09.07.2026 Sl. No.2 Court No.9 Ali IN THE HIGH COURT AT CALCUTTA CIVIL APPELLATE JURISDICTION APPELLATE SIDE FMA 795 of 2023 Tarsila @ Tarshia Bibi @ Bewa & Ors. Vs. M/S Oriental Insurance Company Ltd. & Anr. Ms. Sima Ghosh, Ms. Manosi Mondal .... for the appellants/claimants. Mr. Rajesh Singh ...for the respondent No. 1/Insurance Co. 1. Learned advocate for the appellants-claimants and learned advocate for the respondent No.1-Oriental Insurance Company Ltd. are present. 2. Heard the learned advocates for the parties. 3. The grievance of the appellants-claimants against the judgement and award dated 9th day of September, 2015 passed by learned Additional District Judge, 3rd Court, Berhampore in MAC Case No. 430 of 2011 is that the learned Trial Judge has awarded compensation which is inadequate. It is further the case of the appellants that the learned Trial Judge in spite of the vehicle being insured has directed the vehicle owner to pay compensation which is not paid till today. It is further the case of the appellants that 2 the learned Trial Judge ought to have directed the respondent No.1-Oriental Insurance Company Ltd. to pay compensation to the appellants-claimants instead of directing the respondent No.2-vehicle owner to pay the same. 4. Mr. Singh, learned advocate appearing for the respondent No. 1 submits that as the driver of the offending vehicle was not holding any valid driving licence the learned Trial Judge did not commit any error in directing the vehicle owner to pay the compensation. It is held in different judicial decisions that where there is any violation of the condition of policy of insurance, namely, vehicle without valid driving licence or valid permit the Insurance Company is required to pay the compensation with a right to recover the same from the vehicle owner. In the case of National Insurance Company Ltd.-Versus- Lirasa Bibi & Anr reported in FMA 1003 of 2025 it was observed as follows: “Now with regard to the submission of pay and recovery it is well settled that in case of violation of Insurance Policy Condition, the Insurance Company is entitled to recover from the insured the compensation amount awarded after making payment to the claimant/victim. However before proceeding to recover from the insured, the compensation amount the insurer upon making necessary enquiry and upon giving the vehicle owner an opportunity of being heard shall ascertain as to whether the violation of policy condition was bona fide unintentional or deliberate. Thereafter the 3 Insurance Company may decide whether to proceed against the insured or to condone such breach. In the case of Reliance General Insurance Company Ltd. VS Niyati Kumar and ors FMA- 1326 of 2025 reported in 2025 SCC Online Cal 8886 it was observed as follows: „Thus it is well settled that in order to absolve from liability of paying compensation and to obtain an order of pay and recovery it is mandatory for the Insurer to prove breach of the condition of Insurance Policy. Although all Insurance Companies are not „State‟ within the meaning of Article 12 of the Constitution of India but the fact that third party Motor Insurance Law is a beneficial Legislation and it has a public aspect and its object is to protect the public (third parties) from financial losses due to accidents caused by a motorist by ensuring that victims are compensated. On one hand, and also to protect the vehicle owners from bearing huge burden of compensation in case of accidents where the insurance policy condition is complied with on the other hand. Thus considering the public aspect of Motor Insurance Claims Insurance Companies have responsibilities to ensure that genuine accident claims are settled without delay and the vehicle owner who has not violated the terms of policy is not unnecessarily harassed. In the event the Insurance Company has reasons to believe that policy conditions were violated it should conduct an enquiry issue notice upon the vehicle owner and give him an opportunity of being heard. Where the Insurance Company is satisfied after enquiry that conditions of policy were not violated the allegations of violation of policy, namely the vehicle was driven without permit or without valid driving license should not be raised in Court. However upon Enquiry if the Insurance Company finds that there was violation of terms of policy such findings should be recorded by Insurance Company and necessary evidence should be adduced in Court. In such a case the Enquiry Report should also be filed in Court, apart from adducing evidence. 4 A vehicle owner after getting his vehicle insured proceeds with the assumption that Insurance Company will settle the compensation claim in case of accidents thus the vehicle owners ordinarily do not appear in Court to contest claim cases. Thus in the event there is allegation of violation of condition of Policy the vehicle owners should be given an opportunity of being heard before such allegation being made in Court and before being examined in Court as witness. Upon such enquiry being made the Insurance Company can decide as to whether policy violation was minor or major and whether to condone such violation or recover the amount of compensation paid. In the instant case the Appellant Insurance Company has merely alleged that the vehicle was driven without permit on the ground permit was not seized by Police Authority but no steps were taken to conduct an enquiry and to examine officers of Regional Transport Authority as witness with regard to permit of the vehicle.‟ In the event the violation of policy condition appears at the time of argument when the case is at the verge of disposal and there was no scope for the Insurance Company to make preliminary enquiry and give the vehicle owner an opportunity of being heard the Learned Tribunal after it arrives at a finding that there was breach of policy condition shall after directing payment by the Insurance Company to the claimant issue show cause upon the Insured/vehicle owner as to „why the compensation amount directed to be paid shall not be recovered.‟ Copy of the Award shall also be enclosed with the notice. Upon hearing the vehicle owner/insured with regard to violation of policy condition if the tribunal/Court comes to the conclusion that there was violation of policy condition which was not bona fide and without sufficient explanation, the Court/Tribunal will order recovery of amount directed to be Paid by Insurance Company. In the normal course where vehicle owners receives notice of claim case they ordinarily do not appear in Court on the ground that Insurance Company will settle the claim. 5 However if subsequent allegation is made in the written statement about violation of policy condition and additional issue in this regard is framed, and evidence adduced by the Insurance Company further notice in this regard should be issued upon vehicle owner to meet the allegation. In the event the Court/Tribunal is of the view that notice to be issued after considering the evidence adduced in this regard Learned Tribunal may issue notice after evidence. In any event prior to directing recovery after payment notice in this regard must be issued specifically and the vehicle owner should be given an opportunity of being heard. In the instant case the vehicle owner/insured was not put to notice with regard to violation of policy condition for the purpose of pay and recovery. Thus no order with regard to recovery can be directed without the Appellant Insurance Company causing enquiry and giving the vehicle owner/insured an opportunity of being heard. Thus the Appellant National Insurance Company Limited is granted liberty to cause service of notice upon the vehicle owner/insured annexing copy of the order of trial Court and this order and upon hearing him with regard to violation of policy condition and recovery of compensation amount awarded. Upon hearing the insured respondent no-2 Subrata Nath the Appellant National Insurance Company Limited will decide whether to proceed against the said respondent for recovery. In the event recovery proceedings is instituted parties will be entitled to take relevant points involved to enable the Court/Tribunal to arrive at a just decision. Thus this Appeal FMA-No-1003 of 2025 and COT-155 of 2025 stands disposed. The Judgment and Award dated 21st day of January 2025 passed by Learned Additional District Judge Fast Track 3rd Court Berhampore Murshidabad in MAC Case No- 341 of 2015 stands modified to the extent that the Respondent no-1 and-2 namely Lirasa Bibi and Kamala Bibi will be entitled to total compensation of Rs. 500,000/- (Rupees five lakh) from the Appellant 6 National Insurance Company Limited along with interest @6% per annum from the date of filing claim case till today. Such deposit shall be made before the Registrar General High Court Calcutta within 8 weeks from the date of communication of the Order. In the event the amount awarded by the trial Court is already deposited, the balance amount shall be deposited. The Appellant/Insurance Company upon making the deposit is granted liberty to proceed for recovery upon compliance of the procedure as observed above.” 5. In the case of Smt. Sova Dey & Ors. –Versus- National Insurance Company Ltd. & Anr. reported in FMA 1442 of 2014 it was observed as follows: “As Motor Vehicles Claim Legislation is a Welfare legislation, it is to be remembered that the third parties who have no knowledge about payment of premium and cancellation of Insurance Policies are on the road with the impression that necessary care and precaution will be taken by the vehicle owner/insured and the insurance companies regarding insurance. Thus for the laches of the Insurance Companies or Vehicle owner third party victims of accidents should not suffer.” 6. In the case of National Insurance Co. Ltd. v. Ishroo Devi, reported in 1997 SCC OnLine HP 28 observed as follows: “14. In National Insurance Co. Ltd. v. Santro Devi, 1997 ACJ 111 (P&H), a Full Bench of Punjab and Haryana High Court summarised the questions posed before it in para 69 of the judgment. It was observed therein that where an insured bona fidely believing in the validity of a forged driving licence employing the holder of a fake driving licence renewed by a competent authority, would not amount to violation of the conditions of contract or of insurance policy. It would not be violating either conditions of indemnity or the insurance policy or the contract or violation of any statutory provisions. Under these 7 circumstances, merely employing a driver with a forged driving licence would not absolve the insurer of its liability. It was further observed that in the absence of mens rea or knowledge or intention to violate the terms of policy or the provisions of the Act by the insured, the insurance company would not be discharged of its liability of indemnifying the insured or of its statutory liability to third party or its contractual liability to third party. We do not think that the ratio of the decisions in Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan, 1987 ACJ 411 (SC) and Punjab Full Bench would be of any help to the appellant. On the contrary all the judgments referred to above have supported the defence of the respondent society on the facts and circumstances of the present cases.” 7. Thus, considering different judicial decisions in case of expiry of validity period of driving licence and dispute of fake licence bona fide of insured should be considered. Thus the learned Trial Judge could have directed Oriental Insurance Company Ltd. to pay the compensation to the claimants-appellants and recover the same from the respondent No.2-vehicle owner. Further with regard to the enhancement prayed for by the appellants this Court is of the view that considering the latest amendment of Section 163-A of Motor Vehicles Act, 1988 and considering the fact that Motor Vehicle Claims legislation is the beneficial legislation it would be just and reasonable to award compensation of Rs.5,00,000/- as provided under Section 163-A of the Motor Vehicles Act, 1988. 8 8. In the facts and circumstances, this appeal FMA 795 of 2023 stands disposed. The judgement and award dated 9th day of September, 2015 passed by learned Additional District Judge, 3rd Court, Berhampore in MAC Case No. 430 of 2011 stands modified to the extent that the appellants-claimants are entitled to Rs.5,00,000/- from respondent No.1-Oriental Insurance Company Ltd. along with interest @ 6% per annum from the date of filing of the claim case till today. 9. The respondent No. 1-Oriental Insurance Company shall deposit Rs.5,00,000/- along with interest @ 6% per annum within eight weeks from the date of communication of this order before Learned Registrar General, High Court, Calcutta. The claimants- appellants will be entitled to withdraw the compensation upon compliance of necessary formalities. 10. Upon depositing the compensation amount the respondent No. 1-Oriental Insurance Company Ltd. will be entitled to recover the compensation amount from the vehicle owner in accordance with law by issuing notice to the vehicle owner and giving him an opportunity of being heard and following the procedure as laid down in the case of National Insurance Company Ltd.-Versus- Lirasa Bibi & Anr.(Supra). 9 11. This appeal FMA 795 of 2023 stands disposed of. 12. Urgent photostat certified copies of this order, if applied for, be supplied to the parties upon compliance of all necessary formalities. (Biswaroop Chowdhury, J.)