Synopsis

The claimants (dependents of a deceased passenger) filed a claim after the deceased fell from a Mahindra Jeep and died due to rash driving. The tribunal held that the vehicle was insured under an ‘Act Liability Only Policy’ (covering only third-party risks, not occupants) and therefore absolved the insurer, directing the owner to pay compensation. On appeal by the claimants and the owner, the High Court, following the Supreme Court’s decision in Sunita v. United India Insurance Co. Ltd. (2025), held that even under an Act-only policy, the insurer must first pay the compensation to the claimants and then recover it from the insured (owner) – the ‘pay and recover’ principle. The court also enhanced compensation from ₹7,30,500 to ₹14,06,100 by revising the notional income, adding future prospects, applying correct multiplier, and granting conventional heads with statutory escalation.

Court: High Court of Karnataka at Dharwad

Coram: Hon’ble Mr. Justice Ravi V. Hosmani

Date of Judgment: 24th April 2026

Citation: Miscellaneous First Appeal No.103406/2014 & MFA No.23555/2012 (NC:2026:KHC-D:6014)

Core Law: Motor Vehicles Act, 1988 – Sections 147, 149, 173; ‘Act Liability Only Policy’; ‘Pay and recover’ principle

1. Heading of the judgment

High court of karnataka at dharwad

Miscellaneous first appeal no.103406 of 2014 c/w miscellaneous first appeal no.23555 of 2012

Kavita w/o shivanand khannanavar & ors. (claimants) vs. Maruti basagouda malagouda navar (owner) & anr. (insurer)

Coram: hon’ble mr. justice ravi v. hosmani

Date: 24th april, 2026

2. Legal framework

Major laws and provisions involved:

• Motor vehicles act, 1988 – section 147 (requirements of insurance policy), section 149 (duty to satisfy judgments), section 173 (appeals)

• ‘Act liability only policy’ – a policy covering only the statutory minimum third-party risk, not occupants, owner or driver.

• ‘Pay and recover’ principle – insurer initially pays compensation to claimant and then recovers the amount from the insured.

Subject matter of the judgment:

Whether an insurance company can be completely absolved of liability for the death of a passenger travelling in a private vehicle (jeep) when the vehicle is covered by an ‘Act Liability Only Policy’ (with no premium paid for occupant coverage); and whether the claimants are entitled to enhanced compensation under the structured formula of Pranay Sethi.

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