Relief Vehicle Plying Beyond Permit Route Not Fundamental Breach | Karnataka High Court Holds Insurer Liable To Compensate Instead Of Owner
Sanchayita Lahkar
The High Court of Karnataka Single Bench at Dharwad of Justice Hanchate Sanjeevkumar held that a mere deviation from a permitted route under compelling circumstances does not constitute a fundamental breach of the insurance policy. The Court modified the judgment of the Motor Accident Claims Tribunal by setting aside the liability fastened on the bus owner and directed the insurance company to indemnify the claimants. The Court further enhanced the compensation amounts awarded to the injured claimants in two separate appeals arising out of the same accident.
The matter arose from two connected road accident claims filed before the Principal Senior Civil Judge and Additional Motor Accident Claims Tribunal, Haveri, relating to an incident that occurred on 21 January 2014. On that day, around 11:45 a.m., two individuals, Ganesh and Basavaraj, were traveling from Mudur to Haveri on a motorcycle bearing registration No. KA-27/Q-9748. Ganesh was riding the vehicle, and Basavaraj was the pillion rider.
While they were near the sugar factory at Sangur village, a private bus bearing registration No. KA-14/A-1313, allegedly driven in a rash and negligent manner, collided with their motorcycle. Both sustained serious injuries. Subsequently, each filed a separate claim petition—MVC No. 172/2014 and MVC No. 173/2014—before the Tribunal.
The Tribunal, in its judgment dated 24 January 2017, allowed the claims and awarded compensation to both injured parties. However, it fastened the liability for compensation solely on the bus owner, K. M. Altaf Hussain, holding that the bus was being plied on a route not covered by its permit. Specifically, the Tribunal found that the bus had a permit from Shivamogga to Hangal but was operating on a route extending to Haveri at the time of the accident, thereby violating the permit conditions.
Aggrieved, the bus owner filed MFA Nos. 101568/2017 and 101569/2017 challenging the liability finding. The claimants, Ganesh and Basavaraj, filed MFA Nos. 101341/2017 and 101342/2017 respectively, seeking enhancement of compensation.
It was admitted by both parties that the owner possessed two buses—KA-14/A-1313 and KA-14/A-7144. The latter, which had a valid permit from Dasanakoppa to Haveri, broke down en route. To continue service, the owner deployed the other bus (KA-14/A-1313) as a relief vehicle. While returning from Haveri, the latter bus met with the accident.
The Tribunal, without appreciating the exigent circumstances, held that deploying a vehicle on an unpermitted route amounted to a violation under Section 66 of the Motor Vehicles Act, 1988, and exempted the insurer from liability.
The High Court, however, took a different view. It noted that the deviation in route occurred due to the breakdown of the permitted vehicle, and the replacement was done to continue passenger services. Relying on Rule 57 of the Karnataka Motor Vehicles Rules, 1989, the Court noted that using a transport vehicle as a relief vehicle is exempt from the requirements under Section 66 of the Act.
The Court further observed that the insurer had issued a valid policy covering the period in question and that no fundamental breach had occurred merely due to route deviation under compelling circumstances.
On the issue of quantum of compensation, the Court examined the evidence on record including disability certificates, medical bills, and witness depositions.
In MVC No. 173/2014, claimant Basavaraj had sustained a Type IV fracture of the medial condyle of the left tibia and underwent screw fixation surgery. The Tribunal had awarded Rs. 1,27,250. The Court reassessed the compensation considering the 10% functional disability and revised the amount to Rs. 2,24,810. Notional income was considered at Rs. 7,500 per month, and a multiplier of 17 was applied.
In MVC No. 172/2014, claimant Ganesh had sustained multiple fractures including to the right wrist and left tibia. The Tribunal had awarded Rs. 3,71,030. The Court noted that the Tribunal erred in considering only 9% disability despite the doctor's assessment of 70%. It accepted 20% permanent disability and recalculated the compensation to Rs. 7,15,550, factoring in 40% towards future prospects in accordance with Pranay Sethi.
In both cases, interest on compensation was fixed at 6% per annum from the date of petition till realization.
The Court recorded its findings as follows: “It is not a case that the bus bearing registration No. KA-14/A-1313 did not have permit at all. Here, it is the only deviation of route under the compelling circumstances and the bus bearing registration No. KA-14/A-1313 was used as a relief vehicle.”
According to Rule 57 of the Karnataka Motor Vehicles Rules, 1989, the requirement under Section 66 of the Motor Vehicles Act, 1988, does not apply in this case.
As a result, no fundamental breach was established that would justify absolving the Insurance Company of its liability. The Court found that the Tribunal had erred in arriving at a contrary conclusion.
The Court relied on its earlier decisions, including MFA No. 2526/2018 C/w MFA No. 5720/2018 and MFA No. 102693/2022, and quoted: “Mere deviation of route does not mean to fundamental infraction so as to absolve the Insurance Company from the responsibility of paying the compensation.”
On quantum of compensation, the Court in Basavaraj’s case stated: “The doctor has stated that the claimant had suffered 44% permanent physical disability to the whole body. Therefore... 10% of functional disability is taken into consideration.”
In Ganesh’s case, the Court noted: “The Tribunal has committed an error in considering only 9% towards permanent physical disability, which is on lower side... 20% of permanent physical disability is taken into consideration.”
Regarding loss of future prospects, the Court applied the formula:
“Rs.7,500/- + Rs.3,000/- (40% of Rs.7,500/-) = Rs.10,500/-
Rs.10,500/- x 20% x 16 x 12 = Rs.4,03,200/-”
The Court concluded that in both cases, the compensation awarded by the Tribunal was on the lesser side and required enhancement.
The Court allowed the appeals filed by the owner of the bus in MFA Nos. 101568 and 101569 of 2017. The appeals filed by the claimants in MFA Nos. 101341 and 101342 of 2017 were allowed in part.
The judgment and award dated 24.01.2017 passed in MVC Nos. 172 and 173 of 2014 were modified, holding that the Insurance Company shall indemnify the owner of the bus by paying compensation to the claimants.
The claimant in MFA No. 101341/2017 (MVC No. 172/2014) was held entitled to total compensation of Rs. 7,15,550/- as against Rs. 3,71,030/- awarded by the Tribunal.
The claimant in MFA No. 101342/2017 (MVC No. 173/2014) was held entitled to total compensation of Rs. 2,24,810/- as against Rs. 1,27,250/- awarded by the Tribunal.
The total compensation amount was directed to carry interest at the rate of 6% per annum from the date of petition till its realization.
The Court directed that the Insurance Company shall deposit the amount within a period of eight weeks from the date of receipt of a copy of the judgment.
The amount in deposit made by the owner of the bus in MFA Nos. 101568 and 101569 of 2017 was ordered to be refunded to his bank account.
Finally, the Court recorded that there would be no order as to costs and that, in view of the disposal of the appeals, any pending applications shall stand disposed of.
Advocates Representing the Parties
For the Petitioners: Sri B.M. Patil, Advocate
For the Respondents: Sri Sanjay S. Katageri, Advocate for R1; Sri S.S. Koliwad, Advocate
Case Title: Shri Basavaraj v. K. M. Altaf Hussain & Anr. and connected matters
Neutral Citation: 2025:KHC-D:7397
Case Number: MFA Nos. 101342, 101341, 101568, and 101569 of 2017
Bench: Justice Hanchate Sanjeevkumar
