- 1 - NC: 2025:KHC-D:2896-DB MFA No. 102021 of 2018 C/W MFA No. 102020 of 2018 IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 13TH DAY OF FEBRUARY, 2025 PRESENT THE HON'BLE MR. JUSTICE B.M.SHYAM PRASAD AND THE HON'BLE MR. JUSTICE RAMACHANDRA D. HUDDAR MISCELLANEOUS FIRST APPEAL NO. 102021 OF 2018 (MV-D) C/W MISCELLANEOUS FIRST APPEAL NO. 102020 OF 2018 (MV-D) IN M.F.A NO. 102021 OF 2018 BETWEEN: 1. BOYA THIPPESWAMY S/O. LATE B LAKSHMANA, AGED ABOUT: 41 YEARS, OCC: AGRICULTURIST, R/O: 4-53, BADANAHAL VILLAGE, D. HIREHAL MANDAL, RAYADURGA TALUK, ANANTHPUR DISTRICT, NOW R/O: 91/6TH WARD, NEAR UJJINI SCHOOL, BANDIMOTE, BALLARI. 2. BOYA THIPPAMMA D/O. LATE B. LAKSHMANA, W/O. B. RAMANJINEYULU, AGED ABOUT: 32 YEARS, OCC: COOLIE, R/O: 4-53, BADANAHAL VILLAGE, D. HIREHAL MANDAL, RAYADURGA TALUK, ANANTHPUR DISTRICT, NOW R/O: 91/6TH WARD, NEAR UJJINI SCHOOL, BANDIMOTE, BALLARI. …APPELLANTS (BY SRI. Y. LAKSHMIKANT REDDY, ADVOCATE) Digitally signed by SHAKAMBARI Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC-D:2896-DB MFA No. 102021 of 2018 C/W MFA No. 102020 of 2018 AND: 1. JANDA YERRISWAMY S/O. K. LAKSHMANA AGED ABOUT: 37 YEARS, DRIVER OF THE AUTO BEARING REGN.NO.KA-34/TR-000078/2016-17, R/O: BOMMADEVARAHALLI VILLAGE, MOLAKLMUR TALUK, CHITRADURGA DISTRICT. 2. YERRISWAMY S/O LAKSHMANA AGED ABOUT: 37 YEARS, OWNER OF THE AUTO BEARING REGN NO.KA-34/TR-000078/2016-17 R/O: BADANAHATTI VILLAGE, KURUGODU TALUK, BALLARI DISTRICT-583101. 3. THE BRANCH MANAGER M/S. BHARATHI AXA GENERAL INSURANCE COMPANY LIMITED, II FLOOR, NIRANJAN BUILDING, PLOT NO.3/9 W.NO.16 ANANTAPUR ROAD, BALLARI-583101. …RESPONDENTS (BY SRI.NAGARAJ C. KOLLOORI, ADVOCATE R3; R1 AND R3 SERVICE HELD SUFFICIENT) THIS MFA IS FILED U/S.173 (1) OF MOTOR VEHICLES ACT, AGAINST THE JUDGMENT AND AWARD DATED 03.03.2018 PASSED IN MVC NO.457/2016 ON THE FILE OF THE MEMBER, MOTOR ACCIDENT CLAIMS TRIBUNAL-II, BALLARI, PARTLY ALLOWING THE CLAIM PETITION FOR COMPENSATION AND SEEKING ENHANCEMENT OF COMPENSATION. IN M.F.A NO. 102020 OF 2018: BETWEEN: 1. BOYA HANUMAKKA, W/O. LATE B. NAGARAJU, AGED ABOUT: 30 YEARS, OCC: COOLIE, R/O: 53, BC COLONY BADANAHAL VILLAGE, - 3 - NC: 2025:KHC-D:2896-DB MFA No. 102021 of 2018 C/W MFA No. 102020 of 2018 D. HIREHAL MANDAL, RAYADURGA TALUK, ANANTHPUR DISTRICT, NOW R/O: 91/6TH WARD, NEAR UJJINI SCHOOL, BANDIMOTE, BALLARI-583101. 2. MINOR B. NANDINI, D/O. LATE B. NAGARAJU, AGED ABOUT: 12 YEARS, OCC: STUDENT, R/O: 53, BC COLONY BADANAHAL VILLAGE, D. HIREHAL MANDAL, RAYADURGA TALUK, ANANTHPUR DISTRICT, NOW R/O: 91/6TH WARD, NEAR UJJINI SCHOOL, BANDIMOTE, BALLARI-583101. 3. MINOR B. KIRAN KUMAR, S/O. LATE B. NAGARAJU, AGED ABOUT: 10 YEARS, OCC: STUDENT, R/O: 53, BC COLONY BADANAHAL VILLAGE, D. HIREHAL MANDAL, RAYADURGA TALUK, ANANTHPUR DISTRICT, NOW R/O: 91/6TH WARD, NEAR UJJINI SCHOOL, BANDIMOTE, BALLARI-583101. 4. MINOR B. RANJITHA, D/O. LATE B. NAGARAJU, AGED ABOUT:6 YEARS, R/O: 53, BC COLONY BADANAHAL VILLAGE, D. HIREHAL MANDAL, RAYADURGA TALUK, ANANTHPUR DISTRICT, NOW R/O: 91/6TH WARD, NEAR UJJINI SCHOOL, BANDIMOTE, BALLARI-583101. …APPELLANTS (BY SRI. Y. LAKSHMIKANT REDDY, ADVOCATE) - 4 - NC: 2025:KHC-D:2896-DB MFA No. 102021 of 2018 C/W MFA No. 102020 of 2018 AND: 1. JANDA YERRISWAMY S/O. K. LAKSHMANA AGED ABOUT: 37 YEARS, DRIVER OF THE AUTO BEARING REGN.NO.KA-34/TR-000078/2016-17, R/O: BOMMADEVARAHALLI VILLAGE, MOLAKLMUR TALUK, CHITRADURGA DISTRICT. 2. YERRISWAMY S/O. LAKSHMANA AGED ABOUT: 37 YEARS, OWNER OF THE AUTO BEARING REGN NO.KA-34/TR-000078/2016-17 R/O: BADANAHATTI VILLAGE, KURUGODU TALUK, BALLARI DISTRICT-583101. 3. THE BRANCH MANAGER M/S. BHARATHI AXA GENERAL INSURANCE COMPANY LIMITED, II FLOOR, NIRANJAN BUILDING, PLOT NO.3/9 W.NO.16 ANANTAPUR ROAD, BALLARI-583101. …RESPONDENTS (BY SRI.NAGARAJ C. KOLLOORI, ADVOCATE R3 R1 SERVED; R2 SERVICE HELD SUFFICIENT) THIS MFA IS FILED U/S.173(1) OF MOTOR VEHICLES ACT, AGAINST THE JUDGMENT AND AWARD DATED 03.03.2018 PASSED IN MVC NO.458/2016 ON THE FILE OF THE MEMBER, MOTOR ACCIDENT CLAIMS TRIBUNAL-II, BALLARI, PARTLY ALLOWING THE CLAIM PETITION FOR COMPENSATION AND SEEKING ENHANCEMENT OF COMPENSATION. THESE APPEALS, COMING ON FOR HEARING, THIS DAY, JUDMENT WAS DELIVERED THEREIN AS UNDER: CORAM: THE HON'BLE MR. JUSTICE B.M.SHYAM PRASAD AND THE HON'BLE MR. JUSTICE RAMACHANDRA D. HUDDAR - 5 - NC: 2025:KHC-D:2896-DB MFA No. 102021 of 2018 C/W MFA No. 102020 of 2018 ORAL JUDGMENT (PER: THE HON'BLE MR. JUSTICE RAMACHANDRA D. HUDDAR) These two appeals are directed against the common judgment and award dated 3.3.2018 passed in MVC No.457/2016 clubbed with MVC No.458/2016 by the MACT- II, Ballari. 2. Parties to these appeals are referred as per their rank before the Tribunal. 3. That the claimants in both the petitions filed their respective petitions under Section 166 of Motor Vehicle Act, 1988 claiming compensation on account of death of Boya Lakshmana S/o.Kannaiah and Boya Nagaraju S/o.late B.Lakshmana in a road traffic accident that took place on 30.4.2016 at about 3.30 p.m. when both of them were proceeding in an auto bearing Regn.No.KA-34/TR- 000078/2016-17 with sheep from Rampur village near unmanned LC Gate, Pennammanahalli Village on Raidurga- Ballari Road. It is alleged that, respondent no.1 the driver of the auto drove the said auto in a rash and negligent manner - 6 - NC: 2025:KHC-D:2896-DB MFA No. 102021 of 2018 C/W MFA No. 102020 of 2018 without observing the goods train and the said goods train dashed to the auto on its behind portion. Because of that, both the deceased sustained fatal injuries and died. These claimants have spent substantial money towards final rites of the deceased by spending more than Rs.50,000/-. 4. It is specifically stated by the claimants that, deceased Lakshmana being the father of claimants nos.1 and 2 in MVC No.457/2016 was aged 55 years at the time of accident and was quite hale and healthy. Likewise, deceased B.Nagaraj, the husband of claimant no.1 and father of claimant nos. 2 to 4 in MVC No.458/2016 was aged 32 years at the time of accident and he too was hale and healthy. It is stated that, both were the agriculturist and also used to rear sheep and were earning Rs.20,000/- each per month. The claimants in both the petitions were completely depending upon deceaseds’ income. Because of untimely death of deceased persons, the claimants in both the petitions are put to great hardship and loss and they are suffering mentally, physically and financially. As the accident has taken place because of rash and negligent - 7 - NC: 2025:KHC-D:2896-DB MFA No. 102021 of 2018 C/W MFA No. 102020 of 2018 driving of auto by respondent no.1, owned by respondent no.2 insured with respondent no.3, it is prayed that, all the respondents are liable to pay the compensation as prayed in their respective claim petitions together with interest at 18% p.a. 5. Despite service of notice, respondent nos.1 and 2 did not appear before the Tribunal and hence, they were placed exparte. Respondent no.3, the insurer appeared and resisted the petition by filing detailed objection statement to both the claim petitions with the similar contentions denying the entire assertions made in the petitions with regard to the accident, age, income and occupation of the deceased persons. It is denied that the said auto rickshaw was insured with respondent no.3. The driver of the said auto was not holding the driving licence. Hence, it is prayed by respondent no.3 to dismiss both the petitions. 6. Based upon rival pleadings of both the parties, the learned Tribunal framed relevant issues in both the petitions. - 8 - NC: 2025:KHC-D:2896-DB MFA No. 102021 of 2018 C/W MFA No. 102020 of 2018 7. To prove the claim of the claimants, claimant no.1 in both the petitions were examined themselves as PW1 and PW.2, got marked Ex.P1 to P8 and closed claimants’ evidence. An authorized officer of respondent no.3 was examined as RW.1 and got marked Ex.R1 to 5. On closure of the evidence of the claimants in both the petitions, the learned Tribunal, heard the arguments of both the side and on assessment of the evidence, held that, because of rash and negligent driving of the auto by respondent no.1, the said accident has taken place and the respondent no.3 is able to prove about the non-holding of the driving licence by respondent no.1 thereby there is violation of policy conditions and awarded the compensation in both the petitions as under: Compensation Awarded by the Tribunal (In Rs.) Sl. No. Heads In MVC No. 457/2016 In MVC No. 458/2016 1. Loss of Dependency 4,75,200/ 12,09,600/- 2. Funeral Expenses, transportation of dead body 15,000/- 15,000/- - 9 - NC: 2025:KHC-D:2896-DB MFA No. 102021 of 2018 C/W MFA No. 102020 of 2018 3. Loss of Estate -- 15,000/- 4. Loss of Consortium to claimant no.1 --- 40,000/- TOTAL 4,90,200/- 12,79,600/- However, directed respondent nos.1 and 2 jointly and severally liable to pay the compensation and dismissed the petition against respondent no.3. 8. Being dissatisfied with the award passed by the Tribunal, the claimants in both the petitions are before this Court by filing these two appeals seeking enhancement of compensation. Respondent nos. 1 and 2 have not filed any appeal being aggrieved of fastening the liability. 9. The learned counsel for the claimants Sri Y.Lakshmikant Reddy would submit that, so far as rash and negligent driving of the auto by respondent no.1 at the time of accident is not disputed. He would further submit that though the driver of the said offending vehicle was well aware about the movement of the goods train on the said level crossing which was not having any gate restricting the - 10 - NC: 2025:KHC-D:2896-DB MFA No. 102021 of 2018 C/W MFA No. 102020 of 2018 movement of the vehicles when the train crosses the said level crossing but, rashly and negligently drove the same without caring for the life of deceased persons being the inmates of the vehicle and in a hurry to cross the said level crossing, the goods train dashed to the offending vehicle on its hind portion and because of that, both the deceased died. He would further submit that, both the deceased persons were hale and healthy and from doing agriculture as well as sheep business, they used to earn Rs.20,000/- each. He would submit that, the claimants in both the petitions were completely depending upon the deceased persons. He would submit that, because of untimely death of deceased persons, now these claimants in both the petitions are put to mental agony and hardship. He would submit that, the income arrived at by the Tribunal is on lower side and proper income is not assessed by the Tribunal. He would submit that, even on fastening liability on respondent nos. 1 and 2, he would submit that, deceased persons were the third parties to the contract between respondent nos. 2 and 3 with regard to claim of compensation. Therefore, because of - 11 - NC: 2025:KHC-D:2896-DB MFA No. 102021 of 2018 C/W MFA No. 102020 of 2018 the rash and negligent driving of the auto by respondent no.1, the driver of the said vehicle and servant under respondent no.2 for the tortious act of respondent no.1, respondent no.2, the master is liable. He would submit that, as on the date of accident, the insurance policy was in force and valid. Merely because respondent no.1 was not holding driving licence, does not deprive the claimants to claim the compensation from respondent no.3 in view of the judgment of this Court in National Insurance Co. vs. Shantabai and others1. It is prayed to order for depositing the said compensation amount by respondent no.3, and then recover the same from respondent nos. 1 and 2. 10. As against this submission, Sri Nagaraj C.Kolloori appearing for respondent no.3 submits that, respondent no.1 was not holding the effective driving licence and inspite of issuance of notice, respondent no.1 has not produced the driving licence therefore, Insurance Company is not liable to deposit the compensation. He would submit that, the Tribunal is right in fastening liability on 1 1999 ACJ 391 - 12 - NC: 2025:KHC-D:2896-DB MFA No. 102021 of 2018 C/W MFA No. 102020 of 2018 respondent nos. 1 and 2 and absolving respondent no.3 from deposit of compensation. Further, he would submit that, in case, if, Court comes to the conclusion that, the Insurance Company has to deposit the compensation as the policy was valid on the date of accident, he would submit that, respondent no.2 being the owner of the said vehicle has entrusted the vehicle to respondent no.1 who was not holding the driving licence and thereby, there is violation of policy conditions. Therefore, he fairly submits that in view of the judgment in Balu Krishna Chavan vs. The Reliance General Insurance Co. and others2, decided on 3.11.2022, the Insurance company be directed to deposit the said compensation amount and then recover the compensation amount from the owner of the vehicle. 11. In view of rival submissions of both the side, the points that would arise for our consideration are: 2 arising out of SLP (C) 3368 of 2017 - 13 - NC: 2025:KHC-D:2896-DB MFA No. 102021 of 2018 C/W MFA No. 102020 of 2018 “1.Whether the claimants/appellants in both the appeals are entitled for enhancement in the compensation as prayed in their respective appeals? 2. Whether the respondent no.3 be reserved with a liberty to deposit the compensation amount and recover the said amount from respondent no.2 ?” 12. So far the accident that occurred on 30.4.2016 at 3.30 p.m., when deceased Lakshmana and Nagaraju were proceeding in the auto driven by respondent no.1 and dashing the said goods train on the hind portion of the auto at the level crossing because of rash and negligent act of respondent no.1 in driving the said vehicle is not seriously disputed by respondent no.3. With regard to the said accident, PWs1 and 2 have produced the police documents with regard to registration of crime as well as filing of charge sheet against the driver of the said auto marked at Ex.P1 to P8. 13. The findings of the Tribunal are not challenged by any of the respondents and thus have attained finality - 14 - NC: 2025:KHC-D:2896-DB MFA No. 102021 of 2018 C/W MFA No. 102020 of 2018 with regard to the said accident. Even on re-appreciation of the evidence, it is proved that, because of rash and negligent driving of offending auto by respondent no.1, the said accident has taken place. The very act of attempt to cross the level crossing though anticipated a goods train running on the said railway track itself shows the rashness and negligence on the part of respondent no.1. Therefore, the allegation with regard to rash and negligent driving of offending auto is duly proved by the claimants in both these petitions. MFA No.102021/2018 (MVC No.457/2016) 14. So far as award of compensation in MVC No.457/2016 is concerned, the Tribunal taking into consideration of occupation of the deceased Lakshmana, has assessed his monthly income at Rs.6,000/- though it was pleaded that he was earning Rs.20,000/- per month from his agriculture and sheep business. No documents are produced to prove the said income. The said accident has taken place in the year 2016 and as per the guidelines - 15 - NC: 2025:KHC-D:2896-DB MFA No. 102021 of 2018 C/W MFA No. 102020 of 2018 issued by the Karnataka State Legal Services Authority, in the absence of proof of income, it is to be assessed that, deceased Lakshmana would have been earning Rs.8,750/- per month. Therefore, income assessed by the Tribunal is on the lower side. In view of judgment of Hon’ble Apex Court in National Insurance Company Ltd., V/s. Pranay Sethi3, as deceased was self-employed and aged 60 years at the time of accident, 10% is to be added towards his future prospects. Out of that, as the claimants in MVC No.457/2016 were the two dependents therefore, 1/3rd of his income is to be deducted towards personal and living expenses. As the deceased was aged 60 years, the proper multiplier that is applicable is `9’ as per the judgment of the Hon’ble Apex Court in Sarla Verma and Ors. V/s. Delhi Transport Corp. and Anr.4. Thus, the `Loss of Dependency’ has to be calculated as under: 3 (2017) 16 SCC 680 4 AIR 2009 SC 3104 - 16 - NC: 2025:KHC-D:2896-DB MFA No. 102021 of 2018 C/W MFA No. 102020 of 2018 Computation of Loss of Dependency [In Rs.] Monthly Income 8,750-00 Addition towards future Prospects at 10% 875-00 Monthly Income with Future prospects 9,625.00 Deduction at 1/3rd towards personal expenses 3,208.00 Monthly Income after deductions 6,417.00 Annual Income 77,004.00 Loss of dependency with multiplier of '9' 6,93,036.00 15. So far as conventional heads such as transportation of dead body, funeral expenses are concerned, claimants are held entitled for Rs.15,000/- with 20% escalation for every three years. As the Tribunal has not given compensation towards `loss of estate’ in this case, but as per the judgment in Pranay Sethi (Supra), if certain amount is awarded towards 'loss of estate' it would meet the ends of justice. Hence, the same is awarded. It would be Rs.15,000/- with 20% escalation. Thus, it would be Rs.15,000 + 15,000 = 30,000 + 6,000 = Rs.36,000/-. Towards 'loss of consortium' to the claimants Rs.40,000/- each with 20% escalation it would meet the ends of justice, - 17 - NC: 2025:KHC-D:2896-DB MFA No. 102021 of 2018 C/W MFA No. 102020 of 2018 it would be Rs.96,000/- (Rs.48,000/- + Rs.48,000/-). Accordingly, the claimants are held entitled for total compensation of Rs.8,25,036/- as against Rs.4,90,200/- awarded by the Tribunal, thereby, compensation is enhanced by Rs.3,34,836/-. MFA No.102020/2018 (MVC No.458/2016) 16. So far as claimants in MVC No.458/2016 are concerned, claimant no.1 is the wife of deceased and claimant nos. 2 to 4 are minor children and they are deprived of income of the deceased because of his untimely death. The occupation of deceased Nagaraj was agriculture as well as sheep business as per the averments made in the claim petition. He was aged 32 years at the time of accident. In the absence of proof of income, as per the guidelines issued by the KSLSA, looking to the year of the accident, the income that has to be assessed for the year 2016 would be Rs.8750/-. To this as per judgment of Hon'ble Apex Court in Pranay Sethi supra, as he was aged 32 years, 40% is to be added towards the future prospects. As per the judgment of - 18 - NC: 2025:KHC-D:2896-DB MFA No. 102021 of 2018 C/W MFA No. 102020 of 2018 Hon'ble Apex Court in Sarla Verma supra, as there were four dependents, 1/4th of his income is to be deducted towards personal and living expenses and the proper multiplier applicable is `16’. Thus, the claimants are held entitled for the compensation towards 'loss of dependency' as under: Computation of Loss of Dependency [In Rs.] Monthly Income 8,750-00 Addition towards future Prospects at 40% 3,500-00 Monthly Income with Future prospects 12,250.00 Deduction at 1/4th towards personal expenses 3,063.00 Monthly Income after deductions 9,187.00 Annual Income 1,10,244.00 Loss of dependency with multiplier of '16' 17,63,904.00 17. Claimant no.1 in this petition is the wife and claimant nos.2 to 4 are the minor children of tender age. They have lost their father and claimant no.1 aged 28 years has lost her husband at her young age and also lost her conjugal happiness. Therefore, all these claimant nos. 1 to 4 are entitled for consortium at the rate of Rs.40,000/- each - 19 - NC: 2025:KHC-D:2896-DB MFA No. 102021 of 2018 C/W MFA No. 102020 of 2018 with 20% escalation i.e., Rs.48,000/- each (Rs.40,000/- + Rs.8,000/-) from next three years for every three years, i.e., Rs.1,92,000/- (Rs.48,000/- X 4). In addition to the same, the claimants in this petition are held entitled for compensation of Rs.15,000/- towards transportation of dead body, loss of estate at Rs.15,000/- with escalation of 20% for every three years next to the year 2016 as per the judgment in Pranay Sethi supra i.e., Rs.18,000/- each. Thus, claimants/appellants in both the appeals are held entitled for compensation as under: Compensation Awarded by the Tribunal (In Rs.) Compensation Awarded by this Court (In Rs.) Sl. No. Heads In MVC No. 457/2016 In MVC No. 458/2016 In MFA No. 102021/1 8 (MVC No. 457/2016) In MFA No. 102020/18 (MVC No. 458/2016) 1. Loss of Dependency 4,75,200/- 12,09,600/- 6,93,036/- 17,63,904/- 2. Funeral Expenses, transportation of dead body 15,000/- 15,000/- 18,000.00 18,000/- 3. Loss of Estate -- 15,000/- 18,000/- 18,000/- 4. Loss of Consortium -- 40,000/ Claimant No.1 96,000/- 1,92,000/- To claimant nos. 1 to 4 TOTAL 4,90,200/- 12,79,600/- 8,25,036/- 19,91,904/- - 20 - NC: 2025:KHC-D:2896-DB MFA No. 102021 of 2018 C/W MFA No. 102020 of 2018 18. Thus, the claimants/appellants in MFA No.102021/2018 (MVC No.457/2016) are held entitled for compensation of Rs.8,25,036/- as against Rs.4,90,200/- awarded by the Tribunal thereby, enhancement of compensation of Rs.3,34,836/- and the claimants/appellants in MFA No.102020/2018 (MVC No.458/2016) are held entitled for compensation of Rs.19,91,904/- as against Rs.12,79,600/- awarded by the Tribunal, thereby there is enhancement of Rs.7,12,304/- respectively, together with interest at the rate of 6% p.a. on the compensation awarded in both the appeals. 19. So far as liability is concerned, the learned counsel for the claimants relied upon the judgment in Shantabai supra of the co-ordinate bench of this Court in which it is held that, in a case of present nature, the Insurance Company has to deposit the compensation amount and then recover the same from the respondent no.2 being the owner of the offending vehicle. Likewise, in judgment of Hon’ble Apex Court in Balu Krishna Chavan supra, the principle of pay and recover has been discussed - 21 - NC: 2025:KHC-D:2896-DB MFA No. 102021 of 2018 C/W MFA No. 102020 of 2018 and it is stated that, in a case of present nature, the liberty is reserved to Insurance Company to deposit the compensation and recover the same from owner of the vehicle. Even the Full Bench of this Court in New India Assurance Co. Ltd., Bijapur by its Divisional Manager V/s. Yellavva and Another5, have elaborately discussed about the liability of Insurance Company in a case of present nature to deposit the compensation amount and then recover the same from owner as the claimants are the third parties. The observations of the Full Court read 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 5 ILR 2020 KAR 2239 - 22 - NC: 2025:KHC-D:2896-DB MFA No. 102021 of 2018 C/W MFA No. 102020 of 2018 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. 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. 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 - 23 - NC: 2025:KHC-D:2896-DB MFA No. 102021 of 2018 C/W MFA No. 102020 of 2018 party and recover from the insured. This could be illustrated with reference to the vehicle not being covered 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.” 20. In view of the aforesaid factual features as well as the ratio laid down in the aforesaid judgments, respondent nos. 2 and 3 jointly and severally are held liable to pay the compensation however, respondent no.3 being the insurer to deposit the compensation and by reserving the liberty to it to recover the same from respondent no.2 by executing the award. - 24 - NC: 2025:KHC-D:2896-DB MFA No. 102021 of 2018 C/W MFA No. 102020 of 2018 21. With this view, the aforesaid points for consideration are answered in favour of claimants. Resultantly, we pass the following: ORDER i. Both the appeals in MFA are allowed in part. ii. Claimants in MFA No.102021/2018 are held entitled for compensation of Rs.8,25,036/-as against Rs.4,90,200/- awarded by the Tribunal thereby enhancement of Rs.3,34,836/- and claimants in MFA No.102020/2018 are held entitled for compensation of Rs.19,91,904/- as against Rs.12,79,600/- awarded by the Tribunal, thereby there is enhancement of Rs.7,12,304/- together with interest @6% p.a. from the date of petition till its realization on the compensation awarded in both the appeals. iii. Respondent nos. 2 and 3 are jointly and severally held liable to pay compensation. However, respondent no.3 to deposit the compensation within six weeks from the date of receipt of certified copy of the - 25 - NC: 2025:KHC-D:2896-DB MFA No. 102021 of 2018 C/W MFA No. 102020 of 2018 judgment. The liberty is given to respondent no.3-Insurer to recover the compensation amount from respondent no.1 by executing the award so passed in these cases. iv. So far as disbursement, apportionment and deposit of compensation, the order of the Tribunal remains unaltered. v. There shall be modified award in the above terms. vi. Send back the trial Court records along with copy of this judgment. Sd/- (B.M.SHYAM PRASAD) JUDGE Sd/- (RAMACHANDRA D. HUDDAR) JUDGE Sk/-/CT:VG LIST NO.: 3 SL NO.: 12