The Supreme Court observed that while entertaining a claim petition u/s 163A of the Act, the question of negligence cannot be looked into.

An appeal was filed by the insurance company against the order of Punjab and Haryana High Court granting compensation of Rs.15 lakhs with interest @ 9% p.a.

The Bench of Justice J.K. Maheshwari and Justice Aravind Kumar observed, “The High Court took note of the fact that there was collision between two vehicles, as the claim petition had been filed under Section 163A of the Act does not require any proof of negligence for seeking compensation. While entertaining a claim petition u/s 163A of the Act, the question of negligence cannot be looked into...In the light of aforesaid exposition of law enunciated by this Court which we are also in agreement, and as such we are of the considered view that compensation cannot be determined as prescribed under Section 166 of the MV Act as sought for by the claimants, but on the other hand it requires to be determined under Section 163A read with Second Schedule of the Act, particularly when claim petition is filed under the said provision.”

Case Brief

A claim petition under Section 163A of the Motor Vehicles Act, 1988 came to be filed by the dependents of deceased seeking compensation of Rs.15,00,000/- alleging the driver of the offending vehicle was driving the vehicle in a rash and negligent manner and had caused the accident. It was also contended that at the time of the accident, deceased was working as a truck driver and drawing monthly salary of Rs. 3,000/- and was aged 35 years.

However, the Motor Accidents Claims Tribunal dismissed the claim petition on the ground that it was not maintainable as claimants had failed to prove that the accident was caused on account of rash and negligent act.

Later, the Punjab and Haryana High Court allowed the appeal in part and awarded a lump sum compensation of Rs. 15,00,000/- with interest @ 9% p.a. to the claimants and directed that compensation amount should be paid jointly by all the respondents therein.

It was the submission of the Appellant that the compensation awarded to the claimants is exorbitant and ought to be reduced. It was further contended that the insurance company cannot be held liable to pay compensation in the given case as the victim was the driver himself and he cannot be treated as a third party within the ambit of Section 147 of the Motor Vehicles Act, because he steps into the shoes of the owner while driving the vehicle.

While the Respondents contended that compensation awarded by the High Court is just, fair and reasonable.

Court’s Analysis

The Court opined that the High Court took note of the fact that there was collision between two vehicles, as the claim petition had been filed under Section 163A of the Act does not require any proof of negligence for seeking compensation. While entertaining a claim petition under section 163A of the Act, the question of negligence cannot be looked into.

Further, the Court calculated the compensation to be Rs.4,77,839/- which shall carry interest @ 8% p.a. from the date of petition till date of payment or deposit whichever is earlier.

The Court also observed that, in the instant case, the Truck Driver would be treated as 'third party', and the insurer and insured would be liable jointly and severally.

“The appeals stand allowed in part and the amount deposited in Special Leave Petition (Civil) No.15191 of 2020 with accrued interest shall be refunded to the appellant/ petitioner therein. The amount deposited in Special Leave Petition (Civil) No.9460 of 2022 to the extent above referred shall be transmitted to the jurisdictional tribunal with accrued interest thereon to be disbursed in favor of claimant as ordered herein above with proportionate accrued interest and balance and shall be refunded to the appellant/petitioner (National Assurance Company Limited) with proportionate accrued interest”, the Court said.

Accordingly, the Court partly allowed the appeal.

Cause Title: The New India Assurance Company Limited V. Usha Devi And Others (2025 INSC 836)

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Justice J.K. MaheshwariJustice Aravind Kumar

Pridhi Chopra

    Pridhi Chopra was earlier practicing as an Advocate in Delhi. She pursued B.A. (H) English from Gargi College, University of Delhi, and subsequently pursued a degree in Law.