- 1 - NC: 2025:KHC-D:1280-DB MFA No. 102800 of 2022 C/W MFA No. 101140 of 2022 IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 23RD DAY OF JANUARY, 2025 PRESENT THE HON'BLE MR. JUSTICE B.M.SHYAM PRASAD AND THE HON'BLE MR. JUSTICE RAMACHANDRA D. HUDDAR MISCELLANEOUS FIRST APPEAL NO.102800 OF 2022 (MV-D) C/W MISCELLANEOUS FIRST APPEAL NO. 101140 OF 2022 IN MFA NO.102800/2022 BETWEEN: 1. SMT. INDRAVVA AGE. 52 YEARS OCC. HOUSEHOLD 2. KALPANA D/O. SATYAPPA ALLIGIDAD AGE. 32 YEARS OCC. COOLIE, BOTH ARE R/O. KALLATTI GALLI TAL.RABAKAVI BANAHATTI, DIST.BAGALKOT 587315. …APPELLANTS (BY SRI. HARISH S. MAIGUR, ADVOCATE) AND: 1. SHRISHAIL S/O. SIDDAPPA PALABHAVI AGE:. MAJOR OCC: BUSINESS, R/O: HALINGALI, TAL. RABAKAVI BANAHATTI, DIST. BAGALKOT 587311. 2. THE DIVISIONAL MANAGER SHRIRAM GENERAL INSURANCE Digitally signed by SHAKAMBARI Location: High Court of Karnataka, Dharwad Bench - 2 - NC: 2025:KHC-D:1280-DB MFA No. 102800 of 2022 C/W MFA No. 101140 of 2022 COMPANY LIMITED, CTS NO. 477/M, 1ST FLOOR, V.A. KALABURGI HALLMARK, DESAI CROSS, PINTO ROAD, HUBBALLI-DHARWAD 580020. …RESPONDENTS (BY SRI. VITAL S. TELI, ADVOCATE FOR R1; SRI. NAGARAJ S. KOLLORI, ADVOCATE FOR R2) THIS MFA IS FILED UNDER SECTION 173 (1) OF MOTOR VEHICLES ACT, AGAINST THE JUDGMENT AND AWARD DATED 30.11.2021 PASSED IN MVC NO.219/2020 ON THE FILE OF THE SENIOR CIVIL JUDGE AND JUDICIAL MAGISTRATE FIRST CLASS, XIII MOTOR ACCIDENT CLAIMS TRIBUNAL, BANAHATTI, PARTLY ALLOWING THE CLAIM PETITION FOR COMPENSATION AND SEEKING ENHANCEMENT OF COMPENSATION.SRI. HARISH S. MAIGUR, ADVOCATE FOR APPELLANT. IN MFA NO.101140/2022 BETWEEN: THE DIVISIONAL MANAGER SHRIRAM GENERAL INSURANCE COM LTD., CTS NO. 477/1M, IST FLOOR, V.A. KALABURGI, HALLMARK, DESAI CROSS, PINTO ROAD, HUBBALLI REPRESENTED BY ITS AUTHORISED SIGNATORY. …APPELLANT (BY SRI. NAGARAJ C. KOLLOORI, ADVOCATE) - 3 - NC: 2025:KHC-D:1280-DB MFA No. 102800 of 2022 C/W MFA No. 101140 of 2022 AND: 1. SMT. INDRAVVA W/O. SATYAPPA ALLIGIDAD AGE: 52 YEARS, OCC: HOUSEHOLD WORK, R/O: KALLATTI GALLI, TERDAL, TQ: RABKAVI –BANAHATTI, DIST: BAGALKOT-587314. 2. KALPANA D/O. SATYAPPA ALLIGIDAD AGE: 32 YEARS, OCC: COOLIE, R/O: KALLATTI GALLI, TERDAL, TQ: RABKAVI –BANAHATTI, DIST: BAGALKOT-587314. 3. SHRISHAIL S/O. SIDDAPPA PALABHAVI AGE: MAJOR, OCC: BUSINESS, R/O: HALINGALI, TQ RABAKAVI-BANAHATTI DIST BAGALKOT-587314. …RESPONDENTS (BY SRI. HARISH S. MAIGUR, ADVOCATE FOR R1 AND R2; SRI. NAGARAJ S. KALLOORI, ADVOCATE FOR R3) THIS MFA IS FILED U/S.173(1) OF MOTOR VEHICLES ACT, AGAINST THE JUDGMENT AND AWARD DATED 30.11.2021 PASSED IN MVC NO.219/2020 ON THE FILE OF THE SENIOR CIVIL JUDGE AND JUDICIAL MAGISTRATE FIRST CLASS, XIII MOTOR ACCIDENT CLAIMS TRIBUNAL, BANAHATTI. THESE APPEALS, COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: THE HON'BLE MR. JUSTICE B.M.SHYAM PRASAD AND THE HON'BLE MR. JUSTICE RAMACHANDRA D. HUDDAR - 4 - NC: 2025:KHC-D:1280-DB MFA No. 102800 of 2022 C/W MFA No. 101140 of 2022 ORAL JUDGMENT (PER: THE HON'BLE MR. JUSTICE RAMACHANDRA D. HUDDAR) These two appeals are directed against a single judgment and award dated 30th November 2021 passed in MVC No.219/2020 by the Senior Civil Judge and JMFC XIII MACT, Banahatti (`Tribunal’ for short). MFA No.101140/22 is presented by respondent No.2 the Insurer challenging the liability and quantum of compensation and MFA No.102800/22 is filed by the claimants seeking enhancement of compensation. 2. Parties to these appeals are referred to as per their rank before the Tribunal. 3. Brief and relevant facts as stated by the Claimants before the Tribunal in their claim petition under Section 166 of the Motor Vehicle Act, 1988 are as under: The claimants filed a claim petition under Section 166 of MV Act, 1988 seeking compensation on account of death of Satyappa S/o.Ramappa Alligidad who died in a road traffic accident at 8.15 p.m on 25.2.2020. According to the - 5 - NC: 2025:KHC-D:1280-DB MFA No. 102800 of 2022 C/W MFA No. 101140 of 2022 claimants, deceased Satyappa was travelling in an auto rickshaw bearing Regn KA-48-A-0163 from Terdal Circle towards Harugeri. When the said auto rickshaw came near first canal of Ajanal Bridge, the driver of the said vehicle drove the said auto rickshaw in a high speed in a rash and negligent manner thereby it turtled down. Because of this accident, the inmates of the vehicle sustained injuries and Satyappa died on the spot. The deceased was aged 55 years and was earning Rs.20,000/-per month. Claimant No.1 is the wife and claimant No.2 is unmarried daughter. Due to his death, they have lost their earning member as the claimants were fully depending upon him. Both the respondents are liable to pay the compensation and prayed to award a compensation of Rs.50,00,000/-. 4. Both the respondents appeared before the Tribunal and filed independent written statements denying the entire assertions made in the petition and specifically contended that claimants are not entitled for compensation. Offending vehicle was insured with respondent No.2 and as on the date of accident, the insurance policy was in force - 6 - NC: 2025:KHC-D:1280-DB MFA No. 102800 of 2022 C/W MFA No. 101140 of 2022 and hence, respondent no.2 is liable to pay the compensation. On the other hand, respondent 2 contends that, said vehicle was plied by respondent no.1 without valid permit and it was permitted to ply within the radius of 10 kms. of Rabakavi and Banahatti towns. The Driver of the said offending vehicle was not possessing the effective driving licence. Therefore, there is violation of terms and conditions of the policy and hence, respondent No.2 is not liable to pay the compensation. By contending so, both the respondents pray to dismiss the petition. 5. Based upon the rival pleadings of both the parties, the Tribunal framed in all five issues. To prove the case of the claimants, claimant no.1 was examined as PW1 and got marked Ex.P1 to 7. Respondent No.1 being owner of offending auto rickshaw was examined himself as RW.1 and got marked his original RC card as per Ex.R1. Respondent no.2-Insurance Company examined its official by name Sri Nithin Shenoy as RW.2 and got marked Ex.R2 to 10 and closed respondents’ evidence. - 7 - NC: 2025:KHC-D:1280-DB MFA No. 102800 of 2022 C/W MFA No. 101140 of 2022 6. On closure of the evidence of both the side, the learned Tribunal held that, the said accident has taken place because of the rash and negligent driving of the offending auto rickshaw by its driver and further held that, there is no violation of any policy conditions and ultimately came to the conclusion that, the driver of the offending vehicle was not holding the effective driving licence. It further held that deceased was earning Rs.12,000/- as his monthly income and by applying multiplier `11’ ,held that claimants being the dependents are entitled for compensation of Rs.11,11,000/- together with interest @6% p.a. from the date of petition till its realization. It is held that respondent No.2 the Insurer is liable to pay the said compensation. Now, the Insurer challenges the judgment and award questioning the liability and quantum and claimants seek enhancement of the compensation by preferring these two independent appeals. 7. The learned counsel for the Insurer Sri Nagaraj C. Kolloori submits that, quantum and liability fixed by the Tribunal is against the facts of the case and it is without - 8 - NC: 2025:KHC-D:1280-DB MFA No. 102800 of 2022 C/W MFA No. 101140 of 2022 looking into the materials placed on record placed. The Tribunal has wrongly calculated the monthly income of the deceased at Rs.12,000/- to reckon the quantum of compensation towards `Loss of Dependency’ which is on higher side. It is contended that, the driver of the said vehicle was not possessing the valid and effective driving licence at the time of accident and the documents so produced show that, the police have filed charge sheet against the driver even under Section 3 of the MV Act which is the violation of the policy conditions and which was a fundamental breach and against the provisions of the MV Act. Therefore, the claimants are not entitled for compensation and fixation of liability on the Insurance Company is wrong. Hence, it is prayed by the learned counsel to allow the appeal. 8. As against this submission, the learned counsel for claimants Sri Harish S.Maigur submits that, the income so arrived at by the Tribunal is on lower side and it is against the guidelines issued by the Karnataka State Legal Services Authority. He would submit that, rightly the - 9 - NC: 2025:KHC-D:1280-DB MFA No. 102800 of 2022 C/W MFA No. 101140 of 2022 Tribunal has fastened the liability on the Insurer as Insurance Policy was in force as on the date of accident. Respondent No.1’s evidence do establishes about validity of Insurance Policy as on the date of accident and hence, he seeks enhancement of compensation as prayed. 9. We have considered the submissions of both the side and perused the records. In view of the rival submissions of both the side, the point that would arise for our consideration are: “1. Whether the insurer is absolved of payment of any compensation amount in view of alleged breach of policy conditions? 2. Whether the claimants are entitled for enhancement in compensation awarded by the Tribunal?” Our answers to the above points are partly in the affirmative for the following reasons: 10. So far as occurrence of accident on 25.2.2020 at 8.15 p.m. is concerned, it is not in dispute. It is also not in dispute that, in the said vehicle deceased was also an - 10 - NC: 2025:KHC-D:1280-DB MFA No. 102800 of 2022 C/W MFA No. 101140 of 2022 inmate. He died in the said accident. It is also not in dispute that, respondent no.1 is the owner of the said offending vehicle and his name is shown as owner in the RC Card Ex.R1 so produced by him. Even it is admitted that, as on the date of accident, the Insurance Policy was in force and valid as per contents of R3 produced by R2. 11. Now the question arises as to whether respondent no.1.has violated any of the policy conditions as contended by respondent no.2. The respondent no.1 who is examined as RW1 in his examination-in-chief admits about the accident and according to him, at the time of accident, he was not driving the auto rickshaw but, some other person was driving the rickshaw. He never says in his examination-in-chief that, the driver of the said auto rickshaw was not possessing the effective driving licence. He states that, he is an auto rickshaw driver by profession. He is possessing driving licence but, he has not produced his driving licence but, states that, he has lost his driving licence. About losing of said driving licence, he has not - 11 - NC: 2025:KHC-D:1280-DB MFA No. 102800 of 2022 C/W MFA No. 101140 of 2022 taken any steps as per his cross-examination directed to him by R2. 12. RW.2 by name Sri Nithin Shenoy is consistent that, respondent no.1 being the driver of the said auto rickshaw was not possessing the driving licence when he caused the accident and thereby, the police have charge sheeted him for the offence of Section 3 read with 181 of MV. Even the notices were issued to respondent no.1 to produce the driving licence. The investigation officer of the insurer on investigation came to know that, respondent no.1 was not possessing the driving licence thereby, violated the policy conditions. With regard to issuance of notice, respondent no.2 relies upon R4 copies of legal notice dated 4.8.2021 and postal receipt and acknowledgment at Ex.P5 to P10. 13. RW.2 admits that, a notice was not issued to ARTO, Jamkhandi but, he is consistent that the driver of the said offending vehicle was not possessing the driving licence, filing of charge sheet against respondent no.1 for not possessing the driving licence at the time of accident - 12 - NC: 2025:KHC-D:1280-DB MFA No. 102800 of 2022 C/W MFA No. 101140 of 2022 which is not denied by respondent no.1. The notices were issued to respondent no.1 so also to ARTO, Jamkhandi, calling upon them to produce driving licence. There was no response. Thus, from the evidence of RW.1 and 2, it is proved by respondent no.2 that, respondent no.1 being the driver of the offending vehicle was not possessing the effective and valid driving licence thereby, violated the policy conditions. It is mandatory on the part of the driver of the vehicle who drives the vehicle must hold an effective driving licence at the time of the driving the vehicle. In this case, as stated supra, it is not proved that driver of the offending vehicle was possessing effective driving licence and as per the clause stated in R3, there is violation of policy conditions. 14. The Insurer relied upon judgment of Hon’ble Apex Court in Balu Krishna Chavan v/s The reliance General Insurance co Ltd. And Ors.1 and submits that, insurer is not liable to deposit the compensation. In this judgment, it is ordered to the Insurance Company to deposit 1 SLP (C)No.33638/2017 - 13 - NC: 2025:KHC-D:1280-DB MFA No. 102800 of 2022 C/W MFA No. 101140 of 2022 the compensation amount and liberty is reserved to recover the compensation from the owner of the vehicle. 15. So far as quantum of compensation is concerned, though the learned counsel for the insurer submits that the compensation awarded by the Tribunal is on the higher side, but, the claimants contend that it is on lower side. While considering the income of the deceased, the learned Tribunal has taken the monthly income of the deceased at Rs.12,000/- as there is no evidence placed on record about the income of the deceased. But, according to KSLSA guidelines, for the accident of the year 2020, Rs.13,750/- is to be taken as notional income. Thus, Rs.13,750/- is taken as monthly income of the deceased. As the deceased was aged 55 years as per the claimants themselves and have produced the PM report at Ex.P4 showing his age as 55 years as on the date of accident, as per the judgment in National Insurance Co.Ltd v/s Pranay Sethi2, 10% of the income of the deceased is to be added towards future prospects. Thus, 10% of Rs.13,750 x 10% = Rs.13,750 + 2 (2017) 16 SCC 680 - 14 - NC: 2025:KHC-D:1280-DB MFA No. 102800 of 2022 C/W MFA No. 101140 of 2022 Rs.1375 =Rs.15,125/-. Thus, the monthly income of the deceased comes to Rs.15,125/-. There are two claimants. As per judgment of Hon’ble Apex Court in Sarla Verma and Ors. v/s Delhi Transport Corporation and Anr3, 1/3rd is to be deducted towards personal expenses of the deceased. It comes to Rs.5041.66. Thus, the total contribution of the deceased towards his family would be Rs.10,083/- per month. This should be calculated annually by multiplying with `12’. The proper multiplier as per Sarla Verma’s (supra) is `11’ as the deceased was aged 55 years. Thus, the `loss of dependency’ would be Rs.13,30,956/-. Thus, the claimants are entitled for compensation towards `loss of dependency’ at Rs.13,30,956/-. 16. So far as compensation towards `loss of consortium’ is concerned, the claimant no.1 being the wife of deceased, claimants no.2 being the unmarried daughter of deceased are each entitled for compensation of Rs.40,000/-. Thus, they are entitled for Rs.80,000/- 3 AIR 2009 SC 3104 - 15 - NC: 2025:KHC-D:1280-DB MFA No. 102800 of 2022 C/W MFA No. 101140 of 2022 towards `loss of consortium’. Under the conventional heads, is towards loss of estate, funeral expenses & transportation, the claimants are entitled for compensation at Rs.15,000/- each i.e. in all Rs.30,000/-. Thus, the claimants are entitled for compensation of Rs.14,40,956/- rounded off to Rs.14,41,000/-Thus, the claimants are entitled for compensation as under: Sl. No. Heads Amount Rs. 1. Loss of Dependency 13,30,956-00 2. Loss of Consortium (Rs.40,000 x 2) 80,000-00 5. Transportation & Funeral Expenses 15,000-00 6. Loss of Estate 15,000-00 Total 14,40,956.00 17. Sofar as liability is concerned, claimants are third parties so also the deceased. It is respondent no.1 who has violated the policy conditions. But, the claimants being the third parties cannot be deprived of the compensation amount as the MV Act is a benevolent legislation. In this - 16 - NC: 2025:KHC-D:1280-DB MFA No. 102800 of 2022 C/W MFA No. 101140 of 2022 regard, with regard to deposit of compensation then recover from owner of the vehicle, as per the facts so brought on record, the Full Bench judgment of this Court passed by the then Ladyship Smt.B.V.Nagarathna (now the judge of the Hon’ble Supreme Court) in the case of New India Assurance company Limited Bijapur by its Divisional Manager Vs. Yallavva and Another4 can be made applicable to the present facts of the case. In the said judgment, it is held as under: “36. Thus, on a reading of Section 149, it becomes clear that when third party risks are involved or when the victim of the accident is a third party, such risk being compulsorily covered under sub-Section (1) of Section 147, any exclusion in the policy must be suitably interpreted having regard to the main purpose for which an insurance contract is entered into. In Swaran Singh the Hon'ble Supreme Court has enumerated the aforementioned twin tests in the above context. It is only when both the tests are satisfied that the insurer could be permitted to pay and recover from the insured as per the proviso to sub-Section (4) of Section 147 otherwise, no pay and recovery order could be made and the insurer has to satisfy the award. 4 ILR 2020 KAR 2239 - 17 - NC: 2025:KHC-D:1280-DB MFA No. 102800 of 2022 C/W MFA No. 101140 of 2022 37. Thus, what follows is that, in regard to third party rights, the insurer can defeat such rights under Section 149(2)(a) by proving a breach of the condition of the policy and further, proving that the same is a fundamental breach. In such an event, the insurer can only mitigate its liability and the insured would be liable to satisfy the judgment vis-a-vis the insurer who would have satisfied the claim of the third party in the first instance. Therefore, the insurer cannot defeat a third party claim by any exclusion in the policy having regard to the four comers of Section 149(2)(a). It can only mitigate its liability by seeking recovery from the insured on proof of the exclusion clause as per the twin tests enumerated by the Hon'ble Supreme Court. This is the object of Section 149(4) and the proviso thereto which contemplates pay and recovery order to be made against the insurer who has been notified in a claim proceeding instituted by a third party under Section 149(1) of the Act. The underlining is by this Court 38. To this, another nuance may be added. What would be the position when the insurer is able to prove a breach of the policy, but the said breach is not a fundamental breach or the breach did not contribute to the cause of the accident but what could be termed as an innocent breach and not an intentional one. In such a case also, the Insurance Company must pay to the third party and recover from the insured. This could be illustrated with reference to the vehicle not being covered - 18 - NC: 2025:KHC-D:1280-DB MFA No. 102800 of 2022 C/W MFA No. 101140 of 2022 by a permit to ply for hire or reward. The Hon'ble Supreme Court in the case of Amrit Paul Singh v. Tata Aig General Insurance Co. Ltd [(2018) 7 SCC 558: AIR 2018 SC 2662.] , held that the vehicle not having a permit at all and being used for hire or reward is a case of fundamental breach and hence, the insurer though absolved of its liability had to pay the compensation and recovery order was made in the said case permitting recovery from the insured. Also, when a vehicle had a permit to ply within a particular area or on a route deviated from the said area or route and was plying in another area or route and an accident occurred, then it is not a case of fundamental breach, although, there is a violation of the terms of the policy. In such an event also, the pay and recovery order has been made in the case of Rani v. National Insurance Company Ltd. [(2018) 8 SCC 492.] , by the Hon'ble Supreme Court.” 18. So, in view of Full Bench judgment of this Court, as the claimants are the third parties, therefore the Insurance Company has to deposit the compensation and then recover the same from respondent No.2. Even this Court in other similar cases, have followed the said judgment of the Full Bench of this Court and has directed the insurer to deposit the compensation and recover the - 19 - NC: 2025:KHC-D:1280-DB MFA No. 102800 of 2022 C/W MFA No. 101140 of 2022 same from the owner of the offending vehicle. In view of discussion made above, we proceed to pass the following: ORDER i) The appeal filed by the claimants is allowed in-part. The claimants are held entitled for compensation of Rs.14,41,000/- as against Rs.11,11,000/- awarded by the Tribunal and there is enhancement of Rs.3,30,000/-. The claimants are entitled for interest on the entire compensation amount @ 6% p.a. from the date of petition till its realization. ii) Respondents Nos.1 and 2 are jointly and severally held liable to pay the compensation. However, respondent no.2 to deposit the compensation amount within six weeks from the date receipt of a certified copy of the judgment with accrued interest and is at liberty to recover the same from respondent no.1 by executing the award. - 20 - NC: 2025:KHC-D:1280-DB MFA No. 102800 of 2022 C/W MFA No. 101140 of 2022 iii) There shall be modified award in the above terms. iv) Registry is directed to send back the Tribunal records along with a copy of this judgment forthwith. Sd/- (B.M.SHYAM PRASAD) JUDGE Sd/- (RAMACHANDRA D. HUDDAR) JUDGE SK/ct:VG LIST NO.: 1 SL NO.: 29