Supreme Court Allows Insurer To Recover 50% Of Compensation From Owner And Driver Over Policy‑date Discrepancy

A bench of Justice K. Vinod Chandran and Justice N.V. Anjaria heard the appeal by New India Assurance Company challenging a common judgment of the Uttarakhand High Court that had upheld an award by the Motor Accident Claims Tribunal in favour of the claimants. The principal question involved whether the insurer could be relieved of liability because the vehicle’s insurance policy, when verified, bore validity dates that did not cover the date of the accident.

The Court affirmed the High Court’s conclusion on quantum but modified the relief on the ground that verification disclosed a discrepancy in the policy validity period. The Court noted that the insurer had raised the contention only in a review petition before the Tribunal and that "though the allegation of fraud is levelled but it could not be proved by the insurer," and that the insurer had not challenged the Tribunal’s review order before the High Court. The Court, in its reasoning, observed: The Supreme Court therefore partially modified the impugned order to permit the insurer to recover fifty per cent of the awarded compensation from the vehicle owner and driver.

Background The claim arose from a fatal road accident on 21 June 2006 in which 21‑year‑old Hem Singh Mehta, a security guard earning Rs.4,000 per month, was struck by a rashly driven truck and died during treatment. The Claims Tribunal at Haldwani awarded Rs.3,87,000 with 7% interest, holding that the offending vehicle was insured and that the driver was negligent. The owner produced an insurance policy showing validity from 17.06.2006 to 16.06.2007; the Tribunal relied on that to hold coverage existed on the date of the accident.

The insurer filed a review petition before the Tribunal asserting that verification with the issuing office at Rohtak showed the policy was valid only from 28.06.2006 to 27.06.2007 and alleged that the owner had fraudulently altered dates. The Tribunal declined to entertain the review on the ground that it had no power under the Act to review, and dismissed the review on 12.10.2007. The insurer did not challenge that order before the High Court. On appeal, the Uttarakhand High Court affirmed the Tribunal’s assessment of income, dependency and compensation, and dismissed the insurer’s appeal; claimants’ cross‑appeal for enhancement was also dismissed.

Before the Supreme Court, the insurer reiterated that the verified policy did not cover the accident date. The Supreme Court found that, although the fraud allegation was not proved and the insurer had not challenged the Tribunal’s review order in the High Court, equitable considerations warranted permitting the insurer to recover fifty percent of the compensation from the owner and the driver. The Court directed that if the insurer had not deposited any part of the compensation, it must do so before the concerned Tribunal within six weeks. The appeal was otherwise dismissed subject to this modification.

Case Details: Case No.: 2025 INSC 1178 (Special Leave Petition (C) No. 19976 of 2019) Case Title: New India Assurance Co. Ltd. v. Narayan Singh & Ors. Appearances: For the Petitioner(s): Advocate for the appellant (name not indicated in the judgment) For the Respondent(s): Counsel not indicated in the judgment