- 1 - NC: 2025:KHC-D:6709-DB MFA No. 103508 of 2024 IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH DATED THIS THE 22ND DAY OF APRIL, 2025 PRESENT THE HON'BLE MR. JUSTICE S G PANDIT AND THE HON'BLE MR. JUSTICE C.M. POONACHA MISCELLANEOUS FIRST APPEAL NO.103508 OF 2024 (MV) BETWEEN: THE DIVISIONAL MANAGER, NATIONAL INSURANCE CO. LTD., ITS BRANCH OFFICE AT KRISHNA AGENCY BUILDING, OLD P.B. ROAD, HAVERI DISTRICT-581104. …APPELLANT (BY SRI SUBHASH J. BADDI, ADVOCATE.) AND: 1. SMT. GAYITRI W/O. HALAPPA @ K.N. HALAPPA, AGE: 46 YEARS, OCC: HOUSEHOLD WORK, 2. SURESH H. S/O. HALAPPA K.N., AGE: 23 YEARS, OCC: EMPLOYEE IN KSRTC, 3. HARISH H. S/O. HALAPPA K.N., AGE: 20 YEARS, OCC: STUDENT, ALL ARE RESIDING AT # 100/3, DEVASTANADA HAKKALU, KOTIPUR, SORABA TALUK, SHIVAMOGGA DISTRICT-577413. 4. GUDADAYYA S/O. SHEKHAPPA BINGAPUR, AGE: MAJOR, OCC: BUSINESS, R/AT. YALLUR, KARAGUDRI Digitally signed by MALLIKARJUN RUDRAYYA KALMATH Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC-D:6709-DB MFA No. 103508 of 2024 POST, HANGAL TALUK, HAVERI DISTRICT-581104. …RESPONDENTS (BY SRI B.M.PATIL, ADVOCATE FOR C/R1 TO R3; SMT.ASHA N. MAKANDAR, ADVOCATE FOR R4.) THIS MISCELLANEOUS FIRST APPEAL IS FILED UNDER SECTION 173(1) OF MOTOR VEHICLES ACT, 1988, PRAYING TO ALLOW THE APPEAL AS PRAYED FOR BY SETTING ASIDE THE JUDGMENT AND AWARD DATED 22.04.2024 PASSED BY THE SENIOR CIVIL JUDGE AND JMFC AND ADDL. MACT, AT HANGAL, IN MVC NO.133/2021, WITH COST IN THE INTEREST OF JUSTICE AND EQUITY. THIS MISCELLANEOUS FIRST APPEAL COMING ON FOR ADMISSION THIS DAY, JUDGMENT IS DELIVERED THEREIN AS UNDER: CORAM: THE HON'BLE MR. JUSTICE S G PANDIT AND THE HON'BLE MR. JUSTICE C.M. POONACHA ORAL JUDGMENT (PER: THE HON'BLE MR. JUSTICE C.M. POONACHA) The preset appeal is filed by the insurer under Section 173(1) of the Motor Vehicles Act, 1988, calling in question the judgment and award dated 22.04.2024, passed in MVC No.133/2021, by the Senior Civil Judge and JMFC and Additional MACT, Hangal1, wherein the Tribunal has partly allowed the claim petition and awarded a total compensation of Rs.45,37,672/- together with interest @ 9% p.a. 1 Hereinafter referred to as ‘Tribunal’. - 3 - NC: 2025:KHC-D:6709-DB MFA No. 103508 of 2024 2. Although the above appeal is listed for admission, with the consent of both the learned counsels, the above appeal is heard finally on merits. 3. The parties will be referred to as per their ranking before the Tribunal, for the sake of convenience. 4. The relevant facts in a nutshell leading to the present appeal are that on 28.10.2018, one Halappa2 was travelling as a pillion rider on a motorcycle when the rider of the said motorcycle rode the same in a rash and negligent manner causing the accident in question, wherein the motorcycle fell down and the deceased sustained grievous injuries and succumbed to the same. Claiming compensation for the death of the deceased, his wife and children instituted claim proceedings arraying the owner and insurer of the motorcycle as respondents No.1 and 2. The respondents entered appearance before the Tribunal and contested the claim proceedings. The claimant No.1 (wife) was examined as PW.1 and Exs.P.1 to P.12 were marked. The 2 Hereinafter referred to as ‘deceased’. - 4 - NC: 2025:KHC-D:6709-DB MFA No. 103508 of 2024 representative of the insurer was examined as RW.1 and Exs.R.1 to R.7 were marked. 5. The Tribunal by its judgment and award dated 22.04.2024, partly allowed the claim petition and awarded a total compensation of Rs.45,37,672/- together with interest @ 9% p.a. and held the insurer liable to pay the compensation. 6. Being aggrieved, the present appeal is filed by the insurer. 7. The primary contention urged by the learned counsel Sri Subhas J. Baddi, appearing on behalf of the appellant insurer is that the rider of the insured motorcycle did not have a driving licence to ride the motorcycle and hence the Tribunal erred in fastening liability to pay compensation on the insurer. It is further contended that since the rider of the motorcycle did not have a driving licence, the owner of the motorcycle is liable to pay the compensation awarded. It is further contended that - 5 - NC: 2025:KHC-D:6709-DB MFA No. 103508 of 2024 assessment of income of the deceased by the Tribunal is erroneous. 8. Per contra, Learned counsel Sri B.M.Patil, appearing for the caveator respondents No.1 to 3 justifies the finding of the Tribunal on liability and further contends that the income of the deceased assessed by the Tribunal is in terms of the salary certificate of the deceased (Ex.P.10) and hence is just and proper. 9. The submissions of both the learned counsels have been considered and the material on record including the records of the Tribunal have been perused. 10. The questions that arise for consideration are: i) Whether the finding of the Tribunal fastening liability on the insurer is just and proper? ii) Whether the income assessed by the Tribunal is excessive? Regarding Question No.(i): 11. The relevant fact situation is admitted in as much as the rider of the insured motorcycle did not have a driving - 6 - NC: 2025:KHC-D:6709-DB MFA No. 103508 of 2024 licence at the time of accident. The Hon’ble Supreme Court in the case of Shamanna and another vs. Divisional Manager, Oriental Insurance Company Limited and others3, after considering its earlier judgment in the case of National Insurance Co. Ltd., vs. Swaran Singh and others4, and various other judgments, held as follows: 11. In the present case, to deny the benefit of ‘pay and recover’, what seems to have substantially weighed with the High Court is the reference to larger Bench made by the two-Judge Bench in National Insurance Co. Ltd. v. Parvathneni and another (2009) 8 SCC 785 which doubted the correctness of the decisions which in exercise of jurisdiction under Article 142 of the Constitution of India directing insurance company to pay the compensation amount even though insurance company has no liability to pay. In Parvathneni case, the Supreme Court pointed out that Article 142 of the Constitution of India does not cover such type of cases and that “if the insurance company has no liability to pay at all, then, it cannot be compelled by order of the court in exercise of its jurisdiction under Article 142 of the Constitution of India to pay the compensation amount and later on recover it from the owner of the vehicle.” The above reference in Parvathneni case has been disposed of on 17.09.2013 by the three-Judges Bench keeping the questions of law open to be decided in an appropriate case. 3 (2018) 9 SCC 650. 4 (2004) 3 SCC 297. - 7 - NC: 2025:KHC-D:6709-DB MFA No. 103508 of 2024 12. Since the reference to the larger Bench in Parvathneni case has been disposed of by keeping the questions of law open to be decided in an appropriate case, presently the decision in Swaran Singh case followed in Laxmi Narain Dhut and other cases hold the field. The award passed by the Tribunal directing the insurance company to pay the compensation amount awarded to the claimants and thereafter, recover the same from the owner of the vehicle in question, is in accordance with the judgment passed by this Court in Swaran Singh and Laxmi Narain Dhut cases. While so, in our view, the High Court ought not to have interfered with the award passed by the Tribunal directing the first respondent to pay and recover from the owner of the vehicle. The impugned judgment of the High Court exonerating the insurance company from its liability and directing the claimants to recover the compensation from the owner of the vehicle is set aside and the award passed by the Tribunal is restored.” (Emphasis Supplied.) 12. In the case of Parminder Singh vs. New India Assurance Company Limited and others5, the Hon’ble Supreme Court considering a similar fact situation held as follows: “7. On the issue of liability to pay the compensation awarded, we affirm the view taken by the High Court that the respondent Insurance Company is absolved of the liability to bear the 5 (2019) 7 SCC 217. - 8 - NC: 2025:KHC-D:6709-DB MFA No. 103508 of 2024 compensation, as evidence has been produced from the office of the Regional Transport Office to prove that the drivers of the two offending trucks were driving on the basis of invalid driving licences. It is also relevant to note that the owners and drivers of the offending trucks have not appeared at any stage of the proceedings, including this Court. 7.1. This Court in Shamanna v. Oriental Insurance Co. Ltd.7, held that if the driver of the offending vehicle does not possess a valid driving licence, the principle of “pay and recover” can be ordered to direct the insurance company to the pay the victim, and then recover the amount from the owner of the offending vehicle. 7.2. We deem it just and fair to direct the respondent Insurance Company to pay the enhanced amount of compensation as indicated in para 6 above, to the appellant within a period of 12 weeks from the date of this judgment. The respondent Insurance Company is directed to make out a demand draft in the name of the appellant, which can be used for his care for the rest of his life. The respondent Insurance Company is entitled to recover the amount from the owners and drivers of the two offending trucks.” (Emphasis Supplied.) 13. A Full Bench of this Court in the case of New India Assurance Co. Ltd., Bijapur vs. Yallavva and another6, after noticing various judgments has held as follows: 6 2020 (2) SCCR 1405 (FB). - 9 - NC: 2025:KHC-D:6709-DB MFA No. 103508 of 2024 “SUMMARY OF FINDINGS: 110. The summary of our findings to the various issues as raised in these petitions is as follows: (i) XXXX (ii) XXXX (iii) The breach of policy condition e.g., disqualification of driver or invalid driving licence of the driver, as contained in sub-section (2)(a)(ii) of section 149, have to be proved to have been committed by the insured for avoiding liability by the insurer. Mere absence, fake or invalid driving licence or disqualification of the driver for driving at the relevant time, are not in themselves defences available to the insurer against either the insured or the third parties. To avoid its liability towards insured, the insurer has to prove that the insured was guilty of negligence and failed to exercise reasonable care in the matter of fulfilling the condition of the policy regarding use of vehicles by duly licensed driver or one who was not disqualified to drive at the relevant time. (iv) Insurance companies, however, with a view to avoid their liability must not only establish the available defence(s) raised in the said proceedings but must also establish ‘breach’ on the part of the owner of the vehicle; the burden of proof where for would be on them. (v) XXXX (vi) Even where the insurer is able to prove breach on the part of the insured concerning the policy condition regarding holding of a valid licence by the driver or his qualification - 10 - NC: 2025:KHC-D:6709-DB MFA No. 103508 of 2024 to drive during the relevant period, the insurer would not be allowed to avoid its liability towards insured unless the said breach or breaches on the condition of driving licence is/are so fundamental as are found to have contributed to the cause of the accident. The Tribunals in interpreting the policy conditions would apply “the rule of main purpose” and the concept of “fundamental breach” to allow defences available to the insured under section 149(2) of the Act. (vii) XXXX (viii) XXXX (ix) The Claims Tribunal constituted under Section 165 read with Section 168 is empowered to adjudicate all claims in respect of the accidents involving death or of bodily injury or damage to property of third party arising in use of motor vehicle. The said power of the tribunal is not restricted to decide the claims inter se between claimant or claimants on one side and insured, insurer and driver on the other. In the course of adjudicating the claim for compensation and to decide the availability of defence or defences to the insurer, the Tribunal has necessarily the power and jurisdiction to decide disputes inter se between insurer and the insured. The decision rendered on the claims and disputes inter se between the insurer and insured in the course of adjudication of claim for compensation by the claimants and the award made thereon is enforceable and executable in the same manner as provided in Section 174 of the Act for enforcement and execution of the award in favour of the claimants. - 11 - NC: 2025:KHC-D:6709-DB MFA No. 103508 of 2024 (x) Where on adjudication of the claim under the Act the tribunal arrives at a conclusion that the insurer has satisfactorily proved its defence in accordance with the provisions of section 149(2) read with subsection (7), as interpreted by this Court above, the Tribunal can direct that the insurer is liable to be reimbursed by the insured for the compensation and other amounts which it has been compelled to pay to the third party under the award of the tribunal. Such determination of claim by the Tribunal will be enforceable and the money found due to the insurer from the insured will be recoverable on a certificate issued by the tribunal to the Collector in the same manner under Section 174 of the Act as arrears of land revenue. The certificate will be issued for the recovery as arrears of land revenue only if, as required by sub-section (3) of Section 168 of the Act the insured fails to deposit the amount awarded in favour of the insurer within thirty days from the date of announcement of the award by the tribunal. (xi) XXXX (Emphasis supplied) 14. It is clear from the said position of law as noticed above that even in the cases where the insured did not have a driving licence, the insurer has been saddled with the liability to pay compensation with liberty to recover the same from the owner of the vehicle. 15. A co-ordinate Bench of this Court in the case of the Divisional Manager, Cholamandalam M.S. General - 12 - NC: 2025:KHC-D:6709-DB MFA No. 103508 of 2024 Insurance Com. Ltd., vs. Smt.Tarawwa W/o.Deepak Bajantri @ Mane and others7, has also considered a similar contention and noticing the judgments of the Hon’ble Supreme Court in the case of Swaran Singh and others5 and Shamanna and another4 has held that the insurer is liable to pay the compensation awarded with liberty to recover the same from the owner of the vehicle. 16. It is relevant to note that the co-ordinate Bench in the case of Smt.Tarawwa W/o.Deepak Bajantri @ Mane and others8, has also noticed the judgment of the Hon’ble Supreme Court in the case of Balu Krishna Chavan vs. Reliance General Insurance Company Limited and others8, relied upon by the learned counsel for the insurer in the said case and has distinguished the same by noticing that the claimant in the case of Balu Krishna Chavan9 was a gratuitous passenger and liability was not on the insurer. Considering the same, the co-ordinate Bench, by applying the principles laid down in the case of Shamanna and another4, affirmed the finding of the Tribunal that the 7 MFA No.105407/2023, dated 04.07.2024. 8 SLP (C) No.33638/2017, dated 03.11.2022. - 13 - NC: 2025:KHC-D:6709-DB MFA No. 103508 of 2024 insurer is liable to pay compensation awarded with liberty to recover the same from the owner of the vehicle. 17. Although the learned counsel for the appellant insurer relies on various other co-ordinate Bench judgments of this Court, having regard to the legal position as held by the Hon’ble Supreme Court and the Full Bench of this Court as noticed above, the finding of the Tribunal directing the insurer to pay compensation awarded is not liable to be interfered with. 18. In view of the discussion above, the question No.(i) framed for consideration is answered in the affirmative. Regarding Question No.(ii): 19. The deceased was a driver of the Karnataka State Road Transport Corporation (KSRTC). The salary certificate of the deceased for the month of August 2018 (Ex.P.10) discloses that the gross pay for the said month as paid to the deceased was Rs.29,620/-, which has been assessed by the Tribunal. However, it is relevant to note that a sum of - 14 - NC: 2025:KHC-D:6709-DB MFA No. 103508 of 2024 Rs.1,110/- has been paid towards unpaid basic, Rs.502/- towards unpaid DA and Rs.111/- towards unpaid HRA. Learned counsel for the appellant is justified in contending that the said amounts are the arrears that have been paid to the deceased in the month of August 2018 and hence, is required to be deducted. Further the professional tax of Rs.200/- is also required to be deducted. Hence, after deducting the said amounts, the income of the deceased is re-assessed as Rs.27,697/-. 20. The deceased was aged 45 years as on the date of accident. Hence, 30% is required to be added towards future prospects in terms of the judgment of the Hon’ble Supreme Court in National Insurance Company Limited vs. Pranay Sethi and others9. The deceased being married, 1/3rd is to be deducted towards personal and living expenses of the deceased. Hence, the income for assessment of loss of dependency is re-assessed as Rs.24,004/- (Rs.27,697/- + 30% less 1/3rd). The appropriate multiplier 9 (2017) 16 Supreme Court Cases 680 - 15 - NC: 2025:KHC-D:6709-DB MFA No. 103508 of 2024 is 14. Hence, the loss of dependency is re-assessed as Rs.40,32,672/- (Rs.24,004/- x 12 x 14). 21. The claimants being wife and two children are entitled for loss of consortium at Rs.40,000/- each together with 10% increment in terms of the judgment of the Hon’ble Supreme Court in Magma General Insurance Co. Ltd., vs. Nanu Ram and others10. Accordingly loss of consortium is re-assessed as Rs.1,32,000/- (Rs.40,000/- + 10% x 3), as against Rs.1,20,000/- awarded by the Tribunal. 22. Loss of estate and funeral expenses is to be awarded in a sum of Rs.16,500/- each. 23. Compensation on other heads awarded by the Tribunal is liable to be set aside. 24. In view of the same, the compensation is re-assessed as follows: Sl. No. Heads Amount awarded by the Tribunal (₹) Amount awarded by this Court (₹) 1. Loss of dependency. 43,12,672 40,32,672 2. Loss of consortium. - 1,32,000 10 (2018) 18 Supreme Court Cases 130 - 16 - NC: 2025:KHC-D:6709-DB MFA No. 103508 of 2024 3. Loss of estate. 80,000 16,500 4. Funeral expenses. 20,000 16,500 5. Loss spousal consortium. 40,000 - 6. Loss parental consortium. 80,000 - 7. Towards transportation of dead body. 5,000 - Total: 45,37,672 41,97,672 25. Hence, the claimants are entitled to a total compensation of Rs.41,97,672/- as against Rs.45,37,672/- awarded by the Tribunal. 26. The Tribunal has awarded interest @ 9% p.a. Taking judicial notice of the rate of interest awarded towards fixed deposits, the rate of interest awarded by the Tribunal is re-assessed as 7% p.a. 27. In view of the aforementioned, the question framed for consideration is answered in the affirmative. 28. Hence, the following: ORDER i) The appeal is partly allowed. - 17 - NC: 2025:KHC-D:6709-DB MFA No. 103508 of 2024 ii) The judgment and award dated 22.04.2024, passed in MVC No.133/2021, by the Senior Civil Judge and JMFC and Additional MACT, Hangal, is modified to the extent of holding that the claimants are entitled to a total compensation of Rs.41,97,692/- as against Rs.45,37,672/- awarded by the Tribunal, together with interest @ 7% p.a. from the date of petition till the date of payment. iii) The judgment and award of the Tribunal in all other respects shall remain unaltered. iv) The amount in deposit and the records of the Tribunal shall be transmitted to the Tribunal forthwith for disbursement. v) The insurer shall deposit the balance compensation together with accrued interest before the Tribunal within six weeks. - 18 - NC: 2025:KHC-D:6709-DB MFA No. 103508 of 2024 vi) Pending interlocutory applications if any, stand disposed of as they do not survive for consideration. vii) Modified award to be drawn accordingly. Sd/– (S G PANDIT) JUDGE Sd/- (C.M. POONACHA) JUDGE MRK CT: UMD. List No.: 1 Sl No.: 20