospects have been granted by the Tribunal, deduction ought to have been applied in terms of ratio of law laid down by Supreme Court in the case of Smt. Sarla Verma and others vs. Delhi Transport Corporation and another, (2009) 6 SCC 121. 6. Per contra, counsel for the claimants would submit that the Tribunal erred in assessing the income of the deceased as Rs.9,000/- per month notionally. The deceased was 27 years of age at the time of death and DEEPAK KUMAR 2026.07.10 16:47 I attest to the accuracy and integrity of this document FAO No.362 of 2021 (O&M) with 3 XOBJC No.71 of 2021 was earning more than Rs.20,000/- per month by stitching clothes apart from being a homemaker. He thus prays that the compensation needs to be re- worked and the amount for loss of consortium needs to be paid to each of the claimants in terms of ratio of law laid down by Supreme Court in the case of National Insurance Company Limited vs. Pranay Sethi and others, (2017) 16 SCC 680 and Magma General Insurance Company Limited vs. Nanu Ram alias Chuhru Ram and others – Civil Appeal No.9581 of 2018, decided on 18.09.2018. 7. I have heard counsel for the parties and have gone through records of the case. 8. The Tribunal while deciding issue of permit, observed as under: “The plea raised by learned counsel for respondent no.3 insurance company that as per the statement of RW2 Harminder Singh, the route permit Ex.P5 relating to the alleged offending vehicle was not valid for Badshahpur, therefore, it is a breach route permit and thus, it is a breach of terms and conditions of insurance policy and recovery rights ought to be granted to the respondent no.3 insurance company, is not sustainable in view of the law laid down by Hon'ble the Punjab and Haryana High Court at Chandigarh in case titled as United India Insurance Co. Ltd. Vs. Baljinder Singh and Ors. F.A.O no.3996 of 2015, decided on 20.12.2019. Accordingly, the respondent no.3 is held liable to pay the above-said amount of compensation to the petitioners. With these observations, both these issues stand decided accordingly.” DEEPAK KUMAR 2026.07.10 16:47 I attest to the accuracy and integrity of this document FAO No.362 of 2021 (O&M) with 4 XOBJC No.71 of 2021 9. In the considered opinion of this Court, once the Insurance Company proved by leading cogent evidence that the insured vehicle was being plied without route permit, the Tribunal ought to have granted recovery rights to the appellant in view of the following observations made by Supreme Court in the case of ‘National Insurance Co. Ltd. vs. Chella Bharathamma, (2004) 8 SCC 517: “8. High Court was of the view that since there was no permit, the question of violation of any condition thereof does not arise. The view is clearly fallacious. A person without permit to ply a vehicle cannot be placed at a better pedestal vis-a-vis one who has a permit, but has violated any condition thereof. Plying of a vehicle without a permit is an infraction. Therefore, in terms of Section 149(2) defence is available to the insurer on that aspect. The acceptability of the stand is a matter of adjudication. The question of policy being operative had no relevance for the issue regarding liability of insurer. High Court was, therefore, not justified in holding the insurer liable. 9. The residual question is what would be the appropriate direction. Considering the beneficial object of the Act, it would be proper for the insurer to satisfy the award, though in law it has no liability. In some cases the insurer has been given the option and liberty to recover the amount from the insured. For the purpose of recovering the amount paid from the owner, the insurer shall not be required to file a suit. It may initiate a proceeding before the concerned Executing Court as if the dispute between the insurer and the owner was the subject matter of determination before the Tribunal and the issue is decided against the owner and in favour of the insurer. Before release of the amount to the claimants, owner of the offending vehicle shall furnish security for the entire amount which the insurer will pay to the claimants. The offending vehicle DEEPAK KUMAR 2026.07.10 16:47 I attest to the accuracy and integrity of this document FAO No.362 of 2021 (O&M) with 5 XOBJC No.71 of 2021 shall be attached, as a part of the security. If necessity arises the Executing Court shall take assistance of the concerned Regional Transport Authority. The Executing Court shall pass appropriate orders in accordance with law as to the manner in which the owner of the vehicle shall make payment to the insurer. In case there is any default it shall be open to the Executing Court to direct realisation by disposal of the securities to be furnished or from any other property or properties of the owner of the vehicle i.e. the insured. In the instant case considering the quantum involved we leave it to the discretion of the insurer to decide whether it would take steps for recovery of the amount from the insured.” 10. The same view finds echo in the case of ‘Amrit Paul Singh and another vs. TATA AIG General Insurance Co. Ltd. and others’, (2018) 7 SCC 558 wherein Supreme Court observed as under: “23. In the case at hand, it is clearly demonstrable from the materials brought on record that the vehicle at the time of the accident did not have a permit. The appellants had taken the stand that the vehicle was not involved in the accident. That apart, they had not stated whether the vehicle had temporary permit or any other kind of permit. The exceptions that have been carved out under Section 66 of the Act, needless to emphasise, are to be pleaded and proved. The exceptions cannot be taken aid of in the course of an argument to seek absolution from liability. Use of a vehicle in a public place without a permit is a fundamental statutory infraction. We are disposed to think so in view of the series of exceptions carved out in Section 66. The said situations cannot be equated with absence of licence or a fake licence or a licence for different kind of vehicle, or, for that matter, violation of a condition of carrying more number of passengers. Therefore, the principles laid down in Swaran Singh (supra) and Lakhmi Chand (supra) in that regard would not be applicable to the case at hand. DEEPAK KUMAR 2026.07.10 16:47 I attest to the accuracy and integrity of this document FAO No.362 of 2021 (O&M) with 6 XOBJC No.71 of 2021 That apart, the insurer had taken the plea that the vehicle in question had no permit. It does not require the wisdom of the "Tripitaka", that the existence of a permit of any nature is a matter of documentary evidence. Nothing has been brought on record by the insured to prove that he had a permit of the vehicle. In such a situation, the onus cannot be cast on the insurer. Therefore, the tribunal as well as the High Court had directed the insurer was required to pay the compensation amount to the claimants with interest with the stipulation that the insurer shall be entitled to recover the same from the owner and the driver. The said directions are in consonance with the principles stated in Swaran Singh (supra) and other cases pertaining to pay and recover principle.” 11. The same view has been reiterated by Supreme Court in the case of ‘K. Nagendra vs. The New India Insurance Co. Ltd. and others’, 2025 AIR Supreme Court 5281, observing as under: “8. Now, let us consider the instant case. The record reveals that the offending vehicle did not have the permit to enter Channapatna City, where the accident took place. This position is not in dispute. Unquestionably, therefore, the terms of the permit have been deviated. 9. The purpose of an insurance policy in the present context is to shield the owner/operator from direct liability when such an unforeseen/unfortunate incident takes place. To deny the victim/dependents of the victim compensation simply because the accident took place outside the bounds of the permit and, therefore, is outside the purview of the insurance policy, would be offensive to the sense of justice, for the accident itself is for no fault of his. Then, the Insurance Company most certainly ought to pay. 10. At the same time though, when an Insurance Company takes on a policy and accepts payments of premium in pursuance DEEPAK KUMAR 2026.07.10 16:47 I attest to the accuracy and integrity of this document FAO No.362 of 2021 (O&M) with 7 XOBJC No.71 of 2021 thereto, it agrees to do so within certain bounds. The contract lays down the four corners within which such an insurance policy would operate. If that is the case, to expect the insurer to pay compensation to a third party, which is clearly outside the bounds of the said agreement would be unfair. Balancing the need for payment of compensation to the victim vis-a-vis the interests of the insurer, the order of the High Court applying the pay and recover principle, in our considered view, is entirely justified and requires no interference.” 12. In view of above, this Court finds that the Tribunal should have granted recovery rights to the Insurance Company. Accordingly, the impugned award passed by the Tribunal is modified and the liability of the Insurance Company is held limited to the extent of pay and recover principal. In other words, the compensation shall be paid by the Insurance Company, who shall be entitled to recover the same from the insured. 13. Coming on to the quantum of compensation payable, this Court finds that the deceased Kanchan Devi, who lost her life at the age of 27 years even if treated to be a homemaker, her income needs to be assessed as Rs.30,000/- per month in terms of ratio of law laid down by Supreme Court in the case of ‘Shishu Pal @ Shish Ram and others vs. Surjeet and others’, 2026 INSC 634 wherein Supreme Court held that the homemaker’s contribution towards household elevates her to the status of a ‘Nation Builder’ and her income should be taken as Rs.30,000/- per month. 13.1. The income of deceased Kanchan Devi is thus taken to be Rs.30,000/- per month. Deduction of 1/3 needs to be applied. At the time of DEEPAK KUMAR 2026.07.10 16:47 I attest to the accuracy and integrity of this document FAO No.362 of 2021 (O&M) with 8 XOBJC No.71 of 2021 death, she was 27 years of age. 40% Future Prospects need to be added. Multiplier of 17 has been rightly applied by the Tribunal. Each of the claimants shall be entitled for loss of consortium @ Rs.48,400/-. The claimants are held entitled for Rs.18,150/- for Loss of Estate and Rs.18,150/- towards Funeral Expenses. 13.2. The interest and apportionment shall abide by the award. 14. Needless to say, anything paid to the claimants in execution of the award shall be set off. 15. With the aforesaid modification in the impugned award, the appeal as well as cross-objections are disposed off. 16. Pending application, if any, shall also stand disposed off. 17. A copy of this order be kept on the file of other connected case. July 08, 2026 (Pankaj Jain) Dpr Judge Whether speaking/reasoned : Yes/No Whether reportable : Yes/No DEEPAK KUMAR 2026.07.10 16:47 I attest to the accuracy and integrity of this document