Safiya Malik

The Karnataka High Court, Dharwad Bench has dismissed an appeal filed by the National Insurance Company challenging a compensation award granted by the Motor Accident Claims Tribunal (MACT), Belagavi. The appeal sought to dispute both the liability assigned to the insurer and the quantum of compensation awarded to the claimants. The court upheld the Tribunal’s findings, ruling that the learner’s license held by the motorcycle rider at the time of the accident was a valid license and did not constitute a breach of insurance policy conditions.

The case arose from a road accident on May 29, 2009, in which Mangala, a government school headmistress, sustained fatal injuries while riding as a pillion passenger on a Hero Honda Pleasure motorcycle. The motorcycle was being operated by respondent. The claimants, her husband and son, filed a petition under Section 166 of the Motor Vehicles Act, 1988, seeking compensation for her death.

According to the claimants, the accident occurred due to rash and negligent driving by the rider, which led to Mangala falling from the vehicle and suffering serious injuries. She was hospitalized for ten days but succumbed to her injuries despite treatment. The claimants sought a compensation amount of Rs. 30,00,000, citing Mangala’s monthly earnings as a school headmistress and the financial loss incurred by her dependents.

The first respondent, the motorcycle owner and rider, contended that the vehicle was insured and that she held a learner’s license at the time of the accident. The second respondent, the National Insurance Company, denied liability, arguing that the accident did not involve the insured vehicle and that the claim was fraudulent. The insurer further asserted that the rider lacked a valid driving license, rendering it not liable under the policy.

The MACT, in its judgment dated September 4, 2010, ruled in favor of the claimants, awarding a compensation of Rs. 12,65,731 with an interest rate of 9% per annum. The Tribunal held that the accident was caused due to negligent riding and that the insurance company was liable to compensate the claimants.

Justice K. Natarajan, examined the appeal on three primary grounds: whether the insurance company was correctly held liable, whether the awarded compensation was excessive, and whether the interest rate required revision.

On the issue of liability, the insurer argued that the rider’s learner’s license was invalid and that she was required to have an instructor present while driving. The court referred to Rule 3 of the Central Motor Vehicle Rules, 1989, which mandates an instructor’s presence for learners operating four-wheeled vehicles but does not impose the same requirement for two-wheelers. Citing New India Assurance Co. Ltd. v. Mandar Madhav Tambe, the court observed that "a learner’s license is also a valid license, and absence of an instructor for a two-wheeler does not constitute a breach of policy conditions."

The court also noted that the deceased held a valid permanent driving license, supporting the contention that she was capable of instructing the rider if necessary. It found that there was no pleading or evidence to indicate a violation of the policy conditions. The court, therefore, upheld the Tribunal’s finding that the insurer was liable for compensation.

Regarding the quantum of compensation, the court examined the Tribunal’s calculation of loss of dependency. The Tribunal had considered the deceased’s monthly salary of Rs. 20,703 after deductions and applied a multiplier method in accordance with Sarla Verma v. Delhi Transport Corporation. The insurer argued that the Tribunal had failed to deduct an adequate percentage for personal expenses, as the deceased’s husband was an earning member. The court, however, ruled that "50% deduction towards personal expenses was appropriate, and additional deductions suggested by the insurer were not warranted."

The court also addressed the insurer’s contention that a “split multiplier” should be applied due to the deceased’s expected retirement at age 60. It agreed with this argument and applied a split multiplier method, considering five years of full salary followed by a pension calculation. Despite the revised calculation, the reassessed compensation amount exceeded what was awarded by the Tribunal. As no appeal for enhancement was filed, the court upheld the Tribunal’s award without modification.

On the issue of interest, the insurer sought a reduction from 9% to 6%. The court cited the Supreme Court’s ruling in Supedei v. National Insurance Co. Ltd., which upheld a 9% interest rate, and found no reason to reduce the rate in this case.

The Karnataka High Court issued the following directives:

1. The appeal filed by the National Insurance Company is dismissed.

2. The compensation awarded by the Tribunal, amounting to Rs. 12,65,731 with 9% interest, is upheld.

3. The insurer remains liable to pay the compensation, as no breach of policy conditions was established.

4. The split multiplier argument was considered, but as the reassessed amount exceeded the Tribunal’s award, no modification was made.

Case Title: The Senior Divisional Manager, National Insurance Co. Ltd. v. Jyotiba Appaji Shigate & Others
Case Number: Miscellaneous First Appeal No. 20655 of 2011
Bench: Justice K. Natarajan

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