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Patna High Court

New India Assurance Company Ltd. Cinema Road, HajipurversusNirmala Devi and Ors

Decided
Disposal
DISPOSED

Holding

The Court held that the insurance company is bound to pay the settlement amount as per the mediation agreement and is liable to interest and costs for any delay.

Summary

The petition was filed by New India Assurance Company Ltd. challenging a district court judgment in a motor vehicle accident claim. The matter was referred to mediation, where the parties agreed that the company would pay Rs. 4,45,000 in addition to Rs. 50,000 already paid, within two weeks of 10 September 2025. The company failed to make the payment, claiming the agreement needed a judicial stamp. The High Court held that the mediation agreement, being a court‑ordered compromise, was binding and the company was obligated to pay as promised. The Court ordered payment by 10 January 2026, with 9% interest accruing from 11 January 2026 if delayed, and an additional cost of Rs. 25,000 if payment was not made by 25 January 2026. The appeal was consequently disposed.

Issues considered

  • Whether a mediation settlement agreement, not stamped by a judicial order, is enforceable against the insurance company.
  • Whether interest and costs can be imposed for non‑payment of the settlement amount.

Subjects

  • mediation
  • insurance claim
  • motor vehicle accident
  • settlement agreement
  • interest
  • costs
  • enforcement of compromise

Judgment

                     IN THE HIGH COURT OF JUDICATURE AT PATNA
                                  Miscellaneous Appeal No.1041 of 2017
                 ======================================================
                 New India Assurance Company Ltd. Cinema Road, Hajipur ... ... Appellant/s
                                                 Versus
           1.     Nirmala Devi Wife of Late Ramesh Choudhary,
           2.    Rinku Kumari, Daughter of Late Ramesh Choudhary,
           3.    Vikash Kumar, Son of Late Ramesh Choudhary,
           4.    Baby, Daughter of Late Ramesh Choudhary, (2 to 4 are minor son and minor
                 daughters of Late Ramesh Choudhar All 1 to 4 are residents of Village-
                 Bakhari Barai, P.s.- Rajapakar, District- Vaishali.
           5.    Md. Allauddin, Son of Multan Mian, resident of Village- Bakhari Barai, P.s.-
                 Rajapakar, District- Vaishali. Driver of Tractor No.- BR-06A/68973.
           6.     Jagdish Prasad Singh, Son of Ram Udir Singh, Resident of Village-
                  Faridpur, P.S.- Rajapakar, District- Vaishali. Owner of Tractor No.- BR-
                  06A/6873.
                                                                         ... ... Respondent/s
                 ======================================================
                 Appearance :
                 For the Appellant/s    :        Mr.Vikash Chandra Srivastava, Advocate
                 For the Respondent/s   :        Mr.Javed Aslam, Advocate
                 ======================================================
                 CORAM: HONOURABLE MR. JUSTICE RAJIV ROY
                                       ORAL ORDER

6   08-01-2026                 Heard the parties.

                               2. The present petition has been preferred for the

                   following relief/s:

                                            (i) being aggrieved and dissatisfied with the

                                            impugned     judgment       dated     07.08.2017

                                            passed by Court of District Judge-cum-

                                            Motor Vehicle Accident Claim Tribunal,

                                            Vaishali in Claim Case No. 43 of 1995.

                               3. On 29.07.2025, the matter was sent to the

                   Mediation Centre and as per the Mediator's report, the dispute

                   has been resolved through the process of mediation on

                   10.09.2025.
Patna High Court MA No.1041 of 2017(6) dt.08-01-2026
                                            2/3




                       4. As per the compromise, the New India Assurance

          Company (henceforth for short ‘the Company’) has settled the

          amount of Rs. 4,45,000/- beside the amount of Rs. 50,000/-

          which has already been paid. The agreement shows that ‘the

          Company’ was to pay the amount within a period of two weeks

          from 10.09.2025.

                       5. On query, whether the undertaking given on

          10.09.2025 stands fulfilled and the amount has been paid, it is

          the contention of the learned counsel representing ‘the

          Company’ that since it has not been stamped by a judicial order,

          the payment could not be made.

                       6. The said act of ‘the Company’ is deprecable to say

          the least. Those sitting in their respective chambers must take

          note of the fact that pursuant to the judicial order, the matter was

          sent to the Mediation Centre and the memorandum of agreement

          was signed between             the parties. In that background, ‘the

          Company’ was duty bound to abide by the undertaking given

          that the payment shall be made in two weeks from 10.09.2025.

                       7. Since already lots of water has flown down the

          ganges and Nirmala Devi and family has been deprived of the

          fruits of the Mediators’s order dated 10.09.2025, this Court

          wanted to impose cost on ‘the Company’ and also pay interest
         Patna High Court MA No.1041 of 2017(6) dt.08-01-2026
                                                     3/3




                   to the lady from 01.10.2025 but on the assurance given by the

                   learned counsel representing ‘the Company’ that immediately

                   payment shall be made, this Court passes the following order:

                                                  (i) the payment is to be made by ‘the

                                                  Company’ by 10.01.2026 positively;

                                                  (ii) failure to pay the amount by

                                                  10.01.2026 she will be entitled to 9%

                                                  interest from 11.01.2026.

                                8. It is further made clear that if the payment is not

                   made by ‘the Company’ by 25.01.2026, she will be entitled to

                   an additional cost of Rs.25,000/- effective 26.01.2026 and ‘the

                   Company’ shall be free to realize the amount from the Officer

                   concerned due to whom the payment is not made despite an

                   undertaking given on 10.09.2025.

                                9. The M.A. No. 1041 of 2017 is disposed of with the

                   aforesaid observation.



                                                  (Rajiv Roy, J)
Ravi/-

U


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