Holding

The Court ordered the insurer to pay the compensation and thereafter recover it from the driver, and enhanced the award to Rs 4,23,500 with 9% interest.

Summary

The appellant challenged a Motor Accident Claims Tribunal award of Rs 2,89,000 compensation for the death of Naranbhai, caused by a tractor driven without a valid licence. The tribunal had exonerated ICICI Lombard General Insurance Company, holding the driver‑owner liable. The appellant sought (i) a pay‑and‑recover order directing the insurer to pay the award and then recover from the driver, and (ii) enhancement of the compensation on the basis of prospective income, loss of consortium, loss of estate and funeral expenses. The High Court held that a breach of the insurance policy condition (no licence) justifies a pay‑and‑recover order against the insurer and recalculated the quantum, adding 10% prospective income, applying a multiplier of 11, and increasing loss of consortium, estate and funeral amounts, resulting in a total compensation of Rs 4,23,500 with 9% interest. The insurer was ordered to deposit the amount within eight weeks and may recover it from the driver without further suit. The appeal was allowed.

Issues considered

Whether the insurance company can be directed to pay the compensation award and subsequently recover it from the vehicle owner where the policy condition of a valid driving licence is breached.
Whether the compensation awarded by the Tribunal is just, fair and reasonable, and if not, what the appropriate quantum should be, including prospective income, loss of consortium, loss of estate and funeral expenses.

Legislation cited

Motor Vehicles Act, 1988s. 168

Subjects

motor accidentcompensationinsurancepay and recoverpolicy breachprospective incomeloss of consortiumloss of estatefuneral expensesinterest rate

Judgment

C/FA/418/2015 JUDGMENT DATED: 29/01/2026

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

R/FIRST APPEAL NO. 418 of 2015

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE J. L. ODEDRA
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Approved for Reporting Yes No
✔
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GANGABEN @ AMRUTABEN NARANBHAI DOLASHIYA & ANR.
Versus
MADHUBHAI SHAMBHUBHAI JOLIYA & ANR.
==========================================================
Appearance:
MR.HIREN M MODI(3732) for the Appellant(s) No. 1,2
MS VIDHI J BHATT(6155) for the Defendant(s) No. 2
RULE SERVED for the Defendant(s) No. 1
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CORAM:HONOURABLE MR.JUSTICE J. L. ODEDRA

Date : 29/01/2026
ORAL JUDGMENT
1. The present Appeal arises from the judgment and award

dated 30.06.2014 passed by the learned Motor Accident

Claims Tribunal (Aux.), Bhavnagar, in MACP No.152 of

2006.

2. By way of the impugned judgment and award, the Tribunal

was pleased to award compensation to the tune of

Rs.2,89,000/- from the opponent no.1, driver-cum-owner

of the Tractor concerned, with an interest on the said

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amount at the rate of 9% per annum from the date of filing

of the claim petition till its actual realization.

3. The opponent no.2 – ICICI Lombard General Insurance

Company came to be exonerated for the reasons stated in

the impugned judgment and award.

4. The accident in question is owing to the rash and negligent

driving by the owner of the Tractor bearing Engine/Chasis

No.RDT-5771, as a result whereof, one Naranbhai, who

was walking on the road, was dashed upon by the said

Tractor. As a result, Naranbhai sustained grave injuries as

one of the wheels of the Tractor ran over his stomach. As a

result of the resultant injuries, said Naranbhai died on the

spot.

5. Heard learned advocate appearing for the appellant.

6. Learned advocate Mr. Hiren Modi has submitted before this

Court that in the present Appeal, the impugned judgment

and award has been challenged both on the ground of

quantum and exoneration of the Insurance Company. He,

at the outset, has submitted that as such, the reasoning of

the Tribunal that there was a clear-cut breach of policy

condition, for the reason that the owner did not have

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requisite valid and effective driving license, cannot be

disputed. He, however, relied upon two authorities, those

being the judgments in the case of Jawahar Singh Vs. Bala

Jain reported at 2011 (6) SCC 425, which, later on, was

relied on by this Court in the judgment in the case of First

Appeal No.1641 of 2015 in the case of Vimalaben Ratilal

More and Ors. Vs. Sukhmay K Roy and Anr. dated

09.01.2025. Relying on the said judgments, it was urged

that as the case herein is that the breach of the policy

condition of the insurance policy, which admittedly existed

on the date of the accident, therefore, this Court may

kindly pass order/s of “pay and recover” in respect of the

exonerated Insurance Company, the respondent no.2,

herein. He next submitted that the second challenge being

on the quantum is, more or less, for enhancement on the

conventional heads of compensation, viz., that on account

of adding prospective income to the income arrived at by

the Tribunal, as also under the heads of the Loss of

Consortium, Funeral Expenses and Loss of Estate. It was

submitted that in terms of the judgment in the case of

National Insurance Co. Ltd vs Pranay Sethi reported at

2017 (16) SCC 680 as the age of the deceased was of 55

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years, which, in the present proceedings, is undisputed for

the reason being no appeal preferred by the original

opponents, therefore, as per the dictum in the case of

Pranay Sethi (supra), 10% prospective income is liable to

be awarded in terms of the ratio in the said judgment. He

also submitted that for the purpose of computation of loss

of dependency, the income ought to be deducted at the rate

of 1/3 from the aggregate monthly income, i.e., Rs.3,000/-

plus (10% of Rs.3,000/-). He, however, submitted that the

Tribunal has correctly deducted 1/3rd of the income of the

deceased for the reason that there were only two

dependents, those being the claimants in the original claim

petition, i.e., the widow and the son of the deceased.

7. He next submitted that to the sum thus arrived at i.e., the

multiplicand, a multiplier of 11 may be applied. He

submitted that the said amount may kindly be treated as

future dependency loss. It was also submitted that over

and above the future dependency loss, the Tribunal has

only awarded Rs.10,000/- towards Loss of Estate, together

with the Funeral Expenses to the tune of Rs.5,000/-. He,

however, submitted that in terms of the applicable case-

laws, under the heads of the Funeral Expenses and Loss of

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Estate, Rs.18,150/- may kindly be awarded under each

head. Secondly, it was submitted that for the Loss of

Consortium, the Tribunal has only awarded a sum of

Rs.10,000/-. It was, however, submitted that as there are

two dependents, under the head of the Loss of Consortium,

Rs. 96,800/- (Rs.48,400 X 2) may kindly be awarded.

8. Learned advocate Mr. Ninad P Shah appearing for Mrs.

Vidhi J Bhatt for the opponent No.2 - Insurance Company

submits that there is no scope for interference in the

judgment passed by the learned Tribunal. He submitted

that as such the fact that the person driving the offending

vehicle – Tractor did not possess valid and effective driving

license and that it was clear cut breach of policy condition.

It was submitted that no copy of the driving license was

adduced by the driver and also he did not step into the

witness box. It was also submitted that however, the

driver-cum-owner has admitted in his statement before the

police at Exhibit-33 that he did not possess any type of

driving license. It was submitted that a notice at Exhibit-41

was also issued to the opponent no.1(driver-cum-owner of

the offending vehicle) and that the said notice was served

which was evidenced by the fact that acknowledgment for

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the same was produced on record at document Exhibit-42.

9. He submitted that even though the said opponent no. was

called upon through the said notice to produce his driving

license, he has not produce the same which conclusively

proves that the said individual did not possess any driving

license.

10. He next submitted that therefore, the conclusion of the

Tribunal that there was a clear cut breach of policy

condition is unacceptable and it would naturally lead to

the exoneration of the respondent no.2 Insurance

Company. It was thus, submitted that there is no reason

why the Insurance Company could be made liable in the

facts of the present matter.

11. It was next submitted that even the relief for granting pay

and recover is not liable to be granted in asmuch as the

judgment in the case of Jawahar Singh (supra) was

distinguishable on facts. It was submitted that in the said

case, the notice in the Special Leave Petition was only

confined to the question of contributory negligence and

that therefore, no finding in respect of pay and recover,

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could be attributed to the said judgment, as the said

judgment did not consider the said aspect at all. It was

submitted that indeed this Court in the case of Vimlabhen

Ratilal (supra), had based its decisions on the basis of the

decision in Jawahar Singh (supra). It was submitted that

both in the case of Jawahar Singh (supra) and in

Vimlabhen Ratilal (supra), the vehicle was driven by a

minor. It was, however, submitted that in the present case,

there was no such fact. It was thus submitted that both

these judgments are distinguishable and therefore, this

Court may not direct the respondent no.2 - Insurance

Company to first pay the compensation awarded and

thereafter to recover the same from the owner.

12. It was next submitted that insofar as the submissions on

the enhancement of compensation are concerned, the

learned Tribunal, taking into overall facts and

circumstances of the case, has limited the said

compensation to an aggregate amount of Rs. 2,89,000/-. It

was submitted that the facts do not warrant any

enhancement and therefore, the present petition may

kindly be rejected.

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13. Having heard the learned advocates for the parties, this

Court proceeds to decide the present appeal in terms of

appearing hereinafter.

14. The points of determination which arise for decision of

this Court in the present proceedings are as follows:

1. Whether in the facts of the present case, the Insurance

Company could be directed to first pay the

compensation awarded and thereafter to recover from

the owner?

2. Whether the compensation as awarded by the learned

Tribunal in the present case is just, fair and reasonable?

If not, what would be the just, fair and reasonable

compensation, in facts of the present case?

15. Admittedly, neither of the parties in the present matter

dispute that the driver did not have requisite license. In the

present Appeal, the respondent no.1 - driver was served,

though, none has appeared on behalf of the said

respondent. Now, the record indicates that he did not

produce license before the learned Tribunal despite him

having been served with a notice Exhibit-41, calling upon

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him to produce such license. The fact that the said notice

was served upon the said respondent no.1 is evident from

the fact that an acknowledgment, evidencing the service of

the said notice on the respondent no.1, is also produced on

record at Exhibit-42 before the learned Tribunal.

16. Moreover, the said respondent no.1, in his statement

before the Police at Exhibit-33, has candidly admitted that

he did not have any driving license whatsoever. In the

circumstances, the fact that the driver did not have any

license cannot be doubted. Now, the learned advocate for

the appellant had placed reliance on judgment in the case

of Jawahar Singh (supra). In the said case indeed, as

pointed out by learned advocate of the Insurance

Company, the notice was confined with the question of

contributory negligence. However, the fact remains that the

Hon’ble Supreme Court had indeed noted that the Tribunal

has passed an order for pay and recover which was not

disturbed by the High Court in the facts of the said case.

Therefore, it is plain that it was only for the reason that the

Hon’ble Supreme Court was in agreement with the said line

of reasoning, namely, the order of pay and recover, that it

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did not deem it appropriate to issue notice on the said

aspect. Hence, in that case, notice was limited only to the

question of contributory negligence. In the circumstances,

it would not be entirely true to hold that the said judgment

does not endorse the direction to the Insurance Company

for paying first and thereafter recovering the same from the

owner where there is a breach of policy condition of the

insurance policy.

17. Even the Coordinate Bench of this Court in Vimlaben

Ratilal (supra) has followed the said judgment and has held

that in the facts of the said case it was a fit case to pass

order of pay and recover. In both of the aforesaid cases, of

course, the driver was a minor. However, the law is not

that only when a driver is a minor that the order for pay

and recover can be made. The law, succinctly put, is that

when there is a breach of policy condition, a third party

may not be subjected to the technicality of breach of terms

and conditions between the owner and the insurer, nor

could such third party be made to suffer in those

circumstances. And to obliviate such prejudice to third

party, the order of pay and recover ought to be passed. The

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said aspect is duly satisfied in the facts of the present case

and therefore, in this case too, it would be just and proper

for this Court to pass an order for pay and recover.

18. Hence, the compensation, as shall be finalized in terms of

this Order in the forthcoming paragraphs, shall be first

paid by the Insurance Company to the claimant and

thereafter, the Insurance Company would be at liberty to

recover the same from the owner of the offending vehicle.

19. Insofar as the compensation is concerned, there too, this

Court is inclined to hold that as per the dictum in Pranay

Sethi (supra), 10% prospective income is liable to be added

to the income of the deceased. The deceased, as is

apparent from the facts of the present case, was an

agriculturist and therefore, he would qualify under the

direction of the Pranay Sethi (supra) for the purpose of

additional prospective income in terms of the said

judgment. Now, as the age of the deceased at the time of

the accident was 55 years, therefore, 10% prospective

income is liable to be awarded in terms of the said

judgment. The relevant portion of the said judgment reads

as follows:.

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“(iv) In case the deceased was self-employed or on a fixed
salary, an addition of 40% of the established income should
be the warrant where the deceased was below the age of 40
years. An addition of 25% where the deceased was between
the age of 40 to 50 years and 10% where the deceased was
between the age of 50 to 60 years should be regarded as the
necessary method of computation. The established income
means the income minus the tax component.”

20. Accordingly, when to the monthly income, as assessed by

the Tribunal i.e. a sum of Rs. 3,000/- per month, is

considered for the purpose of prospective income, the total

monthly income would be Rs. 3,300/- (Rs.3000/- plus 10%

of Rs.3000/-). As the learned Tribunal had failed to

consider the prospective increase to the income, the entire

comepsnation will have to be reworked. Indeed, the learned

Tribunal has correctly deducted 1/3rd of the income for

the reason that the dependents of the said deceased were

two(2) in number namely, the appellants herein, who are

respectively, the widow of deceased and the son of the

deceased. Therefore, deducting 1/3rd from an amount of

Rs. 3300/-, a sum of Rs.2200/- would be arrived at. The

same would be in terms of the follwoing observation of

Hon’ble Apex Court in Sarla Verma & Ors vs Delhi

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Transport Corp.& Anr. reported at 2009 (2) SCC (CRI)

1002, which reads as follows:

“30. Though in some cases the deduction to be made
towards personal and living expenses is calculated on the
basis of units indicated in Trilok Chandra4, the general
practice is to apply standardised deductions. Having
considered several subsequent decisions of this (2003) 3 SLR
(R) 601 Court, we are of the view that where the deceased
was married, the deduction towards personal and living
expenses of the deceased, should be one-third (1/3rd) where
the number of dependent family members is 2 to 3, one-
fourth (1/4th) where the number of dependent family
members is 4 to 6, and one-fifth (1/5th) where the number
of dependent family members exceeds six.”

21. The aforesaid amount of Rs.2,200/- would be the monthly

income for the purpose of present petition. When the said

amount is multiplied by 12, the yearly income

(multiplicand) would be Rs.26,400/- (Rs. 2,200/- X 12). In

terms of the judgment in Sarla Verma (supra), the

multiplier is to be decided in terms of the following

observations of the Hon’ble Apex Court:

“15. We therefore hold that the multiplier to be used should
be as mentioned in column (4) of the Table above (prepared
by applying Susamma Thomas, Trilok Chandra and
Charlie), which starts with an operative multiplier of 18 (for
the age groups of 15 to 20 and 21 to 25 years), reduced by

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one unit for every five years, that is M-17 for 26 to 30 years,
M-16 for 31 to 35 years, M-15 for 36 to 40 years, M-14 for
41 to 45 years, and M-13 for 46 to 50 years, then reduced
by two units for every five years, that is, M-11 for 51 to 55
years, M-9 for 56 to 60 years, M-7 for 61 to 65 years and M-
5 for 66 to 70 years.”

22. Accordingly, since the age of the deceased in the present

case is of 55 years, which is evident from the Postmortem

Note pertaining to the deceased at Exhibit-29, the

multiplier in this present case would be 11. Accordingly, a

sum of Rs. 26,400/-, when multiplied with 11, the amount

arrived at would be Rs. 2,90,400/-, which would be the

Future Loss of Income.

23. As the dependents in the present case are two(2) in

number, the Loss of Consortium amount would be to the

tune of Rs.48,400/- multiplied by 2, which would be

Rs.96,800/-. The same is in terms of the judgment in the

case of Pranay Sethi (supra). It may be recalled that the

learned Tribunal had awarded only Rs.10,000/- under the

said head. So be it. Adding thereto the sums under the

heads of Loss of Estate and Funeral Expenses, both of

which would be to the tune of Rs. 18,150/- and thus the

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amount liable to be granted under these heads would be

an aggregate amount of Rs.36,300/-.

24. Hence, the overall compensation in the present case

would be as follows:

Sr. Particulars Amount Amount
No. awarded by the determined by
Tribunal (in Rs.) this Court
1 Loss of Income 2,64,000/- 2,90,400/-
(Rs.26,400/-
X 11)
2 Loss of Consortium 10,000/- 96,800/-
(Rs.48,400/-
X 2)
3 Loss of Estate 10,000/- 18,150/-
4 Funeral Expenses 5,000/- 18,150/-

TOTAL 2,89,000/- 4,23,500/-
Less: Already awarded 2,89,000/-
amount by the
Tribunal
Enhanced amount by Rs.1,34,500/-
this Court

25. The enhanced amount of Rs.1,34,500/- shall carry

interest at the rate of 9% per annum. At this stage, it

would be appropriate to note that learned advocate for the

respondent No.2 Insurance Company has vehemently

argued that looking to the banking interest rate being

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awarded by the banks, the said interest rate may kindly be

pegged to 7%. However, this Court is not impressed by the

said argument. The fact remains that the accident in the

present case had occurred in March, 2006 and the

compensation is being awarded after a prolonged period, in

the year of 2026. Considering the same and looking at the

inflationary trends prevalent in the country, so as to

maintain the purchase power of the compensation

awarded, this Court deems it appropriate that the interest

rate on the enhanced compensation be fixed at 9% per

annum.

26. Finally, the mode of recovery of amount by the respondent

– Insurance Company under the pay and recover orders. It

may be noted that the Hon’ble Apex Court in the case of

National Insurance Co. Ltd. Vs. Baljit Kaur and Ors.,

reported at 2004 (2) SCC 1, was a case where the

Insurance Company was directed to first satisfy award

amount and thereafter, it was permitted to recover the

same from the owner of the vehicle. It was further clarified

that such recovery may be initiated through a proceedings

before the executing court itself, rather then having to file a

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second suit for the purpose of such recovery. The relevant

observation of the Hon’ble Apex Court reads as follows:

21. The upshot of the aforementioned discussions is that
instead and in place of the insurer the owner of the vehicle shall
be liable to satisfy the decree. The question, however, would be
as to whether keeping in view the fact that the law was not clear
so long such a direction would be fair and equitable. We do not
think so. We, therefore, clarify the legal position which shall
have prospective effect. The Tribunal as also the High Court had
proceeded in terms of the decision of this Court in Satpal
Singh1. The said decision has been overruled only in Asha Rani2.
We, therefore, are of the opinion that the interest of justice will
be subserved if the appellant herein is directed to satisfy the
awarded amount in favour of the claimant, if not already
satisfied, and recover the same from the owner of the vehicle.
For the purpose of such recovery, it would not be necessary for
the insurer to file a separate suit but it may initiate a
proceeding before the executing court as if the dispute between
the insurer and the owner was the subject-matter of
determination before the Tribunal and the issue is decided
against the owner and in favour of the insurer. We have issued
the aforementioned directions having regard to the scope and
purport of Section 168 of the Motor Vehicles Act, 1988, in terms
whereof, it is not only entitled to determine the amount of claim
as put forth by the claimant for recovery thereof from the
insurer, owner or driver of the vehicle jointly or severally but
also the dispute between the insurer on the one hand and the
owner or driver of the vehicle involved in the accident inasmuch
as can be resolved by the Tribunal in such a proceeding.

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(emphasis supplied by underlining.)

27. The Insurance Company shall forthwith deposit the entire

compensation together with the interest as awarded under

this judgment, within a period of 8 weeks from the date of

the availability of the signed copy of this judgment. The

Tribunal shall forthwith proceed to disburse the said

amount to the claimants after due verification. The

Insurance Company shall be at liberty to recover from the

owner of the offending vehicle, the award amount that it

deposits as aforesaid, without entering into any further

adjudicatory proceedings against the said owner, by way of

execution proceedings.

28. The present Appeal stands allowed to the aforesaid extent

and is disposed of accordingly.

29. R&P, if any, be forthwith remitted back to the Tribunal.

(J. L. ODEDRA, J)
JIGAR J RABARI/ SUDHIR

Page 18 of 18
Original copy of this order has been signed by the Hon'ble Judge.
Digitally signed by: SUDHIR ACHUTHAN EZHUTHASSAN(HC00192), GOV, at High Court of Gujarat on 29/01/2026 12:25:39