In a recent judgment, the Karnataka High Court ruled that an insurance company must compensate the claimants for a fatal accident, even though the vehicle involved did not have a valid permit or fitness certificate at the time of the incident. The court upheld the principle of “pay and recover,” allowing the insurer to later recover the amount from the vehicle owner. This judgment was delivered by Justice T.G. Shivashankare Gowda on September 19, 2024, in the case of Miscellaneous First Appeal No. 7089 of 2016 (MV-D), c/w Miscellaneous First Appeal No. 6824 of 2016.
Background of the Case
The case arose from a tragic accident that occurred on June 17, 2013, near Anjaneya Swamy Temple on NH-207, Hoskote-Chikkathirupathi Road. The deceased, Nandishappa, was returning home on his bicycle when a canter goods vehicle, bearing the registration number KA-30-6744, struck him. He sustained severe head injuries and was admitted to multiple hospitals, including Brookfield Hospital, ESI Hospital, and NIMHANS in Bengaluru. Despite extensive medical treatment, Nandishappa succumbed to his injuries on July 31, 2013.
The dependents of the deceased—his wife Smt. Nagamma and two sons, N. Rudresh and Mahesh N.—filed a claim for compensation of ₹30 lakh before the Motor Accident Claims Tribunal (MACT). The Tribunal awarded a compensation of ₹13,88,209 with 9% interest per annum, which was challenged by both the petitioners seeking enhancement and by the insurance company, Shriram General Insurance, disputing the liability.
Key Legal Issues
The insurance company, represented by advocate Sri. O. Mahesh, argued that the vehicle in question was operating without a valid permit and fitness certificate at the time of the accident, which constituted a fundamental breach of the insurance policy. They contended that this breach absolved the insurer of liability. The company further argued that the death of Nandishappa was caused by cardiac arrest, unrelated to the injuries sustained in the accident.
On the other hand, the claimants, represented by advocate Sri. A.K. Bhat, argued that the deceased remained in an unconscious state from the time of the accident until his death. They produced medical records indicating that the cardiac arrest was a result of the head injuries sustained in the accident, thereby establishing a direct nexus between the injuries and the cause of death.
Court’s Observations and Judgment
The court examined the evidence and medical records, including the post-mortem report, which indicated that Nandishappa remained in a comatose state throughout his hospitalization. Justice Gowda observed that “mere mention of cardiac respiratory arrest in the post-mortem report is not sufficient to disconnect the cause of death from the injuries sustained in the accident.” He found that the injuries were indeed responsible for the death and that the insurance company’s argument lacked merit.
In addressing the issue of liability, the court referred to the Supreme Court’s judgment in National Insurance Co. Ltd. v. Swaran Singh and the Karnataka High Court’s full bench ruling in Yallavva v. New India Assurance Co. Both cases supported the application of the “pay and recover” principle, wherein the insurer is required to compensate the claimants and later recover the amount from the vehicle owner if a policy breach has occurred.
The court held that while the lack of a permit and fitness certificate constituted a fundamental breach of the insurance policy, the insurer could not avoid liability to third-party claimants. Justice Gowda stated, “Even though this is a case of fundamental breach, the insurance company must compensate the third-party claimants and then recover the amount from the vehicle’s owner.”
Compensation and Reduction in Interest Rate
The court adjusted the total compensation awarded by the Tribunal to ₹13,44,209, slightly reducing the original amount. Additionally, the court lowered the interest rate from 9% to 6% per annum, noting that the Tribunal had not provided sufficient reasoning for the higher rate.
In conclusion, the Karnataka High Court ruled that the insurance company was liable to compensate the dependents of the deceased cyclist, despite the vehicle owner’s breach of policy conditions. The court directed the insurer to pay the compensation within eight weeks, allowing it to recover the amount from the vehicle owner.
Case Details:
– Case Title: MFA No. 7089 of 2016 c/w MFA No. 6824 of 2016
– Bench: Justice T.G. Shivashankare Gowda
– Petitioners’ Counsel: Sri. A.K. Bhat
– Respondent’s Counsel: Sri. O. Mahesh
– Appellants: Smt. Nagamma, N. Rudresh, Mahesh N. (claimants)
– Respondent: Shriram General Insurance Company (insurer)
