Holding

The Tribunal erred in its compensation calculation and in rejecting the insurer’s liability; the award is enhanced to Rs. 1,20,000 with interest and New India Assurance is liable as successor insurer.

Summary

The widow of Ram Kishore Pandey filed a claim before the Motor Accidents Claims Tribunal for compensation of Rs. 1,17,747.70 after her husband was killed in a car accident. The Tribunal awarded only Rs. 40,600, assuming a life expectancy of 58 years and deducting 33% for a lump‑sum payment, and dismissed the claim against the insurer on the ground that no insurance affidavit was produced. On appeal, the Supreme Court held that the Tribunal erred in both the computation of compensation—life expectancy should not be less than 65 years and no deduction for lump‑sum was justified—and in rejecting the insurer’s liability. The Court accepted the insurance cover note as genuine evidence and declared New India Assurance, as successor to the original insurers, liable to pay the award. The compensation was enhanced to Rs. 1,20,000 with 12% interest from the date of the Tribunal application, and costs were awarded against the insurer.

Issues considered

Whether the Tribunal correctly computed compensation by using an appropriate life expectancy and by deducting a lump‑sum amount.
Whether the insurance company (New India Assurance) is liable as the successor insurer despite the late production of the cover note.
Whether the Tribunal erred in rejecting the insurance claim for lack of an affidavit.

Subjects

Motor Accidents Claims TribunalCompensationLife expectancyLump‑sum deductionInsurance liabilitySuccessor insurerInterest on award

Judgment

URMILLA PANDEY AND ORS . A
• ~

v.
KHALIL AHMAD AND ORS.

MAY JO, 1994

[KULDIP SINGH AND B.L. HANSARIA, JJ.] B

Motor Accidents Claims : Compensation to legal heirs of decease~
• ~
Tribunal awarding Rs. 40,600 as compensation-Held, amount of Rs. 40, 600
is too /ow-Tribunal erred in making 33% deduction for lumpsumpayment
and taking life expectancy to be 58-It could not be less than 65-Compen- c
sation enhanced to Rs. 1,20, 000.

Motor Accidents Claims Tribunal-Vehicle involved in accident-Proof
of Insurance-Application by owner of car stating that vehicle was insure~
Tribunal rejecting application for want of affidavit-Held, Tribunal should
have asked Insurance Conipany to produce necessary documents-Insurance D
,)
cover note produced before this Coun after 25 years after accident may not
by itself be sufficient to make Insurance Company liable to pay award money
but there is conteniporaneous evidence to show that cover note is genuine.

The husband of appellant No. 1 died in a car accident at the age of
E
29 years. She filed a claim petition before the Motor Accidents Claims
Tribunal against the driver and the owner of the car as well as the
financiers and the New India Insuranct: Company, claiming Rs. 1,17,747
as compensation. The Tribunal held that the accident took place on
account ?f rash and negligent act of the driver. It awarded Rs. 40,600 as
.....J compensation to be paid by the owner of the car. The Tribunal dismissed F
the claim against the financier and the Insurance Company holding that
the car could not be proved to be insured. On appeal, ti;c High Court
upheld the award of the Tribunal. The widow and the two childern of the
deceased filed the appeal by special leave.
G
The appellants produced before this Court, an insurance cover note
dated 30.12.1969 showing that the vehicle involved in the accident was

" insured with an insurance company which merged with the respondent-
New India Insurance Company.
'
;J ··~
Allowing the appeal, this Court H
1001
cl
1002 SUPREME COURT REPORTS [1994] 3 S.C.R.

A HELD : 1. The Tribunal has grossly erred in computing the com-
pensation amount. The Tribunal \\'as not justified in assuming the life
.....
expectancy to be 58. It could not be less than 65 even at that point of time.
The Tribunal also fell into error in making 33% deduction for the lump-
sum payment. As a matter of fact, no payment has been received by the
unfortunate family. The amount of Rs. 40,600 awarded by the Tribunal is
B quite low. Without going into various heads under which the appellants
could be compensated, in order to do complete justice between the parties,
the appellants be awarded Rs. 1,20,000 (rounding - off the figure of Rs.
1,17,747.70 paise as claimed by the appellants) with interest at the rate of
12% per annum from the date of the application before the Tribunal.

c [1006-E-G]
2.1. The Insurance cover note placed before this Court almost 25
years after the accident may not by itself be sufficient to make the
Insurance Con1pany liable to pay the award money but ti1er~ is contem-
poraneous evidence on the record to show· that the cover note is genuine.
D Owner of the car had filed an application before the Tribunal in April,
1979 stating that the car was insured with 'Canara Motor and General
Insurance Company Limited.' The Tribunal rejected the a;11i)ication on
the ground that no affidavit in support of the said application was filed.
The Tribunal should have called upon the insurance company to produce
the necessary do~uments. It failed in its duty to judiciously investigate and
E adjudicate the claim filed by the appellants. (1005-D-FJ

2.2 The car involved in the accident was insured with the Premier
insurance Company Limited and the Canara Motor & General Insurance
Company Limited. The respondent-New India Assurance Company, being
the successor of the said companies is liable to pay the a\.l·ard money as
F an insurer. (1006-D-E]

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 4365 of
1994.

From the Judgment and Order dateG 4.1.89 of the Allahabad High
G Court in F.A.0. No. 646 of 1979.

Ram Ashraya Mishra and K.K. Gupta for the Appellants.

S.M. Suri and Pramod Dayal for the Respondents.

H The Judgment of the Court was delivered by
MRS. URMIT.Li\ v. KHALJT.. AHMAD !KULDIP SINGH,J.] 1003

' . ~·
KULDI:' SINGH, .I. Special leave granted.

Ram Kishon; Pandey - while coming hu111c on a cycle from \Vork -
A

was run over by car No. UPC 8527 on March 3, 1970 and died almost
instantaneously. He was 29 years of age. He left behind his widow Urmila
Devi and two minor children who were infants. Almost a quarter century
has passed by but the unfortunate widow and the orphan children have not
B
as yet been paid a single penny by way of compensation.

Urmilla Pandey widow of Ram Kishore Pandey filed a claim petition
before the Motor Accident Claim Tribunal, Allahabad claiming Rs.
1,17,747.70 as compensation on account of the death of her husband in the C
car accident. Khalil Ahmad, the driver of the car; Ram Kishan (dead)
through his son Purshottam alias Balwa, the owner of the car; M/s.
Chandra FinanciCi-s; and the New India Assurance Company were im-
pleadcd as respondents before the tribunal. The Tribunal came to the
conclusion that the accident took place on the car being driven rashly and D
) negligenrly by Khalil Ahmad, the driver of the car. While assessing the
compensation the Tribunal held that the age of 58 years at which the
deceased would have retired be taken as the life expectancy of the
deceased. The Tribunal further found that the deceased was drawing Rs.
259.10 as his salary - deducting l/3rd for maintaining himself - he was
spending the remaining amount of Rs. 175 per month on his family. Taking E
the annual amount to be Rs. 2100 and multiplying the same by 29, the
Tribunal reached the figure of Rs. 60,000. Making a deduction for the
lump-sum payment at the rate of 33 per cent, the Tribunal awarded Rs.
40,600 as compensation to the family. The Tribunal, however, found that
...J there was no material on the record to prove that the car was insured \vith F
the respondent-company. The Tribunal by order dated May 9, 1979 dis-
missed the claim against the financier and the insurance company and
passed a decree for Rs. 40,600 against Purshotti:lm son of late Ram Kishan.

Urmilla Pandey and the t\vu children filed appeal against the award
of the Tribunal before the Allahabad High Court. Appeal against respon- G
dents 1 & 2 (the financier and insurance company) Wets dismissed on
November 4, 1981 for want of steps to serve notice on then1. A Division
Bench of the High Court heard the appeal against respondents 3 and 4
-.. ,-+' (owner and driver) on January 4, l989. The learnt:d Judges declined to set
aside the earlier order dismissing the appeal against respondents 1 '"!\'.: 2 and H
1004 SUPREME COURT REPORTS I1994]3 S.C.R.
A on further hearing upheld the finding of the Tribunal against the financier
and the insurance company. The High Court dealt with the appeal in a ....'
cursory manner.

This Courl on Augu~t 9, 1989, passed the following order:

B '
1
lnspite or service of notice the respondent No. 2 O\Vner of the
vehicle, has not appeared. The owner is directed to deposit the
compensation amount of Rs. 40,600 in the claims Tribunal within
six weeks from today, failing which the entire amount shall be
recovered as arrears of land revenue,, and when the money is in
deposit 50% thereof shall be permitted to be withdrawn by the
c petitioner without furnishing any security. The CMP is disposed
of. 11

Despite the above quoted order of this Court, the owner of the
vehicle did not deposit any amount before the Tribunal. The appellant in
D I.A. No.2/1990 has stated that the owner has pleaded bankruptcy. The
matter was also taken up by the Lok Adalat on November 19, 1989 when
it was held in the premises of this Court. Unfortunately, no relief was
granted to the appellant even by the Lok Adalat.

This Court on November 12, 1990 issued notice to the New India
E Assurance Company Ltd. Calling upon the company to show cause why the
Cor.lpany should not be made to pay the award - money. On September 6,
1993, this Court passed the following order :
11
The respondents to take notice as to why the compensation
awarded by the Courts below be not enhanced. The learned
F counsel for the Insurance Company seeks a short adjournment. To
be listed on 24.9.93, indicating that the matter may be finally
disposed of on that date".

M canwhile, learned counsel for the appellants placed before this
G Court an Insurance cover note No. A-8351 dated December 30, 1969 which
shows that the vehicle involved in the accident was insured with the Premier
Insurance Company Limited/and the Canara Motor and General Insurance
Company. This Court on October 1, 1993 passed the following order :

"Learned counsel for the petitioners has brought before us an
H insurance cover dated 30.12.1969 from which it is obvious that the
MRS. URMILLA v. KHALIL AIIMAD [KULDIP SINGH J.] 1005

vehicle involved in the accident was insured with the Premier A
Insurance Co. Ltd. It is nol disputed that the said company finally
merged with New India Insurance Company. A copy of this cover
note has been handed over to the learned Counsel for the New
India Insurance Company. He seeks short adjournment to seeks
instructions and also to produce further documents in thi.:; respect,
if available, in the records of the Company. The matter is ad- B
journed to L5-10-93."

The learned counsel for the New India Assurance Company has
stated before us that the company is not in a position to trace the insurance
cover or any connected documents from its record. C

The insurance cover note No. A-8351 dated December 30, 1969 show
the names of the owners of car UPC 8527 as M/s. Chandra Financiers and
Ram Kishan. In the cover the authorised insurer are shown to be the
Premier Insurance Company Limited and the Canara Motor and General D
Insurance Company Limited. It is no doubt correct that the cover note
placed before us almost 25 years after the accident may not by itself be
sufficient to make the insurance company liable to pay the award - money
but there is contemporaneous evidence on the record to show that the
cover note is genuine. Purshottam filed an application (96-C) before the
Tribunal on April 20, 1979 wherein he stated that the car - purchased by E
his father under the hire-purchase agreement - was insured with "Canara
Motor and General Insurance Company Limited." The said application
was, however rejected by the Tribunal on the ground that no affidavit in
support of the said application was filed. The Tribunal should have called
upon the insurance company to produce the necessary docun1ents. We are F
of the view that the Tribunal failed in its duty to judiciously investigate and
adjudicate the claim filed by the appellants.

It is no doubt correct that initially the owner had produced certificate
of insurance (KN-541) issued by the Northern India Insurance Company.
In the said certificate, the names of t\VO persons to whom the financier had G
earlier given the vehicle were mentioned. The Tribunal rejected the certifi-
cate on the short ground that unless the certificate of insurance is trans~
fcrred in favour of Ram Kishan. before the accident took place, no contract
hct\vccn Ram Kishan and the insurance company could have come into
existence. It is not disputed that the car purchased by Ram Kishan \\ras a H
1006 SUPREME COURT REPORTS [1994] 3 S.C.R.

A secnnd hand car. The insurance cover produced before us cl~arly mentions
that it \Vi.t.S a second hand car. ()riginally as a ne\V car it was given to some .,... '
other persons \vho had got it insured \VitJ1 the Northern India Insurance
Company. When the financier transferred the vehicle in the name of Ram
Kishan he n1ust have given the original insurance certificate along with the
vehicle to Ram Kishan. That is how initially in the proceedings before the
B Tribunal the insurance certificate (KN-541) was produced. Later on, Pur-
shottam moved an application before the Tribunal bringing it to the notice
of the Tribunal that his father Ram Kish an had gal the vehicle insured with
the 11 Canara Motor and (.Jcncral Insurance Company Lin1itcd. 1' It seems
that instead of having the original insurance cover transferred is his name,
c Ram Kishan got the car insured afresh with the Premier Insurance Com-
pany Limited and the Canara Motor and General Insurance Company
.Limited. It was a comprehensive cover. It is n 0t disputed that the Premier
Insurance Company Limited finally merged with the New India Assurance
Company.

D We are satisfied that the car with registration No. UPC-8527 was
0

insured with the Premier Insurance Company Limited & Canara Motor
and General Insurance Company Limited. The New India Assurance Com-
pany, respondent in the appeal herein, being the successor of the said
companies is liable to pay the award - money as an insurer.
E
The Tribunal has grossly erred in computing the compensation
amount. The Tribunal was not justified in assuming the life expectancy to
be 58. It could not be less than 65 even at that point of time. The Tribunal
alsn fell into error in making 33o/rJ deduction for lump-sum payment. As a
F matter of fact) no payment tiJI date has been received by the'. unfortunate
family. The amount of Rs. 40,600 awarded by the Tribunal is quite low.
Without going into various heads under which the appellants could be
compensated, we are of the view, that in order to do coinplete justice
between the parties, the appellants he awarded Rs. l,20,000 (rounding - off
the figure of Rs. 1,17,747.70 paise as claimed by the appellants). We order
G accordingly. On claimed by the appellants. We order accordingly. On the
amount of Rs. 1,20,000 the appellants shall be entitled to 12 per cent per
annum interest from the date of the application before the Tribunal. The
total amount shall be paid by the insurance company to Urmilla Pandey,
the widow, on her behalf and on behalf of her two children within three
J-1 months from today. In case the amount is not paid within the period of
MRS. URMILLAv. KHALILAHMAD[KULDIPSINGH,J.] 1007

three months, the insurance company shall be liable to pay interest at the A
, ..,. rate of 18 per cent per annum thereafter. The amount shall be paid by way
of a demand draft in the name of Urmilla Pandey.

We allow the appeal, set aside the High Court Judgment and modify
the award of the Tribunal in the above terms. The appellants shall be
entitled to costs which we quantify as Rs. 5,000 to be paid by the insurance B
company.

R.P. Appeal allowed.

,