Introduction:

The Calcutta High Court in National Insurance Co. Ltd. Versus Sandhya Keora and Others F.M.A. 288 of 2024 delivered a significant judgment reinforcing the beneficial nature of third party motor accident compensation law and clarifying the evidentiary burden on insurance companies seeking to avoid liability. The case arose out of a tragic road accident that occurred in 2015 on G.T. Road near Asansol, where Suresh Keora, an employee of Bharat Sanchar Nigam Limited, sustained fatal injuries after another motorcycle allegedly hit his vehicle from behind. He was immediately taken for medical treatment but succumbed to his injuries after a few days of hospitalization. His wife and daughter filed a claim petition under Section 166 of the Motor Vehicles Act before the Motor Accident Claims Tribunal seeking compensation for loss of dependency and other conventional heads. The Tribunal awarded a sum of ₹22.59 lakh and directed the insurer to satisfy the award. Dissatisfied, the insurance company challenged its liability before the High Court, raising objections relating to delay in lodging the First Information Report and alleged breach of policy conditions. Simultaneously, the claimants filed a cross objection seeking enhancement of compensation, contending that the Tribunal had erroneously deducted several salary components and failed to award just compensation. The matter was heard by Justice Biswaroop Chowdhury, who undertook a detailed examination of both liability and quantum, ultimately enhancing the compensation to ₹34 lakh with 6 percent interest and reaffirming that technical objections cannot be used to defeat genuine claims of dependants of accident victims.

Arguments:

The insurance company advanced two principal submissions before the High Court. First, it contended that the First Information Report had been lodged 26 days after the accident and that such delay cast serious doubt on the authenticity of the claim. According to the insurer, prompt reporting of an accident is crucial for verification and investigation, and unexplained delay raises suspicion regarding the manner of occurrence and involvement of the insured vehicle. It argued that the delay indicated possible fabrication or exaggeration and therefore the claim ought to be viewed with caution. Secondly, the insurer alleged breach of policy conditions by asserting that the rider of the offending motorcycle did not possess a valid and effective driving licence for the relevant class of vehicle. It was submitted that this constituted a fundamental violation of the insurance contract, entitling the insurer either to avoid liability altogether or at least to seek pay and recovery rights against the vehicle owner after satisfying the award. The insurer emphasized that policy terms are binding and any breach thereof absolves the insurer from indemnification. On the other hand, the claimants refuted these contentions and supported the Tribunal’s finding on negligence while seeking enhancement of compensation. With regard to the delay in lodging the FIR, it was submitted that immediately after the accident the primary concern of the family was to save the life of the injured. The deceased was hospitalized and remained under treatment for several days before he passed away. The family members were naturally preoccupied with medical care, arranging funds, and subsequently performing last rites and mourning rituals. In such circumstances, rushing to the police station was neither practical nor socially expected. The claimants argued that in Indian conditions, priority is given to medical assistance rather than procedural formalities, and therefore delay in lodging FIR cannot be treated as fatal in motor accident claim proceedings which are summary in nature. On the question of driving licence, the claimants contended that the insurer had failed to discharge its burden of proof. No specific issue had been framed before the Tribunal regarding breach of policy. The vehicle owner had not been examined, nor had any official from the transport authority been summoned to prove absence or invalidity of licence. Mere pleading without substantive evidence could not absolve the insurer of statutory liability towards third party claimants. Additionally, the claimants argued that the Tribunal had erred in deducting various components from the salary of the deceased while computing loss of dependency. They submitted that only income tax and professional tax are legally deductible and other allowances forming part of regular income ought to be included. They also sought addition towards future prospects in accordance with settled principles and prayed for enhancement under conventional heads.

Judgment:

Justice Biswaroop Chowdhury, after considering the rival submissions and examining the materials on record, rejected the insurer’s objections and allowed the cross objection of the claimants in part. On the issue of delay in lodging the FIR, the Court observed that motor accident compensation law is a piece of beneficial legislation intended to provide relief to victims and their families. It noted that strict standards of criminal jurisprudence cannot be mechanically applied in claim proceedings which are governed by principles of preponderance of probabilities. The Court found that the delay of 26 days had been satisfactorily explained by the circumstances surrounding the accident. The deceased was hospitalized and later succumbed to his injuries, and his family was engaged in treatment, death related formalities and mourning. The Court emphasised that in Indian social conditions, it is natural for family members to rush an injured person to the hospital rather than to the police station. It held that such delay, in the absence of any evidence of fabrication, cannot be viewed with suspicion so as to defeat a genuine claim. The Court categorically stated that mere delay in lodging an FIR cannot defeat a rightful claim for compensation when the occurrence of the accident is otherwise established by evidence. Turning to the allegation of breach of policy conditions, the Court held that the burden lies squarely on the insurer to prove such breach. It clarified that an insurer cannot avoid liability or seek pay and recovery unless it strictly proves violation of policy terms after framing specific issues, conducting proper enquiry, adducing cogent evidence and giving the insured an opportunity of hearing. In the present case, the insurer had neither examined the vehicle owner nor produced evidence from the transport authority to substantiate its allegation regarding invalid driving licence. There was no material on record demonstrating conscious breach by the insured. In the absence of such proof, the insurer could not escape statutory liability towards third party claimants. The Court reiterated that third party insurance under the Motor Vehicles Act is designed to protect innocent victims and their dependants, and technical objections should not be permitted to undermine this objective. On the aspect of quantum, the Court found merit in the claimants’ contention that the Tribunal had wrongly deducted several components from the salary of the deceased. It clarified that while computing loss of dependency, only statutory deductions such as income tax and professional tax are permissible. Other allowances forming part of regular earnings cannot be excluded. The Court recalculated the income accordingly, added 15 percent towards future prospects considering the age and employment status of the deceased, applied the appropriate multiplier and awarded amounts under conventional heads such as loss of consortium and funeral expenses. Upon reassessment, the Court determined that the just and reasonable compensation payable to the claimants was ₹34 lakh. The award was enhanced accordingly with interest at the rate of 6 percent per annum. The insurer was directed to deposit the enhanced amount within eight weeks, granting liberty to the claimants to withdraw the same in accordance with law. The judgment thus reaffirmed that compensation jurisprudence must remain humane and purposive, focusing on substantive justice rather than technical defences.