Justices Maheshwari and Aravind Kumar Clarify Third-Party Liability: Supreme Court Says Driver Was a Victim in Dumper Crash, Not at Fault

The present article dwells on the examination of the recent judgment of the Supreme Court of India on 2025 INSC 836 following its significance in terms of motor accidents claims, especially those made under the section 163A of the Motor Vehicles Act, 1988. The ruling by the Court explains some of the essential points on the compensation establishment and obligation of insurance companies in this kind of case.

The First Instance of the Tragic Incident

The case has its base on a sad event that took place on the night of November 15, 2006. Mr. Surender Singh was driving a truck (HR-38L/6727) which suffered the collision with dumper (HR-38H-9100) on the Pali Crusher Zone. Mr. Singh sustained the serious injuries, and died due to injuries on November 22, 2006, during treatment at GTB Hospital, Delhi. The dumper driver (Mr. Islam) was booked under Sections 279, 337 and 304-A of the Indian Penal Code, 1860 under an FIR (No. 411 dated 15.11. 2006).

The dependents of the deceased such as his wife Usha Devi, four children and the elderly mother of the deceased then proceeded to make a claim petition under Section 163A of Motor Vehicle Act, 1988. They were claiming a compensation of 15,00,000 Rs because due to the rash and careless manner of driving which Mr. Islam is the reason behind this accident. They further have recited that Surender Singh used to work as a truck driver and earns Rs. 3000 per month, and was 35 years old at the time of the accident.

On October 15, 2011, the claim petition was dismissed by Motor Accidents Claims Tribunal, Faridabad, due to mostly the fact that the claimants did not establish that the accident was the ramification of irrational and careless driving by Mr. Islam.

The Intervention of High Court and the appeals thereafter.

The claimants were offended by the ruling given by the Tribunal and under Section 173 of the Act they appealed at the Punjab & Haryana High Court. The High Court partially admits the appeal on February 12, 2020, quashing the rejection by the Tribunal. It gave to the claimants a lump sum payment of Rs. 15, 00, 000/- to be paid with an interest of 9 percent per annum. The High Court also ordered that the compensation be paid jointly and severally, by all the respondents and that all the insurance firms first indemnify the award but that they reserve their rights of subsequent recovery of the sums paid, including indemnity, in case they manage to recover the same as per their policies with the vehicle owners.

Two appeals made to the Supreme Court followed this judgment. The New India Assurance Company Limited which insured the truck of the deceased mounted Special Leave Petition (Civil) No. 15191/2020. National Insurance Company Limited that insured the offending dumper moved this Special Leave Petition (Civil) No. 9460/2022.

Insurance Companies Arguments

Mr. Ranjan Kumar Pandey, the counsel of The New India Assurance Co. Ltd., contended that there was an exorbitant sum of compensation which should be mitigated. He argued that a lump sum compensation would be in contravention of the scheme of the Section 163A of the Act which provides determination thereof as per the Second Schedule. He also said that there is no mention of amounts on the loss of love and affection along with physical/mental pain and agony made under the Second Schedule. Also, no additional damages on account of loss of love and affection deserve to be granted since this is included in loss of consortium as held by the Constitution Bench decision in

National Insurance Co. Ltd. vs Pranay Sethi and Others. And finally, he said that Section 163A limits the liability of the insurer and there should be pro rata division in liability between the two insurers.

On the part of National Insurance Co. Ltd. Mr. Ambhoj Kumar Sinha made it out that because the deceased was not a third party, his company could not cover him. He also argued that where a driver is the victim, an insurance company is not liable because the driver has become the owner in his place. He stressed that when the insured person cannot be held responsible then the insuring company should not suffer the accrued liability to compensate the award simply because the accident entailed the insured vehicle. Thus, he wanted his client exonerated to compensate the counterparty.

The Defense of Claimants and The Supreme Courtal Analysis of Section 163A

On its part, Mr. V. Elanchezhiyan, advocate of the claimants, defended that the amount of compensation given by the High Court was reasonable and fair. The FIR (Ex. P3) he brought as evidence demonstrates the rash and negligent driving of the dumper/crusher vehicle but supports this fact by the testimony of PW2 Constable Lalit Kumar. He emphasized on the fact that the deceased passed on as a result of accident-related injuries and that he was a third-party as far as the dumper/crusher was concerned. He also made the Court aware of a case earlier (Ex. P2) wherein the dependants of Mr. Islam, the dumper driver were given compensation. He claimed that the High Court has used the computation of compensation on the basis of

National Insurance Co. ltd. Vs. Pranay Sethi & Ors..

In its concluding remarks, the Supreme Court agreed with the High Court ruling to quash away the Tribunals rejection to the claim petition. The Court once again upheld that no negligence has to be proved by filing a claim petition under Section 163A of the Motor Vehicles Act of 1988 in order to recover compensation. It pointed out that the issue of negligence cannot be look into when advancing an action under Section 163A. The Court directed itself by reference to its decision given in an earlier case.

The case of United India Insurance Company Ltd. Vs. Sunil Kumar & another case confirmed that an award of compensation under Section 163A is a final award and no other belief must be made to show the negligence of the driver/owner. To permit defense on ground of negligence on part of the claimant, would be a derailment on the intent of the legislature in Section 163A that it is to achieve speedy compensation on a predetermined formula.

The case in hand was also mentioned in the Court.

National Insurance Co. Ltd. v. Sinitha, it was noted that Section 163A takes a supercedence in nature over all and any other sections of the Act including those found in Chapter X because of the non-obstante clause to this Section. That confirms the fact that compensation shall be calculated, not referring to Section 166 but under Section 163A read with the Second Schedule of the Act.

Recomputation of compensation and Indemnity calculation.

The High Court later awarded the compensation that was reviewed by the Supreme Court. Although the High Court has accepted the monthly income of the deceased as Rs. 3,000 (Rs. 36,000 p.a.) the Supreme Court, with the number of six dependants, has calculated the monthly income as per the Second Schedule to be Rs. 40,000. The actual loss of income to the claimants was computed after reducing one-third of personal expenses to emerge with Rs. 26/667. Assuming an age of the deceased at 35 years of age, the multiplier to use according to the Second Schedule is 17. In terms of this, the loss of income compensation came up to 4,53,339 rupees (26,667 x 17).

In the case of general damages the Court ordered Rs. 2000 as damages on loss of consortium at Rs. 5000 in damages on account of funeral expenses and Rs. 2500 on account of loss of estate as recommended by Second Schedule. The claimants had asked Rs. 1,00,000 in terms of medical expenses but the Second Schedule has put a limit of Rs. 15,000 upon which the Court granted Rs. 15,000. Total amount payable to the claimants was, therefore, Rs. 4,77,839 with interest at the rate of 8 per cent per annum into which the amount should be allowed with the date of the petition until payment or deposit.

Importantly, the issue of liability was touched on in the Supreme Court. The Tribunal had earlier rejected the claim on the basis of an FIR through which it was mentioned that the accident happened because of the impertinent and silly driving of the deceased, which was said by the brother of the driver of the dumpter. The leader of this eye-witness was however not interrogated at the Tribunal, hence, the cause of the accident remained obscure. What is more, the criminality against the deceased had died down. The insurer of the dumper also did not bring evidence that could prove how the accident happened.

In absence of any positive response on the part of the offending vehicle insurer on the cause of the accident, the Supreme Court ruled that the deceased was the third party concerning the offending dumper truck (HR 38H 9100). Thus both the insurer and the insured of the perpetrating vehicle were held jointly and severally liable to pay damages. The National Insurance Company Limited being the insurer of the offending vehicle was therefore found liable to indemnity the claim. The appeal was consequently granted systematically.

Lastly, taking into consideration that the accident was almost 20 years old, the Court directed the amount of the awarded to be paid to the claimant, 50:10:10:10:10:10 to claimant Nos. 1 to 6 respectively. That too was explicated so that in case of the death of the mother of the deceased (respondent No. 6) her portion would transfer to the first claimant. The deposited amount by the The New India Assurance Co. Ltd. was to be returned and the deposited amount (to the amount of the sum awarded) by the National Insurance Company Limited was to be sent to the jurisdictional tribunal to be paid to the claimants. Sources